(503) Untold Stories: Volume 1 Issue 5: Last Revision: 12/08/05

The King Ranch:

A Connection to Mexico’s Missing Gold?

By Ralph Poucher, Jr.

Edited by Rod E. Bates, David Busse, and Dr. Alex Siegel

Some people may be unaware that there are close ties between one of the great Texas cattle ranches, its founders and some of Mexico’s Republican mints and those mints’ missing gold.  Hopefully this article will provide sufficient circumstantial evidence to make just such a case. Here then is my story of the King Ranch’s connection to Mexico’s Republican Mints.

South Texas and Its Connection to Mexico’s Mints

It came as a great shock to me when I accidentally discovered that several of South Texas’s most prominent and finest families were probably “neck deep” in smuggling operations of Mexican specie and bullion. There can be little doubt today that some of those leasing the Mexican Republican Mints were not always honest⁶ when it came to reporting production figures to the state and federal Mexican governments.  Furthermore, we know with certainty that many Mexican politicians felt that the mint lessees made far too much money at the expense of Mexican government agencies.  In fact by the mid-1840s, because of the increased production by the mines and mints of the Republic, the new government should have had a surplus well in excess of what the Spanish Crown’s profits were during the late Colonial Era of Mexico.  However, Walter McCaleb, in The Public Finances of Mexico, explains how the new Federal Government of Mexico spent much more money than the Spanish Crown ever did on items such as the military and civil servant wages and pensions, etc., yet collected less in taxes from the mine owners and mint lessees. 

It is also a little-known fact that smuggling gold and silver bullion², as well as specie from Mexico was big business during the Republican Period.  The question is: How did the mint lessees accomplish that smuggling without being caught?  Some didn’t and lost their leases early.  Others seemed to “squeak by the hair on their chinney, chin, chins” through pay-offs⁷ to military and government officials.  While a few lessees seemed to be “clean as new fallen snow”, one can only wonder if even those few had developed a more “fool-proof” method to avoid paying their full share of the taxes due?

My research indicates that there were probably two chief ports where smuggling was rampant during the Republican Period. On the West Coast of Mexico it appears that the port of preference for smuggling gold and silver was Topolobampo, near today’s city of Los Mochis, Mexico.  On the East Coast it was the small fishing village of El Fronton. 

Pen & Ink Drawing of Point Isabel in 1846 with U.S. Warship

El Fronton Becomes Point Isabel and Fort Polk

The village of El Fronton dates back to at least the 1780s¹¹ and was primarily a small fishing village at that time.  However, by the early 1800s Isla Blanca, present day South Padre Island, across the Laguna Madre from El Fronton was a resort area for wealthy Spanish families.  In 1827 Don Rafael Garcia purchased the land on which El Fronton was located and soon established the headquarters for his extensive ranching operations there.  Previously, El Fronton had also been known as “Smugglers Lair” and was used as a base of operations for several pirates and privateers including Jean Lafitte.  Originally the name Point Isabella was given to a finger of land that jutted out into the Laguna Madre just north of the village of El Fronton.

By this time the Rio Bravo (called the Rio Grande by Norte Americanos) and its many tributaries was already an important waterway for the transportation of goods from northern Mexico and southern Texas to the Gulf of Mexico because of the lack of good roads and the problems of hijacking¹².  However, the mouth of the river offered no true harbor for ocean going vessels because of a shallow and constantly moving bar guarding the river’s outlet.  This bar shifted dramatically with the outflow of the river, and normally could only be used following heavy spring snowmelt or rains.  The river bar was also much shallower than the one found at the mouth of the Laguna Madre located just nine miles away.  Matamoros, the closest large town to the mouth of the river, was granted port status by Augustin Iturbide in an Imperial Decree dated January 28, 1823.  Shortly thereafter Mexican Officials established a customs house on Brazos Island at the mouth of the Laguna Madre across the bay from Point Isabella and El Fronton.  The primary reason for the location of the Custom House was that the bar guarding the Laguna Madre, while still precarious, was at least predictable.  This giant bay system offered good shelter and a ready source of fresh water for the ships receiving and off-loading merchandise at the Mexican Custom House.

