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29 On the agrarian crisis consult, see the classic study of G. Anes, Crisis agrarias en la Espa˜ a moderna.
30 Ouvrard “ who had been in charge of supplying allied French and Spanish ¬‚eets since 1798 “ handled
large quantities of cereals because of these contracts. The agreement to import French grain to Spain
was signed by Ouvrard on November 26, 1804. In his M´moires (1826), vol. I, pp. 104“106, Ouvrard
pictured himself as a philanthropist who was able to arrange the delivery of two-million quintiles
of grain by obtaining permissions from British Navy to allow this trade. Nevertheless, according
to Wolf, this was an attractive business in which Napoleon also took part, obtaining large pro¬ts:
O. Wolf, Ouvrard, Speculator of Genius, pp. 107“108.
31 According to A. Fugier, Napole´ n et l™Espagne, Chapter 2, Ouvrard ¬nally imported a little more
than 100,000 quintiles of wheat to the peninsula. However, Fugier also suggests that the banker
Mart´nez-Hervas, the French representative in Paris, was the real author of idea to import grains and
that he received ¬nancial help from the banking house of Gardoqui of Madrid.
164 Bankruptcy of Empire

Espinosa, the director of the Consolidation Fund, providing the Parisian
merchant banker with numerous drafts to be settled in silver at the royal
treasuries in Mexico.32 As the historian Jos´ P. Merino has argued:

Soler, the minister of ¬nance and Espinosa, director of the Fund, appeared to have
discovered with Ouvrard the key to the network of credit they were desperately
trying to broaden. The idea would be to integrate America directly into the Spanish
and European ¬nancial circuits.33

Simultaneously, and as part of this pact, a private contract was signed
between the Consolidation Fund and Ouvrard to jointly participate in trade
with Spanish America. The banker was given a large number of permits
authorizing the import of merchandise into Veracruz and the export of silver
and produce from that port in ships ¬‚ying neutral ¬‚ags. These extraordinary
trade concessions would, in principle, allow Ouvrard to control a consider-
able part of the port™s trade. As we shall see, the trading concessions were
later transferred to other merchant bankers but, in any case, they prompted
a surge in Veracruz™s “neutral commerce” between 1805 and 1808.34
On his return to the French capital, Ouvrard used some of the drafts
from the Consolidation Fund to pay off many of his creditors, who included
a good number of the most important French merchant bankers. However,
the success of these transactions depended on the likelihood of the bills of
exchange being cashed in silver at Mexico and shipped to Europe “ a dif¬-
cult if not impossible task for French and Spanish ships, given the dominant
control of the Atlantic by the British Navy. There was no alternative but to
negotiate a parallel and complementary agreement with neutral merchants
authorized to pass through the British maritime blockade. With this idea,
Ouvrard set out for Amsterdam at the end of 1805, to call on the house of
Hope & Company, one of the leading Dutch ¬nancial ¬rms which, coin-
cidentally, had excellent relations with the politically in¬‚uential British
merchant bank of Baring Brothers.

The Agreements with the Firms of Hope and Baring
to Transfer Mexican Silver
According to contemporary accounts, when Ouvrard made his visit to Ams-
terdam to the house of Hope in May 1805, the partners of the prestigious

32 M. G. Buist, At Spes Non Fracta, pp. 306“308.
33 J. P. Merino, “1805: La crisis ¬nanciera internacional,” pp. 390“391.
34 The classic study on Veracruz™s neutral trade is that of S. Bruchey, R. Oliver, Merchant of Baltimore.
Additional information is to be found in J. A. Jackson, “The Mexican Silver Schemes,” Chap-
ters 4“8.
Napoleon and Mexican Silver, 1805“1808 165

banking ¬rm were initially mistrustful.35 Ouvrard explained with enthu-
siasm the set of astounding transatlantic ¬nancial and trading transactions
to be realized in Mexico. Although there were clearly great risks involved
in such complex business operations at a time of international war, the
Dutch merchant bankers carefully considered the possible losses lest they
let slip this singular business opportunity.36 The head of the ¬rm Pierre
Labouch` re soon agreed to negotiate with the French banker and signed
various contracts.
To begin with, the house of Hope promised to explore the possibility
of opening a new and large loan for the Spanish crown on the Amsterdam
stock market; in exchange for taking charge of the issue of the Spanish
bonds, Hope & Company would receive bills payable by the Consolidation
Fund to be drawn against Mexican royal treasuries, as guarantee of debt
service payments. In the second place, the Dutch ¬rm proposed to hire a
group of young and adventurous traders, led by the merchant banker David
Parish, to take charge of the trade with Mexico. They were to organize
various ¬‚eets of neutral vessels that would be provided with royal licenses
to transport European merchandise (mainly textiles) to Veracruz for sale
to local merchants. As commercial agents of the Hopes, they were also
authorized to cash the drafts issued by the Consolidation Fund on the royal
treasuries of Mexico and to transport the silver pesos on U.S. (neutral)
merchant ships to Europe. The Hope bankers demanded stiff commissions,
but Ouvrard had little choice but to accept. Probably no other continental,
¬nancial ¬rm would have been able to launch this complicated and delicate
mission with much chance of success.37
That the directors of Hope were willing to enter into such a singular
business venture re¬‚ected not only their audaciousness but above all their
con¬dence in their capacity to manage complex ¬nancial and trade trans-
actions. But it was also a fruit of long experience with the ¬nances of the
Spanish crown.38 Already in 1782, the Hopes had been charged by the
Spanish government with the placement of an external loan on the Ams-
terdam bourse in order to help ¬nance war against England. A decade later,
in 1792, the house of Hope again issued a new Spanish loan worth six
million ¬‚orins on Dutch ¬nancial markets, negotiating a contract with a
Madrid banker, Juan Ignacio Gardoqui, who was brother of the minister of

