Agriculture and Credit in Nineteenth-Century Mexico: Orizaba and Cordoba, 1822-71

Author(s): Eugene L. Wiemers, Jr.

Source: The Hispanic American Historical Review, Vol. 65, No. 3 (Aug., 1985), pp. 519-546
Published by: Duke University Press
Stable URL: http://www.jstor.org/stable/2514834
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Hispanic AmnericanHistorial Review
65 (3), 1985, 519-546
Copyright C) 1985 by Duke University Press

Agricultureand Credit in
Nineteenth-Century Mexico:
Orizaba and Cordoba, 182-7

EUGENE L. WIEMERS, JR. *

R ESEARCH on the functioning of rural estates and other ag-

ricultural ventures in colonial and nineteenth-century
Latin America has pointed to the importance of debt
agreements or debtor-creditor relationships in the agricultural economy.
The fact that debtors at all levels of society owed money, goods, or labor
service is irrefutable, and evidence of debts of large and small landowners,
tenant farmers, and rural workers is overwhelming. Only recently have
there appeared systematic studies of credit markets in general, and agri-
cultural credit markets in particular, to provide a context in which to evalu-
ate social and economic dimensions of debt agreements and the perfor-
mance of debtors.' Lindley and Van Young, building on earlier work by
Brading, have examined the credit linkages among members of the elite

*Research for this study was supported by the Social Science Research Council and
American Council of Learned Societies, and a Fulbright-Hays fellowship, with additional
research grants from the University of Chicago, Virginia Tech, and the University of Min-
nesota Computer Center. The author would like to thank Ward Barrett, John Coatsworth,
Friedrich Katz, Bob McCaa, Rus Menard, and Stuart Schwartzfor comments on this project
in its various stages.
i. The best work on the history of credit in Mexico is that of Linda L. Greenow, in two
related works: Credit and Socioeconomic Change in Colonial Mexico: Loans and Mortgages
in Guadalajara, 1720-1820 (Boulder, 1983); and "Spatial Dimensions of the Credit Market
in Eighteenth Century Nueva Galicia,"in David J. Robinson, ed., Social Fabric and Spatial
Structure in Colonial Latin America (Ann Arbor, 1979), pp. 227-279. Research on other
regional credit markets figures in: Richard B. Lindley, Haciendas and Economic Develop-
ment: Guadalajara, Mexico, at Independence (Austin, 1983); Eric Van Young, Hacienda and
Market in Eighteenth-Century Mexico: The Rural Economy of the Guadalajara Region,
1675-1820 (Berkeley, 1981); Richard P. Hyland, "A Fragile Prosperity: Credit and Agrarian
Structure in the Cauca Valley, Colombia, 1851-87," HAHR, 62 (Aug. 1982), 369-406; and
Marco Palacios, Coffee in Colombia, i850- 1970: An Economic, Social, and Political History
(Cambridge, 1980). On the legal and institutional status of credit, see: Arnold J. Bauer, "The
Church in the Economy of Spanish America: Censos and Dep6sitos in the Eighteenth and
Nineteenth Centuries," HAHR, 63 (Nov. 1983), 707-733.
520 HAHR j AUGUST j EUGENE L. WIEMERS, JR.

in eighteenth-century Guadalajara.2Bauer's work on nineteenth-century

Chile is more general in scope, but the results are only partially com-
parable to those found for Mexico, because the formal banking institu-
tions so important in Chile were not developed in Mexico until very late
in the century.3 In the most exhaustive study of early Latin American
credit markets to date, Greenow has described the Guadalajaramortgage
market in the eighteenth and early nineteenth centuries. With the ap-
pearance of these and other works, it has become possible to assert that
credit markets indeed existed, and to assess the roles of institutions, indi-
viduals, and groups in them.
These studies have established that ecclesiastical bodies, clerics, and
merchants were the principal sources of capital for agriculture in the eigh-
teenth century.4 Mercantile and clerical groups were, after all, those with
the greatest liquid assets. Even the crown depended on their resources to
finance some industries producing royal revenues. Also well established
is the prominent role urban properties played in securing ecclesiastical
debts. Borrowing secured by houses and other urban properties became
progressively more prominent over the eighteenth and nineteenth cen-
turies so that by the time of the Reform, urban properties dominated ec-
clesiastical investment.6
While research on credit in the eighteenth century has shown the im-
portance of credit to enterprises of all kinds, including agriculture, the
comparative analysis of the terms and results of credit contracts of large
and small landowners, merchants, and other groups is still incomplete. It
is not clear how debtors in general fared in their ability to get loans,

