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Donations
400,000a
1780“1781
1793“1802 616,659
300,000b
1809“1810
Loans
For Banco de San Carlos (1783) 134,300
˜±
For Compan´a de Filipinas 98,187
For royal War loans 1793“1801 707,803
For Royal Consolidation Fund 750,000
subtotal 2,698,918
a Rodr´guez Venegas (1996) provides archival lists.
±
b Estimates based on Tank (1994) and Franco (1988).



funds: in 1790, royal of¬cials used 50,000 pesos taken from these communal
treasuries to buy stock of the Bank of San Carlos in Madrid; in 1796 another
80,000 pesos was loaned to the Crown (with the tobacco monopoly acting as
guarantor); between 1807 and 1808 almost 200,000 pesos were sent from
the Yucatan villages to the Consolidation Fund in Madrid; and in 1809 a
donation of 32,000 pesos was made “for the mother country that has been
invaded by the per¬dious Napoleon.”23
Throughout the viceroyalty the situation was similar. The Indian towns
had already contributed heavily to the Crown decades before “ as revealed
by the more than 400,000 pesos they were forced to make to the universal
donation in the years 1781“1783 “ and to the donations and loans in
1793, 1795, and 1798, totaling more than 800,000 pesos.24 And between
1805 and 1808 the Indian communities were forced to disburse to the
Juntas de Consolidaci´n the enormous sum of 670,000 pesos.25 Such forced
o
contributions undermined the foundations of rural community ¬nance that


23 D. Tanck, “Escuelas y cajas de comunidad,” pp. 430“436.
24 D. Tanck, “Protesta ind´gena al rey,” p. 27, mentions that: “Between 1793 and 1801 the cajas de
±
comunidad (of New Spain) bestowed several donations to the king: 50,072 pesos in 1793; 11,638
pesos in 1795; and 122,445 pesos in 1799. Donations totalled 184,155 pesos. Also, the communal
funds lent 644,500 pesos to the government (during this period).” The author quotes as one of the
most comprehensive sources, AGN, Consolidaci´n, vol. 10, fs. 395 and 395.
o
25 D. Tanck, Pueblos de indios, Chapter 4, presents accurate ¬gures on payments by the cajas de comunidades
of the Indian republics. The amount was comparable to the total sum of funds contributed to the
Consolidaci´n by the entirety of nun convents, which were the religious institutions that had most
o
capital and properties in New Spain. On the latter, see A. Lavrin, “Execution of the Laws,” 41.
248 Bankruptcy of Empire

traditionally ful¬lled many important economic functions and also provided
monetary reserves for hundreds of thousands of peasants in Bourbon Mexico
at times of agrarian crises.26
By late 1809, the ecclesiastical hierarchy began to express concern about
the drain of resources from the peasant villages and protested to ¬nan-
cial of¬cials. Archbishop Manuel V´ zquez de Le´ n criticized the measures
a o
decreed by the Royal Legal Counselor of the Indian Communities (Real
Fiscal Protector de Naturales) Vicente Rebolledo, ordering that two-thirds of
the monies in the communal funds of Indian towns should be used “as a
donation during the War.” The archbishop reminded Rebolledo that the
Indian peasants had already made important contributions to the donation
and had also “ . . . ceded their stock of goods and even the capital and interest
that belonged to them to the Consolidation Fund.”27
Incredible as it may seem, the royal of¬cials were not satis¬ed with
the contributions obtained from the Indian peasant population but rather
attempted to increase them by even more rigorous tax collection.28 As Luis
J´ uregui points out, Viceroy Lizana (formerly archbishop who on other
a
occasions had expressed his concern for the Indians™ fate) decided it was
necessary to extract as much money as possible from the rural communi-
ties to comply with the demands of the royal purse. In March 1810, the
viceroy requested the of¬ce of ¬scal accounts (Tribunal de Cuentas) to apply
an increase in the tribute rates. The of¬cers replied that this measure was
not possible but added that it might be possible to increase the number
of taxpayers (tributarios) by an acceleration in reproduction rates of Indian
peasant women. The argument was crudely disguised:

An increase in tribute (can be obtained) by multiplying the number of Indians,
blacks and free mulattos. . . . Increased income can come from multiplication of
marriages which is the Catholic means for increasing the population . . . and brings
the bene¬t of giving new life to people, injecting them with greater love for the
government and invigorating the true strength of the State . . . 29


26 Indian communities claimed more than once that the funds they had been forced to advance to the
Banco de San Carlos did not yield interests in cash, but were only paid with vales reales, a kind of
debt instrument that did not circulate in any signi¬cant quantities in New Spain. See the letter
dated July 27, 1804, from Iturrigaray to Soler where he describes the misery of Indian communities.
AGN, Correspondencia de Virreyes, 1a serie, vol. 219, ¬le 533, f. 231.
27 Letter, November 6, 1809, AGN, Donativos y Pr´stamos, vol. 12, f. 17.
e
28 Margarita Menegus, “Los bienes de la comunidad y las reformas borb´ nicas, 1786“1814,” in Estruc-
o
turas agrarias y reformismo ilustrado en la Espa˜ a del siglo XVIII (Madrid: Ministerio de Agricultura,
n
1989), p. 389, points out that the the sum of monies from communal treasuries transferred to the
Crown treasury in Mexico in 1809 was over 180,000 pesos.
29 Quoted in L. J´ uregui, La real hacienda de la Nueva Espa˜ a, p. 215.
a n
Rebellion of 1810, Colonial Debts, and Bankruptcy of New Spain 249

