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previous years he had lost 105,000 pesos in various badly conceived mining
investments, adding that:
The rest of my wealth consists of goods that I have in my warehouse and in a store;
in the current state of commercial conditions these cannot be sold, at least without
being subject to a considerable loss.83
That a signi¬cant number of merchants and miners should have refused
to contribute to the royal purse was due to many factors. The most frequent
cause cited was decline in commercial activity, although a review of the trade
trends suggests that the years 1792“1793 were not especially prejudicial to
New Spain™s trade. On the other hand, it is true that as a result of the recent
rati¬cation of the free trade decree in New Spain (1789), the merchants
of Mexico City were exposed to greater competition from the Veracruz
merchants, who were already mobilizing to organize their own merchant
guild.84 Moreover, many of the most af¬‚uent merchants claimed that that

81 For the list of subscribers up to June 28, 1793, see AGN, Donativos y Pr´stamos, vol. 1, exp. 80“88, fs.
e
317“324. One has to take care in comparing the promise to pay with actual investment. In practice
the ecclesiastical corporations supplied the greatest amounts.
82 AGN, Donativos y Pr´stamos, vol. 1, exp. 33, fs. 88“89.
e
83 The correspondence with these merchants is to be found in AGN, Donativos y Pr´stamos, vol. 1, exp. 4,
e
f. 8 and exp. 33, fs. 88“89.
84 G. Valle Pav´ n, “Consulado de Comerciantes,” Chapter 4, states that from the establishment of free
o
trade in New Spain, 1789, the Mexico City merchants faced competition from those of Veracruz,
Imperial Wars and Loans from New Spain, 1780“1800 107

they lacked cash because they had so much of their capital committed to the
purchase of goods in Europe or to transactions with Peru and other colonies
in America. The wealthy entrepreneur Isidro Icaza, for example, deplored
that he could not make a contribution owing to large commitments that he
had in “regular commercial activities that continue with Peru via Acapulco
that require remittances in advance. . . . ”85
Another argument used by the great property owners was to call atten-
tion to the large amounts they had invested in cattle, wheat, and sugar
properties, details of which can be found in the correspondence between
the royal of¬cials and such rich landowners as Juan de Oteyza, the Marquis
de Inguanzo, or the Count of Medina y Torres.86 For his part, Gabriel de
Yermo, merchant and landowner, later to become an important political
¬gure, wrote to the viceroy that the considerable expenses incurred on his
estates in Cuernavaca and on a new sugar mill, which he had just bought,
made it impossible for him to make signi¬cant contributions to the gov-
ernment. He also pointed out that the greater part of his liquid capital was
tied up in business related to sugar exports and to the import of European
cloth that he had ordered from his agents in C´ diz and Santander.87
a
The correspondence with the wealthiest individuals re¬‚ects the hetero-
geneity of their fortunes. This appears to con¬rm the arguments of historian
Perez Herrero with regard to the diversi¬cation of investments by the great
merchant houses of New Spain, particularly from the 1780s, having placed
much capital in mines, estates, and urban real estate, as well as in trade.88
For the leading merchants it was necessary to adopt strategies to protect for-
tunes during periods of abrupt changes in the economy of the viceroyalty,