After Iturbide was deposed the new Republican government continued to use the Brazos Island Customs House as the prime entry port for south Texas and northern Mexico from Tampico to Corpus Christi.  Another little known and overlooked fact is that the Rio Grande River and its tributaries⁹ provided relatively easy and inexpensive access to the Gulf of Mexico from deep inside northern Mexico for shipping heavy cargoes.  As a result, the Laguna Madre and El Fronton became an important port for the Mexican Republic well into the first half of the 19^th Century.  

All of that changed on August 4, 1844, when a powerful hurricane roared down on the coast of Texas and devastated the Brazos Island Customs House and other port facilities located there.  In Fort Polk: Point Isabel’s American Roots, Rod Bates quotes a report he found in the Matamoros newspaper El Latigo de Tejas dated just five days later: “…At El Fronton the only house that remains standing, from the effects of the wind, was that of Hipolito Gonzales, as this is the highest point, it is the most eligible spot, on which to establish the maritime custom-house section.”           

But the new customs house and wharves built at Point Isabella didn’t last very long because war was soon to begin in earnest between the United States and Mexico.  Bates points out that the customs house as well as the entire village of El Fronton, was burned to the ground in 1846 by fleeing Mexican forces in advance of the large U.S. military force under the command of General Zachary Taylor that arrived by land and sea at Point Isabella in March 1846. Bates further states that upon arriving in the area General Taylor was confronted by civil authorities from Matamoros who protested the presence of U.S. military forces at the burned and gutted site of El Fronton. 

General Taylor ignored these protests and immediately ordered the building of a supply depot and fort on the old site of El Fronton and Point Isabella, which he named Fort Polk in honor of the U.S. President and his commander-in-chief.  The promontory and bay soon bustled with activity, as it became the marshalling point for the invasion of Mexico by over 20,000 U.S. troops.  For a more complete recount of the events occurring in and around Point Isabel after the war began I highly suggest buying or borrowing a copy of Bates’s book.   

The Affects of the U.S. Mexican War on Point Isabel

Just as General Norman Schwarzkopf did almost 150 years later in the first Gulf War with Iraq, General Taylor understood the importance of building a superior force and supply lines to insure his men the best chance of winning a war on foreign soil.  Therefore, Taylor spent much effort, time, and money on Brazos Island and the mainland Fort Polk building up the surrounding infrastructure that included bridges, roads, wharves and warehouses. 

Taylor also immediately requested ships, both deep draft ocean-going steam ships that could ply the waters of the Gulf of Mexico as well as shallow draft steam ships that could navigate the muddy shallow waters of the Rio Grande and its larger tributaries.  Even more importantly, Taylor requested that the U.S. Congress authorize the recruitment of highly trained and experienced Captains and pilots for both fleets.  Because of this “call to arms” many Mississippi, Missouri and Ohio River boat captains and pilots saw south Texas for the first time.  After the U.S. Mexican War several of those Captains were to be prominent players in our story.

Soon new recruits and war materials were flowing into what had been sleepy little El Fronton. In fact, there are eyewitness accounts that at times there were over 100 ships in and around Brazos Island and Fort Polk unloading supplies making it one of the busiest ports of the United States at the time.     

War Surplus Items Become the Basis for a Cattle Kingdom

There is always a surplus of military hardware after a conflict and the U.S. Mexican War provided many such items after fighting ceased.  Much like the airplanes, ships, trucks and jeeps of World War II, the veterans of the U.S. Mexican War were offered many of the surplus military items at steep discounts.  Some of the most important items offered for sale were the ships built for the war and more than one enterprising ex-riverboat captain was able to secure a number of both the shallow draft and ocean-going surplus ships at bargain prices.

