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Bankruptcy of Empire

This book incorporates recent, rich literature on the history of the ¬scal organization
and ¬nancial dynamics of the Spanish empire within the broader historical debates on
rival European imperial states in the eighteenth and early nineteenth centuries. The
focus is on colonial Mexico because it served as a ¬scal and ¬nancial submetropolis
that ensured the capacity of the imperial state to defend itself in a time of successive
international con¬‚icts.
Whereas the monarchy of Charles III (1759“1788) was able to successfully meet
the challenges of reinforcement of empire, the ¬nances of the Spanish state began
to sink under Charles IV (1789“1808). This collapse was caused by the enormous
expense of waging successive wars in the Americas and Europe. In each war, colonial
Mexico was the most important source of resources for the Crown, but these demands
gradually outstripped the tax base of the viceroyalty despite the extraordinary silver
boom of the late eighteenth century. The bankruptcy of the Spanish monarchy and
its empire was the inevitable consequence.

Carlos Marichal was born in Baltimore, Maryland, and has dual nationality of both
the United States and Mexico. He earned his B.A. and Ph.D. from Harvard and has
taught history at the university level in Mexico since 1979. Since 1989, he has been
a professor of history at El Colegio de Mexico, the leading social science university
institute in Mexico. He is the founder and former president of the Mexican Association
of Economic History and has served on the executive committee of the International
Economic History Association since 2003. He is the author of A Century of Debt Crises
in Latin America, 1820“1930 (1989), and is the editor or coeditor of ¬fteen books in
Spanish and English, published over the last twenty years, the majority on the ¬scal
and ¬nancial history of Mexico, as well as numerous texts on the economic history of
Latin America.
cambridge latin american studies

General Editor
Herbert S. Klein
Gouverneur Morris Emeritus Professor of History, Columbia University
Director of the Center of Latin American Studies, Professor of History, and
Hoover Senior Fellow, Stanford University

Bankruptcy of Empire

Other Books in the Series
1. Ideas and Politics of Chilean Independence, 1808“1833, Simon Collier
2. Church Wealth in Mexico: A Study of the “Juzgado de Capellanias” in the
Archbishopric of Mexico 1800“1856, Michael P. Costeloe
3. The Mexican Revolution, 1910“1914: The Diplomacy of Anglo-American
Con¬‚ict, P. A. R. Calvert
4. Britain and the Onset of Modernization in Brazil, 1850“1914, Richard
5. Parties and Political Change in Bolivia, 1880“1952, Herbert S. Klein
6. The Abolition of the Brazilian Slave Trade: Britain, Brazil and the Slave
Trade Question, 1807“1869, Leslie Bethell
7. Regional Economic Development: The River Basin Approach in Mexico, David
Barkin and Timothy King
8. Economic Development of Latin America: Historical Background and Contem-
porary Problems, Celso Furtado and Suzette Macedo
9. An Economic History of Colombia, 1845“1930, W. P. McGreevey
10. Miners and Merchants in Bourbon Mexico, 1763“1810, D. A. Brading
11. Alienation of Church Wealth in Mexico: Social and Economic Aspects of the
Liberal Revolution, 1856“1875, Jan Bazant
12. Politics and Trade in Southern Mexico, 1750“1821, Brian R. Hamnett
13. Bolivia: Land, Location and Politics since 1825, J. Valerie Fifer, Malcolm
Deas, Clifford Smith, and John Street
14. A Guide to the Historical Geography of New Spain, Peter Gerhard
15. Silver Mining and Society in Colonial Mexico: Zacatecas, 1546“1700,
P. J. Bakewell

(Continued after index)
Bankruptcy of Empire

Mexican Silver and the Wars Between Spain, Britain, and France,

El Colegio de Mexico
Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo

Cambridge University Press
The Edinburgh Building, Cambridge CB2 8RU, UK
Published in the United States of America by Cambridge University Press, New York

Information on this title: www.cambridge.org/9780521879644
© Carlos Marichal 2007

This publication is in copyright. Subject to statutory exception and to the
provision of relevant collective licensing agreements, no reproduction of any part
may take place without the written permission of Cambridge University Press.
First published in print format 2008

ISBN-13 978-0-511-50808-0 eBook (NetLibrary)

ISBN-13 978-0-521-87964-4 hardback

Cambridge University Press has no responsibility for the persistence or accuracy
of urls for external or third-party internet websites referred to in this publication,
and does not guarantee that any content on such websites is, or will remain,
accurate or appropriate.
To Soledad, with love and admiration

page xi
List of Tables and Figures

1 Resurgence of the Spanish Empire: Bourbon Mexico as
Submetropolis, 1763“1800
2 An Imperial Tax State: The Fiscal Rigors of Colonialism
3 Imperial Wars and Loans from New Spain, 1780“1800
4 The Royal Church and the Finances of the Viceroyalty
5 Napoleon and Mexican Silver, 1805“1808
6 Between Spain and America: The Royal Treasury and
the Gordon & Murphy Consortium, 1806“1808
7 Mexican Silver for the Cortes of C´ diz and the War against
Napoleon, 1808“1811
8 The Rebellion of 1810, Colonial Debts, and Bankruptcy
of New Spain
Conclusions: The Financial Collapse of Viceroyalty and


