(903) Untold Stories: Volume 2 Issue 9: Last Revision: 08/10/07
In an effort to help our readers fully understand and appreciate why the there are so many gaping holes in the information about the production of precious metals, both in the mining and minting industries, during the early Mexican Republic we will continue our study of the foreign influences in Mexico in these industries.
Mexico After The Loss of 60% of Its Territory
In two previous articles appearing in Issue 7 (703) Untold Stories: Foreign Influences in The Republican Mints & Mines of Mexico, and our book review (706b) Something New: Missions to Mexico: A Tale of British Diplomacy in the 1820s we showed you how important Great Britain and King George thought the Mexican Republic was to future world commerce. But that was just the beginning of this tale. Several readers have asked for more details, so we will oblige.
Most Mexican Numismatic publications, except Dr. Pradeau’s works, cover little, if any of the problems the early Republican Government faced. There are numerous reasons for this, but foremost the average collector of Mexican coins cares little for the historical events behind the scenes. However, for the serous collector understanding these problems may help us determine why so many coins from this period of time are difficult, if not almost impossible to find.
Two other important sources, for our English speaking/readers only, about the early history of the Mexican Republic are two books published by the University of Pittsburgh. The first book, The Mexican Republic: The First Decade 1823-1832, was written by Stanley C. Green; this book is a must read for all of you who want more information about this traumatic period of Mexico. The second book is by Harold Dana Sims, The Expulsion of Mexico’s Spaniards 1821-1836 that is also helpful when looking for information. Be forewarned these books have no photographs or price lists of Mexican coins, so they will be of little value for the casual collector of Mexican coins. Recently we discovered another work, in two volumes, that is a contemporary comment of Mexican history published in 1852 by Brantz Mayer entitled Mexico; Aztec, Spanish and Republican that is a treasure trove of information.
While the United States of America had one War of Independence, Mexico actually had two. The Catholic Priest Miguel Hidalgo started the first War of Independence in Mexico in 1810 and its root cause was the mistreatment of Mexico’s native Indian population. This was a Race War of the “Haves” versus the “Have Not's” and it ravaged New Spain (Mexico’s colonial name) from 1810 until 1817 when the “insurgents” were finally defeated. Many thousands of people were massacred, including civilians; some estimates put the total at well over 100,000 people. The rebellious Indians indiscriminately killed Spaniards and creoles. The Spaniards and creoles did likewise to the Indians. One Creole general supposedly cut the throats of thousands of captives in order to save gunpowder. Grave and uncalled for atrocities were committed by both sides. Many of the original leaders (Father Hidalgo, Jose Maria Morelos, and others) of this revolution were captured and executed or killed during the conflict. Some of the remaining leaders such as Manuel de Mier y Teran and Nicolas Bravos accepted a pardon by the Spanish Viceroy Apodaca. However, there were some like Guadalupe Victoria and Vicente Guerrero who disappeared into hiding and who would later emerge to fight again in the second revolution.
The second revolution began in 1821 by an unlikely person, a Spanish military officer Augustin de Iturbide, and this time the revolution had different impedance. Events in Europe started this revolution and for the most part the massacres and heavy fighting of the first revolution were almost minimal. Iturbide’s call to arms affected all of New Spain and those past revolutionary leaders in hiding emerged and took to the forefront of this second war.
The second revolution soon ended and led to Iturbide being crowned the first Emperor of Mexico. Iturbide’s reign was short lived and the popular revolutionary leader Guadalupe Victoria was elected Mexico’s first president. Guadalupe Victoria was a strong man and a great revolutionary hero, but he realized he didn’t have the education and political savvy to rule a new democracy without help. Some of the people he selected to help him were great men; others were interested only in seizing the moment to gain political power and wealth.
Shortly after the second war Mexico had something unusual happen; three powerful political parties emerged. The first was the Conservative Party supported by the Yorkshire division of the Free Masons, the second was the Liberal Party whose main support came from the Scottish Rite Free Masons, and finally the Royalist Party which was made up of the remaining peninsular Spaniards, Catholic clergy, and old-line military officers who wanted Mexico to return to a royal form of government. The in-fighting between these groups led to widespread discontent, bloodshed and many small and large wars over the next 50+ years of Mexico’s history.
The Mexican commercial and political scene after the War of Independence was awful. Once the popular, and powerful, Guadalupe Victoria retired as Mexico’s first president things really landed in the dumpster. There were countless Mexicans who wanted to take advantage of the power vacuum left by the Spanish and Victoria. Many of these men were heroes from the War of Independence and they felt their ideas were the only way to run Mexico.