Havana, and other parts of the Spanish empire, reducing the hoarding of silver and obliging them
to put it into circulation. This reinforces the arguments of Pedro P´ rez Herrero, Plata y libranzas: la
e
circulaci´n mercantil en el M´xico borb´nico (Mexico: El Colegio de M´ xico, 1988), Chapters 9 and 10.
o e o e
There he argues on the greater circulation of bills of exchange (in place of silver) to ¬nance commerce
within the viceroyalty.
Icaza wrote the viceroy that his ¬rm™s prosperity would depend on maintaining the “continuous
85
movement” of his capital and that he did not dispose silver pesos for royal loans. Similarly, his col-
league, the merchant Juan Dosamentes, insisted that the great bulk of his goods had been consigned
“internally . . . in this capital and in the port of Veracruz.” AGN, Donativos y Pr´stamos, vol. 1, exp. 3,
e
f. 7 and exp. 29, f. 75.
Medina y Torres pleaded poverty, telling the viceroy that from 1786 his many estates (haciendas)
86
were doing badly and that in the previous year he had to spend 80,000 pesos in corn to feed his
laborers (sirvientes) “ permanent laborers in the core of the hacienda “ as a result of which he had to
¬nd new mortgages for his lands. AGN, Donativos y Pr´stamos, vol. 1, exp. 12.
e
The viceroy was disappointed with Yermo™s reply and told him he would have to tell the king about
87
his unwillingness to contribute. AGN, Donativos y Pr´stamos, vol. 1, exp. 38, f. 101.
e
P. P´ rez Herrero, Plata y libranzas, Chapter 9, argues that mining investment was one of the mech-
e
88
anisms adopted by Guild merchants to maintain their monopoly of silver circulation in spite of the
Crown™s attempts to limit their control over this key facet of the colonial economy.
108 Bankruptcy of Empire

caused by international wars, sharp trade ¬‚uctuations, and the Bourbon
regime™s administrative and ¬scal reforms.
But the reluctance of a considerable number of the wealthy to contribute
to the ¬rst loan requested by Viceroy Revillagigedo was also due to the
fact that this transaction carried no interest payments. The refusals indicate
that a good number of the capitalists of New Spain were not disposed to
risk their funds without a reasonable return. In fact, in the majority of the
subsequent loan operations, the colonial administration was forced to offer
interest payments and more secure ¬scal guarantees, together with a series
of special concessions, including the granting of titles of nobility to some
of the greatest creditors.89
The new methods of raising loans suggest a growing complexity in
the way that ¬nancial markets functioned in the viceroyalty. Illustrative
of the ¬nancial innovations were the attempts by Viceroy Revillagigedo
in 1793 to convince the powerful Mining Tribunal and Merchant Guild of
Mexico City to act as intermediaries for a new million-peso loan. The viceroy
asked these privileged corporations to act as ¬nancial intermediaries (much
like merchant banks) and charged them with seeking individual investors
interested in placing their capital in government loans. Nevertheless, their
functions were more complex, since they were also commissioned to cover
future debt service, using speci¬c ¬scal resources for the payment of future
interest. This re¬‚ected one way in which the public and the private inter-
twined in the colonial ancien regime.90 The negotiations with the merchants
of the Mexico City were laborious. As Guillermina del Valle has pointed
out:
On March 8, 1793 one day after the French Assembly formally declared war
on Spain . . . the Consulado noti¬ed Revillagigedo that they had only been able
to raise 527,000 pesos with great dif¬culty. Various individuals and corporations
had advanced 309,200 pesos, plus the 218,000 pesos already delivered by the Royal
Tribunal (Audiencia). . . . 91
Later, the authorities in Madrid informed Revillagigedo that they
required additional amounts and urged him not only to mortgage the
branches of the royal treasury but also to appropriate the “capital of pious

89 The granting of titles of nobility to merchants such as Antonio Bassoco or Pedro Antonio de Alles is
described in D. Ladd, The Mexican Nobility. Other rewards included appointments as militia of¬cials.
90 The basic model for placing capital had been successfully tried since 1782“1783. Now each Tribunal
was offered a tax resource to guarantee the service of new debts: ¬ve per thousand of the aver´a tax
±
to be collected by the Consulado and 1% of minting taxes by the Tribunal de Miner´a. The most
±
detailed research about this type of colonial ¬nancial intermediary is G. Valle Pav´ n, “Consulado
o
de Comerciantes,” Chapters 3 and 4. For some comparisons with Peru, see A. W. Quiroz, Deudas
olvidadas, pp. 142“149.
91 G. Valle Pav´ n, “Consulado de Comerciantes,” p. 229.
o
Imperial Wars and Loans from New Spain, 1780“1800 109

