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of Gordon & Murphy, see G. Jim´ nez Codinach, “An Atlantic Silver Entrepot,” pp. 14“16.
36 M. Souto, “Consulado de comercio,” Chapter 6 describes the special contracts for the rescue of Spanish
ships in Jamaica arranged by the Viceroy Asanza with the Murphy™s house and the Cuban trader
Pedro Juan de Erice.
37 J. Ortiz de la Tabla, Comercio exterior, p. 332
Royal Treasury and the Gordon & Murphy Consortium, 1806“1808 195

and retained at the port of Kingston, Jamaica.38 These rescue operations
were linked to the attempts by Spanish authorities to maintain the supply
of crown commodities essential to the imperial, ¬scal system. In these cir-
cumstances, it is not surprising that they should have turned to a trading
house “ that of Murphy “ which had already been acting as one of the
principal paper suppliers for the Mexico City tobacco factory for a number
of years.39 Murphy™s pro¬ts increased on this trade as the price of paper
increased from ¬ve pesos per ream before the war with Great Britain to
between ten and twenty-six pesos per ream after the defeat of the Span-
ish ¬‚eet at Cape St. Vincent in 1797.40 The historian Susan Deans-Smith
con¬rms that the volume of traf¬c was considerable: according to the cor-
respondence of Viceroy Marquina, the Mexico City and Queretero tobacco
factories consumed 100,000 reams of paper per year in the mid- and late
1790s, with a value of close to three million silver pesos.41 Unfortunately,
there is less data on the annual amounts and value of mercury imports for
this period “ much also transported by ships of the Murphy family “ but
they were also considerable.42
Thomas Murphy™s success in obtaining licenses for his naval expedi-
tions to Jamaica to obtain mercury and paper were largely the result of
his excellent political connections with senior government authorities in
Spain, but equally important were the political contacts in England of the
¬rm Gordon & Murphy of London, in which his brother Juan Murphy
was a senior partner.43 William Gordon, the head of Gordon & Murphy of
London, was Member of Parliament at the time and well connected with
the Board of Trade and the Admiralty. The London ¬rm had traditionally

38 During the naval war, 1796“1802, various Spanish ships were captured by the British Navy in the
Caribbean and taken to Jamaica where their cargos were auctioned off. Spanish of¬cials used the
expression rescates to refer to operations by which the royal treasury authorized the house of Murphy
to send ships to Kingston to buy these cargos, which included mercury, paper, and other products
sent from Spain. Some of these expeditions are mentioned in J. Ortiz de la Tabla, Comercio exterior,
pp. 291“292 and 328“330; S. Stein, “Crisis metropolitana,” p. 201; and M. Souto, “Consulado de
comercio,” Chapter 6.
Thomas Murphy not only bene¬ted from the consignments (rescates) of paper from Jamaica to
Veracruz, but was also able to obtain a license for his Havana agent, Francisco Santa Cruz, who
imported paper from Kingston and then reexported a substantial part to Veracruz: J. Ortiz de la
Tabla, Comercio exterior, p. 329.
S. Deans-Smith, Bureaucrats, Planters and Workers, p. 101.
S. Deans-Smith, Bureaucrats, Planters and Workers, pp. 101“103.
R. Garner and S. E. Stefanou, Economic Growth and Change, Chapter 4 offers some data but not a
complete series.
It should be taken into account that ships traveling with Spanish licenses for neutral trade also
required licenses from the British government to avoid being captured by British frigates of war that
were constantly traversing the Caribbean seas. F. Crouzet, L™Economie Britannique, vol. 1, pp. 175“185
is the fundamental source on this issue.
196 Bankruptcy of Empire

