. 7
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N. A. M. Rodger, “Recent Books on the Royal Navy of the Eighteenth Century,” The Journal of
Military History, 63, 3 (July 1999), 683“703.
28 Bankruptcy of Empire

been slow to recognize the simultaneous and surprising renovation of the
Spanish Navy. However, the recent monumental study by Jan Grete has
forcefully demonstrated that, already quite early in the eighteenth century,
the Spanish naval forces became the third most important in the world, after
those of Great Britain and France. The maritime contest for world power
intensi¬ed from the 1740s onward as both France and Spain pushed forward
with new construction of warships and frigates. Although the Seven Years™
War led to major defeats at sea for both Bourbon monarchies, this did not
discourage them. The Bourbon allies were bent on establishing parity with
their more vigorous, naval rival, Great Britain. As a result, the French and
the Spanish governments plowed enormous amounts of money into warship
construction during the last four decades of the eighteenth century.31
In the case of metropolitan Spain the three naval ports of Cartagena,
Ferrol, and C´ diz were sites of construction of a large number of warships,
particularly in the second half of the century.32 But, the most important
naval shipbuilding arsenal was, in fact, that of Havana, where there were
built a grand total of 114 ships for the Spanish Navy during the eighteenth
century, including ¬fty-four warships as well as sixteen frigates and many
smaller armed vessels. The Havana-built warships carried a total of 3,642
cannon and the frigates 684 cannon, altogether a formidable force.33 The
enormously expensive naval construction program in Cuba, however, was
not ¬nanced from Spain but mainly from colonial Mexico. A review of
imperial ¬nance demonstrates that it was New Spain that ¬nanced the bulk
of construction of the great warships built in Cuba during the century by
sending large annual silver subsidies to Havana as well as basic provisions.34
All these military projects “ army, navy, and fortresses “ were extremely
costly and required the ¬nancial support that only a strong tax state could
provide. The tax reforms (which ¬nanced the military buildup) are analyzed
in detail in the next chapter, but here we wish to reiterate that the greater
part of military and naval expenditures for the defense of empire was covered
by the colonies themselves. Metropolitan Spain did not have to ¬nance more
than a fraction of the expenses in the Americas. The colonial administrations

31 For data on construction of warships, see numerous charts in J. Glete, Navies and Nations, vol. 2.
32 The essential study on building of warships in Spain is Jos´ Patricio Merino Navarro, La armada
espa˜ ola en el siglo XVIII (Madrid: Fundaci´ n Universitaria Espanola, 1981) but, unfortunately, this
n o
work provides no information on the Havana naval arsenal.
33 The detailed notes by J. S. Thrasher provide the information on each of the ships built in Havana.
These notes are found in Alejandro von Humboldt, Ensayo pol´tico sobre la isla de Cuba (Havana: Archivo
Nacional de Cuba, 1960), pp. 114“117. J. S. Thrasher was translator into English of Humboldt™s
essay that was published in New York in 1856.
˜ ´ ˜
34 A recent study is Andrade Munoz, “La busqueda espanola de suministros, v´veres y pertrechos navales
en Nueva Espana (siglo XVIII). Los intereses coloniales frente a los problemas imperiales,” Master™s
thesis, Instituto Mora, Mexico, 2002.
Resurgence of the Spanish Empire 29

took charge of the military salaries of rapidly growing armies and militias
in the western hemisphere, of the ¬nance and building of the numerous
great and small fortresses, and of the construction of close to half of the
warships of Spanish royal Navy. In addition, they provided victualling of
the Spanish warships in American waters, which included provisioning
of ships in the greater Caribbean, in the River Plate, as well as the few
warships on the Paci¬c coast and the famous Manila galleon that yearly
crossed the largest ocean in the world. In order to understand how these
vast requirements were ¬nanced, it is essential to focus attention on the
vast network of interimperial ¬scal transfers. In the section that follows,
particular attention will be focused on the contributions of the richest tax
colony “ the viceroyalty of New Spain “ to the defense of the Spanish empire.