works, entailed estates, chaplaincies, Indian community funds . . . ” as well
as “loans from wealthy subjects, under the just premise that it bene¬ts
them.” However, the viceroy answered the Minister of Finance, Diego de
Gardoqui, that the viceroyalty™s resources were strained to the utmost.92
The marquis of Branciforte, who became viceroy in July 1794, had some-
what better luck than his predecessor “ quickly completing successful nego-
tiations with the Mining Tribunal and the Merchant Guild for two loans
of one million pesos.93 Initially, the wealthy miners resisted Branciforte™s
request, pointing out that the royal treasury had not returned the greater
part of the old loan of 1782. But ¬nally, they agreed to give money under
the condition of being able to collect additional receipts from the Mexico
City mint and with the royal promise that there would no further increases
in the price of powder, which was as essential as mercury for mining.94 The
Mining Tribunal met the ¬nancial requests of the viceroy but, as Flores Clair
points out, this drastically reduced the credit available to mining ¬rms and
re¬‚ected the Crown™s “crowding out” of private investment.95
The dif¬culties in negotiating new loans with the most af¬‚uent privi-
leged corps of New Spain in 1793 and 1794 do not imply that funds in
local ¬nancial markets or ¬scal branches were exhausted. It is important to
note that the greatest ¬nancial operation of this era (the so-called tobacco
loan) produced more than 7 million pesos for the treasury between 1795
and 1802. This loan had been authorized in 1795 by the Spanish minister of
¬nance for the huge sum of 15 million pesos (300 million reales) to be raised
among all investors in New Spain, offering to mortgage the revenues of the
tobacco monopoly as a guarantee for interest payments.96 This loan was to
be placed among subscribers by both the in¬‚uential Mexico City Merchant
Guild and the Mining Tribunal. As ¬nancial intermediaries, each body was
expected to raise three and a half million pesos from individual investors.
In exchange for their monies, the subscribers would receive certi¬cates (a
kind of bond) which were guaranteed with “written pledges based on the


92 Revillagigedo relied on the reports of the of¬cials, Luis Gutierrez and Juan de Axandoy, June 28,
1793, indicating that they had now collected 3,559,000 pesos of the supplement from wealthy men
and each one of the loans from the Consulado de Comercio and the Tribunal de Mineria. AGN, Donativos
y Pr´stamos, vol. 1, exp. 88, f. 319.
e
The fact that Branciforte was the brother-in-law of Manuel de Godoy, the favorite of Charles IV,
93
probably was important for the success of these transactions: G. Valle Pav´ n, “Consulado de Com-
o
erciantes,” Chapter 4.
W. Howe, Mining Guild, pp. 376“378.
94
E. Flores Clair, “Las deudas del Tribunal,” 33.
95
The ¬gure of 15 millions was a maximum. In practice more than 7 million pesos were collected from
96
New Spain between 1795 and 1802. The measure was similar to those adopted in the metropolis
where royal income had been mortgaged with the purpose of offering the security of speci¬c tax
branches to their debtors. See M. Artola, La hacienda del antiguo r´gimen, pp. 388“420.
e
110 Bankruptcy of Empire

