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52
and 203“206.
The British Board of Trade itself recommended a licensing policy for neutral trade in June 1805 in
53
order to assure bene¬ts for English commerce: S. Stein, “Crisis metropolitana,” pp. 163“164.
Napoleon and Mexican Silver, 1805“1808 169

The 1805 Financial Crisis in Paris and the Bankruptcy of Ouvrard
After receiving news of approval by the British Cabinet, Ouvrard moved to
put the grandiose transatlantic operation into practice, but, unexpectedly,
the outbreak of a ¬nancial crisis in Paris (between August and October
1805) crippled his plans. The crisis had several causes, but one of the most
decisive was the dif¬culty in cashing the hundreds of Spanish Treasury
drafts that Ouvrard had put into circulation in French ¬nancial markets
from early 1805, and which had been accepted by an important number of
private bankers in Paris and provincial cities, con¬dent of the solvency of the
Spanish Consolidation Fund.54 Ouvrard and his partner Vanlerberghe tried
to sustain con¬dence in the letters of credit, but the ¬rm had inadequate
liquidity and was weakened by the huge amount of debt accumulated as
the result of provisioning the French and Spanish ¬‚eets; neither the Paris
nor the Madrid authorities were disposed to pay Ouvrard on his advances
because of their respective ¬scal crises.55
The most important factors that undermined French ¬nancial markets
from June 1805 onward can be quickly summarized. The ¬rst was a set
of acute dif¬culties faced by French bankers and the Banque de France as a
result of capital ¬‚ight and monetary depreciation. By August 21, the of¬cial
bank™s metallic reserves had fallen to 3,900,000 francs, having had to extend
numerous subsidies for the French army in Italy.56 When the reserves fell
to scarcely a million francs at the beginning of September, the bank regent
and ¬nancier M´ dard Desprez tried desperately to save the situation by
e
bringing precious metals to Paris from Madrid, Milan, Strasbourg, and
even London. This was little more than a palliative, although it saved the
bank.57
A second contributory factor to the deepening French ¬nancial crisis
was the bankruptcy of the ¬rm of Ouvrard and Vanlerberghe in October
1805. The French Finance Minister, Barb´ -Marbois, was later to attribute
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this failure to what he termed the bankruptcy of the Spanish Consolidation
Fund, arguing that its inability to pay the numerous bills of exchange in
Ouvrard™s power and those of the bankers connected with his operations

54 The extensive correspondence of the French Minister of Finance, Barb´ -Marbois, with Napoleon
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in 1805 is found in ANF (Paris), AF IV, vol. 1082: it reveals that apart from Ouvrard, a large
number of important Parisian bankers were also committed to these negotiations, such as, Michel,
Bastide, Recamier, Fulchiron, D´ sprez, and others, including the Spanish banker Mart´nez Hervas,
e ±
the representative of the Banco de San Carlos in Par´s. See additional comments in J. P. Merino,
±
“1805: La crisis ¬nanciera internacional,” passim.
55 J. A. Jackson, “The Mexican Silver Schemes,” pp. 73“75, describes these ¬nancial operations.
56 The correspondence of the Minister Barb´ -Marbois with Napoleon about the crisis is particularly
e
enlightening. See ANF (Paris), AF IV, vol. 1082, in particular the letters of August 20, 21, and 31.
57 ANF (Paris), AF IV, vol. 1082, letter of September 28.
170 Bankruptcy of Empire

