The mine owners’ income far surpassed that of high government officials. Mine-owning families in northern Mexico would buy titles of nobility and vie socially in Mexico City with Spaniards. In a society where 300 pesos a year provided a decent living, the Mexico City home of the great silver miner Jose de la Borda cost 300,000 pesos. Such mine owners often provided extravagant support for charities, while remaining blind to the material needs of the mineworkers who made possible this philanthropy.75
Only the fortunate struck it rich, since, according to lore, for every ten who invested in mines, eight failed. The limited number of Creoles and Spaniards who did become successful miners obtained the millions needed to open and expand their mines by borrowing from other elite groups, such as hacendados, merchants, and royal officials, who lent illegally.76
The hacendados formed another important sector of the elite, and as with the miners, they played a key role in the development of northern New Spain. They generally produced livestock and crops, processed what they produced, and marketed it. Wheat growers milled grain and distributed flour. Agave growers manufactured and sold intoxicants. Stock raisers slaughtered animals and sold meat. Hacendados created virtual feudal realms with their own jails. Owners routinely meted out corporal punishment to employees who displeased them. Typically hacendados established residences in Mexico City or a provincial capital and only visited the hacienda during the planting and harvest seasons. At other times, an overseer (mayordomo) administered the hacienda.77
Hacendados developed close ties with wealthy merchants and the most powerful colonial officials. They exploited their access to capital and their local predominance to provide credit and sell manufactured items and food to those living in the region. The Sanchez Navarro family, whose holdings in Coahuila at the end of the colonial period totaled more than 800,000 acres, provides a perfect example of the hacendado as merchant. The family supplied the Presidio de Rio Grande and exercised a virtual monopoly on retailing in the capital, Monclova.78
Merchants solidified their control of urban markets by dealing only with major producers of grain, meat, and other commodities. This eliminated small producers who might undercut their prices. They lent to producers on the condition that the producer sold only to them. They also monopolized the sale of imported goods, so they could mark up the price 100 percent or more. Spanish-born wholesale merchants did not welcome the locally born, even if they were their own sons. They based their trade monopoly on their control of the merchant guild, kin ties, connections to Spain, and access to capital. Wholesale merchants only numbered 177 in 1689. That year, of the 1,182 adult male Spaniards in Mexico, only 124 served in government, compared to 628 in Commerce.
Merchants in Mexico City who acted as middlemen and the Spanish who shipped goods to Mexico and withdrew cash to Spain benefited from this system. The small and mid-sized farmers and the
Indian villagers who provided repartimiento labor and paid tribute lost out. As historian E. J. Hobsbawm noted, these merchants became the linchpin of the economic system linking Mexico and Europe:
The key controller of these decentralized forms of production, the one who linked the labour of lost villages and back streets with the world market, was some kind of merchant. . . The typical industrialist (the word had not yet been invented) was as yet a petty-officer rather than a captain of industry.80
A merchant guild (consulado), which only accepted wholesalers, lobbied for its members and served as a commercial court, resolving disputes between traders as well as suits involving merchants and non-merchants. It also collected a sales tax known as the alcabala and received a 4 percent commission for its effort. The roughly 200 men in the consulado headed trading firms that regularly dealt with other firms scattered across both the Atlantic and the Pacific.81
Merchants invested much of their accumulated wealth in landed estates. Such estates provided a steady, if not spectacular source of revenue. Landowning merchants could accurately assess demand and adjust production. In the late colonial period, investment in land became especially attractive as demand for food increased and labor became cheaper. Merchant capital facilitated the construction of granaries, reservoirs, and irrigation canals.82
Merchants became a major source of credit in the late colonial period. They invested heavily in sugar production and textile weaving shops known as obrajes and provided miners with the necessary capital to purchase iron, steel, salt, mules, cattle, cloth, leather, and mercury. Others lent money to royal officials. They also bought refined silver and then coined it at the mint, which they controlled. Typically, they would keep as a fee one-ninth of the silver bullion that they had converted into coins. They made additional profits by minting silver and then smuggling it out of Mexico to avoid taxes. The merchants’ control of the mint and their collection of the alcabala provide examples of private control of functions now accepted as valid government roles. The merchants’ pervasive influence led Mexican historian Justo Sierra to comment, “The shopkeeper, and not the conqueror, is the true Spanish father of Mexican society.”83
Frequently members of an extended family formed a trading partnership. Due to the difficulty in obtaining justice from a distant business associate, merchants relied on relatives or those whom they knew personally. The widespread use of credit buying necessitated a high degree of trust.84
Just as with miners, merchant families occupied a precarious social position. An often-cited proverb concerning merchants commented: “Padre comerciante, hijo caballero, nieto pordiosero” (“Merchant father, gentleman son, beggar grandson”). As with most proverbs, it contained an element of truth. Bequests to the Church drained capital from merchant families. Division among many children, conspicuous consumption, seasonal losses, and the inability to collect debts forming part of an inheritance all dispersed capital.85
Despite such loss of wealth, at least half of the merchant families studied by historian Louisa Hoberman managed to remain wealthy in the third generation. Families preserved wealth over the generations and maintained estates undivided by having a small number of children or by sending siblings into ecclesiastical careers. Marriage to descendants of other merchant families or to wealthy non-merchant families also maintained family fortunes. Finally, in the second and third generation, diversification into other careers, especially holding public office, maintained merchant wealth.86
Many elite families invested in mines, commerce, and haciendas. Frequently owners mortgaged their haciendas to obtain capital for commerce and mining ventures. Merchant families lacking capital frequently allied with land-owning families. This permitted land to be mortgaged to provide capital for commerce. Diversification permitted a family to retain its status in the event of a downturn in one economic sphere. It also permitted businesses to complement each other. Thus, a family’s haciendas might provision its mine as well as supply its store.87
The economic elite’s desire to have a voice in governance dovetailed with the Crown’s view of the colonies as a revenue source. During the 1600s, municipal office could be bought in perpetuity. Thus wealthy Creoles would not only control local government but would will their positions to their children, who in turn would pass the position to the next generation. Beginning in 1687, posts in the audiencias were put up for sale. This allowed Creoles to buy their way into the central colonial administration and reinforce their social and economic dominance.88
World History