mortgage of tobacco income” (escrituras de cauci´n con hipoteca de la renta del
o
tabaco), which showed the amount and date of the delivery of the funds to
the of¬ces of royal treasury.97 (See details in Appendix III.2.)
The merchant guild and the Mining Tribunal were charged with super-
vising interest payments and authorized to collect the required 5 percent
annual interest from funds obtained by the tobacco monopoly “ a func-
tion which they punctually ful¬lled for a number of years.98 In the ¬rst
quarter of 1798, for example, the guild presented a list of payments made
to ninety-four creditors. Among the largest lenders were the Marquis de
Apartado, rich mine owner who had placed 200,000 pesos in this loan;
various chaplaincies from Guadalajara which invested 344,000 pesos; the
merchant Antonio Bassoco, 160,000 pesos; and the Countess of San Mateo
Valpara´so, 113,000 pesos. These were substantial amounts for the period
±
and speak of truly colossal fortunes “ equivalent or superior to the wealth-
iest merchants and bankers of eighteenth-century Spain.99 (According to a
much-used contemporary index, it is possible to calculate that the personal
fortune of the Marquis de Apartado worth 4 million pesos in 1800 would
have been equivalent to more than a billion dollars of the year 2005. His
loan of 200,000 pesos to the Crown would have been equivalent to more
than 80 million dollars of the year 2005.100 )
Apart from wealthy individuals, a good proportion of the other investors
were religious institutions: chaplaincies, convents, ecclesiastical councils,
bishoprics, congregations, colleges, and religious seminaries. In addition,
many Indian peasant villages and towns were pressed to release funds from

97 Documentation on the tobacco loan is to be found in various sources; for example, see, AGN,
Consulado, vol. 312, exp. 8, leg. 4; Donativos y Pr´stamos, vol. 33, exp. 5, fs. 130“137.
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98 There are some parallels between the ¬nancial measures adopted in 1795 in the colony and the
metropolis since in both cases help was requested from trading institutions to collect and administer
the Crown loans. An example is the issue of vales reales with a value of 240 millions in Spain in 1795
with the help of the powerful commercial association Cinco Gremios Mayores who provided advances
to the government and presumably were responsible for the placement of the majority of the bonds.
The information published regarding this credit operation is incomplete. See M. Artola, La hacienda
del antiguo r´gimen, pp. 404, 412, and 416.
e
99 Certainly, the total capital of the great Mexican trading houses was greater than the principal banks
in Madrid; for example, in 1808 it is estimated that Bassoco™s fortune was greater than 3.5 million
pesos (70 million reales) while the capital of Madrid™s most powerful banker Alvaro Benito scarcely
˜
amounted to 18 million reales. Compare data in Pedro Tedde “Comerciantes y banqueros madrilenos
al ¬nal del Antiguo R´ gimen,” Historia econ´mica y pensamiento social: Estudios en Homenaje a Diego
e o
Mateo del Peral (Madrid: Alianza, 1983), p. 311 with data on the fortunes of Mexican merchant
bankers in D. Ladd, The Mexican Nobility, passim.
100 The data on Apartado™s fortune is from D. Ladd, The Mexican Nobility, pp. 33“34. The subsequent
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 BLS.
Imperial Wars and Loans from New Spain, 1780“1800 111

their community treasuries for the same purpose. The merchant guild
and miner™s association complied with the task of paying interest to indi-
viduals and creditor institutions during several years.101 From the point
of view of the government, the tobacco loan was a success, collecting
an annual average of around a million pesos per year between 1795 and
1801.

The Universal and Compulsory Donations of 1793“1795
Although loans with interest constituted an important and ef¬cient ¬nan-
cial instrument to collect funds for the royal treasury, both viceroys, Revil-
lagigedo and later Branciforte, also resorted to the well-tried instrument of
the donation. These forced contributions had the advantage of not requiring
the money to be returned to donors and, as such, permitted the exercise of
traditional, compulsory measures as applied to both af¬‚uent and popular
classes. In 1793, Revillagigedo began the collection of a new donation from
the entire population of New Spain. He successfully raised 460,000 pesos
from merchants and proprietors and various religious institutions in a little
less than eight months, followed by an additional fund-raising campaign
which was applied in hundreds of peasant villages.102 Two years later in
1795, the new viceroy Branciforte returned to the charge.103 The collection
of the new donation was more rigorous than in previous years, extending
not only to the towns but also to most landed estates, mines, guilds, and
religious foundations in the viceroyalty.
In Mexico City, for example, the donation of the year 1795 was requested
of the artisans™ guilds, which contributed a total of 5,267 pesos: among the

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