had led to the ¬nancial debacle.58 Some twenty of the most important Paris
bankers went under, including the important houses of Recamier, B´ rard,e
Borgstrom, Delon, Enfantin, and Bastide, together with eight banking
¬rms in Marseilles.59
A third factor, unmentioned in the French minister of ¬nance™s corre-
spondence, but which exercised a powerful in¬‚uence on the last phase of
the banking and ¬nancial crisis, was the defeat of the combined French and
Spanish navies at the battle of Trafalgar (October 21, 1805). The news of
this naval disaster could not but have a depressing effect on the already
buffeted ¬nancial markets, although they recovered on news of the great
victory of Napoleon and the French army at Austerlitz (December 2, 1805).
After his triumph at Austerlitz, Bonaparte intervened to resolve the
¬nancial crisis in Paris. He decided to force the partners of the Compagnie des
N´gociants R´unis to settle their multiple debts with the French government.
e e
On his return to Paris, in January 1806, he demanded the resignation of the
Finance Minister, Barb´ -Marbois, who was replaced by Francois Mollien,
e ¸
director of the French public debt of¬ce. The new minister renegotiated the
outstanding debts with Ouvrard and the Consolidation Fund™s representa-
tive in Paris, Eugenio Izquierdo.60 The total value of the Mexican bills of
exchange held by Ouvrard amounted to approximately 20 million pesos,
to which were added the bills to be cashed in Madrid at the of¬ces of the
Consolidation Fund for 32.5 million francs (6 million pesos). Following
Ouvrard™s bankruptcy and the delivery of his assets to the French Treasury
at the beginning of 1806, Minister Mollien and the ¬nancial agent of Godoy
in Paris, Eugenio Izquerdo, came to an agreement to use the proceeds of the
Spanish loan issued in Holland, plus Ouvrard™s drafts on Mexico, to liqui-
date the pending debt of the Consolidation Fund with the French Treasury,
which now amounted to perhaps 60 million francs. The agreement stipu-
lated that the Fund would send instructions to the viceroy of New Spain
to pay drafts up to a value of 10 million pesos. At the same time, from
May 1806, the Consolidation Fund in Madrid would agree to pay 3 million

58 ANF (Paris), AF IV, vol. 1082, the letter of October 11 to Napoleon, where Barb´ -Marbois com-
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mented on: “l™esp` ce de Banqueroute faite para la Caisse de Consolidation,” although it could be
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supposed that this was linked to the fall in the price of bills of exchange from 63 at the beginning of
the month to 51 by the end of October. Annexed to this letter to the Emperor “ then in campaign
in Austria “ Barb´ -Marbois included a copy of the message from the French ambassador in Madrid
e
who backed Ouvrard™s efforts (then in the Spanish capital) to obtain funds for France, achieving an
agreement from the Spanish Treasury to send 50,000 silver pesos to France per week via Bayonne.
´
On the prices of the vales reales, see P. Tedde, “Crisis del Estado y deuda publica,” Table 3.
59 ANF (Paris), AF IV, vol. 1082, letter of Barb´ -Marbois to Napoleon, October 20, 1805.
e
60 The correspondence with Napoleon and the ¬nal report of Barb´ -Marbois from August 1805 to
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January 1806 are of exceptional interest. See these documents in ANF (Paris), AF IV, vol. 1082.
Napoleon and Mexican Silver, 1805“1808 171

francs monthly to French Treasury agents until the total amortization of the
bills of exchange (24 million francs), in the hands of various bank creditors
of Ouvrard and the Compagnie des N´gociants Reun´s.61
e ±
In spite of the collapse of Ouvrard™s ¬rm, this did not disrupt the plans
of Hope and Baring (now in progress) but simply changed part of the
equation. Hope was now responsible for delivering the funds from the New
Spain silver operation directly to the French Treasury, replacing Ouvrard,
who was at the point of being imprisoned on Napoleon™s orders.62 To carry
out the plan to bring Mexican silver to Europe, Hope had prepared with care.
In mid 1805, the merchant house had sent three agents to the United States
and to Mexico, and from early 1806, the dispatch of the silver commenced
from Veracruz by way of neutral commerce and more directly by using
English warships. But the Hopes also counted on the collaboration of the
Spanish Consolidation Fund and the top royal of¬cials in Mexico.


