<<

. 20
( 64 .)



>>

apiece, and the royal functionary had to content himself with extracting
only four reales per neighbor. The of¬cial added that while a good number
of the inhabitants delivered their donation, others were unable to do so,
“not because they are lazy . . . but they reply that they ¬nd themselves too
insolvent. . . . ”47
Success in obtaining funds from each village depended on the type of
community or social group from whom the contribution was requested.
In some regions, the of¬cials used a caste classi¬cation that re¬‚ected the
hierarchies and different socioethnic characteristics of colonial society. In
Zimatl´ n, for example, the donation was levied on family heads based on
a
various categories: those described as Spanish descendants (espa˜ oles) paid
n
two pesos per head of family while mulattos and other mixed racial groups
(mestizos and castizos), as well as Indian peasants, paid one peso. The Zimatl´ n
a
donation lists reveal that Spaniards and mestizos (a total of 207) were concen-
trated in four towns, mulattos were workers in four rural estates (haciendas)
and sugar mills (trapiches), while the 3,840 Indians were distributed among
a broad spectrum of forty-six villages.
The methods used to convince the local population of the donation™s
importance were varied. Although it may be supposed that a sentiment of
loyalty to the King may have prevailed, it is evident that the of¬cials™ zeal
counted for a great deal in extracting funds, in many cases prompted by
the ambition to be promoted up the bureaucratic-political ladder. When
there was dif¬culty or resistance to collection, royal of¬cials often appro-
priated the accumulated funds in the respective, community treasury (caja
de comunidad). In others, the local mayors threatened Indian peasants with
severe punishment. Silva Prada notes that in the jurisdiction of Maravit´o, ±
two Indian towns accused the mayor of transgressing the spirit of the royal
instruction by demanding donations from “maids, widows, and old people,
menacing the rest with threats and diverse apparatus for execution.”48
In summary, the universal donation of 1781 was a compulsory ¬scal
requirement that all the king™s subjects in colonial Mexico were obliged
to pay. Donations, however, were not the only extraordinary ¬nancial

47 AGN, Donativos y Pr´stamos, vol. 21, exp. 20, f. 300.
e
48 N. Silva Prada, “Contribuci´ n de la poblaci´ n ind´gena,” p. 10, who cites AGN, Donativos y Pr´stamos,
o o ± e
vol. 24, fs. 252“255.
Imperial Wars and Loans from New Spain, 1780“1800 97

instrument adopted by New Spain in this period. Almost simultaneously,
Viceroy Mayorga instructed high-level treasury of¬cials to launch a cam-
paign to obtain loans from the most af¬‚uent individuals and the most
opulent corporations in New Spain: the Mexico City Merchant Guild, the
Mining Tribunal, and the Catholic Church.

The 1781“1783 War Loans: The Financial Contribution
of New Spain™s Elite
While the donation for the war against England (1779“1783) provided the
Crown with some 800,000 pesos, this sum was substantially less than the
loans collected from wealthy members of New Spain between 1781 and
1783.49 (See Table 3.1 and, for more details on loans, see Appendix III.2.)
Requests for loans were not new. It was customary for the viceroys to ask
for monies from the privileged corporations of New Spain at times of war.
For example, in 1706 (during the War of the Spanish Succession), approxi-
mately one hundred members of the powerful Merchant Guild of the City of
Mexico (Consulado de Comerciantes de Mexico) contributed a total of 903,000
pesos to ¬nance metropolitan armies.50 In 1727 the Mexican merchants
again assisted the monarchy, collecting a million pesos for the war that the
Spanish crown prosecuted against the English in the Mediterranean.51 And
in 1742, during another naval con¬‚ict with Britain, the viceroy, the Count
of Fuenclara, asked for a loan from the Merchant Guild of Mexico City and
a donation from the Catholic Church with the objective of ¬nancing the
Spanish naval squadron operating in the Caribbean Sea.52
The loyalty to the Crown of the richest individuals of the viceroyalty
was recon¬rmed in 1778 when Viceroy Bucareli requested help for a naval
rearmament campaign. On that occasion, the viceroy received a remarkably
large loan from the Count of Regla, the richest miner in colonial Mexico, to
¬nance the construction of two great warships at the Cuban arsenals, each
with eighty cannon: the ships, appropriately enough, were named Conde de