2. Van Young, Hacienda and Market, Chap. 8; D. A. Brading, Miners and Merchants in
Bourbon Mexico, 1763-1810 (Cambridge, 1971), Chap.4 and 9; Lindley,Haciendas and
Economic Development, Chap. 2.
3. Arnold J. Bauer, Chilean Rural Society from the Spanish Conquest to 1930 (Cam-
bridge, 1975), pp. 92-101.
4. Greenow, Credit and Socioeconomic Change, pp. 59-60. On the nineteenth cen-
tury, see: Michael P. Costeloe, Church Wealth in Mexico: A Study of the "Juzgado de
Capellanias" in the Archbishopric of Mexico, i8oo-1856 (Cambridge, 1967); and Jan
Bazant, Alienation of Church Wealth in Mexico: Social and Economic Aspects of the Liberal
Revolution, 1856-1875 (Cambridge,1971).
5. Merchants and the church were financing cochineal and mining, with crown acquies-
cence. See Brading, Miners and Merchants, p. i8o; and Brian R. Hamnett, Politics anld
Trade in Southern Mexico, 1750-1821 (Cambridge, 1971), pp. 148-149. Veracruztobacco
growers were also dependent upon such advances. The records of these loans are housed in
the notarial archives of Orizaba, ANO, Primera Parte.
6. Greenow, Credit and Socioeconomic Change, p. 53, notes that the percentage of
loans and mortgages secured by urban property in Guadalajararose from 50.6 percent in
1721-40 to 90.3 percent in 1798- 1820. The preponderance of urban property at the time of
the Reform is detailed in Bazant, Alienation of Church Wealth, pp. 46-47, 75-76, 93-95,
117-118, 127-131.
ORIZABA AND C6RDOBA, 1822-71 521

which of their lands and properties they had to mortgage to get credit,
and how well they repaid their debts, especially in the nineteenth cen-
tury. This article will look at credit conditions in Orizaba and Cordoba in
the state of Veracruz-the volume of transactions, the properties used to
secure repayment, the purposes of loans and debts, the sources of credit,
and repayment behavior-in order to assess conditions of credit to hacen-
dados and rancheros.7
The chief aims of this exploration are empirical, but the evidence casts
some light on three interpretative questions in nineteenth-century Mexi-
can economic history: (i). Why did entrepreneurs of all kinds invest in
agriculture, and did agricultural investment represent a drain on re-
sources generated in other sectors?8 (2). Did hacendados enjoy "advan-
tages" in "access to outside credit" not shared by smaller landowners,9
and was estate ownership necessary to get credit?'0 (3). Did credit charges
represent a "burden" on agricultural enterprises?" This study examines
credit markets that affected all kinds of enterprises, including haciendas
and ranchos, asks if debts of hacendados and rancheros were fundamen-

