Published by EH.Net (July 2018)

Guillermina del Valle Pavon, Donativos, préstamos y privilegios: Los mercaderes y mineros de la ciudad de México durante la Guerra anglo-española de 1779-1783. Mexico: Instituto Mora, 2016. 227 pp. $15 (273 pesos), ISBN: 978-607-9475-47-5.

Reviewed for EH.Net by Marie Christine Duggan, Department of Economics, Keene State College.

Guillermina Del Valle’s intimate knowledge of the Consulado de Mexico takes us in Chapters 1 and 3 of this volume into the high-stakes negotiations between Crown and Consulado de Mexico (Mexico City’s merchant guild) that financed Spain’s conflict with Britain from 1779 to 1783. The negotiated nature of the Spanish Empire is thus illuminated. In between these chapters she explains the logic of the idiosyncratic nature of Bourbon Spain’s 1778 managed commerce through a case study of the cacao trade on the Pacific coast of Spanish America. The fact that the rules were ambiguous opened up opportunities for royal officials to extract donations from business people, who for their part attempted to curry favor with royal officials, so that any interpretation of the trade regime would be to their benefit. The focus of this volume on the Pacific is a welcome antidote to the more abundant literature on Spain’s Atlantic.

In 1779, King Carlos III asked New Spain’s Viceroy to raise some two million pesos in donations for the war effort, though he was not to use force in any way. In 1783, the king needed another million, though this time he was prepared to pay the money back. How exactly was the Viceroy able to satisfy these requests?

As in all of Del Valle’s work, there are rich personal details and complete lists of donors. This gives us an entrée into who exactly was Mexico’s mercantile elite in the Bourbon period. One story stands out and connects Chapters 1 and 3. The Conde de Rábago lost an election inside the Consulado by one vote, and in a rage he accused the elected Torre Cossio of using a slush fund to bias the outcome. The fund in question was “sobras de alcabalás” — between 1694 and 1754 the Consulado de Mexico had been collecting the sales tax in New Spain (known as the alcabalá) and shipping the proceeds to Spain. It turned out that over a million pesos extra had been collected by the Consulado and never sent to Spain. This one million extra made up the “sobras de alcabalá” which was managed by Gonzalez Calderon. Rábago accused the men of using the fund for personal and political aggrandizement, and in doing so revealed the Consulado’s subterfuge in hiding the funds from the King.

Del Valle explains how the Viceroy used the proceedings hanging over the Torre Cossio faction as the means to persuade the Consulado de Mexico to donate 300,000 to the war effort. When the tribunal then found Gonzalez Calderón guilty of all that Rábago had implied, they nonetheless found him to be a pillar of the community who had only used the sobras de alcabalá for the common good. The Viceroy instructed all involved (i.e., Rábago) to never speak of the matter again. At this point, Rábago turned to a donation of 10,000 pesos plus 70 horses in an effort to win himself back into the Viceroy’s good graces.

Del Valle explains that the Viceroy used the 300,000 pesos in hand from the Consulado to leverage a second 300,000 peso donation from the silver mining community. Along the way, the Viceroy approved a corporate body for the miners, akin to the Consulado, and permitted a tiny piece of state taxes to flow into a capital fund that they could use as a source of loans to upgrade mines. The miners had been seeking these measures for years, especially the fund, which gave the miners the means to refuse the harsh terms typically imposed by creditors from the Consulado de Mexico.

In Chapter 3, Torre Cossio emerges once again. In the early days of 1783, the King asked the Viceroy to raise one last million in order to supply troops in the Caribbean as the war’s final battles were fought. The Viceroy sought not donations, but the next best thing: no-interest loans with no fixed date of repayment. Torre Cossio hosted a fundraiser to which he invited ranchers who supplied large-scale quantities of beef and wheat. Among the invited was the Conde de Rábago who had such a ranch. In further effort to restore his fortunes, he lent the king 100,000 pesos, offered an in-kind gift of wheat for the troops, and personally paid the 3,000 peso cost of transporting the flour. It appears these donations were to no avail, as he declared bankruptcy a short while later. Others were more successful in using easy loans to advance their families’ social standing, and Del Valle suggests that the incentive to lend at no interest was above all access to contracts to supply the troops.