49 Information on the loans borrowed from the Merchant Guild of Mexico City (Consulado de comerciantes
de la ciudad de M´xico) in the seventeenth and eighteenth century can be found in the doctoral thesis
e
by G. Valle Pav´ n, “Consulado de Comerciantes.”
o
50 AGN, Archivo Hist´ rico de Hacienda, vol. 213, exp. 9; see the correspondence in vol. 223, exp. 3,
o
fs. 39“69.
51 G. Valle Pav´ n, “Consulado de Comerciantes,” pp. 117“121.
o
52 AGN, Archivo Hist´ rico de Hacienda, vol. 213, exp. 5. The 1742 loan is an example of the enormous
o
wealth of the leading silver merchants in Mexico: one million two hundred thousand pesos were
collected, although the greatest contribution came from the leading silver merchant in the viceroyalty
at the time, Francisco de Valdivielso, who personally lent the huge sum of 840,000 pesos to the
king, possibly the greatest individual loan recorded in colonial history. For details see Mar´a Vargas-
±
˜
Lobsinger, “El ascenso social y econ´ mico de los inmigrantes espanoles: el caso de Francisco Valdivielso
o
(1683“1743),” Historia Mexicana, xxxv, 4 [140] (1986), p. 615.
98 Bankruptcy of Empire

Regla and Mexicano and cost 450,000 pesos to build.53 (According to one
much-used index, this would be equivalent to almost 200 million dollars
in 2005,54 a third of the cost of construction of a navy frigate today.55 )
To obtain loans, the royal authorities habitually used a combination of
economic, political, and social incentives. Requests by the monarch for
¬nancial assistance were doubtless interpreted in a political way by his
most af¬‚uent subjects: it was understood that the privileges enjoyed by
the New Spain plutocrats “ be they landowners, mine owners, merchants “
depended upon good relations with the government. Financial advances to
the royal treasury in emergency situations might reinforce these privileges
and open doors to new business or favors. But, at the same time, it was
also deemed proper that the Crown of¬cials offer inducements that could
reinforce the social prestige of the donors: granting noble titles in exchange
for loans became an increasingly common practice in the second half of
the eighteenth century. In fact, during this period, thirteen titles were
granted to great merchants of New Spain in exchange for war loans “ a
phenomenon that illustrates the persistence of old regime values in these
¬nancial transactions.56
While retaining some traditional elements, the debt policies adopted
from the 1780s were of greater complexity and modernity than in pre-
vious decades. This is con¬rmed by the diversity of creditors and by
the types of guarantees offered by ¬nancial of¬cials. Study of the priv-
ileged corporations of Bourbon Mexico suggests that important innova-
tions in public sector debt management can be observed in the role of
¬nancial intermediaries, the Mexico City Merchant Guild and Mining
Tribunal, both of which effectively began to operate as bankers to the
colonial state. Some parallels can be suggested with the Bank of San Carlos
established in Madrid in 1782 and charged with the issue and sale of the
new instruments of public debt, vales reales, in ¬nancial markets in Spain.
These novel securities served as commercial and investment paper, but also

53 B. Bobb, ViceRegency of Antonio Mar´a Bucareli, p. 114. Regla also donated 300,000 pesos to found
±
the important institution the Monte de Piedad in Mexico City: Edith Couturier, “The Philanthropic
Activities of Pedro Romero de Terreros, First Count of Regla, 1753“1781,” The Americas, xxxii, 1
(1975), 13“30.
54 This calculation is based on the EH Net (http://eh.net/hmit/compare) complete index of the money
wage rates paid for common or unskilled labor from 1774 to the present; three sources are used: a
series published by Paul David and Peter Solar in 1977, the work of Robert Margo published in
2000, and various publications of the Bureau of Labor Statistics (BLS).
55 In 2005, according to U.S. Navy budget procurement reports, building an aircraft carrier cost
approximately 5 billion dollars, a missile guided destroyer 2 billion dollars, and a frigate some 600
million dollars. Ronald O™Rourke, CRS Report for Congress, “Navy Ship Acquisition: Options for
Lower-Cost Ship Designs: Issues for Congress, Updated June 23, 2005,” published on CSR Web.
56 On the subject of noble titles granted in the eighteenth century, see the excellent study by D. Ladd,
The Mexican Nobility, Chapters 1 and 2.
Imperial Wars and Loans from New Spain, 1780“1800 99