The Viceroy, the Hope/Parish Consortium, and the Dispatch
of Silver from Veracruz
While the extraordinary Mexican silver scheme required complex ¬nancial
and political negotiations in Europe, it also required the acquiescence of
the viceroy of New Spain and the small circle of his closest advisers. The
correspondence of Viceroy Iturrigaray in 1805 shows that, from the ¬rst,
he was informed that multiple drafts had been extended to merchants who
were involved in the provisioning of the Spanish Navy as well as other
pressing ¬nancial commitments of the Consolidation Fund, including the
payment of the subsidy to Napoleon and the service of foreign loans of the
Spanish crown.
That Iturrigaray knew a substantial part of the funds requested were to
be sent to Napoleon is revealed in a letter of June 1805 to the Finance
Minister Soler. In it he acknowledged the royal instructions and reported

61 The remaining bills of exchange for 10 million pesos and 8.5 millions of francs in the hands
of the French Treasury were returned to the Consolidation Fund: M. G. Buist, At Spes Non Fracta,
pp. 306“308. There is an interesting document about these transactions in AHN (Madrid), Ministerio
de Hacienda, Serie General, leg. 5848, “Index of Documents and Correspondence Referring to the
Dutch Credits and the Debt with France (1805“1808),” although various pertinent documents
have apparently disappeared. The correspondence in ANF (Paris), AF IV, vols. 1082 and 1608 is
important as it throws light on the redemption of the Fund™s bills of exchange by other French
bankers such as Michel and S´ guin.
e
62 It can be estimated that Hope had around ten million pesos in bills of exchange in their power
(previously sent by Ouvrard) with the obligation to transfer to the French Treasury at 75% of their
face value, discounting expenditures and commissions for the delivery and transport of the strong
pesos (pesos fuertes) from Mexico to Amsterdam; M. G. Buist, At Spes Non Fracta, pp. 306“309.
172 Bankruptcy of Empire

that he had ordered the local commissioner of the Consolidation Fund in
Mexico to:
. . . authorize the extraction of all drafts (to be paid in silver) belonging to the
French treasury, entirely at liberty and without any constraint in Spanish or neutral
embarkations and allow them to be trans-shipped to any vessel of war, even if it be
an enemy warship.63
The viceroy was, evidently, referring to the fact that he had received instruc-
tions indicating that British warships would also be authorized to transport
the funds of the Consolidation to Europe.
An additional set of bills sent by the Consolidation Fund to Mexico was
intended to help cover the interest payments due on the Spanish external
debt service since neither the Bank of San Carlos nor the Royal Remittance
Of¬ce in Madrid (Real Giro) had the necessary hard currency for this pur-
pose. A signi¬cant portion of the silver consignments from New Spain was
intended to cover the service of the Dutch loans taken by the monarchy,
although it should be recognized that there was nothing new in these cir-
cumstances. In the 1790s, the Spanish exchequer had contracted various
loans in Amsterdam; in each case the Dutch bankers had demanded Mex-
ican silver as security for the international credits being negotiated. (See
Appendix III.3.) Proof that the top of¬cials of the viceroyalty were also
aware of these arrangements is to be found in the letter of July 16, 1805, in
which the Finance Minister Soler wrote to the Viceroy Iturrigaray, ordering
the payment of royal bills to the amount of 500,000 pesos, stating that:
. . . for the punctual payment of capital and interest on the loans of the Crown
taken in Holland . . . it has been required that the Royal Consolidation Fund (Real
Caja de Consolidaci´n de Vales) hand over at once 21 million 930 thousand reales. . .
o
so it has pleased the king to ask me to expedite . . . ¬ve bills of exchange drawn on
the royal treasuries of Mexico.64
The Madrid of¬cers in charge of the Consolidation Fund also sent an addi-
tional eighty drafts to Iturrigaray with the ostensible object of obtaining
the silver with which to cover the debt service of some of the older loans
issued and managed by the banking ¬rm of Weduwe E. Croese and Com-
pany of Amsterdam.65 The fact that the Dutch claimed these guarantees

63 AGN, Correspondencia de Virreyes, 1a serie, vol. 233, exp. 1326, fs. 244“245. For additional details,
see AGN, Reales C´dulas Originales, vol. 197, exp. 257, f. 362, and vol. 198, exp. 130, f. 196.
e
64 AGN, Reales C´dulas Originales, vol. 196, exp. 85, f. 111. See also the ¬le 185 in the same volume
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and in which are included other orders about the royal fund of Mexico for 1,200,000 pesos to cover
advances to the Royal Remittance Of¬ce (Real Giro) for the service of the Spanish external debt.
65 AGN, Reales C´dulas Originales, vol. 196, exp. 11, fs. 13“14. It should be noted, however, that a year
e
and half later, instructions were sent to the viceroy not to pay these bills of exchange as their payment
was now covered by a new credit negotiated with the banking house of Hope and Company.
Napoleon and Mexican Silver, 1805“1808 173