worked with the house of Porro & Murphy (headed by Juan Murphy) of
C´ diz and Malaga, importing the ¬nest Spanish sherries, but by the end
of the century they were participating more and more actively in different
business ventures for the royal treasuries in Mexico and Caracas.44
The fact that the Murphys could use Jamaica as an entrepˆt for much of
their business in the Caribbean allowed them to dominate a signi¬cant part
of New Spain™s textile imports from England.45 Such an activity was not
free from danger as it bordered on contraband, exposing the traders to the
possibility of being captured by Spanish or English ships of war and to long
and vexatious litigation in the Veracruz or Kingston tribunals.46 Moreover,
it awakened the enormous hostility of their rivals in port city of Veracruz,
who did not enjoy the same privileges.47
The Murphys, however, did not act alone during this ¬rst phase of neutral
trade. Other Veracruz ¬rms were also quite active. Pedro Echeverr´a, whom
we have already met, played a prominent role in the neutral commerce
between Mexico and the United States in the years 1797“1800, importing
textiles and exporting considerable amounts of cochineal, sugar, dyes, and
other raw materials.48 In summary, prior experience in neutral trade oper-
ations explained much about the performance of these cosmopolitan and
adventurous merchant ¬rms in later years.
Even though a certain number of neutral vessels continued to arrive in the
years 1800“1801 to Veracruz with trade licenses issued by the Spanish gov-
ernment, after 1802 this type of trade transaction was suspended across the
empire. This was a consequence of the peace signed with England but was
also the result of lobbying by the C´ diz Merchant Guild (Consulado de Com-
ercio de C´ diz) that had systematically opposed the permissions granted to

44 S. Stein, “Crisis metropolitana,” p. 202, notes “Thomas Murphy in Veracruz in 1799 advanced
430,000 pesos to buy sugar and cochineal for the Royal Remittance Of¬ce (Real Giro) . . . ” and in
1803 its director Antonio Noriega “contracted with Juan Murphy for the transfer of 100,000 pesos
annually for ¬ve years of bullion from Caracas to C´ diz.”
Anthony Ignace Palyart and Guillermo Gregory were agents for the Murphys in Jamaica moving
back and forth to Veracruz. AGN, Correspondencia de Virreyes, vol. 236, exp. 1446, f. 54 and G.
Jim´ nez Codinach, “An Atlantic Silver Entrepot,” p. 22. In New Orleans, the Murphy agent was
Procopio Jacinto Pollock, who would also travel to New Spain™s principal port. AGN, Marina, 226,
fs. 97“102 and S. Bruchey, R. Oliver, Merchant of Baltimore, p. 270.
This type of dispute which involved the Murphy ¬rm as well as Pedro Echeverr´a took place on
arrival of the North American schooner “Tanner” from Hamburg to Veracruz in February 1800, just
after the end of the ¬rst period of neutral trade. For details see AGN, Correspondencia de Virreyes, vol.
229, exp. 142, fs. 310“311.
See “Representaci´ n del Consulado de Veracruz a la Suprema Junta Central de Espana” (March 1,
1809), AGN, Consulado, 252, exp. 5, f. 4.
J. Ortiz de la Tabla, Comercio exterior, pp. 328“330. For information on other merchant houses in
Veracruz as well as Havana, Tabasco, and Campeche that carried out trading operations in neutral
ships as well as rescates in Jamaica, see M. Souto, “Consulado de comercio,” Chapter 6.
Royal Treasury and the Gordon & Murphy Consortium, 1806“1808 197

foreign vessels since this undermined their traditional control of American
trade.49 In fact between 1802 and 1804, it appeared that normalcy had
returned to transatlantic operations of the Spanish empire. The Spanish
General Treasury received more than 30 million pesos in tax funds from
Veracruz alone in these years. However, the return to the classic Spanish
trade monopoly regime did not last long. In 1805, as a result of naval con-
¬‚icts, the shipments of silver were abruptly suspended, and of¬cial reports
noted that in that year only “the miserable amount of 404,313 pesos arrived
in C´ diz.”50 Threatened by bankruptcy, the Madrid Cabinet was once again
obliged to issue licenses for irregular trade with Spanish America.