One of those men was Richard King, who later with Mifflin Kenedy and Gideon K. Lewis would be instrumental in establishing the famous King Ranch of Texas.  Today, one must assume those men and others had the foresight to see the potential and exponential growth possibilities of South Texas, if only someone were able to establish cost effective and reliable shipping methods from that area to the rest of the United States.  There were thousands of beef cattle freely roaming the thickets and brush country of South Texas.  These cattle had been abandoned by former Mexican citizens who fled into Mexico at the beginning of hostilities between Mexico and the United States.  That surplus beef coincided with a growth in the demand for fresh meat in the developing metropolitan areas of the United States.  Even though that dream would not be fulfilled for many years, it seems safe to assume that this was a goal of Kenedy, King, Lewis, et al.

After the U.S. Mexican War, there remained a goodly amount of intact resources that would help make their vision possible.  There were the shallow draft steamships able to negotiate far up the Rio Grande and its tributaries in northern Mexico.  There were already wharves and warehouses built at Brazos Island and Point Isabel. More importantly, these facilities had already been abandoned by the military.  Additionally there were ships that could ply the turbulent waters of the Gulf of Mexico to the ports of Corpus Christi, Galveston, New Orleans and even beyond.  There were captains, pilots and ships’ crews available that were already familiar with the waters in and around these rivers and ports. 

It must have been a 19^th Century entrepreneur’s dream come true.  All that was needed was a little money, the products to ship and representatives to oversee securing shipments of products destined for the different ports.         

Kenedy, King and Stillman: The Shipping Magnets of South Texas

Mifflin Kenedy and Richard King formed a steamship partnership in 1850 calling it M. Kenedy and Company. The enterprise originally consisted of four partners: Mifflin Kenedy, Richard King, Charles Stillman and James O’Donnell (all had reportedly been steamboat Captains during the U.S. Mexican War).  Prior to this commercial enterprise, Mifflin Kenedy had already had an Anglo-Mexican trading company fail, but during the course of this venture he made many contacts along the rivers of Mexico and as far south as Monterrey, Mexico.  Those contacts would prove to be quite useful after the steamship line was established.

Looking for freight to ship both ways was an initial problem and Kenedy purchased thousands of Merino sheep from his home state of Pennsylvania and shipped them to Hidalgo County in south Texas.  That was his first, albeit unsuccessful, effort at ranching.  Later, after many problems with the sheep business and its liquidation, the three (Kenedy, King and Lewis) partners would become hugely successful at cattle ranching. 

However, the steamship line did very well and was soon the primary source for freight shipments to and from south Texas and northern Mexico.  I assume that during this time our subjects were contacted by a few discreet foreign businessmen inside Mexico, who were associated with some of the Republican Mints.  One might opine that it is possible that Kenedy or Stillman contacted them, because Stillman already owned several mines¹ near Saltillo and Kenedy already knew many of the people involved in the Rio Grande river trade.  It has been asserted that there are numerous manifests from M. Kenedy and Company voyages still in existence that list Mexican specie and bullion shipments to the Port of New Orleans, but more about this later.   

M. Kenedy and Company continued to grow from King’s first purchase of the steamship Colonel Cross for $750 in 1849, and Stillman’s purchase of two additional surplus ships, to a point that at the beginning of the Civil War the company owned at least 26 ships engaged in shipping in and around the Gulf of Mexico and the Rio Grande.  The Civil War provided another opportunity for M. Kenedy and Company to profit because they were soon part of the thriving business built on the export of cotton from the Confederacy to foreign ports.

The U.S. Mints and Their Connections to the Mexican Republic Mints

Prior to 1838 all U.S. coinage had been manufactured at the U.S. Mint in Philadelphia.  Because of ship losses due to hurricanes, the high expenses of shipping, and the fact that the U.S. Mint only coined gold and silver presented to the mint for coining, U.S. gold and silver coinage tended to be rather sporadic. 