became a kind of paper currency in the metropolis, although circulation
was mainly limited to the wealthier merchants and businessmen. In Mex-
ico and the other colonies, such relatively modern securities did not yet
circulate in signi¬cant quantities; rather, public loans were issued by offer-
ing a notarized certi¬cate to creditors, guaranteeing interest payments and
amortization with a lien on royal tax branches.57
Although a capital market for public ¬nancial claims had scarcely
emerged in the viceroyalty, it developed with considerable rapidity in the
1780s.58 The increasing supply of private capital is illustrated with clarity
in a report prepared in 1782 by a religious of¬cial in charge of corporate
ecclesiastical investments:
Because of the abundance of pesos, originating in the mining bonanza, and other
causes, each day has brought more loan repayments (redenciones de grav´ menes) . . . and
a
because the religious communities and foundations have more than enough money,
they can meet the demands of the many who ask for loans. . . . 59
As this document suggests, the viceroy of New Spain, Mayorga, was
able to take advantage of a favorable ¬nancial situation to obtain funds
for the Crown, although, initially, he resorted to a traditional resource, a
non-interest-bearing loan (suplemento). This consisted of an advance of funds
(without interest) to the government from a number of especially af¬‚uent
individuals, to be repaid by the royal treasury in a term of no more than two
years. To obtain this short-term credit, in March 1781, the viceroy ordered
Pedro de Cos´o “ then quartermaster of the army and superintendent of
±
the royal treasury of New Spain, and a respected member of one of the
oldest mercantile dynasties of the viceroyalty “ to organize a meeting at
the government palace with the members of the merchant guild to ask for
subscriptions to a loan of up to a million and a half pesos, but without any
promise to pay interest.60

57 For the 1782“1783 loans, the creditors received escrituras de imposici´ n on dep´ sitos irregulares
o o
(an investment term) in government debt through Tribunal del Consulado or Tribunal de Miner´a. ±
Later in the 1790s the terms of these documents were modi¬ed on account of new loans, utiliz-
ing on occasion the term certi¬cates (certi¬cados) or coupon (c´dulas), but it would not be until
e
1798 that the term share (acci´n) appeared as synonym for what we know today as a government
o
bond.
58 Guillermina del Valle Pav´ n “Las corporaciones religiosas en los empr´ stitos negociados por el
o e
Consulado de M´ xico a ¬nes del siglo xviii,” in P. Mart´nez L´ pez-Cano, ed., Iglesia, estado y econom´a,
e ± o ±
pp. 231“232, notes that it was not until the 1780s that the Mexico City capital market acquired
dynamism.
59 The document was written by a ¬nancial of¬cial from the Real Fisco de la Inquisici´ n. It is cited in
o
Gisela von Wobeser, “La inquisici´ n como instituci´ n crediticia en el siglo XVIII,” Historia Mexicana,
o o
xxxix, 4 [156] (1990), p. 865.
60 On Cos´o, see Vicente Rodriguez Garc´a, El ¬scal de Real Hacienda en Nueva Espa˜ a, Ram´ n de Posada
± ± n o
y Soto, 1781“1793 (Oviedo: Universidad de Oviedo, 1985), pp. 72“77.
100 Bankruptcy of Empire