The Royal Treasury and Its Financial and Trading Agreements with
the Gordon & Murphy Consortium, 1806“1808
The outbreak of the new naval war with England in 1805 initiated a new
phase of neutral trade, but in contrast to the years 1797“1800 “ a time
of considerable rivalry between the merchant houses engaged in neutral
trade through Veracruz “ the same business now became much more con-
centrated.51 In fact it was largely monopolized by the two conglomerates
already mentioned: the Hope/Baring consortium participated directly and
indirectly in the dispatch to Veracruz (between 1805 and 1808) of approx-
imately seventy ships from the United States while the Gordon & Murphy
group sent thirty-eight ships from Europe and Jamaica between 1806 and
1808.52 According to the Veracruz Merchant Guild™s of¬cial ¬gures, neu-
tral trade was responsible for the bulk of the silver exported from Mexico
in these years, amounting to more than twenty-¬ve million pesos between
1805 and 1808.53
Why did these two trading conglomerates receive these extraordinary
privileges simultaneously from the Spanish crown?54 As we have already
seen, the Madrid authorities had ¬rst granted royal drafts and trading

49 Regarding the C´ diz Merchant Guild™s opposition to neutral trade, see J. Ortiz de la Tabla, Comercio
exterior, Chapters 7 and 8.
50 G. Jim´ nez Codinach, Gran Breta˜ a y la independencia de M´xico, p. 223.
e n e
51 The most complete information on participants in the Veracruz neutral trade is in J. A. Jackson,
“Mexican Silver Schemes,” Chapters 9 and 10.
52 G. Jim´ nez Codinach, “An Atlantic Silver Entrepot,” p. 18, records thirty-eight ships arriving on
the account of the Murphy™s at Veracruz. Compare these ¬gures with J. A. Jackson, “Mexican Silver
Schemes,” pp. 215“226.
53 For annual silver exports, see P. P´ rez Herrero, Plata y libranzas, Table 3, p. 161.
54 In Gordon & Murphy™s case, it is worthwhile noting their alliance with the important London
banking ¬rm of Reid, Irving & Company, specialists in the silver and gold trade as well as in
cochineal, which linked them to trade with New Spain. It would be interesting to explore what
kind of relationships Reid, Irving & Company might have had with the British government and
198 Bankruptcy of Empire

licenses for Mexico to Ouvrard and his associates of the house of Hope
in December 1804. But it soon became clear that there were disadvantages
in granting a virtual monopoly in such transactions. Although the highest
¬nancial authorities of the Spanish government had agreed to deliver the
bulk of the several million pesos accumulated by the Consolidation Fund in
Mexico to pay Napoleon™s subsidy, the Crown was also interested in using
funds from the royal treasuries of Mexico for other purposes of equally vital
interest to the imperial state. At the end of 1805, Miguel Soler, the Spanish
¬nance minister, and Manuel Espinosa, the director of the Consolidation
Fund, Espinosa, began to issue royal drafts and additional licenses on colo-
nial treasuries to other international merchants, in particular to the ¬rm
of Gordon & Murphy, which promised to ful¬ll essential ¬scal and trading
functions for the Crown.55 Madrid immediately informed the viceroy of
Mexico of these transactions.
Already from the beginning of 1805, the viceroy of New Spain, Iturri-
garay, had begun to appeal for urgently required provisions, such as mer-
cury and paper for the tobacco monopoly and the silver mines, respectively.
Although a risky enterprise “ given British hostility “ ships began to be
dispatched directly from Europe for this purpose, many of them hired by
the Gordon & Murphy ¬rm. These operations were quite different from
those negotiated with the Hope/Baring consortium as is shown by the spe-
cial contract signed in May 1806 between Gordon & Murphy, the Spanish
General Treasury, and the Consolidation Fund. The ¬rst copy of this docu-
ment reached the Mexican viceroy™s hands only in the autumn of 1806. It
speci¬ed that the purpose of the agreement with the private trading ¬rm
was to supply New Spain™s royal treasuries with indispensable goods, such
as mercury and paper, as well as of¬cial stamped paper and hundreds of
boxes of playing cards and papal bulls (indulgencias), which were also state
The contract signed by the Spanish ¬nance minister with the ¬rm of Gor-
don & Murphy and its associates, Reid and Irving and Company, London

