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  • Bonds and Bondholders: British Investors and Mexico’s Foreign Debt, 1824–1888
  • Victor J. Rodriguez
Michael P. Costeloe. Bonds and Bondholders: British Investors and Mexico’s Foreign Debt, 1824–1888. Westport, Conn.: Praeger Publishers, 2003. xxii + 384 pp. ISBN 0-275-97939-3, $69.95 (cloth).

This work offers a distinctive look at Mexico's foreign debt crisis of the nineteenth century through, as the title reminds us, the particularities of the bonds and the bondholders—the British bondholders, in this case. Eschewing the financial focus of the historiography of the Mexican debt, Costeloe, a Professor Emeritus and Senior [End Page 699] Research Fellow in Hispanic and Latin American Studies at the University of Bristol, offers instead a more traditional and detailed rendering of the material form and circulation life of the Mexican bonds for the years 1824 to 1888 and an equally meticulous analysis of Mexico's British creditors in order to correct their absence in the literature. Thus the book is divided in two corresponding parts. In Part I, we learn about the financial history of the Mexican debt in the nineteenth century through all bond issues and re-schedulings. The author looks at the securities' numbers and values, the institutional agents and procedures involved in each negotiation, and their marketing and sale. The actual bonds are also described through a close examination of their design, size, color, and even the texts written on them. The author recognizes that information such as this perhaps would be of interest primarily to collectors and scripophilists rather than the general historian, yet he is seeking to correct certain "factual errors and misunderstandings" that have plagued scholarship, such as the fact that money assigned in payment of dividend arrears did involve the shipment of cash.

In Part II Costeloe discusses the various committees established to represent the interest of British bondholders, their influence and significance, and the social background of their membership. Here the author traces the origins of all committees of Mexican bondholders by a careful analysis of their composition, their debates, including serious accusations of nepotism and insider trading, the acrimonious relationship with Mexican agents, the finances of the committees, and their various appeals to the British government for help as Mexico failed to keep its obligations. Why would British investors place their faith on a nation that, as the author makes clear, constantly defaulted on its financial obligations? In chapter 5, where the social background of the investors is discussed, the author offers a fascinating glimpse on the manner whereby Mexico and its wealth was imagined by those who sought to benefit from it and provides a partial answer to this question. Besides the bonds' attractive interest rates, discussed in previous chapters, Mexico was seen as a nation with an unlimited economic potential, and its strategic location between two oceans was thought to ensure for it the benefit of the growth in trade that would necessarily follow from the liberation of the American nations. The author shows how various kinds of information flows, from newspaper accounts to the works of German scientist Alexander von Humboldt, assisted in creating a vision of Mexico characterized by a persistent optimism. "Despite all the evidence to the contrary," states the author, "the belief in Mexico's economic potential never subsided" (p. 272).

Furthermore, Costeloe establishes one more important fact: the loans did not originate from banks or from any institution with [End Page 700] "some Machiavellian imperial ambition to gain domination of the borrower by manipulation of the debt" (p. xviii), but from "ordinary people the breadth and length of Britain" (p. xxi). Rather than dealing with banks or the British government itself, the nation of Mexico was forced to negotiate with these bondholders directly as the British government refused to take responsibility for their debts. From members of Parliament, generals and admirals to country clergymen, widows and retired annuitants, the investors in the Mexican debt came from a wide spectrum of British society. Costeloe maintains that it was the bondholders who were affected the most by the failure of Mexico to honor its debt; in their own words, they "sacrificed" millions of pounds in their Mexican investment. The British government...

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