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for the British government in order to cover payments in silver to its allies
in Europe ¬ghting against Napoleon. They were also crucial to the Bank of
England to maintain its metallic reserves and the East India Company to
assure availability of silver for trade with India. The ¬rm of Gordon Murphy
received bills of exchange for these sums but we do not know exactly how
the bulk of these bills were later transferred from England to the Spanish

87 For information about silver deliveries on British ships after 1808, see G. Jim´ nez Codinach, Gran
Breta˜ a y la independencia de M´xico, pp. 231“245.
n e
Royal Treasury and the Gordon & Murphy Consortium, 1806“1808 211

royal treasury or to its several creditors, for there is dif¬culty in ascertaining
the ¬nal destination of this large volume of Mexican funds, given the dis-
persed nature of the documentation in this time of war, contraband, and
complex transatlantic transactions.88
The neutral trade conducted with Mexico was also of great importance
to the British economy, as we have already argued. Some general estimates
of the volume of this commerce can be obtained from contemporary reports,
in particular those of the Veracruz Merchant Guild. A large number of local
merchants were furious with the privileges obtained by foreign merchant
houses and their local allies. The guild merchants calculated that neutral
trade between 1805 and 1808 had allowed for the introduction of eigh-
teen million pesos of foreign goods through Veracruz and the extraction of
almost twenty-eight million silver pesos and four million pesos in Mexican
commodities.89 These large ¬gures suggest that the Veracruz trade was
among the most important and pro¬table of the entire transatlantic trade
conducted during these years of Napoleonic wars.
The expeditions of neutral ships of the Hope/Baring and Gordon &
Murphy merchant groups continued to arrive at the port of Veracruz dur-
ing the ¬rst half of 1808, but were suspended in July owing to the invasion
of the Iberian peninsula by the French army. In early 1808 the Napoleonic
invasion of Spain produced a series of radical and profound changes in
international alliances. The British government now threw its support to
the Spanish patriot forces, struggling against the invading armies and the
result was suspension of neutral trade since the British Navy henceforward
allowed all Spanish vessels and warships clear passage across the Atlantic.
Given the new circumstances, the Hope/Baring partnership no longer had
an important role in the Veracruz trade after May 1808. But, surprisingly
enough, the international merchant conglomerate headed by Gordon &
Murphy continued to be active in Mexican“European trade for several more

88 At the same time as the treasure was being transferred to the British ships anchored near the port of
Veracruz, a considerable quantity of precious metals was being loaded onto a French warship at the
port of Acapulco. This surprising event can be explained taking into account (1) France was the ally
of Spain at this time, and so agreements of mutual support existed; (2) in the Paci¬c, the British ¬‚eet
did not have the same presence as in the Atlantic, making it easier for the French ships to operate
with a certain freedom along the west coast of America. The French frigate had arrived from the
Philippines, accompanying the Spanish galleon Magallanes on the Manila to Acapulco route. For its
return to Manila, the viceroy authorized 2,670,387 pesos be sent in the French warship, of which a
little more than a ¬fth were destined to sustain the military fort (situado) of the Philippines. It can be
assumed that the French Navy would have instructions to transport the remainder of the silver from
the Philippines to France to assist the Napoleonic navy and army. AGN, Correspondencia de Virreyes,
vol. 233, exp. 1421, f. 363.
89 “Representaci´ n presentada por el Consulado de Veracruz a la Suprema Junta Central de Espana,”
AGN, Consulado, 252, exp. 5, fs. 6“7.
212 Bankruptcy of Empire

years “ a fact that was due to their close ties to the Spanish patriot govern-
ment that found shelter from late 1809 in the great port of C´ diz, the only
major city in Spain that was not occupied by the Napoleonic armies.90

90 G. Jim´ nez Codinach, Gran Breta˜ a y la independencia de M´xico, pp. 231“239, has collected a
e n e
great amount of documentation which demonstrates that the Gordon & Murphy consortium was
responsible for sending 42 ships to Veracruz between 1808 and 1811, the majority closely associated
with the requirements of Spanish royal treasuries, including the transfer of bullion from Mexico to
pay British troops ¬ghting in Portugal against Napoleon under Wellington™s command.
Mexican Silver for the Cortes of C´ diz and the
War against Napoleon, 1808“1811

Loans are only useful in two circumstances, that is: when governments are
solidly established and in consequence have credit and good faith, or when
the investors run similar risks as the government and can see no other way
to save their life and fortune than by helping it with money. . . .
Manuel Abad y Queipo, Bishop of Valladolid de Michoac´ n,
May 30, 18101