55 By royal command, August 9, 1805, permissions began to be granted to trade with Spanish America
in neutral ships to a variety of ¬rms, apart from Hope. These included both Gordon & Murphy
and Joaqu´n Fern´ ndez da Silva, merchant of Oporto; Basilio Bay´ n, merchant of Santander, the
± a o
merchants Guillermo Barr´ n and Mariano Malanc´ y Bad´a of C´ diz; the commercial companies of
o o ± a
Jos´ Antonio Pereyra and Francisco Mar´a Montano of Lisbon; the Duke of Osuna, Spanish minister
e ±
to Washington. Further, licenses were granted to the house of Atkinson and Zogle, Jamaica, to send
boats with Swedish registrations to the Spanish American colonies. AGN, Reales C´dulas Originales,
vol. 196, exp. 73, f. 85, exp. 156, f. 238, exp. 221, f. 286; vol. 197, exp. 157, f. 238; and vol. 198,
exp. 4, f. 5, exp. 16, f. 21, exp. 21, f. 30, exp. 129, f. 195; and AGN, Correspondencia de Virreyes, vol.
229, exp. 1047, fs. 187“188 and vol. 233, exp. 1191, f. 83.
56 See the secret (muy reservada) letter from the Minister of Finance, Miguel Cayetano Soler, to Viceroy
Iturrigaray, signed May 19, 1806, by which the Gordon & Murphy operations were authorized.
AGN, Reales C´dulas Originales, vol. 197, exp. 30, fs. 37“42.
Royal Treasury and the Gordon & Murphy Consortium, 1806“1808 199

bankers, established that the foreign traders would have the right and obli-
gation to:

carry to the port of Veracruz mercury, paper for cigars and other effects of the
Royal Treasury and return bearing fruits and other colonial items belonging to
His Majesty (Charles IV) with the condition that the said merchant houses obtain
permits or licences from the British Government such that the ships transporting
these effects and fruits do not meet with the least obstacle in their outgoing and
incoming passages. . . . 57

Additionally, it was established that a third of each ¬‚eet™s cargo of mer-
chandise from Veracruz would be reserved for the royal treasury while a
quarter of the return cargo should be used for the remittance of bullion
and “cocoa of Soconusco, cochineal, indigo dyes, and other commodities on
the Consolidation Fund™s account.” In addition, Gordon & Murphy were
to be responsible for maintaining a system of mail ships (buques correos) for
the Spanish government, sending one mail ship per month from Lisbon
but also specifying that “two or three other ships will carry the correspon-
dence of the Royal Service and the Consolidation Fund, from the ports
of Veracruz, Cartagena de Indias, and Havana to Jamaica, and that these
merchant houses will receive them in London and will transfer them to the
same Consolidation Fund.”58 (See Figure 6.2.)
Lastly, Gordon & Murphy were authorized to cash drafts for approxi-
mately ten million silver pesos from Veracruz to pay for the mercury, paper,
and other articles purchased by them for the Spanish royal exchequer in the
Americas. The historian Jim´ nez Codinach points out:

Gordon & Murphy were at liberty to send pesos directly to London or via Jamaica
in English ships. The traders were to deliver letters of exchange to the Spanish Con-
solidation Fund at the rate of £177 per 1,000 pesos so that the Spanish government
(effectively) received 885 pesos.59

In exchange for carrying Mexican silver to Europe, the Consolidation Fund
accepted a discount of almost 11 percent, which was pro¬t for the traders,
shippers, and bankers involved in the business.60 The ¬rm of Gordon &
Murphy was in a splendid situation to coordinate these transactions “ thanks

AGN, Reales C´dulas Originales, vol. 197. exp. 30, f. 37.
Ibid., fs. 41“42.
G. Jim´ nez Codinach, “An Atlantic Silver Entrepot,” p. 341.


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( 64 .)