In summary, the Crown™s ¬scal policy weighed unequally on New Spain™s
population, with traumatic effects on the peasant communities.30 But it
was precisely the most productive rural sectors “ which had accumulated
savings “ that suffered the most and to such an extent that by 1810, the
more prosperous Indian peasant towns no longer had much left in the way
of communal monetary reserves.
Preliminary estimates allow us to conclude that the total amount con-
tributed by Indian towns in colonial Mexico between 1780 and 1810 in
the shape of loans and donations for the Crown reached almost 2.7 million
pesos. Virtually no interest was ever paid on this large sum, and the principal
was never returned to the owners. The approximately 4,500 Indian peasant
villages depended on these resources for a variety of economic, political,
religious, and educational needs, as described in previous chapters. The
decapitalization of the extensive network of what may be described as the
savings and loan system of the Mexican peasantry represented an extremely
severe blow to a predominantly agrarian society.31


Colonial Debt in the Early Years of Insurgency:
The Bankruptcy of the Viceroyalty
As a result of the outbreak of insurgency and war, the royal administration
began progressively to suspend service on debts, which now constituted a
major burden. The bulk of ¬scal income was devoted to paying the loyalist
military forces that struggled to contain numerous rebellions throughout
the viceroyalty. The result was a growing tax crisis. In a thoughtful study
on the gradual disintegration of New Spain™s ¬scal system, historian John
TePaske has suggested that the war of independence was, in itself, the cause
of a dramatic decline in the ef¬ciency of tax policy and administration,
reducing revenues as well as transfers between treasuries. Political and mil-
itary con¬‚icts spurred a centrifugal process that advanced with great rapid-
ity, disarticulating the complex, ¬scal and ¬nancial system of the Bourbon

30 The success of the donation was extraordinary as indicated by reports from the far-off province of
New Mexico, more than 2,000 kilometres to the North of Mexico City. In this sparsely populated
territory, the royal of¬cials forced the traders and small cattlemen, as well as the Indian communities
to contribute money and in-kind, resulting in 117 pesos in metal, together with 218 blankets
(sarapes), 149 fanegas of corn, 52 tanned hides, 18 strings of chiles, and 32 garlic plants. In the case
of Indian women from the village of San Felipe, it was reported that they were obliged to contribute
apiece one peso of silver and one buffalo hide! See Marc Simmons, Spanish Government in New Mexico
(Albuquerque: University of New Mexico Press, 1968), p. 93.
31 M. Ter´ n, “Muera el mal gobierno,” p. 177, argues that Bourbon policies led to the reduction of
a
autonomous control of the Indian towns, including the loss of control over the communal treasury
and the total loss of surplus monies. The consequence, she argues, was decapitalization of the towns.
250 Bankruptcy of Empire

regime.32 As a result there was a steep fall in ordinary tax income of the
royalist administration which never returned to the levels attained before
1810.33 The information on total gross revenues of various regional trea-
suries is indicative of the dramatic decline in income, but much further
research is required to clarify this fundamental issue in detail.34
The decentralization of income and expenditure “ especially in these areas
where there was most intense military con¬‚ict “ led to a marked reduction
in the transfer of funds from the silver-producing districts to the treasuries
of Mexico and Veracruz. John TePaske argues: “Most signi¬cantly, though,
the independence movement marked the end of remissions of tax receipts to
Mexico City from the wealthy mining districts and other treasuries of the
viceroyalty.”35 The immediate consequence was that there were no longer
available funds for the remittances abroad (situados), which had tradition-
ally been essential to the sustenance of the Spanish colonies in the greater
Caribbean. The result was, inevitably, that after 1810 the viceroyalty began
to cut its links to the rest of the empire as a result of the abrupt decline in
shipments of tax monies abroad.
The reduction in tax income obliged the royalists to seek new methods of
¬nancing military obligations. The war against the insurgency gave birth
to new forms of exactions which included not only extraordinary taxes but
also expropriations and forced loans. However, these instruments were also
applied by insurgent armies and, as a result, this gave rise to a system
of “double taxation” which may be described as the coexistence of the
traditional royalist tax administration with the emergency ¬nance of the
insurgent forces.
From 1810 onward, certain members of the colonial elite in Mexico
expressed their concern with regard to the effects of war and debts on the
administration™s solvency and emphasized the dif¬culties in repressing the

