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30 The Real Loter´a de la Nueva Espana began operations in 1771 and was used to obtain funds for
±
the government as well as to ¬nance poorhouses, including the Hospicio de Pobres de la ciudad de
M´ xico. Subsequently, lotteries were established in the late eighteenth century in Peru, Chile, and
e
Cuba.
31 David Cahil “Taxonomy of a Colonial “riot”: The Arequipa Disturbances of 1780,” in John Fisher,
Allan J. Kuethe, and Anthony Mcfarlane, eds., Reform and Insurrection in Bourbon New Granada and
Peru (Baton Rouge: Louisiana State University Press, 1990), p. 257.
58 Bankruptcy of Empire

the resistance to tax reforms, long before the arrival of Areche to Peru.
The magni¬cent book by Scarlet O™Phelan Godoy on the successive
eighteenth-century rebellions in the viceroyalty of Peru clearly demon-
strates the long-standing opposition of great swaths of colonial Andean
society to ¬scal innovations that negatively affected local trade and also
weighed heavily on peasant towns.32
Almost at the same time as the Peruvian rebellions were being bloodily
dissolved, in the viceroyalty New Granada, a revolution broke out that
also was spurred by rejection of the Bourbon tax reforms. Colonial elites
allied with popular sectors and organized a rebel army in central regions
of the viceroyalty that marched by stages to the capital to protest the
increase in sales taxes, the imposition of new duties on alcoholic beverages
(aguardiente), and the imposition of the tobacco monopoly. The Visitor-
˜
General Juan Francisco Gutierrez de Pineres was forced to ¬‚ee from Bogot´ a
to the coastal port of Cartagena. Eventually, the rebels (known as comuneros)
put down their arms in exchange for a wide range of concessions, including
temporary reductions in certain taxes.33
In colonial Mexico, as we have noted, initial social protests in the late
1760s were rapidly crushed and, subsequently, there is little documentary
evidence of tax rebellions before 1810. Why this was so is a major question
which historians have not yet resolved since the intensity and breadth of
the Bourbon ¬scal offensive in colonial Mexico was unmatched. There was
undoubtedly much disguised local resistance to hikes in taxes as is con-
¬rmed by archival research on the numerous protests to be found in the
alcabala (sales tax) documentation, every time rates were raised or the base
extended.34 But it is also true that there is scarce testimony of full-blown
tax riots in the late colonial period in the viceroyalty. Indeed, the lack of
systematic opposition to the tax reforms surely contributed to the extraor-
dinary large volume of receipts from virtually all taxes and state monop-
olies. The result was that New Spain became the tax jewel of the Spanish
empire during its ¬nal decades, and more speci¬cally between 1780 and
1810.

32 The resentment was directed at the mita, the traditional form of forced labor recruitment imposed
by the Spanish regime in the Andes, against hikes in the rates of alcabalas, aguardiente (alcoholic
beverages), and tobacco as well as opposition to reforms of the repartimiento system of trade. Details
on the many rebellions of the eighteenth century can be found in Scarlet O™Phelan Godoy, Un siglo
de rebeliones anticoloniales. Per´ y Bolivia, 1700“1783 (Cuzco, Peru: Centro Bartolom´ de las Casas,
u e
1988). An excellent analytical discussion can be found in Juan Garavaglia and Juan Marchena,
Am´rica Latina: De los or´genes a la independencia, vol. 2 (Barcelona: Cr´tica, 2005), pp. 132“143.
e ± ±
33 The standard study is John L. Phelan, The People and the King: the Comunero Revolution in Colombia,
1781 (Madison: University of Wisconsin Press, 1978). For more recent contributions, see essays in
J. Fisher, A. J. Kuether, and A. Mcfarlane, eds., Reform and Insurrection.
34 I thank Richard Salvucci for drawing my attention to this point.
Imperial Tax State 59

Table 2.1. Net Income of Royal Treasuries of New Spain, Consolidated Accounts, 1795“1799
(annual average income in silver pesos)

Fiscal Branches Gross Income Collection Costs Net Income
Mining taxes 4,512,191 524,096 3,988,095
Trade taxes 4,174,124 444,086 3,730,038
Indian tribute 1,247,861 87,910 1,159,951
8,852,943a 4,033,311a
State monopolies 4,819,632
Church ¬scal transfers 6,88,186 29,932 658,254
Administrative income 94,476 2,861 91,615
Other income 233,778 8,939 224,839
Forced loans 652,625 300 652,325
Sum 20,456,184 5,131,435 15,324,749
a The costs registered are those involved in production costs of tobacco and powder. In the case of
the state tobacco monopoly, collection costs include the payment of sums to tobacco leaf producers,
to workers in the state factory and for other costs of production.
Source: Memoria instructiva y documentada del estado comparativo de los productos de la Real
˜
Hacienda desde el ano de 1809 (M´ xico, 1813), ms. 1282, Biblioteca Nacional (M´ xico).
e e