7. This analysis is based on three sets of data extracted from three prinlcipalarchives:
the archives of the Registro Puiblicode Propiedad of Orizaba, and the notarial archives of
Orizaba and C6rdoba (hereinafter cited as RPPO, ANO, and ANC, respectively). The RPPO
data are mortgages registered in the Libros de Censos y Hipotecas of the Canton of Orizaba,
which record debt contracts affecting property within the Orizaba jurisdiction. This is the
regional equivalent of the registry Greenow analyzed for Guadalajara.Portions of a similar
registry for C6rdoba survive in ANC, but not complete enough for this analysis. Notarial
archives were the source of loan records, or obligaciones por reales. The notarial archives of
Orizaba are housed in the library of the Universidad Veracruzanain Xalapa, in two parts: the
"Primera Parte," consisting principally of judicial archives, and cited here by date and expe-
diente number; and the Protocolos of Orizaba, which make up the "Segunda Parte," cited
here as ANOP. The notarial archives of C6rdoba are in the hands of notary Lic. Salvador
Zamudio, consisting chiefly of protocolos. Because of the volume of notarial records, data
are presented for 1840-71; sale contracts for urban property are excluded. The assistance of
the Centro de Estudios Hist6ricos of the Universidad Veracruzanain obtaining and filming
this documentation, especially that of Ricardo Corzo and Adriana Naveda Chavez-Hita, is
gratefully acknowledged. Microfilm copies of the ANO and ANC documentation are depos-
ited in the Centro.
8. This is the "hacienda was a sink" thesis of Brading in Miners and Merchants, p. 219,
analyzed in greater detail in his Haciendas and Ranchos in the Mexican Bajio, Leon,
1700- i86o (Cambridge,1978).
9. John H. Coatsworth, "Obstacles to Economic Growth in Nineteenth-Century Mex-
ico," American Historical Review, 83 (Feb. 1978), 87. Coatsworth compares estate agricul-
ture to Indian villages with these words, but the sentiment on availability of credit to large
landowners is more widespread. Bauer notes, for example, that in late nineteenth-century
Chile "a good-sized property-much larger than a single family farm-was required to ob-
tain a loan over $iooo." Bauer, Chilean Rural Society, pp. 93-94.
10. This is a central assumption of Lindley's work. See his Haciendas and Economic De-
velopment, pp. 43-44.
ii. Brading, Haciendas and Ranchos, pp. 91, ii8. Costeloe, Church Wealth in Mexico,
P. 95.
522 HAHR j AUGUST j EUGENE L. WIEMERS, JR.

tally different from those of others in the nineteenth century, and argues
that they were not. This amounts to an analysis of the behavior of all kinds
of debtors in an environment of high transport costs, institutional in-
stability, and intermittent warfare.'2

The Setting
Orizaba and Cordoba lie on the eastern slope of the mountains that
separate Veracruz and Puebla, in a valley that widens and merges into the
broad coastal plain.'3 Lying on the southern route across the mountains,
the region was part of a major transport and communications link be-
tween Mexico City, Puebla, and the coast.'4 The streams and rivers of
these narrow valleys provided permanent and abundant water for irriga-
tion and water-power, making Orizaba one of the earliest mill towns in
Mexico: its flour mills supplied Mexico City and Veracruz, and some of the
earliest Mexican textile mills were established there with the help of gov-
ernment financing in the 1840S. 15
Although Orizaba has been associated closely with the early develop-
ment of industry and working-classmovements in Mexico, and Cordoba is
often contrasted with it as a rather less advanced agricultural town in its
shadow, both had long experience in commercial agriculture by mid-
nineteenth century. 16 The development of agriculture was linked to three

12. This is in the spirit of Coatsworth'sadmonition to look at the "economy as a whole"

rather than at single sectors in analyses of obstacles to economic growth in Mexico; Coats-
worth, "Obstacles," p. 88.
13. For history of Veracruz, see: Manuel B. Trens, Historia de Veracruz (Jalapa-
Enrfquez, 1947-50); and Jose Luis Melgarejo Vivanco, Breve historia de Veracruz (Xalapa,
1960). The basic work on history of C6rdoba is that by Enrique Herrera Moreno, El Cant6n
de C6rdoba: Apuntes de geografta, estadistica, historia, etc. (C6rdoba, 1892); for Orizaba,
Jos6 Maria Naredo, Estudio geogrdfico, hist6rico y estadistico del Cant6n y de la ciudad de
Orizaba (Orizaba, 1898). See also: Mariano Ramfrez, "Estadistica del Partido de C6rdoba,
formada en 1840," Boletin de la Sociedad Mexicana de Geografta y Estadistica (Mexico City)
(hereinafter cited as BSMGE), 4 (1854), 72-112; Vicente Segura, Appuntespara la estadistica
del Departamento de Orizava (Jalapa, 1831); and Manuel de Segura, "Apuntes estadfsticos
del Distrito de Orizava, formados el afio de 1839," BSMGE, 4 (i854), 3-71.
14. On the position of C6rdoba and Orizaba in Mexico City-Veracruz transport, see:
Peter W. Rees, Transportes y comercio entre Mexico y Veracruz, 1519-1910 (Mexico City,
1976). John Gresham Chapman, La construcci6n del Ferrocarril Mexicano, 1837-188o
(Mexico City, 1975) describes the building of the railroad through the region; and Arthur
Paul Schmidt, Jr., "The Social and Economic Effects of the Railroadin Puebla and Veracruz
Mexico, 1867-19 1, " (Ph.D. Diss., Indiana University, 1974) analyzes its impact.
15. The early industrial development in the region is described in Robert A. Potash,
Mexican Government and Industrial Development in the Early Republic: The Banco de Avio
(Amherst, 1983), pp. 155-157. See also: Alice Foster, "Orizaba;A Community in the Sierra
Madre Oriental," Economic Geography (Worcester, Mass.), 1 (Oct. 1925), 356-372; and the
gen-eraldescriptions in Bazant, Alienation of Church Wealth, pp. 68-74.
i6. On working-class movements, see: Bernardo Garcfa Dfaz, Un pueblo fabril del
porfiriato: Santa Rosa, Veracruz (Mexico City, 1981). This has been the subject of long-term
research by John Womack, Jr.
ORIZABA AND C6RDOBA, 1822-71 523