32 John Jay TePaske, “The Financial Disintegration of the Royal Government of Mexico during the
Epoch of Independence,” in Jaime Rodr´guez O., ed., The Independence of Mexico and the Creation of the
±
New Nation (Los Angeles: University of California Press, 1989), pp. 63“84.
33 Important studies on the ¬scal and ¬nancial crises during the wars of 1810“1820 include Luis
J´ uregui, La Real Hacienda de Nueva Espa˜ a; Timothy Anna, La ca´da del gobierno espa˜ ol en la ciudad de
a n ± n
M´xico (Mexico: Fondo de Cultura Econ´ mica, 1981); John J. TePaske, “The Financial Disintegration
e o
˜
of the Royal Government of Mexico” and “La crisis ¬nanciera del virreinato de Nueva Espana a ¬nes
de la colonia,” Secuencia, 19 (1991), 123“140; G. Valle Pav´ n “Consulado de Comerciantes”; Mar´a
o ±
Eugenia Romero Sotelo, Miner´a y guerra: la econom´a de la Nueva Espa˜ a, 1810“1821 (Mexico: El
± ± n
Colegio de M´ xico, 1997).
e
34 Numerous tables on ¬scal income are included in John J. TePaske, “The Financial Disintegration
of the Royal Government of Mexico, in particular in pages 74“83. However, most of these use
aggregate data. Future studies should carry out more detailed analysis in order to reach more de¬nite
and precise conclusions on the evolution of each of the major tax branches and the principal, regional
trends during the wars of independence.
35 John J. TePaske, “The Financial Disintegration of the Royal Government of Mexico,” p. 73.
Rebellion of 1810, Colonial Debts, and Bankruptcy of New Spain 251

insurgency and the economic effects of the interruption of much transport
and commerce. Successive viceroys requested support to ¬nance the ¬ght
the war against the insurgents and received considerable support from the
wealthiest groups in colonial society. But progressively, the ¬nancial con-
tributions decreased as many members of the colonial elite argued that the
volume of loans and donations advanced in preceding years had drained
their personal resources, and therefore did not allow them to provide more
money for the royal administration.
The result was a ¬nancial crisis that was explicitly con¬rmed by the
reports of a commission of ¬nancial experts in 1813 who evaluated the level
of government debt and proposed remedies to attempt to maintain service
payments in the midst of war. In the pages following, we comment these
reports in some detail insofar as it is important to be aware of the opinion
of those contemporaries who had the best information on the evolution of
royal ¬nances.
In 1813, Viceroy Calleja gave instructions for the organization of a spe-
cial ¬nancial commission ( Junta Permanente de Arbitrios) to analyze the ¬scal
and debt situation of the government.36 Calleja wished to obtain greater
¬nancial stability for his government and to open up the possibility of
new loans for military operations. But the trends of ¬scal receipts were
not encouraging. According to the decree of April 17, 1813: “The Public
accounts are in agony . . . with a monthly de¬cit of 260,000 pesos, consum-
ing all public funds and exhausting all ordinary and some extraordinary
¬nancial instruments. . . . ”37 To attempt a debt conversion would not be
an easy task, since investors resented the suspension of debt service on an
already long sequence of loans and donations collected before 1810 and,
even more, the forced loans decreed since the outbreak of the insurgency.
This was con¬rmed in a key report on the situation of the ¬nances of the
viceroyalty at the end of 1813. The collective authors were wealthy indi-
viduals and high-level functionaries with a profound knowledge of the
economic status of the royal administration: the group included one of the
wealthiest miners of Mexico Jos´ Mar´a Fagoaga, the director of the Mining
e ±
College, Fausto de Elhuyar, the rich Veracruz merchant Tom´ s Murphy, the
a
great landed proprietor Jos´ Mart´nez del Campo, and the knowledgeable
e ±

36 On the several debt commissions formed between 1810 and 1812, see L. J´ uregui, La real hacienda
a
de la Nueva Espa˜ a, Chapter 6. The Junta Permanente de Arbitrios, constituted in 1813, was made
n
up of the Intendant of Mexico, Ram´ n Guti´ rrez del Mazo, an ecclesiastical representative, Andr´ s
o e e
Fern´ ndez Madrid, a representative of mine owners, Jos´ Mar´a Fagoaga, two representatives from
a e ±
commerce, Antonio Bassoco and Tom´ s Murphy, the head of the royal treasury of Guadalajara,
a
Antonio Medina, and the accountant of the Central Army (Ej´rcito del Centro), Francisco Javier de
e
Aramberri. L. J´ uregui, La real hacienda de la Nueva Espa˜ a, pp. 266“270, analyzes the activity of
a n
this commission in detail.
37 Cited by L. J´ uregui, La real hacienda de la Nueva Espa˜ a, p. 266.
a n
252 Bankruptcy of Empire

and sophisticated treasury functionary Antonio Medina. Their report
included a debt summary and an estimate of potential tax income, as well as
numerous penetrating observations on the evolution of public and private
¬nance during the war.38
The debt summary in this report was entitled, “Approximate state of
the national debt up to the end of June, 1813” and showed that the cumu-
lative debt incurred by the government with corporations and individuals
amounted to 32 million silver pesos.39 Of this total, 4.3 million pesos con-
sisted of old debt ( juros antiguos) as well as loans placed between 1782 and

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