Royalists loans during the War for Independence
Over time, national, state, local and military authorities have demanded loans, either voluntary or compulsory, from the populace and the receipts produced, as for a compulsory loan made in Hidalgo del Parral in January 1877, could be viewed as a form of paper currency. We have, therefore, for the sake of completion, documented these loans whenever we have encountered them.
In the case of the loans authorised by the Royalist government during the War of Independence, however, the process and the sizeable amounts involved are unlikely to have produced any such “paper currency”.
The loan of 1809
On 5 August 1809, Viceroy-Archbishop Lizana issued a proclamation reproducing the royal order sent on 12 March 12 by the Secretary of State and Finance, Francisco Saavedra, in which he ordered the opening of "a patriotic loan with the security and conditions that reconcile the prompt and greatest possible aid that the nation’s needs and the individual interest of its faithful and beloved vassals". The loan was to be at 5 or 6% and it was left to the viceroy's choice as to which of all the royal revenues would be responsible for the security of the lenders' funds and the punctual payment of interestGazeta de México, Tomo XVI, Núm. 99, 9 August 1809.
The documentation in the Archivo General de la Nación referring to this loan, although voluminous, does not offer us a complete view of the response to it, since it refers fundamentally to what was delivered by the indigenous communities. As indicated by the lists that appeared in the Gazettes of the days immediately after the opening of the loan, the merchants were the most interested in lending their capital at the very attractive interest rate of 6% Among the lenders are the dean and chapter of the Cathedral with $50,000, the convent of Santo Domingo $24,000; the Marquis of Apartado $80,000; the governor of the state, Manuel Santa María, $400,000 pesos. Among the merchants. Antonio Bassoco gave $200,000, Tomás Domingo de Acha, $150,000, Gabriel de Iturbe and Sebastián de Heras, $100,000 each; the Count of La Cortina, Diego Agreda, Vicente Eguía, Gabriel del Yermo, Pedro González Noriega $50,000 each, Lorenzo García Noriega $40,000, etc. and, of course, the Church, among whose loans were those of the not excessively wealthy Bishoprics of Nuevo León and Oaxaca; The first delivered a total of 80,000 pesos, 50,000 without any interest and 30,000 at 5%{ (AGN, Donativos y Préstamos, vol. 3, f. 233): the second gave 90,950 pesos of free loan and 47,045 of loan with interest (AGN, Donativos y Préstamos, vol. 11, exp. 21 ff. 26-40v).
It also seems that some municipalities saw in this loan the possibility of cleaning up their own funds a little, such as that of the town of Sombrerete, which offered to lend the only 4,000 pesos it had, though this was not accepted AGN, Donativos y Préstamos, vol. 3, ff. 105-108. The city council of Puebla, for its part, requested that it be allowed to borrow 50,000 pesos, even if it was in partial amounts from individuals, in order to allocate 20,000 pesos from that capital for the patriotic loan, leaving the remaining 30,000 for the needs of the municipality AGN, Donativos y Préstamos, vol. 3, ff. 209-219..
However, the bulk of the documentation refers to the contributions of the indigenous communities, and in most cases the offer was of an interest-free loans, as Lizana had suggested.
The proposed loan of 1810
On 1 January 1810 a royal order[text needed] ordered the collection of a loan of 20 million pesos.
In order to study the best way to collect the required amount, a board was formed which decided to invite all kinds of suggestions aimed at achieving greater efficiency in the collection of cash: all very rational, but not suitable for a time of urgency, so the board, to avoid further delays, had to ask the residents of New Spain, in the first place, voluntarily to hand over to the consulate of their district their belongings of wrought gold and silver or the amounts of cash that they had, promising them an annual premium of 8% and 6% respectively. But in order to support the capital lent and its revenues, it was necessary to increase the revenues of the royal treasury and, to this end, it was decided to establish a series of extraordinary taxes, with an explicit promise that they would not last longer than necessary for the complete amortization of the 20 million.
The new taxes referred to wax that arrived from Campeche, Havana and other places in America; cocoa from Caracas, Magdalena, Soconusco, Tabasco, Maracaibo and Guayaquil, and Asian effects. In addition, the alcabala fee was increased by a third and the Tobacco Revenue was requested to deliver 500,000 pesos each year for the loan, raising the price of tobacco so that it could do so without serious problems.