commercial crops-tobacco, sugar, and coffee-as well as the subsistence

cultivation of foodstuffs. Until the arrival of the railway, tobacco was most
important: Cordoba and Orizaba offered an ideal setting for supervised
and controlled movement of goods, and were chosen as the legal growing
region for the tobacco monopoly of New Spain in the 1770S. 17 Before In-
dependence, tobacco was a growing source of income for large and small
growers, producing annual incomes of up to $940,000 in Orizaba, and
$370,000 in Cordoba.'8 Even after the monopoly was abolished in 1856,
tobacco continued to be grown by rancheros and hacendados, as well as by
small cultivators who rotated tobacco and chile with corn and beans in
small plots.'9 Sugar and coffee were also important to both the Cordoba
and Orizaba jurisdictions, although sugar had declined after Indepen-
dence. Neither surpassed tobacco until late in the century.20
The region was not dominated by the large haciendas associated with

17. On the history of the tobacco mon-opoly,see: Reseiia hist6rica de la renta del tabaco
tornada desde la epoca del Exmno.Sr. Conde de Revillagigedo (Mexico City, 1850); David
Lorne McWatters, "The Royal Tobacco Monopoly in Bourbon Mexico, 1764- i8io" (Ph. D.
Diss., University of Florida, 1979); David W. Walker, "A Fiscal History of the Mexican To-
bacco Monopoly, 1764-1856," unpublished ms., University of Chicago, 1978, and David W.
Walker, "Business As Usual: The Empresa del Tabaco in Mexico, 1837-44," HAHR, 64
(Nov. 1984), 675-705.
i8. Archivo General de la Naci6n, Ramo de Tabaco, vols. 446, 532, 509, 38, 120, 414,
54, 96, 331, 77, for the years 1765-1809. Assistance of Lorne McWatters in locating these
data was in-valuable.The figures are summarized in Walker, "Fiscal History," p. 12. Mone-
tary values here and elsewhere in this article are expressed in current pesos.
19. On tobacco cultivation, see: J. Rafael de Castro, "Dictamen de la Comisi6n Especial
de Agricultura," BSMGE, 12 (1865), 74-76; Manuel A. Romero, "Apuntes sobre el cultivo y
beneficio del tabaco," Boletin de la Sociedad Agricola Mexicana (Mexico City) (hereinafter
cited as BSAM), 6, 4 (1883), 54-57; and A. Baker, "Informe sobre el cultivo y manufactura
del tabaco en el Estado de Veracruz," BSAM, 13, 25 (1889), 292-293, and 13, 28 (1889),
435-438. Detailed examination of early twentieth-century practice is in the report of Ing.
Ram6n P. Placencia on practice in Fortfn at the time of the agrarianreform. See his report of
Dec. 27, 1934, in the archives of the Secretaria de la Reforma Agraria, Mexico City (here-
inafter cited as SRA), 23/5091 (Fortfn), pp. 23-60.
20. Fernando B. Sandoval, La industria del azuscar en Nueva Esparia (Mexico City,
1951), pp. 87-88. Two excellent studies of slavery associated with sugar in the region are:
Patrick James Carroll, "Mexican Society in Transition:The Blacks of Veracruz, 1750-1830,"
(Ph. D. Diss., University of Texas at Austin, 1975); and Adriana Naveda Chavez-Hita,
"Esclavitud negra en la jurisidicci6n de la Villa de C6rdoba an el siglo xviii" (Tesis, Maestro
en Historia, Universidad Veracruzana, 1977). Vicente Segura, Apuntes, pp. 67-69, de-
scribes abandoned sugar estates in 1825. The sugar in-dustryrevived after the railroad was
completed, and some of the C6rdoba mills, particularlyPotrero, became "model" haciendas
of the Porfirianera. See: Jose C. Segura, "Cultivo de la cafia de az6car en el Estado de Vera-
cruz," BSAM, 7, ii (1883), 166-170; 7, 12 (1883), 185-187; 7, 13 (1883), 199-205; and 7, 14
(1883), 211-214. On coffee cultivation, see: Vicente Segura, Apuntes, p. 57; and R. Herrera,
"El cafe de C6rdoba," BSAM, 23, 4 (1889), 64-67. The gen-eraldescription of agricultural
practice in Huatusco written in 1865 by Christian Carl Sartorius(called Carlos in local docu-
mentation), German immigrant an-dmodel hacendado from Huatusco, includes considerable
detail on technical and organizationalaspects of tobacco, sugar, and coffee cultivation in cen-
tral Veracruz. See Carlos Sartorius, "Memoria sobre el estado de la agriculturaen-el Partido
de Huatusco," BSMGE, 2a. 6poca, 2 (1870), 158-169.
524 HAHR j AUGUST j EUGENE L. WIEMERS, JR.