35 The negotiations with the ¬nancial house of Hope of Amsterdam are described in considerable detail
by M. G. Buist, At Spes Non Fracta, Chapter 9.
36 In his M´moires (1826), vol. I, p. 113, Ouvrard underlined the surprise of the Hope partners at this
extraordinary proposal.
37 Details about the commissions are included in M. G. Buist, At Spes Non Fracta, Chapters 9 and 10.
38 A Dutch loan had been negotiated between Hope and the well-known Spanish banker Cabarrus in
1782, when the latter was exploring the creation of the Banco de San Carlos. M. G. Buist, At Spes
Non Fracta, Chapter 9 and P. Tedde, Banco de San Carlos, Chapter 2.
166 Bankruptcy of Empire

¬nance of the Spanish government. Subsequently, between 1799 and 1801,
the Hopes had collaborated with the Croese bank of Amsterdam to issue
another three foreign loans for Charles IV™s administration.39 (For details
of the Dutch loans arranged for Spain, see Appendix III.3.)
The Hopes™ relations with the Spanish Treasury, therefore, were close.
They had a marked interest in ensuring a regular ¬‚ow of funds from Spain
to cover payments on the many loans that had been issued and sold in the
Amsterdam ¬nancial market. But, above all, their objective was to directly
control a part of the lucrative business of American silver remittances. All
Spanish foreign loan contracts signed between 1791 and 1801 invariably
stipulated that funds from the royal treasuries of Mexico would serve as
guarantor of payment. The same procedure was adopted in the negotiations
that took place between Ouvrard and Hope in preparation of the new
Spanish loan of 1805. The transactions were guaranteed with ten bills of
exchange issued by the Consolidation Fund (for a total of 8,484,375 pesos),
payable by the royal treasuries in Mexico.40
According to the ever-modest Ouvrard, the pact negotiated with the
Hope banking ¬rm promised to become “one of the greatest commercial and
political operations ever conceived.”41 Nevertheless, there were substantial
obstacles to this complicated transatlantic transaction. The most serious
was the probable opposition of the British government to the transfer of
Mexican treasure to Europe, particularly if destined to end up in the coffers
of their principal enemy, Bonaparte. For other banking ¬rms, this would
have been a dif¬culty almost beyond repair, but not for Hope & Company.
They had long maintained close relations with one of the most important
banking houses of London, Baring Brothers, and this critical alliance would
eventually facilitate key negotiations with the British Cabinet.42
Baring Brothers, like Hope, had special reasons for being interested in
the Mexican silver shipments. To begin with, the scion of the ¬rm Alexander
Baring was a director of the Bank of England, which was actively engaged in
assisting the government with the acquisition of silver coin, essential to the
payment of military subsidies to Britain™s wartime allies on the European
continent. In the second place, Sir Francis Baring, the head of the banking
¬rm, was director of the East India Company (the largest private company
in England), which required a constant supply of silver to sustain purchases

For details see M. G. Buist, At Spes Non Fracta, pp. 281“285.
M. G. Buist, At Spes Non Fracta, p. 284.
G. J. Ouvrard, M´moires, p. 135.
The trading relations between both banking houses were strengthened by matrimonial alliances:
Pierre Labouch` re, director of Hope, was married to the daughter of Sir Francis Baring. For details
about personal and ¬nancial relations between both ¬rms, see M. G. Buist, At Spes Non Fracta,
pp. 40“61.
Napoleon and Mexican Silver, 1805“1808 167

