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5,000,000
1740

1744

1748

1752

1756

1760

1764

1768

1772

1776

1780




1788

1792

1796

1800
1728
1720

1724




1784
1732

1736




YEARS

* Total of remittances from New Spain to Treasuries of Spanish
*REMITTANCES OF TAX SILVER Caribbean and Spain
**SILVER PRODUCTION
**Coin mintage in Mexico (18th century)

Figure 1.3. Silver Coin Mintage and Remittances by the Royal Treasuries of New Spain.
Source: Data from Richard Garner, Economic History Data Desk,
http://home.comcast.net/∼richardgarner04/ and C. Marichal and M. Souto, Silver and Situados: New
Spain and the Finances of the Spanish Empire in the Carribbean in the Eighteenth Century, Hispanic
American Historical Review, 74, 4 (1994).


That these remittances could have increased so notably during the eigh-
teenth century has drawn the attention of historians who have been struck
not only by the great volume of tax silver exported but also by the quite
close correspondence with the trends of silver production and mintage in
New Spain.44 (See Figure 1.3.) Despite the close correlations, it would be
a mistake to think that remittances were simply derived from the mines,
for as we will have occasion to see in Chapter 2, the tax system of the colo-
nial regime in the late Bourbon period was quite broadly based, and only
one-quarter of the monies collected by the royal administration came from
mining taxes. On the other hand, there is no question that without the
great silver mining boom of the late colonial era, there would not have been
possible such high volumes of ¬scal transfers to the other Spanish American
colonies and to Spain itself.
The remittance of royal silver from the richest colonies to support mil-
itary defenses in South America, the Caribbean, and the Philippines was

44 See, in particular, R. Garner and S. E. Stefanou, Economic Growth and Change in Bourbon Mexico,
Chapter 7.
34 Bankruptcy of Empire

an old mechanism of imperial ¬nance, although its signi¬cance increased
enormously in the eighteenth century. During the reign of Philip II (1556“
1598), when the basic legislation governing commerce and navigation
within the empire was rati¬ed, the practice of tax transfers became institu-
tionalized and came to constitute a regular part of royal ¬nance throughout
Spanish America. Not surprisingly, most of the ¬scal remittances (situados)
were sent to key ports with fortresses and garrisons or, alternatively, to key
frontier posts of the empire.45
The principal providers of these funds were the royal treasuries of New
Spain and of Peru, although they were not the only ones. A lesser but
still signi¬cant role in this regard was exercised by the treasuries of Tierra
Firme and Caracas. Already in the year 1584 the Crown ordered that New
Spain should send ¬nancial support to Cuba, Santo Domingo, Puerto Rico,
and Florida and hence Havana became the key redistributing point for the
¬scal transfers sent from Mexico to the greater Caribbean.46 Since foreign
shippers and pirates (particularly British, French, Dutch) also used the same
sea-routes, the Spanish authorities found it necessary to create a defensive
system that was based on the protection of the most vulnerable and strategic
ports and channels of passage, and it was there that the major forti¬cations
and garrisons were established.47
The costs that such a defensive system required could not be covered by
the Caribbean provinces and, as a result, recourse was had to remittances
from the more prosperous American possessions of the Spanish crown “ a
tendency that was accentuated progressively as military expenses rose over
the seventeenth and eighteenth centuries. Thus, it became established prac-
tice that the viceroyalty of New Spain would send large, annual sums of
royal funds to pay for a large part costs of the garrisons and forti¬cations

45 Although the term “situado” means salary or rent paid or remitted, within the Spanish empire
it was used speci¬cally to refer to the remittance or transfer of royal funds from one “caja” of
the royal treasury to another in order to cover expenses of strategic importance. For a de¬nition,
see Jos´ Canga Arguelles, Diccionario de Hacienda, vol. 2 (Madrid Imprenta de Don Marcelino
e
Calero y portocarrero: 1834), p. 509: “Llevaban este nombre (“Situados”) las cantidades que
anualmente se remit´an desde las cajas reales de Am´ rica a otras provincias, para suplir con su
± e
importe la falta de los productos de sus rentas y atender al pago de las obligaciones del erario en
ellas.”
˜
46 Julio Le Riverend Brusone, “Relaciones entre Nueva Espana y Cuba (1518“1520),” Revista de Historia
de Am´rica, 37“38 (1954), 90. The exact date of the establishment of the ¬rst situados to the islands of
e
the great Caribbean has not yet been established. According to the references cited by Le Riverend,
more or less regular remittances were made to Havana from the 1570s. But the only precise date for a
royal order in this respect “ September 18, 1584 “ is that provided by Manuel Villanova, “Econom´a ±
y civismo,” Revista cubana (1892), 157“190 (reprinted in Havana: Ministerio de Educaci´ n, 1945),
o
p. 43.
47 A suggestive analysis is found in Paul E. Hoffman, The Spanish Crown and the Defense of the Caribbean,
1535“1585 (Baton Rouge: Louisiana State University, 1980).
Resurgence of the Spanish Empire 35

