In 1823 and 1824, the newly independent government of Mexico entered the international capital market, raising two loans in London totaling GBP6.4 million. Intended to cover a variety of expenses, the loans fell into default by 1827 and remained in default until 1887. This case study explores how the loan process worked in Mexico in the early nineteenth century, when foreign lending was still a velty, and the unexpected ways in which international debt could influence politics and policy. The history of the loans, the efforts of successive governments in Mexico to resume repayment, and the efforts of the foreign lenders to recover their investment became one of the most significant, persistent, and contentious, if largely misunderstood, issues in the political and financial history of nineteenth-century Mexico. The loans themselves became entangled in partisan politics in Mexico and abroad, especially in Great Britain and France, and were a fertile source of speculation for a wide range of legitimate - and t-so-legitimate - international financiers.
Richard Salvucci is Professor of Economics at Trinity University. He has held major fellowships from the Social Science Research Council, the National Endowment for the Humanities, and the American Philosophical Society. In 2006, he was the Peggy Guggenheim Visiting Fellow at the David Rockefeller Center for Latin American Studies at Harvard University, and, in 2008, he delivered the Christopher Lasch Memorial Lecture at the meeting of The Historical Society. He has published in the Hispanic American Historical Review, the Journal of Interdisciplinary History, and Historia Mexicana. His books include Textiles and Capitalism in Mexico: An Economic History of the Obrajes, 1539-1840; Latin America and the World Economy: Dependency and Beyond; and a chapter in The Cambridge Economic History of Latin America. In 2001, his article in the Journal of Interdisciplinary History, coauthored with Linda K. Salvucci, won the Conference on Latin American History Prize. Richard Salvucci lived in Mexico City from 1976 to 1977 and has returned repeatedly to Mexico for research and other professional purposes since then. He has also spent extensive periods in England, Spain, and Cuba doing historical research.