The French army™s occupation of the Iberian Peninsula in 1808 was “ to
use a modern phrase “ a huge external shock, which brought down the
monarchy in the metropolis and threatened the Spanish administration in
the colonies. Paradoxically, in the viceroyalty of New Spain as well as in
other Spanish American territories, loyalty to the Crown and mother country
was reinforced as news spread of the Napoleonic invasion. Colonial elites
in Mexico and Peru, in particular, feared the possible disturbance of the
status quo and of their traditional privileges, which might be disrupted by
political crisis and social upheaval. Despite collapse at the center of empire,
therefore, the most important and richest colonies did not interrupt silver
shipments to the metropolis. On the contrary, royal of¬cials and the higher
clergy mobilized new and vigorous ¬nancial campaigns to collect donations
and loans to send to the patriot forces combating in Spain, the greatest sums
being gathered in Mexico.
French troops began to traverse the Iberian Peninsula in October of 1807
with the ostensible aim of occupying Portugal, but soon the Napoleonic
forces installed themselves in cities in northern and central Spain. A
rapid succession of military and political events between March and June
1808 (beginning with the mutiny of Aranjuez) led to the fall of Charles
IV™s government. Although Ferdinand VII, son of the Spanish monarch,
brie¬‚y assumed the Crown and attempted to maintain the appearance of
an autonomous, royal administration, he was destined to a quick failure.

1 A collection of Abad y Queipo™s economic writings is included in the volume originally edited in
1837 by Jos´ Mar´a Luis Mora, Cr´dito P´ blico (Mexico: UNAM, 1986), p. 151.
e ± e u

214 Bankruptcy of Empire

Napoleon seized upon the weakness of both son and father and shortly
negotiated their departure and the subsequent imprisonment of Charles IV
and Fernando VII in respective palaces in southern France. The establish-
ment of a French administration in the Spanish capital, however, was not
met without popular resistance. The famous rebellion of the Madrid popu-
lace against the invaders in early May 1808 (immortalized in one of Goya™s
most famous paintings) was bloodily repressed. It was not long, however,
before a number of regional, patriotic juntas began to be formed in different
regions of Spain, and soon the struggle against the French invaders gained
strength. In Spanish America, most colonial elites expressed their sympa-
thies with the patriotic juntas that had sprung up in different regions of
the mother country. But, inevitably, considerable confusion reigned with
respect to the future of monarchy and empire.
In the pages that follow, attention is focused on the loans and donations
collected in colonial Mexico to assist the patriot forces in Spain in their
struggle against Napoleon. The ¬nancial contributions were considerable.
Between late 1808 and early 1811, over twenty-¬ve million pesos in tax
monies, loans, and donations were sent from New Spain to C´ diz, principal
seat of patriot resistance in southern Spain. The Spanish American ¬nancial
contributions to the treasury of the Junta Central in Seville and C´ diz in
1809 and the C´ diz Parliament in the years 1810“1812 underscore the
signi¬cance of ¬scal and ¬nancial contributions of Mexico and the other
colonies to the struggle against Napoleon during this period and demon-
strate that without the silver sent, the patriot resistance in southern Spain
would have probably lacked the ¬nancial resources to resist the prolonged
French siege of C´ diz.2 The paradox was, therefore, that the colonies should
have helped to defend the metropolis in its darkest hour.

The Importance of Spanish American Contributions to the Struggle
against Napoleon and to the C´ diz Parliament, 1810“1812
The Napoleonic invasion created a deep ¬scal and ¬nancial crisis in Spain.
After the French occupation, the Spanish population had to support double
taxation: that of the invading army as well as war taxes (in money and
kind) imposed by patriotic armies in various regions. The French admin-
istration attempted to keep control over the old ¬scal system in the occu-
pied territories, but with mixed results. On May 19, 1808, the Minister of

2 A detailed evaluation of income data for the C´ diz Parliament is found in C. Marichal, “Bene¬cios
y costes ¬scales.” However, Josep Fontana argues that the patriot resistance in the rest of Spain did
not receive much support from the government at C´ diz but rather had to rely on local resources.
See Josep Fontana, “La ¬nanciaci´ n de la guerra de la independencia,” Hacienda P´ blica Espa˜ ola, 69,
o u n
1981, 209“217 and Josep Fontana and Ram´ n Garrabou, Guerra y Hacienda: la Hacienda del gobierno
central en los a˜ os de la guerra de independencia 1808“1814 (Alicante, Spain: Instituto Juan Gil Albert,
Mexican Silver for the Cortes of C´ diz and the War against Napoleon 215