throughout the greater Caribbean and in the Gulf of Mexico. Further-
more, New Spain was charged with the ¬nancial support of the Armada de
Barlovento, a naval squadron created to protect the main sea-lanes used by
Spanish shipping in the Caribbean.48
The original objectives of the situados in the Caribbean were closely
tied to naval priorities and especially to the need to defend the annual
¬‚otillas on the initial or ¬nal stages of their transatlantic journeys. The main
predators in the Caribbean were pirates and privateers of different European
nationalities that ¬‚ourished in the mid- and late seventeenth century. By the
early eighteenth century, it was British warships that came to represent the
greatest danger. As a result, the Spanish monarchy reinforced its networks
of intraimperial ¬nancial transfers, the economic and strategic importance
of which is essential to understand key aspects of the military and ¬nancial
administration of the empire in the Americas.
But were the Mexican situados unique? Clearly not. While our focus is
on the remittances from colonial Mexico, it should not be forgotten that
both the viceroyalty of New Granada and that of Peru provided monies to
a large number of military garrisons and ports in South America. From the
royal treasury at Santa F´ de Bogot´ , capital of New Grenada, and from
e a
that of Quito, tax monies were sent to support the military garrisons at
Cartagena, Santa Marta, Rio Rancha, Isla Margarita, and a part of the costs
of the Armada de Barlovento.49 The royal treasuries of Lima, for their part,
annually sent monies to sustain the military and naval garrisons at Panama
and Portobello as well as to Valdivia and Chilho´ on the southern coast of
e
Chile. In addition, it should be noted that the great treasury at the silver-rich
city of Potosi (in modern Bolivia) ¬nanced additional garrisons, including
that of Buenos Aires and, through it, those of Montevideo, Patagonia, and
the Malvinas Islands.
The analysis of these remittances speaks to the complexity of intraim-
perial tax structures and dynamics.50 Since the Mexican situados were the

48 Bibiano Torres Ram´rez, La Armada de Barlovento (Seville: Escuela de Estudios Americanos, 1981),
±
Chapter 8 and pp. 221“226; Manuel Alvarado Morales, “El cabildo de la ciudad de M´ xico ante e
la fundaci´ n de la armada de Barlovento, 1635“1643,” Ph.D. thesis, El Colegio de M´ xico, 1979,
o e
pp. 11“17.
49 On the evolution of the remittances from New Granada in the seventeenth and eighteenth centuries,
see Hermes Tovar Pinz´ n, “Remesas, situados y real hacienda en el siglo XVII,” in Antonio Miguel
o
Bernal, ed., Dinero, moneda y cr´dito en la monarqu´a hisp´ nica, pp. 241“267. Jos´ Manuel Serrano
e ± a e
Alvarez, Forti¬caciones y tropas. El gasto militar en Tierra Firme, 1700“1788 (Seville: Universidad de
Sevilla/CSIS/Diputaci´ n de Sevilla, 2004).
o
˜
50 There are several historical studies of the “Situados,” including John J. TePaske, “La pol´tica espanola
±
en el Caribe durante los siglos XVII y XVIII,” in Antonio Acosta and Juan Marchena, eds., La in¬‚u-
encia de Espa˜ a en el Caribe, la Florida y La Luisiana (1500“1800) (Madrid: Instituto de Cooperaci´ n
n o
Iberoamericana), pp. 61“87; John J. TePaske, “New World Silver, Castille and the Philippines, 1590“
1800,” in J. F. Richards, Precious Metals in the Later Medieval and Early Modern Worlds (Durham, N.C.:
36 Bankruptcy of Empire