The Tax Structure of New Spain: Microcosm of the Spanish Empire
in the Americas
The tax structure in colonial Mexico was made up of a combination of direct
and indirect taxes. As can be seen from Table 2.1, there were four main
sources of ¬scal income: taxes on trade, taxes on mining, Indian tribute,
and state monopolies. Close to a quarter of the royal receipts came from
sales taxes (alcabalas) and a series of port taxes (aver´a and almojarifazgo),
±
which had long been applied by the monarchy in both Spain and in the
colonies.35 Equally important were the ¬scal monopolies, which also had
their origins in Spain, such as the mercury, tobacco, and powder monopolies
as well as that of playing cards. On the other hand, the direct taxes applied
in the colonies had no counterpart in the metropolis, the most notable being
the taxes on silver mining (which provided around 25 percent of net ¬scal
receipts) and the Indian tribute tax (which contributed somewhat less than
10 percent).
Another distinguishing feature of the tax regime in colonial Mexico was
that it was more homogeneous than tax systems in the different regions
of Spain where ¬scal diversity was common, particularly in Navarre, the
Basque country, and Aragon. In the viceroyalty of New Spain the same set
of taxes were levied throughout the realm and accounting methods tended

35 For a complete list of all tax branches, see H. S. Klein, The American Finances, Appendix 3. For
Mexico, see Archivo General de la Naci´ n, Caja Matriz, Libro Com´ n de la Tesorer´a de Ej´rcito y Real
o u ± e
Hacienda a˜ o de 1810.
n
60 Bankruptcy of Empire

to be more consistent, particularly after the mid-eighteenth century when
the farming out of taxes was eliminated. Nonetheless, there were marked
differences in the productivity of diverse taxes according to each region of
Mexico. Hence, the only adequate method to understand the functioning
of the colonial ¬scal system is to review the productivity of different tax
branches overall and then to do so on a regional basis.
One important propertied sector that had to pay direct taxes was that
composed by the owners of silver mines. The tax rates on silver production
had fallen from 20 percent in the sixteenth century to 10 percent in the
eighteenth century, but still represented a most signi¬cant portion of royal
revenues in Mexico. While the direct tax on mine production (known as the
mining diezmo) was the single most important item among the varied list of
exactions that fell upon silver, a close runner-up was income derived from
seignoriage, as shown by the data on minting revenues (amonedaci´n de oro y
o
plata). (See Table 2.1.) Additional income was derived from the sale of the
products of the state-owned mercury monopoly, an essential ingredient for
colonial silver re¬ning processes, but the bulk of the income thus generated
could not be disposed of by the local treasuries: it was shipped off to Spain to
buy more mercury. The net annual revenues obtained from mining taxes “
directly and indirectly “ approached four million pesos in the 1790s, approx-
imately a fourth of total net income of the viceregal government.36 (See
Figure 2.1.)
The mining guild fought for some reductions and exemptions, but these
were established only in some regions. Most signi¬cant was the struggle
by the corporation of silver miners (known as the Tribunal de Miner´a) to ±
obtain preferential prices on mercury, which was a state monopoly. Regular
shipments of mercury from the Almaden mines of Spain were indispens-
able for an ef¬cient process of silver re¬ning. Throughout the eighteenth
century, silver miners fought to obtain more and cheaper supplies and in
this they were largely successful: as economic historian Rafael Dobado has
demonstrated, the extraordinary boom in silver mining in Bourbon Mexico
was closely correlated with the rise in imports of mercury supplies.37
Richard Garner has demonstrated that the increase of silver production “
as measured by the data of the Mexico City mint “ approached 1.3 percent
a year during the eighteenth century, a ¬gure superior to all other economic

36 These calculations are higher than the relevant percentages offered by Klein (1995), but it should
be noted that Klein did not use consolidated accounts nor did he discount costs of ¬scal adminis-
tration nor does he take into account seignorage of the mint. Our source is Memoria instructive del
estado comparativo de los productos de la Real Hacienda (M´ xico, 1813), Biblioteca Nacional (Mexico),
e
ms. 1282.
37 Rafael Dobado Gonz´ lez, “El trabajo en las minas de Almad´ n, 1750“1855,” Ph.D. thesis, Univer-
a e
sidad Complutense de Madrid, 1989, 2 vols.
Imperial Tax State 61