One important rallying point, for most Mexican politicians and people, was the desire to banish completely the peninsular Spanish (referred to as Gachupines) from Mexico. The reason: Fear that the Spanish Crown would try to re-conquer Mexico and the Gachupines would provide help within Mexico. There was a strong basis for this fear; the Republican government did in fact discover and crush several plots to over-throw the newly elected government hatched by peninsular Spaniards and the Catholic Church of Mexico.
These events led to more wholesale massacres across Mexico of the peninsular Spanish by mobs and sometimes-military forces. The Mexican National Congress took notice of all of this turmoil and passed strict laws that required all but a few of the peninsular Spaniards to leave Mexico. These laws would help create an even greater financial disaster and administrative vacuum for the new government of the republic.
The Spanish Crown, the peninsular Spaniards, and Catholic Church of Mexico owned the vast majority of the income producing properties of New Spain (Mexico) at the beginning of the War of Independence. Yet they paid little, if any, of the taxes in New Spain. Everyone else felt the “heavy heel” of the tax collector. This rampant and unchecked taxation became even more prevalent during the War of Independence. The tax burden became so intrusive and excessive that normal citizens in the cities of Mexico couldn’t feed their families. The Spanish Crown’s only answer to finance the war was the introduction of the “forced loans”. This time the Spanish Crown had to reach into the pockets of the rich: the Catholic Church, the peninsular Spaniards, and the few native born rich Mexican businessmen.
Now the rich of New Spain were forced to open their coffers. None liked this situation, but all paid because they wished to keep New Spain in a status quo and remain in power. Once the “forced loans” of the royalists became common knowledge and took hold, the insurgents soon followed suit. Outside of Mexico City the combatants won and lost city after city, and the local citizens were forced to pay for both sides of the combat. Each time a new military force conquered a city new fees were imposed on its citizens, businessmen and the local churches. The effect of these forced loans caused all commercial activities in New Spain to completely cease and dry up for the lack of funds during the wars. The only people who escaped the forced loans with any hard currency were the well-connected peninsular Spaniards and Catholic Church of Mexico. But even they were hard pressed to meet all of the demands put on them from both the royalists and insurgents.
Once the war was truly over everyone breathed a sigh of relief. Then came the reign of Iturbide with his wild spending, and the realization of a 40 Million Peso war debt. New taxes were imposed immediately to support the extravagant Iturbide Court and all of its trappings. There wasn’t enough hard specie to be found by Iturbide’s tax collectors, so he authorized Mexico’s first issue of paper money. Iturbide’s tax collectors again used forced loans in order to secure funds for the new government. In early 2007 I was able to purchase, on eBay, one of these original “forced loan” documents that was used to extract money from an individual during Iturbide’s reign, it is pictured below.
All, both rich and poor, of Mexico revolted at this state of affairs. Iturbide was soon forced to abdicate the Mexican Crown; Mexico now fully embraced a new Republican form of government. But this new government was totally bankrupt and like a lost child because the peninsular Spaniards had held most of the high-ranking colonial government administrative positions. The new government was at a loss as how to operate effectually; the old Spanish bureaucrats were fleeing the country, as soon as possible with everything they owned.
The largest source of New Spain’s wealth had always been the extraction of precious metals. After years of conflict and the accompanying neglect, many of the most productive mines were for the most part unusable; many were flooded, sometimes under hundreds of feet of water. The experienced miners, supporting skilled workers, and many of the common laborers were dead, or scattered to the four winds as a result of the war. At the beginning of the war Mexico had only one mint located in Mexico City, now it had many. But bullion for the many mints was now almost impossible to secure. The new republican government had but one choice; it would have to revive the dreaded “forced loans” on the country’s businessmen too until the government could secure other financing.
During this troubling time several politicians decided to tap the coffers of the Catholic Church of Mexico by nationalizing some of the commercial properties owned by the church. The church revolted; it didn’t want to provide funds for the new government that it thought illegitimate. The Mexican National Congress passed a law whereby the federal government could seize all of the commercial income producing properties owned by the church. The federal government’s first target was the commercial properties owned by Mexico’s version of the Inquisition, as everyone in Mexico hated this establishment of the Catholic Church.