central and northern Mexico. The largest hacienda in Orizaba measured

7,728 hectares; most were much smaller than the vast estates of the cen-
tral plateau.2' In contrast, both towns were surrounded by small ranchos,
many in Cordoba on plots of less than one caballeria leased from the
Ayuntamiento.22 By the end of the century, substantial development of
haciendas had taken place, including the renovation of abandoned sugar
properties, but smaller properties continued to play an important role.23
The mix of property sizes and commercial crops means the region was not
typical of Mexican development in the nineteenth century; but it does
allow a detailed comparison of the terms and availability of credit to a va-
riety of landowners, making possible an analysis of the importance of
large landholding in access to credit sources.

Borrowing and Lending

In order to discover whether large landlords had preferred access to
credit markets, the properties used to secure debts must first be exam-
ined. What is clear for this region is that urban properties, especially
urban houses, were the most important assets securing loans and debts.
Large debts secured by haciendas or industrial properties account for a
large percentage of total debt, but these properties were rarely used
to secure loans. Agricultural loans were remarkably similar in size and
length to other loans, and were secured by a similar distribution of prop-
erties; access to credit markets did not require ownership of large estates.
In fact, most large properties were themselves purchased on credit; so, far
from being a source of liquid capital as Lindley has suggested, agricultural
property purchases were one of the principal causes of indebtedness.24
The volume of credit associated with all mortgages and agricultural
mortgages in Orizaba, and loans in Cordoba and Orizaba, is displayed in
five-year moving averages in Figure i. The amount of mortgage debt re-

21. Segura, Apuntes, pp. 33-58, describes Orizabaand C6rdoba haciendas. The largest
he mentions was Tocuila at one sitio de ganado mayor, one sitio de ganado menor, plus four
caballerias, or about 3,487 hectares. When this hacienda was surveyed in i888, it came
to 2,665 hectares; Archivo de la Comisi6n Agraria Mixta, Jalapa(hereinafter cited as CAM)
249, vol. 1, pp. 167- i68. The largesthacien-dawas Tuxpango,measuredin 1923 at 7,728
hectares; CAM i8o, vol. i, p. i2o. Most properties called haciendas in the Orizaba and
C6rdoba region were listed by Segura as fifteen to twenty caballerias, or 640-850 hectares.
For equivalencies, see Manuel CarreraStampa, "The Evolution of Weights and Measures in
New Spain,"HAHR, 25 (Feb. 1949), 19.
22. Segura, Apuntes, p. 58. The records of Ayuntamiento leases are located in the mu-
nicipal archives of C6rdoba: Archivo Municipal de C6rdoba (hereinafter cited as AMC),
vols. 137, 163, 206, 219. The alienationof municipalpropertyis describedin Jan Bazant,
Los bienes de la Iglesia en Mexico (1856-1875) (Mexico City, 1971), pp. 82-84.
23. Naredo, Estudio, pp. 68-8o.
24. Lindley, Haciendas and Economic Development, pp. 43-47.
ORIZABA AND C6RDOBA, 1822-71 525