The U.S. Coinage Act of 1834, which unwisely lowered the value of the ratio (15 to 1) of silver to gold, had the effect of removing much of the U.S. silver coinage from circulation as specie. Speculators bought all the U.S. silver coinage they could and shipped it from the U.S. to foreign countries where the ratio of silver to gold remained at the “classic” 16 to 1 ratio.  This and other problems led to the U.S. Coinage Laws of 1837. This set of laws finally established a “Bullion Fund” which the U.S. Treasury could use to buy gold and silver on the open market in order to produce U.S. coins and returned the silver to gold value to the “classic” 16 to 1 ratio.  Those events, along with the establishment of three additional branch mints in (Charlotte, North Carolina; Dahlonega, Georgia; and New Orleans Louisiana) helped alleviate some of the problems the United States Mint was having in obtaining enough gold and silver to make coinage of sufficient quantity for the needs of U.S. commerce. 

The Branch Mints at Charlotte and Dahlonega were unique in that they produced only gold coins from locally mined gold.  The New Orleans Mint was a much different operation because there was no local supply of either gold or silver. As a result, it had to import all gold and silver that would be used to strike coinage there.  That “need” opened the door for currency traders to supply the necessary gold and silver.

From 1838 until 1861, when the forces of the Confederate States of America seized the mint, all of the gold and silver used by the New Orleans Mint had to be brought in from other areas, and much of it was imported from abroad. It doesn’t take a “rocket scientist” to determine the closest location for shipping gold and silver to New Orleans.  Looking at a map of the Gulf of Mexico one can easily see that Point Isabel, Texas and the ports of Tampico and Vera Cruz, Mexico take this honor.

Today, one must believe this was noted even before the U.S. Mexican War.  But one also has to question whether the small Mexican port located at Brazoria Island was capable of handing large shipments of Mexican specie before that conflict?  Retrospectively, I believe that probably were illicit shipments of Mexican specie and bullion from those places in the late 1700s and early 1800s, but not on the order that would be seen after the U.S. Mexican War:  There didn’t seem to be a great deal of commerce up and down the Rio Grande until after that because of the lack of shallow draft steam ships.

Once the war ended and M. Kenedy and Company became the primary source of shipping for the area, and I believe everything changed.                 

Table #1: Total Gold and Silver Production of the New Orleans Mint from 1837 to 1861

                   Face Value of Gold & Silver Production 

From Table#1 we see a few interesting facts about the early days of the New Orleans Mint:

• The New Orleans Mint produced more gold (by value) than silver coinage during the 23 years from 1838 to 1861

• The average yearly production of gold (by value) of the New Orleans Mint from 1838 until 1861 was $1,590,709, but averaged only $752,853 from 1839 to 1842

• The first above average ($3,177,000) spike in gold production occurred in 1843

• Other above average gold production spikes occurred in 1844 ($3,010,000), 1847 ($6,085,000), 1850 ($3,619,000), 1851 ($9,795,000), and 1852 ($4,470,000)    

• The average yearly production of silver (by value) of the New Orleans Mint for this same period was $1,240,468

• The first above average spike in silver coinage production occurred in 1843

• Other above average silver production spikes occurred in 1844, 1847, 1848, 1850, 1854, 1855, 1856, 1858, 1859, and 1860

• The largest single year of gold production for the New Orleans Mint occurred in 1851 when almost 10 Million ($9,795,000) dollars of gold was produced

• The largest single year of silver production for the New Orleans Mint occurred in 1858 when $3,889,000 dollars of silver was produced

Now let’s see if we can figure out where this gold and silver may have come from?

As stated earlier, the closest sources of native gold and silver to the New Orleans Mint were the three above-mentioned ports in Point Isabel, Texas; Tampico and Vera Cruz, Mexico. Therefore, let’s take a look at several Mexican Mints that could easily have played a role in supplying gold and silver specie and bullion to the New Orleans Mint from 1838 until 1861.