After seizing The Inquisition’s properties the federal government decided to auction them off to the highest bidder. It didn’t take long for the new federal government to realize the only people left with hard specie were the few remaining rich peninsular Spaniards. So in order to allow locally (Mexican) born citizens to purchase these properties the new government didn’t accept the highest bid in cash. They elected to allow native (Mexican) born citizens to purchase these properties on a long-term payout program. This was another terrible mistake; there was no immediate income produced from the sale of these properties. Furthermore many of the new owners couldn’t make timely payments for the lack of funds and because they had no business management skills. Eventually the government had to foreclose on these properties thus forcing the government to make additional outlays of cash to keep these businesses running. Seizing other income producing church properties was temporarily put on the back burner by the federal government.
Rather than bore the majority of our readers with endless statistics, we will not go into all of the gory details, so if you are interested in Mayer’s findings we suggest you find a copy of his books. See Coin Views and Reviews in this issue (906a) Something Old: Mexico: Aztec, Spanish, and Republican by Brantz Mayer if you would like more information.
Another big problem now confronted the federal government; the peninsular Spaniards were fleeing from Mexico as soon as they could book passage on foreign ships in Vera Cruz and Acapulco. The peninsular Spaniards forced to exit Mexico were leaving with three hundred years of commercial profits! Estimates of this fleeing capital range from a low of 20 Million pesos to a high of 60 Million pesos per year by 1828.
However, new investors from the United States and Europe were “eagerly waiting in the wings” to become involved in the commercial enterprises of Mexico, especially the mining and minting operations in the new republic. These foreign businesspeople weren’t interested in the overall welfare of Mexico; all they wanted were the enormous profits they expected for their investments. It soon became apparent, to these foreigners, that Mexico was politically unstable and everyone wanted money from them. This was the result of the civil unrest and the many forced loans they were required to make just to stay in business and operate on a day-to-day basis. Forced loans were demanded by a number of entities: (1) the federal government (2) state governments (3) local military officials (4) plus the political pay-offs to local and state politicians. It became imperative for the foreign mining companies and mint operators to remove their profits from the reach of brigands of Mexico as soon as possible.
By combining Stanley Green’s chart of legal specie exports (page 131) from 1820 to 1829 with the published legal specie production of the Mexican mints from the same time period you can see some very interesting trends.
Table #1: Early Mexican Specie Production and Exports:
Year: Specie Export in Pesos: Total Specie Production in Pesos:
1820 10,104,645 11,170,165
1821 10,023,020 8,945,012
1822 9,338,357 9,333,713
1823 3,391,924 9,800,215
1824 6,503,648 10,284,688
1825 3,714,354 13,144,867
1826 5,925,367 5,185,807
1827 9,669,428 10,096,417
1828 12,367,766 9,689,161
1829 13,010,020 10,904,953
Total: 75,643,529 98,564,998
Remember this is only the “legal” export of specie, not that which was smuggled out by the peninsular Spaniards, the mine and mint operators, or foreign businessmen. Some historians’ estimates of smuggled specie range from as little as 20% to a high of 110% of the total specie production for illegal specie exports per year during this time frame.
These comparisons might make you think the Mexican economy was in great shape if these were the only figures we had? But this isn’t the case. We also need to look at the import figures of Mexico that include consumer goods, mining and minting equipment entering Mexico during the same period of time. Also we need to ascertain what items were being imported. Note: I have found these figures for four years at this time:
Table #2: Early Mexican Imports and Exports of Non-Specie Items:
Year: Imports in Pesos: Exports of Non-Specie in Pesos:
1825 19,360,179 4,731,987
1826 15,450,565 7,648,133
1827 14,889,049 12,171,777
1828 9,947,846 14,488,788
According to Green (page 133) the most popular early imports were foreign cloth that represented 60% to 75% of the total imports from 1826 to 1828 indicating a terrible shortage cloth and clothing after the long War of Independence in Mexico.
The War of Independence and the earthquake of 1820 cost the port city of Acapulco almost one half of its 12,000-person population, these two events along with the embargo of trade with the Philippine Islands by Spain rendered this port almost useless as a source of commerce and taxes for the new republic. Therefore the eastern Mexican port of Vera Cruz became even more important during the early republic.
Tampico Harbor (1840s?) Woodcut Picture from Brantz Mayer book Mexico
Under the Spanish reign Acapulco and Vera Cruz were the only two Mexican ports allowed to make legal international shipments for import or export, but one of the first things Iturbide did was to open other ports for international shipments; on Mexico’s east coast these included Tampico and Matamoros. Customs Houses were established in both ports so taxes and import duties could be collected. Because Matamoros was located miles up the Rio Bravo (today’s Rio Grande) River the Mexican Customs House was located on a small island adjacent to today’s Port Isabel. We have already covered some of the smuggling that occurred from Port Isabel in an earlier article on this website (503 Untold Story: The King Ranch: A Connection with the Republican Mints?) so you may want to refresh the details about the smuggling going on in the Republic of Mexico to avoid the high exports tariffs and taxes.