The Fiscal Logic of Imperial Expenditures
The ¬scal and military system of the Spanish empire in the Americas was
older, quite different, and more complex than that of its imperial rivals.
This vast imperial organization had its fulcrum in Spain, yet it spanned
a great part of the western hemisphere as well as the Philippines and was
based to a large degree on a complex network of tax transfers between the
different treasuries of the different viceroyalties and captaincy generals. But
how centralized was the ¬scal administration in the empire? This is a hotly
debated issue among historians today with a confrontation between two
points of view. On the one hand, there is a traditional view that emphasizes
the success of the Bourbon monarchy in establishing a professional ¬scal
bureaucracy, a modern accounting system, and an increasingly centralized
tax machinery.35 On the other, there is a growing school of historians who
emphasize the active role of local elites in the control of transfers of silver
taxes from one treasury to another and in management of supply contracts
derived from much local expenditure in the military sphere.36

35 L. J´ uregui, La Real Hacienda de Nueva Espa˜ a; C. Marichal, La bancarrota del virreinato (1999),
a n
Chapter 2; Linda Arnold, Burocracia y bur´cratas en M´xico, 1742“1835 (Mexico: Grijalbo/Consejo
o e
Nacional para la Cultura y las Artes, 1991).
36 Alexandra Irigoin has argued: “Thus, private merchants largely ran the system and made handsome
pro¬ts out of it. . . . But funds were also employed in various other purposes, in addition to the
expected naval and military defence.36 These ranged from funding shipbuilding or tobacco purchases
in Cuba, to the support of religious missions or colonisation ventures in other islands, to stipends for
clergy and civil of¬cials”: Alexandra Irigoin, “Bargaining for Absolutism: A Spanish Path to Nation
State and Empire Building,” unpublished manuscript, October 2005, p. 16. Similar arguments
have been advanced forcefully by Pedro P´ rez Herrero, “Los bene¬ciarios del reformismo borb´ nico:
e o
metr´ poli versus elites novohispanas,” Historia Mexicana, xii, 2 [162] (1991), 207“264 and by Allan
Kuethe and Juan Marchena F., eds., Soldados del Rey. El ej´rcito borb´nico en Am´rica colonial en v´speras
e o e ±
de la Independencia (Castellon: Universitat Jaume I, Colecci´ n Am´ rica, 2005).
o e
30 Bankruptcy of Empire

In any case, it is clear that the dynamics and logic of expenditure of
funds in Spanish America were based on a secular three-tiered system of
management of imperial ¬nance. This system can be de¬ned in terms of the
operation of basic principles that explain the disbursement of public monies
as well as the logic of expenditures of the multiple treasuries of the empire.
A ¬rst, basic and secular principle of imperial ¬nance (applied since the
sixteenth century) was that the largest number of expenses should be covered
in situ with the tax income collected on a regional level and accumulated in a
local caja real (treasury).37 However, when a local treasury district produced a
¬scal surplus, part of this money would be transferred to another tax district
which had a de¬cit or, alternatively, to one of the principal treasuries of the
respective viceroyalty. These remittances, nonetheless, were not necessarily
limited to the viceroyalty itself; they frequently were also shipped abroad
to different points of the empire, as we will see.
In the case of New Spain, we can observe the dynamics of this tridimen-
sional ¬scal system in the transferences regularly realized (in the late eigh-
teenth century) among the different twenty-four regional treasury of¬ces of
the viceroyalty, in most cases to cover military expenditures. For example,
certain regional treasuries such as that of Veracruz and Yucat´ n (that reg-
ularly accumulated ¬scal surpluses) were responsible for the payment of a
substantial part of military expenses of districts that had scarce tax income
such as Campeche, located in the Gulf of Mexico, which had an important
military and naval garrison. Similarly, the revenue-poor military forts and
garrisons (presidios) of northern Mexico depended heavily on the remittances
of funds collected by the more proximate regional treasuries of Guadalajara
and Bolanos that accumulated a regular surplus of funds from taxes on local
silver production as well as on trade.
A second level of expenditures were the transfer of surplus ¬scal funds
from one colony to another which were known as situados, those from New
Spain being directed principally to the Greater Caribbean, including Cuba,
Santo Domingo, Puerto Rico, Florida, Louisiana, and Trinidad. These con-
stituted a broad network of tax transfers between the different colonies, the
quantitative importance of which suggests that historians should rethink
many fundamental aspects of the way that imperial ¬nance operated in
Spanish America.38 In addition, it should be noted that the viceroyalty of

37 Jos´ Patricio Merino Navarro, Las cuentas de la administraci´ n central espa˜ ola, 1750“1820 (Madrid:
e o n
Instituto de Estudios Fiscales, 1987), pp. 11“28 offers a preliminary outline of the operating prin-
ciples of the Spanish Treasury administration.
38 In the latter half of the eighteenth century, New Spain covered approximately 75% of the costs
of administrative and military costs of the government of Cuba and a large portion of the other
Caribbean colonies mentioned. For information and estimates, see C. Marichal and M. Souto, “Silver
and Situados” and C. Marichal, La bancarrota del virreinato (1999), Chapter 1.
Resurgence of the Spanish Empire 31

Figure 1.2. General Treasury of Spain, 1763“1811: Remittances from Spanish America
and New Spain.
Source: Appendix Tables 1.1 and 1.3.