The Chihuahua Mint would be the first suspect for several reasons:

• The Chihuahua Mint was the closest Republican Mint to the United States and New Orleans

• The Chihuahua Mint was approximately 50 to 75 miles from the Rio Conchos, which happens to be a tributary of the Rio Grande and enters the Rio Grande near present day Presidio, Texas

• The Chihuahua Mint lease was taken over by Kelly & Co. (John Potts and John Jennison) in 1839

• There was no recorded legal production of gold at the Chihuahua Mint until 1841 

The Guadalupe y Calvo Mint has to be another suspect:

• The Guadalupe y Calvo Mint was also located in the State of Chihuahua

• The Guadalupe y Calvo Mint was located near the headwaters of the Rio Florida that is a tributary of the Rio Conchos

• Fraud was a problem at the Guadalupe y Calvo Mint and its two lessees lost their leases early for that reason

• Both gold and silver mines operated in the area of Guadalupe y Calvo as early as the 1830s, but no minting operation began until 1844.  Moreover the mint ceased operations in 1852 even though the “Official Mint Records” say it closed in 1849

The Durango Mint is another candidate for supplying gold and silver for New Orleans:

• While Durango is located closer to the west coast of Mexico than the east coast, it too has a nearby river system that could be used for transport to the Rio Grande, this time it is the Rio Salinas and its tributaries that enter the Rio Grande north of Mier, Mexico

• The State of Durango had been known for large quantities of gold and silver production since the early Colonial Period

• The Durango Republican Mint began production of silver in 1824 and gold in 1832

• The Durango Mint recorded large quantities (over 100,000 Pesos) of gold from 1834 until 1843 and then again in 1850 and 1851

• The are also indications of fraud in the Durango Mint that caused several lessees to lose their leases early

Two other candidates are the two mints controlled by the Englishmen, Marshall and Manning (the M&M Guys), that are suspect for several reasons.  First the Guanajuato Mint:

• The Guanajuato Mint lease was the first mint that the M&M Guys took control of in 1825 with their company, the Anglo Mexicana Mint Association, and kept its lease until 1874 in some form or fashion

• The Guanajuato Republican Mint was one of the greatest of the Republican Mints

• Gold production officially began in the Guanajuato Republican Mint in 1828 and it was soon the largest producer of gold for many years

• While not close to any rivers connected to the Rio Grande, there is evidence that some of the Guanajuato Mint’s production was transported to the Rio Panuco river system and its tributaries that emptied into the Gulf of Mexico near Tampico

• Much of the silver coinage received and melted at the New Orleans Mint was reported to be from the Guanajuato by J.L. Riddle, melter and refiner of the New Orleans Mint, in his classic book A Monograph of the Silver Dollar published in 1854

Our final candidate is the Zacatecas Mint:

• The M&M Guys secured the lease for the Zacatecas Mint in 1842

• Historical records and accounts indicate the Zacatecas Mint became one of the more efficient Republican mints producing huge quantities of silver after the M&M Guys secured the lease

• The Zacatecas Mint was located near the headwaters of the Rio Aquanaval and even though it didn’t empty into the Rio Grande it meandered near the Rio Nazas that was a tributary of the Rio Salinas which did

• Officially, no gold was produced in the Zacatecas Republican Mint until 1858, but there are indications that gold was mined in the State of Zacatecas much earlier

• Again, just like Guanajuato, much of the silver coinage received and melted at the New Orleans Mint was reported by J.L. Riddle, A Monograph of the Silver Dollar, to be from the Zacatecas Mint.

Each of these items by itself doesn’t mean or prove anything.  But if one looks at all of this converging data collectively, patterns begin to emerge, especially when looking at the “Official Production” figures from the Mexican mints and the “True Rarity” of their coins during this time frame.  

Table #2: Yearly Gold Production of Four Mexican Mints Near the New Orleans Mint: 1837 to 1861

     Face Value of Gold Production