FIGURE i: Annual Mortgage and Debt Totals, Five-Year Moving Averages

250
225- Orizaba
mortgages
200- Orizabaand C6rdobaloans
n 175 . .. Orizaba
agricultural
mortgages
c, 150:
o 125

,,100-
0
cl, 75-

250

24 28 32 36 40 44 48 52 5660 64 68
Year
Source: RPPO Libro de censos y hipotecas, 1822-i868; ANO, ANC Proto-
colos, 1840-1871, excluding urban property sales.

corded in Orizaba in the forty-seven years between 1822 and i868 was
$4,894,100, an average of $104,130 per year. The total volume fluctuated
greatly from year to year, but the effects of warfare are apparent in the
totals for the years during the War of the Reform and the first years of the
French intervention. The contemporary view that things seemed to be
improving in the early 1850S is clearly reflected in the totals; the most
outstanding year, with $366,297 in total volume, was 1850, when Hacien-
das Tocuila, Tuxpango, and Jalapilla were sold.2 The lowest was $220 in
1824. For agricultural mortgages alone, the total amount for the same pe-
riod was $1,582,606, or approximately i6 percent of the total number of
mortgages in Orizaba, and representing about 32 percent of the total
value. The total amount of loans recorded in Orizaba and Cordoba was
$1,194,504, or about $37,330 per year for the period 1840-71. These
were generally smaller, shorter-term obligations, but their totals closely
followed the pattern of mortgage credit.
The most obvious characteristic of all these debts is the preponderance
of mortgages on houses. As the data in Table I indicate, almost three-
fourths of the mortgages in Orizaba were secured by houses, represent-
ing over 40 percent of secured debt. More than 40 percent of loans in
Cordoba and Orizaba, and one-third of the total value, were secured by

25. In his 1857 Memoria, Veracruz Gov. Manuel Guti6rrez Zamora described recent
agricultural expansion; Memoria leida por el C. Manuel Gutierrez Zarnora . . . 21 Junio
1857 (Mexico City, 1857).
526 HAHR I AUGUST I EUGENE L. WIEMERS, JR.

TABLE I: Mortgages and Loans by Property Mortgaged

Obligaciones por Reales

Orizaba Mortgages Agricultural Mortgages C6rdoba and Orizaba
1822- 1868* Orizaba, 1822-1868* 1840-1871**
Mean Mean Mean
Amount Amount Amount
Pr-operty Amount (St. Dev.) Amount (St. Dev.) Amount (St. Dev.)
Mortgaged (%) [N] (%) [N] (%) [N]
House $2,071,6293 $ 2,011 $ 990 $ 330 $ 281,782 $ 1,795
(42.6) (2,804) (0.1) (135) (23.6) (2,214)
[1,037] [3] [157]
House + 21,654 3,093 107,793 4,000
Other (1.4) (2,852) (9.0) (6,096)
Property [7] [27]
Hacienda 977,475 17,149 876,512 18,261 309,555 19,347
(20.0) (20,701) (55.4) (21,679) (25.9) (23,013)
[57] [48] [16]
Rancho 476,150 3,553 524,880 4,952 179,469 2,393
(9.7) (4,079) (33.2) (11,065) (15.0) (3,110)
[134] [106] [75]
Land 158,329b 2,684 121,178 2,525 49,620 1,378
(3.2) (4,141) (7.7) (4,366) (4.2) (3,186)
[59] [48] [36]
Crop 5,298 2,649 40,301 1,832
(0.3) (143) (3.4) (2,070)
[2] [22]
Llenos 15,852 2,407 30,637 1,702
(1.0) (2,604) (2.6) (1,592)
Industrial 935,172 17,984 [7] [18]
Est. (19.1) (27,887)
[52]
Other 436,114c 4,153 512 512 64,870 3,089
(8.9) (10,557) (0.0) (5.4) (2,860)
[105] [1] [21]
None 14,730 4,910 130,277 1,835
(0.9) (4,425) (10.9) (2,745)
[3] [71]
Total $4,894, lood $ 3,491 $1,582,606 $ 7,034 $1,194,504 $ 2,696
(100.0) (8,828) (100.0) (14,006) (100.0) (6,080)
[1,402] [225] [443]
Source: *RPPO, Libro de censos y hipotecas, 1822-1868, second set limited to mort-
gages on agricultural property. **ANO, ANC Protocolos, 1840-1871, excluding contracts
originating from sale of urban property.
3Jncludes mortgages on solares.
bLand and crop mor-tgagescombined.
cIncludes those specifying no particular property.
dTotals do not sum. Mortgages tabulated for each property mortgaged.
ORIZABA AND C6RDOBA, 1822-71 527