Other income
(224,839)
1.47%

Administrative income Forced loans
(652,325)
(91,615)
0.60% 4.26%


Mining taxes
Church fiscal transfers
(3,988,095)
(658,254)
26.02%
4.30%




State monopolies
(4,819,632)
31.45%



Trade taxes
(3,730,038)
24.34%
Indian Tribute
(1,159,951)
7.57%

Figure 2.1. Net Income of Royal Treasuries of New Spain, 1795“1799.
Source: Memoria instructiva y documentada del estado comparativo de los productos de la Real Hacienda desde
el a˜ o de 1809 [Mexico, 1813], Nacional Library of Mexico, ms. 1282.
n



sectors.38 This has led other authors to speak of the phenomenon of “mining-
led growth” in colonial Mexico. The real and relative increase was notable:
“By 1800, New Spain™s production represented almost two thirds of world
silver output.”39 But silver mining was not simply an extractive sector: it
was the most modern sector of the colonial economy in terms of technology,
¬nance, and labor relations, production in the mines being exclusively based
on free labor. Moreover, it stimulated innumerable backward linkages to
a notable variety of manufacturing and agricultural enterprises.40 In any
case, we have already remarked on the fact that there was certainly a close


38 Richard Garner and S. E. Stefanou, Economic Growth and Change in Bourbon Mexico (Gainesville:
University of Florida Press, 1993), p. 109.
39 Rafael Dobado, “El crecimiento guiado por la miner´a, el papel del Estado y el costo econ´ mico de
± o
la independencia,” unpublished paper presented at El Colegio de Mexico, May 9, 2006.
40 The classic study on this subject is Carlos Sempat Assadourian, El sistema de la econom´a colonial: el
±
mercado interior. Regiones y espacio econ´mico (Mexico: Grijalbo, 1983).
o
62 Bankruptcy of Empire

correlation between the production of silver and tax receipts and remittances
during the eighteenth century.41
The most archaic and “sui generis” of the colonial ¬scal exactions was the
tribute tax (tributo) levied on all heads of households in the Indian towns (the
so-called Indian republics or communities).42 The rate was slightly more
than two silver pesos (two dollars) to be paid yearly by every tributario,
being charged uniformly on Indian peasants who lived and cultivated their
own land and only occasionally on peasants who worked on haciendas or
plantations. In the 1790s the annual income generated from this source was
slightly over one million pesos, making up approximately 7.6 percent of
net income of the viceregal government.
The tributo was levied on the heads of each Indian peasant households
in each of the 4,400 Indian towns (designated as rep´ blicas de indios) that
u
43
existed in late-eighteenth-century Mexico. This head tax was generally
collected by local authority ¬gures or, in some cases, by the local parish
priests or a royal functionary. The governors of each peasant village or town
took charge of receiving funds and depositing them in the local communal
treasuries (cajas de communidad).44 Part of these monies were later handed
over to the royal functionaries who visited each village and town annually
to ensure collection of the tribute. As can be seen in Figure 2.2, there
was a marked trend upward in total revenues “ a fact that bespoke the
demographic recovery in most of the century. While the amounts exacted
were considerable for a poor peasantry, they remained stable and there were
relatively few major protests against this poll tax, perhaps because it was
seen as payment for royal protection of Indian townships, local schools, and
communal lands. It should be noted that a part of the money deposited
in the communal treasuries were used in the second half of the eighteenth
century to pay for the many schools set up in peasant villages and towns as
well as to cover expenses of town government.45 In addition, the payment

41 See the Appendix, Table and the correlations based on a methodological proposal communicated to
the author by Richard Garner.
This tax was originally derived from the tribute paid to the Aztec emperors by all subjects and
42
therefore can be considered to be an “American” tax with no European legacy. For detailed information
on the institutional description of each of the taxes, the fundamental source is the multivolume work
by the functionaries of the colonial treasury, F. Fonseca and C. de Urrutia, Historia General de la Real
Hacienda, a work originally written in the late 1780s.
See the extraordinary atlas by Dorothy Tanck de Estrada, Atlas ilustrado de los pueblos de indios: Nueva
43
Espa˜ a, 1800 (Mexico: El Colegio de M´ xico, 2005).
n e
The fundamental studies are by Dorothy Tanck de Estrada: “Escuelas y cajas de comunidad en Yucat´ n a
44
al ¬nal de la colonia,” Historia Mexicana, xliii, 3 [171] (1994), 401“449 and “Protesta ind´gena al
±

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