Finance Miguel Joseph Azanza (who could be described as a collaborationist)
informed the chief of occupation forces, the Duc de Berg, that the peas-
ants of the entire country were tired of providing supplies to the invading
troops and that tax collection had dropped abruptly as a result of the “total
strangulation of mercantile operations” in Spain.3 Moreover, the ferocity of
war in 1808 and 1809 did not allow the ¬ghting forces complete control of
the peninsula but rather a series of advances and retreats by both armies.4
In the event, the gradual collapse of the old ¬nancial administration also
affected the Spanish resistance.5
The various patriotic juntas, established from May 1808 onward in differ-
ent Spanish regions, received support from the British government, includ-
ing direct subsidies of monies as well as substantial quantities of military
equipment. In June 1808, the ¬rst agents from the Spanish juntas arrived
in London and negotiated a program of ¬nancial support with the Prime
Minister George Canning. Most of the British aid was remitted to the juntas
of Asturias, Coruna, Leon, Seville, and C´ diz, for a total of seventy million
reales (three and a half million pesos or dollars) between June 1808 and
early 1809.6 At the same time, British authorities dispatched uniforms and
provisions to Spain: Canga Arguelles (later minister of Finance at C´ diz a
in 1811) calculated that between August and November of 1808, there
had been sent from Britain 2,300 muskets, 8,200 swords, 160,000 pairs
of shoes, and 50,000 shirts (of varying quality) for the tens of thousands of
Spanish soldiers ¬ghting against the French.7

3 Archives Nationales (Paris) AF IV, 1608, B1, Rapport du Ministre des Finances pour le Gran Duc de Berg,
May 19, 1808. Azanza added that it would be futile to ask for a loan from Holland to ¬nance the
invading army, and it would be socially dangerous to ask for more extraordinary contributions from
the Spanish peasants; he recommended that Napoleon transfer ¬nancial resources to Spain for the
subsistence of the French army during two to four months.
It should be emphasized that Napoleon ¬nanced his armies largely by “living off the land,” taking
cattle and cereals from villages and farms where they could be found, although this was not conducive
to orderly taxation, but rather exploitation. For additional information, consult A. Fugier, Napole´n o
et l™Espagne and Florin Aftalion, “Le ¬nancement des guerres de la R´ volution et de l™Empire,” in
Erik Aerts and Francois Crouzet, eds., Economic Effects of the French Revolutionary and Napoleonic Wars,
Proceedings 10th International Economic History Congress (Leuven: Leuven University Press, 1990),
pp. 22“29.
J. Fontana, ˜Financiaci´ n de la guerra de independencia™ and J. Fontana and R. Garrabou, Guerra y
Hacienda provide important information about this subject especially with reference to the resistance
in Catalonia.
Jos´ Canga Arguelles, Observaciones sobre la historia de la guerra de Espa˜ a que escribe en ingl´s el teniente
e n e
coronel Napier (Madrid: 1835“1836), vol. 1, p. 149 and vol. 2, p. 304, gives the distribution as the
following: eighteen million reales to the junta of Asturias, twenty million each to the juntas of Seville
and Coruna, and ten million to the junta of Le´ n. See J. H. Sherwig, Guineas and Gunpowder, p. 198
for data on the ¬rst series of subsidies paid between June and August 1808.
J. Canga Arguelles, Observaciones sobre historia de la guerra, vol. 1, doc. 57, pp. 253“257. J. H. Sherwig,
Guineas and Gunpowder, pp. 199“200, 222, 227, 249, 251, provides additional information on British
shipments of military supplies to the Iberian Peninsula.
216 Bankruptcy of Empire

In any case, after the spring of 1809 and during most of the two following
years, English subsidies to the Spanish patriots were radically reduced, being
limited henceforward to small shipments of provisions and arms to C´ diz a
which were paid for with drafts on the royal treasuries of Mexico. In fact,
from mid-1809, the bulk of subsidies sent from England for cooperation in
the Peninsular War were redirected almost entirely to sustain the British
army in Portugal under Wellington™s command and to provide succor to
Lisbon™s population.9 As a result, the patriot armies and juntas in war-torn
Spain were obliged to seek alternative sources of income. In most of the
country, there was imposed what the historian Joseph Fontana has called
“immediate taxation.”10 The patriot forces had recourse to voluntary or
forced provisions supplied by the local population in those areas where
resistance continued, and this form of emergency war ¬nance became key
for the struggle against the French. In Galicia, Catalonia, and Valencia the
war was basically ¬nanced with forced local taxes, collected by the provincial
juntas and military commanders.
On the other hand, in Seville and C´ diz “ seats of patriot government in
1809 and 1810“1812 “ the most important tax resources were remittances
of silver from Spanish America, at least until early 1811. An analysis of
government ¬nance at Seville in the year 1809 and of resources available
to the armies of Andalusia and Extremadura reveals the critical importance
of colonial silver remittances for the patriots in the war™s initial phases.
Vicente Alcal´ Galiano, treasurer of the Supreme Governing Junta ( Junta
Suprema Gubernativa) in Seville, reported:
The (¬nancial) assistance from America make up the principal funds that have been
applied to the provision, conservation and increase of our armies. The total amount
coming from those dominions to the Royal Treasury reached the sum (from January
to October 1809) of 295,901,816 reales. . . . 11

8 The Spanish Minister of Finance, Jos´ Canga Arguelles, stated that letters of credit worth three


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