houses or a combination of houses and some other property, even though

debts associated with house sales have been excluded. The importance
of the house as a mortgageable asset was noticed by Bazant in his study of
the disposition of church property in the Reform.26 The preferences of
church lenders were not peculiar; they resembled those of debtors and
creditors in general. Far more mortgages were secured by urban houses
than by any other kind of property, and houses figured prominently as
security for loans having a wide range of purposes.
This should not be surprising, since houses greatly outnumbered any
other type of real property in a given region, and it was more likely for an
individual to own a house than any other form of real estate.27 Urban
property enjoyed a more stable market than rural or industrial property.
Ecclesiastical bodies were not unique. They held mortgages on urban
property for the same reasons private lenders preferred them-property
was more easily supervised, less subject to deterioration or bad manage-
ment, and easier to dispose of than rural or industrial property. As Lic.
Eduardo Guevara explained his actions in administration of the estate of a
deceased ranchero, the house should not be sold, because the decendent's
children only "have to receive rent" on it. The decedent's rancho and
store could be liquidated, because they were in the "risky" business of
corn, tobacco and coffee, and suffered from the children's lack of mana-
gerial skill, "falta de brazos," death of cattle, theft, and transportation
problems.28 In sum, urban properties were the most common form of
mortgaged property because they were most commonly held, most often
transferred and most commonly offered as security for loans. Even agri-
cultural loans were routinely secured by urban houses.
Agricultural property was the second most common security for debt.
This debt was concentrated: in Orizaba, more than one-third of the total
value of mortgages on agricultural property ($567,199) was due to eleven
hacienda mortgages larger than $30,000.29 Mortgages on ranchos were far
greater in number, but they were significantly smaller. Other agricultural
properties were mortgaged, including land, crops, "llenos," and other

26. Bazant, Alienation of Church Wealth, p. 255.

27. An 1871 census of C6rdoba listed 263 shops, 185 ranchos, and 11 haciendas; AMC,
vol. i6o, exp. 4. When the houses in town are added, it is clear why urban property mort-
gages outnumbered rural.
28. ANOP i86o, vol. 1, pp. 155-158.
29. Calculated from RPPO Libro de hipotecas y censos, 1882-68. The eleven hacienda
mortgages ranged from $36,556 to $124,000 and took almost fifteen years to cancel on the
average. The values in the totals for agriculturalmortgages do not precisely match those for
all Orizaba mortgages because multiple listing of individual mortgages has been elimi-
nated-agricultural mortgages are tabulated by principal property they affected, not by all
properties.
528 HAHR I AUGUST I EUGENE L. WIEMERS, JR.

properties, but almost always for relatively small amounts.30 About one
debt in six was not secured by any particular property and was collectable
against the total of the debtor's assets in case of default.3' Unsecured debts
were generally smaller than those secured by haciendas or ranchos, but
were not significantly smaller than those secured by houses, crops, or land.
Orizaba's place in the developing textile industry is evident in the rela-
tive importance of industrial mortgages in that town. Over half of the
amounts in this group were liens on the Cocolapan textile mill,32 but the
total included mortgages on flour mills, tanneries, and a printing press. It
was almost inevitable that the transfer or sale of a property of the value of
a textile or flour mill would give rise to a substantial debt for the buyer;
hence their impressive totals. For example, when Carlos Saulnier, the
French engineer who came to develop the textile mill and then expanded
into grain and other businesses, sold his Molino Puente de la Borda to
Manuel Fernandez Puertas in 1853, the transaction included a short-term
obligation of $69,ooo, recognition of two capellanias, and a long-term
mortgage of $30,000.33 The size of this type of sale and the need for buyer
and seller to finance one another account for the importance of industrial
mortgages in the total. The same applies to hacienda sales, which were
comparable in size and complexity to industrial property transfers. The
result is that haciendas and industrial establishments together accounted
for over 40 percent of the value of mortgaged property in Orizaba, even
though, as is clear in the totals for obligaciones, it was relatively uncom-
mon to use haciendas or industrial properties to secure loans.
What kinds of debts did these contracts represent? For mortgages, the
most common purpose was to secure the unpaid portion of a property
sale. The debt was generally owed by the buyer of the property to the
seller, as in the example of Saulnier's flour mill. Especially for larger ha-
ciendas and ranchos, a large proportion of sales involved some kind of fi-
nancing by the seller. Of forty sales of haciendas and ranchos in Orizaba
between 1840 and 1871, 43 percent were financed in part by the seller,