most important in the period under consideration, we now turn our atten-
tion speci¬cally to the analysis of the problems associated with the ¬nancial
transfers by the royal treasury at Veracruz for the sustenance of the civil and
military administrations in Cuba, Santo Domingo, Puerto Rico, Florida,
Louisiana, and several other Spanish colonies in the Antilles.51 A brief
review of the origins of the military objectives of this kind of intraimperial
remittances is followed by summary analysis of the volume of remittances
to the different colonial territories. We underline the importance of the
¬nancial transfers in times of international war, in particular the huge con-
tribution of the royal treasuries of Mexico and Veracruz to cover the costs of
the military operations conducted by the Spanish crown in the years 1779“
1783 against Great Britain throughout the greater Caribbean “ including
Florida and Louisiana “ precisely as the war of independence of the thirteen
colonies reached its apogee.


Imperial Expenses Covered by the Mexican Situados
Military expenditures were the principal items ¬nanced by the situados,
although they were not the only ones. The payment of salaries of troops
and of¬cers (infantry and artillery) stationed in the different garrisons and
the costs of forti¬cations in the principal ports and of the various naval
squadrons absorbed a large volume of funds, which tended to rise through
most of the eighteenth century.
The strategic importance of these ¬scal transfers in sustaining the naval
“life-lines” of the empire in the Caribbean and the Gulf of Mexico can
be judged by their contribution to the costly reinforcement of the great
forti¬cations of Havana, Cartagena, San Juan, and Veracruz,52 as well as in
the maintenance of the ships of the royal Armada (when on mission in the
region) and the expenses of the Havana shipyards. While the construction
of ships at the Cuban capital was ¬nanced mainly with the royal remittances

Duke University Press, 1983), pp. 425“445; Juan Marchena Fern´ ndez, “La ¬nanciaci´ n militar en
a o
Indias: introducci´ n a su estudio,” Anuario de Estudios Americanos, 36 (1979), 93“110; and Juan
o
Marchena Fern´ ndez, “Financiaci´ n militar y situados,” in Temas de historia militar, Ponencias del 2o.
a o
Congreso de Historia Militar, vol. 1 (Madrid: Servicio de Publicaciones del EME, 1988) (Colecci´ n o
Adalid), pp. 263“307.
51 To determine the levels of remittances on account of the royal treasury from New Spain to Spain
and to the American situados, we consider that the series from the “real caja” of Veracruz are the
fundamental and most complete source of data. We follow here J. J. TePaske in his essays “New
World Silver” and “The Financial Disintegration.”
52 A description of the forti¬cations constructed during the colonial period can be found in J. A.
Calder´ n Quijano, Las forti¬caciones espa˜ olas. Also by the same author: Historia de las forti¬caciones de
o n
Nueva Espa˜ a (Seville: Escuela de Estudios Hispanoamericanos, 1953).
n
Resurgence of the Spanish Empire 37

from New Spain, there were also private contributions to the Armada. In
the 1780s, for example, two of the largest battleships the Regla and the
Mexicano (both with 114 cannon) were built in Havana shipyards with a
half-million peso contribution by two of the wealthiest silver miners of
New Spain.53
During the reign of Carlos III (1759“1788) a considerable portion of the
Mexican ¬scal transfers was also used to reinforce ¬xed garrisons composed
mostly of infantry in the principal Caribbean ports. These military forces
grew in size as is con¬rmed by the increase in number of local units (both
regular troops and militia), provoking a parallel rise in expenditures in
salaries, provisions, and equipment.54 Feeding thousands of troops as well
as providing them with tobacco and alcohol, supplying them with uniforms,
arms, and munitions required considerable resources. To which was added
the maintenance of the small and great fortresses with cannon and powder
as well as materials for regular repairs.
Although the tax monies sent from Mexico were employed principally to
cover costs of the defensive apparatus of the empire, this was not their only
function. From an early date, funds were also used for additional purposes
such as the support of religious missions charged with the submission and
indoctrination of rebel Indian tribes, as was the case both in northern New
Spain and in different parts of the greater Caribbean.55 In addition, the situa-
dos were not infrequently utilized to provide for salaries of civil functionaries
and for ecclesiastical authorities on the frontiers of the empire.56 Occasion-
ally they even were of assistance in ¬nancing certain speci¬c colonization
projects such as was the case in Santo Domingo, whence a considerable

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