was indicative of the contrast between the straitened circumstance of the
metropolitan treasuries and those of the viceroyalty of New Spain, which
continued to project an image of prosperity and wealth.
For the top Spanish ¬nancial of¬cials in Madrid “ faced by an increasingly
severe ¬scal crisis in the metropolis “ the image of apparently inexhaustible
resources (in the shape of silver coin) in the richest colony encouraged
them to send bill after bill for payment by the government of Mexico.
The functionaries later calculated that they had obtained approximately
20 million pesos (400 million reales) between 1804 and 1808, although a
substantial part of these funds never arrived to Spain but were paid out in
Holland to the Crown bankers and/or to French Treasury of¬cials, anxious
to obtain the funds speci¬ed in the Subsidy Treaty signed between the
Spanish government and Napoleon.66
The commissioners of the Consolidation issued many of the drafts on the
royal treasury at Veracruz, since this port was the point at which the colo-
nial administration concentrated most of the silver that was to be remitted
abroad. The initial transfers of Mexican silver on account of the Consolida-
tion Fund began to take place from August 1805; the collection of funds
in Mexico is detailed in lists (recently published by historian Gisela von
Wobeser) that are found in the Spanish archives.67 The documents of the
governing council of the Consolidation Fund in Mexico City ( Junta Suprema
Gubernativa de Consolidaci´n), which began sessions in early 1805, permit
o
a fairly precise reconstruction of the ¬‚ow of bills of exchange. A review
of the correspondence between the Spanish ¬nancial authorities and the
viceroy in Mexico shows that among the ¬rst expenditures covered by the
of¬ces in Mexico of the Consolidation Fund were those related to the Navy.
On January 27, 1805, the ¬nance minister in Madrid, Soler, signed and
sent instructions to Viceroy Iturrigaray to pay a series of drafts signed by
Espinosa, head of the Royal Consolidation Fund, to the tune of 319,000
pesos. These bills were intended to cover advances for the acquisition of
armaments for the Spanish arsenals of Cartagena and El Ferrol. In February,
Soler sent another ¬ve bills of exchange for 500,000 pesos payable by the
Mexican treasuries for the same purpose.68


66 A singular document entitled “Raz´ n de las cantidades que se han librado sobre las Cajas
o
Reales de Am´ rica desde el 2 de agosto de 1804 hasta 8 de febrero de 1808”, AGI, Ultra-
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mar, 833, cited in J. Antonio Calder´ n Quijano, Los virreyes de la Nueva Espa˜ a durante el reinado
o n
de Carlos III, 2 vols. (Sevilla: Escuela de Estudios Hispano-Americanos, 1968), pp. 242“243,
records that the bills of exchange submitted for payment by the Consolidation Commission
(Caja de Consolidaci´n) amounted to the extraordinary sum of 20 million pesos from New Spain
o
alone.
67 G. von Wobeser, Dominaci´ n colonial, p. 198 and Appendixes 1“5, 265“449.
o
68 AGN, Reales C´dulas Originales, vol. 195, exp. 47, f. 87 and exp. 54, f. 96.
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174 Bankruptcy of Empire

These drafts were sent on warships which took several months to arrive
to Veracruz, and thus it was not until April 23, 1805, that the viceroy sent
the ¬rst noti¬cation to Madrid that he had received the bills.69 Iturrigaray
noti¬ed Soler that he had received four orders dated December 24 and 28,
1804 “relating to the shipments to Veracruz under neutral ¬‚ag of bills
for remittance of the funds of the Pious Works.”70 Two weeks later, the
viceroy informed the minister of ¬nance in Madrid that he had received
an additional eleven bills of exchange worth 1,150,000 pesos from the
Consolidation Fund and that he had handed these funds over to the Militia
Colonel Lorenzo Angulo de Guardamino, responsible for transporting the
silver pesos to Veracruz and loading them on the ships that were to set out

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