New Spain also provided regular ¬scal subsidies for the Phillipines and occa-
sional sums for Guatemala and Central America in times of emergencies.
A third and important set of intraimperial tax transfers were remittances
to the metropolitan treasury.39 Analysis of shipments to Spain suggests that
in the early decades of the century (1720s to the 1750s) the contribution
of Mexican royal silver to the metropolitan ¬scal regime was important
but limited in scope. (See Figure 1.1.) During this thirty-year period ¬scal
transfers to Spain did not ordinarily surpass one million pesos per year
but in the 1750s average remittances increased to close to two million
pesos a year.40 Then, after the two-year war with Britain (1762“1763),
royal remittances from Mexico to Spain declined as a result of the huge
expansion of expenditures in reinforcement of the defensive infrastructure
in the greater Caribbean. By the 1770s the shipments of royal silver from
New Spain to C´ diz had returned to the levels of the 1750s, and from that
date until the 1780s the ¬scal remittances by Mexico and Peru provided an
average of approximately 15 percent of the ordinary revenues of the General
Treasury at Madrid.41 Then, in the last-quarter century of empire “ 1785“
1810 “ the percentages rose, reaching extraordinary levels, as is seen in
Figures 1.1 and 1.2.
Whether we look at expenses within the viceroyalty or at ¬scal transfers
abroad (to other colonies or to the metropolis), the bulk were destined to
cover military requirements. A recent monograph demonstrates with clarity

39 These transfers were registered under the category of “Indias” in the metropolitan treasury accounts.
40 Compare the data on Spanish American remittances in our Appendix, Tables I.1 and I.3 with series in
Jacques Barbier “Towards a New Chronology for Bourbon Colonialism: The ˜Depositar´a de Indias™
of C´ diz, 1722“1789,” Ibero-Amerikanisches Archiv, N.F. Jg. 6, H 4 (1980), 335“353.
41 Carlos Marichal, “Bene¬cios y costes ¬scales del colonialismo: las remesas americana a Espana, 1760“
1814” Revista de Historia Econ´mica, x, 3 (1997), 475“505.
32 Bankruptcy of Empire

that the expenditure of funds for military objectives in the viceroyalty of
New Spain increased throughout the eighteenth century.42 Under Phillip
V (1726“1746), total disbursements of the branch of the royal treasury of
Mexico City, known as “War” (Guerra), increased from 1 million pesos a
year in the mid-1720s to over 3 million pesos by 1745. Under the succeed-
ing reign of Ferdinand VI (1746“1759) military expenditures rose to an
average of almost 4 million pesos a year, and during the reign of Charles III
(1759“1788), this level rose again to reach an annual average of 6.3 million
pesos a year, which represented over 60 percent of total disbursements of the
Mexico City central treasury. These sums included both military expenses
effected within the viceroyalty and certain transfers for the defense of other
colonies. These transfers bespeak the highly complex nature of the ¬nan-
cial integration of the empire and re¬‚ect the ¬scal interdependence of its
different parts.
A review of the long-term trends in the export of tax monies from Mexico,
however, indicates that in toto more funds were actually shipped to other
colonies than to Spain itself, between 1720 and 1800. This phenomenon is
relatively little-known and rarely appears in the traditional historiography
but its analysis helps explain why we argue that New Spain operated as a
¬scal submetropolis during the Bourbon era.

The Richest Colony: Mexico as Submetropolis
It may be presumed that, as historians continue to work on the extensive
statistical series of Spanish royal ¬nance in the eighteenth century, a full
description of the ¬scal and ¬nancial geography and dynamics of the empire
will eventually emerge. But such an ambitious purpose must be restricted
at the present stage to more limited objectives. Our aim here is quite
simply to demonstrate that during the eighteenth century a major part of
the costs of maintenance of the Spanish civil and military administration
in the greater Caribbean fell upon large and rising transfers of silver from
the royal treasuries of New Spain.43

42 Carlos Rodr´guez Venegas, “La sociedad novohispana y las guerras imperiales a la luz del donativo
y pr´ stamos de 1781,” B.A. thesis (Philosophy and literature), Universidad Nacional Aut´ noma de
e o
Mexico, 1996, Figure 3.2 and Table 2, pp. 75“76.
43 The statistical series of the real hacienda of New Spain (and especially that of the real caja of Veracruz)
published by Herbert Klein and John TePaske make possible a year-by-year reconstruction and
analysis of the ¬nancial transfers from the viceroyalty to the metropolis and to different parts of
the American empire. We have complemented this data with additional archival information on
the “Situados” from New Spain, among the most important of which were ¬nancial remittances
established from the end of sixteenth century for the support of military and administrative bastions
in the Caribbean.
Resurgence of the Spanish Empire 33







. 7
( 64 .)