Mayorga informed the Crown that he expected to collect the monies
quickly owing to the suspension of trading activities during the war: “for it
is neither here nor there to the merchants whether they keep their treasure
in their own houses or place it for the king™s urgent requirements. . . . ”61
Intendant Cos´o informed Mayorga that the meeting had been a success
±
and that the majority of the merchants had agreed to make important
contributions. He reported that four rich individuals had approached him,
promising very considerable sums: Antonio Bassoco, merchant and a senior
of¬cial of the merchant guild offered to deliver 100,000 pesos for war
expenses; the Count of Rabago, a great landowner, engaged to provide
1,000 horses and 2,000 wagon loads of wheat for the troops as well as
102,000 silver pesos in cash; Pedro Antonio de Alles, a wealthy wholesaler,
promised 100,000 pesos; and Servando G´ mez de la Cortina, later named
o
Count of Cortina for his services to the Crown, offered 50,000 pesos in gold
and silver as well as 500 wagon loads of wheat from one of his haciendas.62
Another nine individuals provided amounts between 40,000 and 50,000
pesos, while others gave lesser sums.
These contributions bespeak the enormous wealth of the Mexican mer-
cantile and landowning plutocracy, not to speak of the wealthiest mining
families. For comparative purposes it should be noted that a case study of
Antonio Bassoco places his fortune circa 1800 at around 2.5 million pesos
(dollars).63 This was superior to practically any individual merchant banker
in Europe at the time except, possibly, the Rothschilds. In the United States
at the time there were not yet any millionaires while in late colonial Mexico
“there were at least 18 families . . . that were reputed to be millionaires.”64
While it is possible to attempt formal conversions to modern purchasing
power, we believe that what is important is to underline the extreme con-
centration of wealth in late colonial Mexico.65
Meetings of the wealthiest traders in the intendancy of Veracruz were held
a few weeks later in the city of Xalapa de la Feria to raise additional funds


61 AGN, Consulado, box 306, exp. 7, f. 7.
62 Ibid., f. 10. Bassoco and Alles also received noble titles in later years. For information on fortunes
of these Mexican merchant bankers, see D. Ladd, The Mexican Nobility.
63 D. Ladd, The Mexican Nobility, p. 36: this author provides much information on the greatest landed,
mercantile and mining fortunes in New Spain at the end of the colonial period. It should be recalled
that one silver peso was equal to one dollar from 1780 to 1850.
64 D. Ladd, The Mexican Nobility, p. 25.
65 Bassoco™s fortune in 1800 would have been equivalent to 628 million dollars of 2005 according to the
EH Net (http://eh.net/hmit/compare) index of the money wage rates paid for common or unskilled
labor from 1774 to the present. Another possible calculation of relative wealth is the following:
Bassoco would have earned at least 5% annually on his fortune, providing him with an income of
125,000 pesos, that is to say the equivalent of the joint income of at least 2,000 urban workers in
Mexico in 1800.
Imperial Wars and Loans from New Spain, 1780“1800 101

for the Crown loan. The meetings were presided over by the governor of the
port and various authorities from the royal treasury.66 The contributions
from Veracruz were less substantial than those of their colleagues in the
capital, but this was not surprising since the great Mexico City merchants
continued to dominate commerce in the viceroyalty. In any case, the monies
collected among the three groups of af¬‚uent merchants and entrepreneurs
amounted to slightly more than the sum of a million and half pesos. (See
Appendix III.2.)
A year later, in August 1782, as the war in the Caribbean continued
unabated, the viceroy decided to solicit two more loans through corporate
intermediaries, but now offered to pay an annual interest rate of 5 percent.
First, he urged the Mexico City Merchant Guild to obtain subscriptions for
a loan of one million pesos, in exchange for which he authorized an increase
in the aver´a, a tax that allowed the mercantile corporation to recoup the
±
debt service.67 The guild would therefore not have to use its own funds
but could act as a ¬nancial intermediary, collecting monies in the colonial
capital market. A detailed study of Guillermina del Valle identi¬es the
leading investors, including seven wealthy merchant bankers of the city of
Mexico, nine landowners, and nine ecclesiastical corporations.68 (See Fig-

<<

. 20
( 64 .)



>>