Without any doubt the commercial health of Mexico during the early Republican Period was a disaster!
The many army officers that had been promoted during the war saw their power and influence wan. In many instances they too were bankrupt, even the wealthy officers who had purchased supplies and equipment from their own pockets for their troops saw little hope of being reimbursed for their drained personal funds. Many of the new army officers had been common folk and had been promoted because they were good fighters and soldiers. These men had earned respect and had gained a high level of reverence and influence during the war. This all changed; now nobody wanted the “heroes of the war”, most were feared by the local population because they had once been powerful and still controlled bands of heavily armed men.
Without jobs, homes, or small farms to return to the ex heroes of the war became the scourge of Mexico. Soon some, if not many, of these old officers became bandits and brigands leading their armed men to raid merchants, wagon trains, mines, and even entire villages and towns in order to stay alive and find food.
Some of the more influential ex army generals led revolts against local, state and the central government. Civil disobedience and conflict was the rule of the early Mexican Republic, not the exception.
Life was hard everywhere, and sometimes it was easier to become a bandit than it was to become a law-bidding citizen of the new Republic of Mexico. If a general was unhappy he would make a proclamation that the local, state or federal government was “treading” on the citizens of his local and start an armed conflict. These small rebellions sometimes led to the fall of the then sitting federal government; a new president would be proclaimed and the current president and his cabinet might be ostracized to the point that they often had to flee Mexico. Other times the current president would raise an army and a major war would begin.
Most of the new presidents of the republic lasted only months, sometimes their term was measured in only days or weeks. In fact, the only President of Mexico to serve a full term for many years was the first one, Guadalupe Victoria. Over the next 100 years several of Mexico’s presidents were arrested and more than one was murdered including several of the old and highly respected heroes of the War of Independence such as Vicente Guerrero.
The federal government and the Mexican National Congress became alarmed at this situation. Congress passed strict laws limiting what businesses foreigners could purchase outright. This created more conflict and dissention among the population because many Mexicans and peninsular Spaniards had sold mines, large haciendas, and other commercial enterprises to foreign businessmen. Now these sales and the cash paid for them were in jeopardy.
Many Mexican mines were totally unusable; some had been sabotaged during the war by one side or the other to remove sources of funds for the combatants. Others had caved in from neglect. But it appears the greatest problem was flooding from accumulated ground water that was ignored during the war. There was hope that some of the flooded mines could be resurrected again with new high-volume water pumps that were being built in England. These new pumps were a direct result of James Watt’s invention of the steam engine. Ground water had long been a great problem for miners worldwide in some locations and old water pumps had been mule or man powered thus limiting their lifting and volume. Once water pumps were harnessed to steam engines this all changed. Now pumps could lift greater volumes of water from deeper depths much quicker making it feasible to try to open some of the old highly productive Mexican mines.
Now the problem was where to find the hard cash to purchase these pumps and steam engines. Again it appears that King George saw an opportunity for England to gain a foothold in Mexico. King George encouraged the English manufactures to become involved in Mexico; he almost forced the English merchant banks to make funds available to new mining companies being formed in England to take over mining in Mexico. King George’s plan was to conquer Mexico without an army by supplying money, equipment, and trained personal to take over the rich mining resources of Mexico. Furthermore he almost succeeded.
But like so many before, and after, King George and the English businessmen under-scoped the problems in Mexico. Many, if not most, of the newly formed English mining companies poured millions of English pounds into these mines and never saw a dime of profit. Within 20 years most of these mining companies were bankrupt. These mining companies bankruptcies helped-- along with the loans to the new republican governments of the New World-- to destroy the majority of London’s leading merchant bankers.
It would be many years before the full potential of the Mexican mines would be realized and many businessmen from all over the world would see fortunes disappear in the mineshafts of Mexico.
Special Note: If you would like this series of articles about the problems of the Early Republic continued please contact us at MexCoinMagic@aol.com, if we don’t hear from our readers we will have to assume there is little, or no, interest in this area.
Green, Stanley C.; The Mexican Republic: The First Decade 1823-1832
McCaleb, Walter Flavius; The Public Finances of Mexico
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