As the state became more costly and intrusive, the New World equilibrium so carefully constructed over a quarter of a millennium began to break down.
John Coatsworth, 2006162
By the beginning of the nineteenth century, Britain’s economic growth and its burgeoning trade with the New World were making the Spanish empire a hollow shell. British Admiral Horatio Nelson’s 1805 naval victory over Spain in the Battle of Trafalgar, which virtually destroyed Spanish sea power, further weakened the empire. As Spanish sea power declined, smuggling increased. Trinidad and Jamaica increasingly served as transshipment points for British goods destined for Spanish America. Smuggling not only deprived the Crown of revenue but demonstrated the advantages of trade outside the empire.163
After the 1808 French invasion of Spain, trade between Britain and Spanish America increased. While the British fleet blockaded Spanish ports, British exporters met the resulting shortages in the colonies either directly or through smuggling and neutral intermediaries. Between 1809 and 1811, 35 percent of all British exports went to Latin America. The opening of Latin American markets compensated the British for markets lost in Europe due Napoleon’s ascendancy.164
Even before the Grito de Dolores, the Mexican economy was in trouble. To maintain mining output at a high level, the Crown provided massive financial subsidies for the purchase of the mercury used to refine silver. As trade barriers were lowered, legally imported textiles, as well as smuggled ones, ruined local producers. Buyers found imported British cottons especially attractive since the mechanization of carding and spinning reduced the cost of producing them—and therefore their market price—by nearly 70 percent between 1790 and 1812. The 1804 Consolidation Decree eliminated the major source of credit. After that date, miners lacked the capital needed to sink deep shafts, could not purchase drilling equipment, and had difficulty buying supplies from
Merchants.165
After the Grito de Dolores, the insurgency damaged the economy in innumerable ways. Well before rebels appeared, mine owners would flee to cities controlled by royalists. Mine workers joined the rebels, died, or moved away. Many wealthy Spaniards not only departed but took their capital back to Spain with them, exacerbating the credit crunch. Higher taxes to finance the royalist war effort increased costs. Royalist officers speculated with merchandise under their control, further increasing prices and damaging the economy.166
The independence struggle most affected mining, with its complex system of supply and financing. Since the insurgents were especially active in mining areas, these areas suffered a precipitous withdrawal of capital. To finance the war, the Crown shifted from subsidizing mining to heavily taxing it, further exacerbating the capital shortage. In 1811, the Crown ended its monopoly on the supply of mercury. However to the mine owners’ chagrin, private suppliers charged as much as five times more to supply mercury than the Spanish government had charged. Also private vendors ceased to provide mercury on credit, as the Crown had. The isolation of mining towns not occupied by rebels often prevented them from obtaining supplies. The population of the mining-dependent Guanajuato area decreased from 70,600 in 1802 to 35,733 in 1822 as that industry declined.167
Mexican silver production peaked at 24.7 million pesos in 1809. By 1812, it had plummeted to 4.0 million due to the independence struggle. After 1812, as the intensity and locale of rebel activity shifted, mintage rebounded. However, between 1813 and 1820, it remained at less than half the 1809 level. The decline in Mexican silver exports caused the price of silver in London to increase by 10 percent.168
As with mining, the textile industry depended on extended raw material and marketing networks. Obraje owners complained of an “almost absolute lack of necessary materials” because of the “present barbarous and destructive insurrection” that had “annihilated the ranchers that supplied the wool” and obstructed the roads for the transport of what little remained. Given their isolation from obrajes, many ranchers began to rely on homespun wool. In the fifteen months after the Grito de Dolores, the number of obrajes in Queretaro fell from nineteen to eight. Machine-made fabrics from Europe and cheap cloth from the Orient displaced local production after they entered Mexico in substantial quantities without the heavy duties established under Spanish trade regulations. As a result of tariff-free textile imports through Pacific ports, Guadalajara’s cotton textile industry was virtually eliminated.169
Some of the richest agricultural areas, such as Jalisco and the Bajio, also saw of some of the heaviest combat and destruction. Hacienda owners often fled to the safety of the city, and many of their workers joined the insurgent cause. Rebel bands in Queretaro killed hacienda administrators, ran off livestock, and pillaged, leaving many haciendas ruined. As mines closed, small farmers lost their markets and left the land. Morelos’s troops specifically targeted Veracruz tobacco fields for burning, since they supplied the royal tobacco factory, a major revenue source for the Crown. Agricultural production during the insurgency fell by roughly 50 percent.170
The insurgency disrupted trade routes for prolonged periods. Many small villages were abandoned to the insurgents. After royalist troops garrisoned cities, their residents complained about the loss of contact with rural areas. As early as 1811, the Chihuahua municipal government noted the interruption of trade had led to shortages of clothing, paper, sugar, chocolate, medicine, and even tobacco, which led to the smoking of local herbs. Due to rebel activity, bullion often could not be shipped to Mexico City to be minted, so the viceroy authorized regional mints to convert bullion Into coins.
Traders who remained in business had to pay the high cost of military escorts to accompany mule trains. As many as 1,000 soldiers guarded the caravans that carried goods from Veracruz to Mexico City. Muleteers operating without royalist military escort often had to pay rebels protection money. The scarcity of beasts of burden and of coins to pay for goods further reduced trade. As a result of the reduction in trade, between 1810 and 1818 the population of Veracruz declined from 15,000 to 8,934.172
In Mexico, the independence conflict resulted in economic and fiscal changes that lasted longer than mere physical destruction, which could be repaired in a relatively short period (witness postSecond World War Europe). Local officials spent more on defense than before the Grito de Dolores. The Guanajuato district transferred roughly 80 percent of all taxes to Mexico City between 1791 and 1807. However, between 1812 and 1816, tax receipts declined to half of the pre-war level and, due to military spending, only 28 percent were transferred to Mexico City. Eliminating Indian tribute deprived the government of 2 million pesos a year. Military spending by the provinces deprived the central government of both resources and political power. Reestablishing the fiscal ties with the provinces that had existed for almost three centuries presented a monumental challenge for nineteenth-century Mexico.173
The interruption of trade routes also deprived Mexico’s core of its traditional power. Tariff revenue fell since between 1811 and 1820 the level of foreign trade was 41 percent below that of the previous decade. Since transport through central Mexico was often impossible during the war, new trade routes opened. Spanish, Panamanian, and South American merchants flocked to the Pacific port of San Bias. These merchants, with commercial ties to Kingston, Jamaica, and access to British capital, provided a preview of the economic forces that would shape post-independence Mexico. Opening new trade routes decentralized power and the tax base.174
World History