Del Valle concludes that Spain had squeezed money out of New Spain to the detriment of the local economy. Yet if those who loaned at no interest received government contracts to supply provisions to the troops, it is not clear that New Spain’s economy lost. Many battles of Spain’s war with England were fought in the Caribbean, of which New Spain’s Atlantic coast was a part. The donations and no-interest loans, then, removed spending power from certain members of the Consulado to other sectors of New Spain, and shifted success from some members to others, but it is not clear that the money was removed from New Spain’s economy.

Chapter 2 tells a different story: how a merchant in Mexico City (Francisco Ignacio de Yraeta) worked with a cacao buyer in Guayaquil (Isidro Antonio de Icaza) to buy cloth from Asia in Acapulco for resale in Lima (to the Conde de San Isidro). Yraeta and Icaza adapted to — and bent — rules for Pacific Rim trade during wartime, with the wealthy Yraeta making copious donations to the war effort to grease the wheels. It is important to understand that the eighteenth century norm had been to prohibit trade between Acapulco and Lima, in order to prevent Asian cloth from making European cloth un-salable in Spanish America. One should also understand that Asian cloth cost only one-tenth as much as European cloth.

In 1774 as part of the general movement to upgrade Spanish Imperial trading rules, New Spain, Guatemala, New Grenada and Peru were authorized to trade “fruits of the earth” — such as cacao — in the Pacific. Duties on this trade were reduced. Originally, Yraeta purchased cacao from both Caracas (in the Atlantic) and Guayaquil (on the Pacific). The 1774 decree did not cover Venezuela, so the lower duties favored sourcing cacao in Guayaquil, where Yraeta purchased cacao from the Icaza brothers. Immediately upon learning of the 1774 decree, Isidro Antonio Icaza had moved from Panama to Guayaquil. He and his brothers were coastal traders of cacao and Guatemalan indigo between Callao and Acapulco, with stops in Realejo, Sonsonate and Panama. The Icazas sold to Yraeta at Acapulco, given that he was the largest buyer of cacao in Mexico City.

Coastal traders may always have included Asian products along with cacao and indigo in their stores. But in 1779, Carlos III made such trade legitimate and encouraged it by authorizing Manila businesses to export Asian goods to New Spain. This prevented shortages of cloth in Spanish America at a time when Spain’s shipments to Veracruz were blocked on the Atlantic by war. In 1780, there was indeed a shortage of European textiles in New Granada, so the king also authorized the Viceroy of New Grenada to permit its inhabitants (among them the province of Guayaquil) to exchange the fruits of its harvest for European goods in all the ports of Spanish America. Does this mean that the Icazas were authorized to pick up Asian and European cloth at Acapulco in exchange for their cacao of Guayaquil with the intent to bring the Asian cloth down to New Grenada?

No. Manila could export Asian goods to New Spain, and merchants of Guayaquil were authorized to sell cacao in New Spain in exchange for European cloth, but merchants of Guayaquil were not authorized to exchange cacao for Asian cloth in Acapulco with the intent of reselling it in Lima. At this point, Yraeta and Icaza took out a 150,000 peso loan at high interest to do precisely that: buy Asian cloth at Acapulco to sell to the Conde de Isidro in Lima. They then petitioned Viceroy Mayorga of New Spain for special permission to take the Asian cloth south.

And this is where Del Valle shows us how the king raised “voluntary donations” by means of his control of Pacific Rim trade. Yraeta gave 40,000 pesos in response to the king’s request for donations to support the war. Mayorga gave him permission to sell 150,000 pesos worth of Spanish and Chinese cloth exported from Acapulco down in Guayaquil and Callao. Where a modern reader may view the loopholes in Spain’s system of commerce as difficult to comprehend, the Spanish state saw the opportunity to exert control and extract concessions.

As the reader can see, Guillermina del Valle tells quite human stories that add depth and personality to the ongoing theoretical debate about the nature of the Spanish state, commercial reform in the Bourbon era, and the importance of Pacific Rim trade to New Spain’s merchant class. In addition, her long-term studies into the Consulado of Mexico make her political inferences astute and convincing.

Marie Christine Duggan is Professor of Economics at Keene State College in New Hampshire. She co-authored with Dení Trejo Barrajas, “San Blas and the Californias: Hispanic Trade in the Northern Pacific Rim in a Time of Great Change,” forthcoming 2018 in Mains’l Haul, a publication of the Maritime Museum of San Diego.

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