The board calculated that these new taxes would produce revenues of 1,700 pesos to the Royal Treasury, which together with the income from the alcabala would add up to a total of 4,200,000 pesos, which was intended to be divided as follows:
1,200,000 pesos for payment of annual interest and "expenses attached to the commission".
1,000,000 pesos for annual redemption of capital.
2,000,000 pesos to form a discount fund for the benefit of the shareholders, so that they could resort to it when they needed to use their funds.
It seems that the junta's willingness to "admit suggestions" responded to serious pressure from the Consulados to keep the administration of the new taxes under their control and, in particular, the right of alcabala. This time the merchants were successful, and it seems Hidalgo's rebellion greatly frustrated the application of this loan.
The forced loans of 1812
In a proclamation of 30 January 1812, in which he announced the opening of a forced loan, Viceroy Venegas declared that "the scarcity of the Treasury had reached the extreme of not being able to absolutely defray the increased costs demanded by the conservation and defence of this precious part of the monarchy …” Venegas had called an extraordinary general meeting, formed by the leading authorities of all the corporations of the city, to propose ideas that would lead to the rapid collection of the two million pesos that were calculated to be of immediate need. The board appointed a commission to study the issue and its proposal, which was approved, was to distribute the loan as follows: the ecclesiastical state of Mexico City was to lend $200,000; the Tribunal of the Inquisition $30,000; the ecclesiastical state of Puebla and others $300,000, and the remaining $570,000 had to be contributed by merchants who had in their possession funds that they could not have sent to their destinations and belonging to people "from Spain or Asia".
According to Venegas, the clergy accepted without question the large part of their contribution and also offered all the churches’ jewels and silver, reserving only the sacred vessels. Venegas then demanded the forced loan of the wrought gold and silver that were in the hands of private individuals to be melted for coinage.
It was decreed that the rents of houses should be taxed at 10% for one year, 5% to be paid by the tenant and the other 5% by the owner. Due to the quantity and complexity of the files relating to the application of these taxesAGN, Donativos y Préstamos, vol. 6, it seems that they caused the Royal Treasury more headaches than profits. From all corners of the country, but especially from the regions where the Insurgents' struggle had been hardest, came reports from mayors, councils and sub-delegates raising the difficulties that arose in collecting them. Most of them claimed that a good part of the houses were empty or demolished, that their owners had fled and the tenants did not want to take care of the part of the tax that did not correspond to them, or vice versa, that only the huts of the Indians were left standing, that the neighbors were already too burdened by contributions and donations and too concerned with recovering what they had lost to the hands of Hidalgo's troops as to bear another load. However, despite problems, this 10% tax, although in principle only be in force for one year, seems to have continued to be charged – or rather, attempted to be collected — at least until 1816.
No less problematic was the collection of gold and silver according to the decree of 30 January 1812Gazeta del Gobierno de México, Tomo III, Núm. 177, 1 February 1812: Gazeta del Gobierno de México, Tomo III, Núm. 178, 4 February 1812. The collection was already complicated, even more so when only cutlery , image ornaments and objects of strict personal use were excepted from the forced loan, but was further complicated when, despite the fact that it had initially been said that gold and silver should be melted down and coined, in July 1813 the government changed its mind after a report by the superintendent of the Mint, San Román, who proposed selling the items. By a decree of 5 July 1913 ordered that all the crockery that had been collected and that which would be collected in the future be sold in pieces and auctioned off in almoneda to the highest bidderAGN, Donativos y Préstamos, vol. 6, ff. 267-270.
On 23 August 1813 Venegas sent a circular to a series of landowners and merchants — selected by an Extraordinary Board of the Royal Treasury in which it seems that the representatives of the Consulado had a lot to say — requesting their contribution to the new loan with an amount in accordance with their fortunes and estimated income. The amounts allocated were significantly lower than those of previous loans, with few above 20,000 pesos, but even so, the complaints fell in a flurry and the resistance of some to contribute to the loan almost bordered on scandal. The list of people who refused to pay all or part of the amount assigned to them was long. Their arguments were almost always the same: the ruin of their estates and businesses by the Insurrection and, above all, the non-repayment of previous forced loans opened, a multitude of patriotic subscriptions and continuous requests for donations. The demands of the lenders to be paid their interest and to return the capital whose imposition period had already expired were continuous and their tone increasingly harsh.
(based on Josefa Vega, The First Loans of the War of Independence, 1809-1812)