of tea, cotton textiles, and silk in India and China.43 During the Napoleonic
wars, particularly from 1804 the naval con¬‚icts had created severe problems
for the Eastern trade. As historian Javier Cuenca has demonstrated in a
detailed study of the role of India in the British balance of payments in
these years, in the years 1803“1805, 4.2 million pounds of bullion “sent
to India by the (East India) Company directors was diverted by (Secretary)
Wellesley for war purposes.”44 As a result the Barings had already ¬xed
their attention on the possibility of obtaining silver from New Spain. The
question was how to do so, and the business proposition made by the Hopes
appeared to offer a singular opportunity, despite its complexity.
To put the transatlantic ¬nancial transaction in practice posed a
formidable challenge but there were, in fact, recent precedents. Both mer-
chant ¬rms of Hope and Baring had collaborated in the transatlantic ¬nan-
cial operations derived from the Louisiana Purchase in 1803, by which the
Napoleonic administration received ¬fteen million dollars in bonds of the
U.S. government.45 The payment of this sum involved the sale of the bonds
in Amsterdam and the subsequent transfer of funds to Paris, demonstrating
the ¬rms™ capacity “ acting in consort “ to resolve ¬nancial and commercial
obstacles during a time of war. Moreover, the merchant banker Ouvrard had
also been involved in these business deals, as he was charged by the French
Navy with using a part of the Louisiana funds to buy large quantities of
Russian timber which was transported to France by Dutch merchants and
In early 1805, when the directors of the Hope ¬rm communicated to
the London bankers the proposal to transport large quantities of silver
from New Spain, Baring Brothers con¬rmed their wish to participate in
this grand transatlantic enterprise but warned of the need to obtain the
agreement of the British authorities to these unorthodox operations.47 The

43 See observations about situation of the East India Company by two contemporary witnesses: G. J.
Ouvrard, M´moires, vol. I, pp. 109“110, and Vincent Nolte, Fifty Years in Both Hemispheres: Remi-
niscences of the Life of a Former Merchant (London , 1854), p. 77. Also useful are references in J. A.
Jackson, “The Mexican Silver Schemes,” pp. 64“66 and G. Jim´ nez Codinach, Gran Breta˜ a y la
e n
independencia de M´xico, pp. 206“208.
J. Cuenca, “India™s Contribution to the British balance of payments, 1757“1812,” p. 8.
The reference is to delivery of ¬fteen million dollars, 1803“1804, from the United States to
Napoleon™s treasury for the sale of territory of Louisiana. On the participation of Hope and Bar-
ing in this operation, see G. Labouch` re, “L™Annexion de la Louisiane aux Etats-Unis et les maisons
Hope et Baring,” Revue d™Histoire Diplomatique, 30, 3 (1916), 423“455 and J. A. Jackson, “The
Mexican Silver Schemes,” pp. 19“22 and 37“43.
M. G. Buist, At Spes Non Fracta, pp. 60“61, points out that Hope had been in charge of payments
to the French Treasury for the Louisiana sale in 1803, which were used for the purchase of a large
quantity of naval materials in Russia on behalf of Ouvrard, principal supplier to the French Navy.
For correspondence between Pierre Labouch` re and Sir Francis Baring, see S. Bruchey, R. Oliver,
Merchant of Baltimore, pp. 274“275.
168 Bankruptcy of Empire

negotiations proved to be complex on account of the distrust of Prime
Minister William Pitt as well as the opposition of the admirals of the
British Navy to participate in operations which might aid the enemy.48
According to one study, “Pitt initially opposed the importation of large
sums of pesos into England because four ¬fths of these shipments were des-
tined for the Caja de Consolidaci´ n and hence the French treasury.”49 But
eventually, the arguments of Barings helped convince the British Cabinet
that approval for the transfer of silver from New Spain would be of enor-
mous utility to replenish the metallic reserves of the Bank of England as
well as to provide the government with hard currency, needed to continue
with its policies of providing military subsidies to allies on the European
Of special importance was the pressure generated by the ¬nancial
demands of Britain™s allies on the continent. The Anglo-Russian Treaty
signed in April 1805 “called for a British subsidy to Russia of 1,250,000
pounds sterling for each 100,000 soldiers that Czar Alexander raised for the
war.”50 Con¬rmation of Pitt™s approval of the Mexican silver scheme can be
found in his correspondence at the end of 1805 with William Huskisson,
of the British Treasury.51 At the same time, the admirals of the British
Navy were eventually brought around by Pitt who explained the urgency
of obtaining silver from Spanish America for the war effort: in addition, the
admirals were promised they would personally receive 1“2 percent of the
silver transported (fairly standard practice at the time). The treasure was
to be extracted from Mexico in two distinct ways.52 The ¬rst procedure,
authorized by the British government, was to grant neutral ships™ licenses
to enter and exit from Veracruz and to cash the bills drawn upon the Con-
solidation Fund that were carried by the ships™ captains, hired by the ¬rms
of Baring and Hope and their agents.53 The second more unorthodox pro-
posal was to send English warships directly to Veracruz and there load the
treasure on board.

48 G. Jim´ nez Codinach, Gran Breta˜ a y la independencia de M´xico, p. 211, citing Pitt™s personal archive,
e n e
notes that in the negotiations between Ouvrard, Hope, and Baring: “Pitt was only willing to
participate under certain conditions. . . .” However, by December 1805 “ a little before he died “
the prime minister had given his approval.
J. A. Jackson, “The Mexican Silver Schemes,” p. 202.
J. A. Jackson, “The Mexican Silver Schemes,” p. 206.
The key references from the British archives can be found in G. J´menez Cudinach, La Gran Breta˜ a
± n
y la independencia de M´xico, pp. 211“212 and 220“221.
M. G. Buist, At Spes Non Fracta, pp. 326 and J. A. Jackson, “The Mexican Silver Schemes,” pp. 65“67


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