List of Tables and Figures

1.1. Wars in Which the Spanish Monarchy Was Engaged
in 1762“1814 page 20
1.2. The Atlantic Navies, 1720“1790 24
2.1. Net Income of Royal Treasuries of New Spain, Consolidated
Accounts, 1795“1799 (Annual Average Income in Silver Pesos) 59
2.2. Royal Treasury at Guadalajara: Income, 1760, 1790, 1800, and 1804 68
2.3. Royal Treasury at Zacatecas: Income, 1760, 1790, 1800, and 1810 70
2.4. Royal Treasury at Merida: Income, 1760, 1790, 1800, and 1808 71
2.5. Royal Treasury at Veracruz: Income, 1760, 1790, 1800, and 1805 72
3.1. Principal Loans Raised in New Spain by the Royal Treasury,
1782“1802 87
4.1. Royal Treasury Income Derived from Religious Fiscal Branches,
Mexico, 1785“1799 (Annual Averages in Thousand Pesos) 126
4.2. Revenues of the Royal Treasury from the Royal Consolidation
Fund in New Spain, 1805“1809 (in Pesos) 150
4.3. Revenues Collected through the Royal Consolidation Fund in
Spanish America and the Philippines, 1805“1810 (in Pesos) 151
6.1. Ships Sent from Veracruz to Jamaica by the Gordon & Murphy
Consortium, 1806“1808 206
6.2. Remittances of Silver from Mexican Treasuries on Ships of British
Navy, 1806“1808 210
7.1. Donations Collected in Mexico City between October 12 and
November 11, 1808 224
7.2. Donations Collected in the Intendencia de Valladolid (Michoac´ n)
1808“1809 227
7.3. Colonial Mexico: Donations and Loans for Spain, 1808“1810 229
7.4. Government Silver Remittances from Spanish America to C´ diz,
1808“1811 235

xii List of Tables and Figures

8.1. Loans for the Spanish Crown Administered by the Mexico City
Merchant Guild, 1780“1811 (in Pesos) 241
8.2. Crown Loans and Donations Administered by the Mexico City
Mining Tribunal, 1777“1810 (in Pesos) 242
8.3. Loans and Donations of the Catholic Church in Mexico to the
Crown, 1782“1810 (in Silver Pesos) 244
8.4. Loans and Donations to the Crown by the Indian Towns of
Mexico, 1780“1810 (in Pesos) 247

1.1. Fiscal Transfers from New Spain to the Caribbean and Spain,
1720“1799 21
1.2. General Treasury of Spain, 1763“1811: Remittances from Spanish
America and New Spain 31
1.3. Silver Coin Mintage and Remittances by the Royal Treasuries of
New Spain 33
2.1. Net Income of Royal Treasuries of New Spain, 1795“1799 61
2.2. Revenue from Indian Tribute in New Spain, Seventeenth and
Eighteenth Centuries (Average Annual Income per Decade) 63
2.3. Sales Taxes (Alcabala) Revenue in New Spain, 1777“1811 64
2.4. Pulque Tax Income in New Spain, 1765“1810 65
2.5. Tobacco Monopoly Income and Expenses in New Spain,
1765“1809 66
3.1. Typical Universal Donation in New Spain (Late Colonial Period) 94
3.2. Administration of Loans for the Crown by the Mexico City
Merchant Guild and Mining Tribunal 102
4.1. Transfers of Church Revenues to Royal Treasuries in New Spain
(circa 1806) 125
4.2. Annual Market Prices of Vales Reales in the Years 1794“1808 in
Spain 140
4.3. Income of the Royal Consolidation Fund, Mexico, 1805“1808 145
5.1. Royal Consolidation Fund: Flow of Funds, Mexico to Spain,
1805“1808 163
5.2. Operations of the Hope/Baring Consortium with Mexico,
1805“1808 178
6.1. Flows of Fiscal Merchandise and Silver between the Royal
Treasuries of Spain, Cuba, and Mexico (circa 1790) 188
6.2. Transatlantic Operations of the Gordon Murphy Consortium,
1806“1808 200

The late eighteenth century may be considered the greatest age of silver of
the Spanish empire and, without question, Mexico was the tax jewel of the
monarchy, providing it with the ¬scal and ¬nancial resources to function on
a world scale. This book documents and analyzes the enormous extraction of
Mexican silver that was used mainly to ¬nance an extraordinary succession
of wars between Spain, Britain, and France that marked the crisis of the
ancien regime in Europe and the Americas. The intention of this work is
therefore to contribute to transatlantic history, a ¬eld so extensive that I
owe a great deal to the work carried on by a great number of researchers
from different countries.
The approach adopted here has its roots in comparative history, a fact
related to my personal intellectual trajectory. After working in the 1980s
on the comparative history of Latin American debt crises in the nineteenth
and twentieth centuries, I turned my attention to the history of colonial
¬nance and debts because I found it to be a ¬eld on which work had just
begun and was ¬‚ourishing. I published a series of articles and directed
a number of doctoral theses, learning much from the work on Mexican
colonial ¬nance by Luis J´ uregui, Guillermina del Valle, Matilde Souto,
and Antonio Ibarra as well as Iv´ n Escamilla, Gisela von Wobeser, Pilar
Mart´nez, Leonor Ludlow, and Ernest S´ nchez Santir´ , among others. At
± a o
the same time, I bene¬ted from discussions with colleagues from Spain
who had worked on the history of the transition from empire to nation, as

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