Socializing the King's Debt: Local and Atlantic Financial Transactions of the Merchants of Buenos Aires, 1793-1808

Between 1722 and 1779, the Bourbon kings managed to achieve financial stability without broadening the tax base or borrowing on a large scale. The incorporation of Aragon's territories under the crown of Castile, the Bourbon administrative reforms, sustained population and economic growth during the first half of the eighteenth century, added to the silver coming from the Americas, explain the general increase in income within the existing fiscal constitution.¹ The revenues extracted from the American possessions, in particular from New Spain, were essential in keeping the metropolitan budget balanced. However, from the 1790s onwards, constant international warfare made ordinary revenues collected in the Americas insufficient for financing deficit spending in Spain. To meet short-falls, the crown implemented extraordinary measures including the collection of loans, donativos, ecclesiastical subsidies, and the enforcement of the Decreto de Consolidación de vales reales in 1804. These measures demonstrate that the Spanish crown increasingly relied on its imperial financial network to balance its budget, and simultaneously postponed the politically costly implementation of a thorough fiscal reform in the metropolis.²

Merchants from the colonial consulados essentially became brokers for these transactions. This article studies the collection of loans and donativos from members of the merchant community of Buenos Aires from 1793 to 1808. It regards these operations not only as investing financial ventures but also as political opportunities for advancing corporate interest vis-à-vis the crown. While in the early 1790s these transactions were advantageous for the merchants and their corporation, their association with a financially crippled crown divided the mercantile community, drew off the colony's financial resources, which was otherwise used for promoting economic development, and ultimately destroyed the financial power of the consulado. Under these circumstances, the merchants of Buenos Aires transferred their financial expertise to the cabildo of Buenos Aires, which was subsequently transformed into a political and financial stronghold.

The Bourbon fiscal reforms have already received extensive scholarly attention, except for the aspects concerning the collection of loans and donativos. Carlos Marichal's works on eighteenth century Mexico are exceptional in that they do emphasize the importance of ordinary and extraordinary transfers of funds within the imperial financial system. His studies demonstrated that, through loans and donativos shipped directly to Spain, the crown was able to keep annual taxes in the metropolis on average lower than those collected in New Spain, and transferred a large share of its own debt to its colonial subjects. Marichal's excellent research stresses the compulsory aspects of loans and donativos and suggests they functioned as indirect forms of taxation.³ However, this article demonstrates that these measures were more than just surrogates for taxes. They were a successful device for raising income because they were politically more palatable than taxes. Therefore, the circumstances as well as the manner in which the crown collected these extraordinary revenues mattered.

Normally, collections of loans and donativos were particular (affecting certain individuals, groups or institutions), sporadic, extraordinary, and intended to provide funds for a specific purpose. They were enforced when other attempts to expand taxation failed or when tax evasion was rampant. Loans and donativos were also collected rapidly carrying low administrative costs. Since they were voluntary, they did not question the contributors' tax status and, as such, they functioned as honorable devices for extracting revenue from traditionally exempt groups. Collections of loans and donativos were constitutionally advantageous as they provided the king with extraordinary funds while circumventing representative bodies in charge of discussing and agreeing on taxation.⁴ They were politically effective because they brought the community together in support of the crown through difficult times. In the sixteenth and seventeenth centuries the kings of Spain occasionally collected loans and donativos. However, on two occasions (after the 1640s fiscal crisis and throughout the 1790s) they became not only universal but also frequent events. In both instances, royal finances were in a critical situation and the funds collected through these fiscal devices were channeled towards servicing public debt. Despite the crises, the crown mobilized the idle wealth...