30. The term "llenos" refers to real property on a hacienda or rancho such as a house,
barn, shed, or other structure, but not the land itself. Mortgages on llenos were common in
cases where the debtor leased a rancho and held or constructed property on the land, but
did not own the land itself. Such an arrangementwas especially common in C6rdoba where
the municipality leased rural property to individuals virtually in perpetuity, and rancheros
held title to the contents, or llenos, of the rancho, but not to the rancho itself.
31. Bauer, Chilean Rural Society, p. 89, discusses the general mortgages as an obstacle
to the flow of credit. The general obligation was not widely used in Orizaba and C6rdoba.
32. On Cocolapan, see: Dawn Keremitsis, La industria textil mexicana en el siglo xix
(Mexico City, 1973), pp. 9-40; and Robert A. Potash, El Banco de Avio de Mexico, el
fomento de la industria, 1821-1846 (Mexico City, 1959), pp. 231-234.
33. ANOP 1853, pp. 54-57.
ORIZABA AND C6RDOBA, 1822-71 529

including virtually all of the large hacienda sales.34 Thus access to credit
was generally required for purchase of agricultural property, and the ac-
quisition of large estates almost always involved substantial long-term
debts of the buyer of the property to the seller. Landowners did not ac-
quire land to get access to credit markets; they needed credit to assume
ownership.3 The mortgage registry alone, however, does not give infor-
mation sufficiently complete to indicate reliably the purpose of debts. For
a comparison of the intended use of borrowed funds, the records of the
local notaries must be consulted.36
Although it was common for a contract not to reveal the purpose of a
loan, the purpose was nevertheless described in more than half the loan
contracts (accounting for about 6o percent of the contracted value). The
purpose most commonly specified, once property sales are eliminated,
was for agricultural finance, or avzo. A creditor, or aviador, advanced a
sum under specific terms to a debtor, or aviado, to finance his rancho or
hacienda. These contracts were common throughout Mexican agricul-
ture, and were widely used in Cordoba and Orizaba to finance planting,
cultivation, and harvesting of tobacco and coffee. Credit also financed la-
bor costs in sugar and aguardiente production. Avto contracts accounted
for about one-fourth of all obligaciones recorded. Contracts carrying for-
ward a balance from the settling of accounts (liquidacion de cuentas)
and loans for other purposes made up about one-fifth of the contracts.
In all, almost two-thirds of loans whose purposes were specified were
agricultural.
Agricultural avto loans were almost identical to other loans in amount
and kind of property secured. The average avto was a contract for $2,825,
compared to $2,696 for all loans. Properties mortgaged for agricultural
avio parallel contracts in general: one-third of avto contracts were se-
cured by houses, half by agricultural property or crops, compared to 40
percent each on houses and agricultural property for all loans.37 Those
needing short-term finance for crops borrowed in amounts similar to
those of borrowers in general, and used much the same distribution of

34. The subject of seller financing of land sales is treated more fully in related work
by this author, "Agriculture and Enterprise in Nineteenth-Century Mexico: C6rdoba and
Orizaba, 1840-1871," Ph.D. Diss. in progress, University of Chicago.
35. Palacios found the same pattern in Colombia in the late nineteenth century-access
to credit was almost always a prerequisite to estate purchase; Marco Palacios, Coffee in Co-
lombia, pp. 38-39.
36. This position differs from Greenow's. She analyzed the mortgage registry only.
I found in Orizaba and C6rdoba notarial registries a clearer indication of the purpose of both
secured and unsecured debts. See Greenow, Credit and Socioeconomic Change, pp. 15-16.
37. Calculated from contracts specifying agriculturalpurpose in ANO, ANC Protocolos,
i840-71.
530 HAHR I AUGUST I EUGENE L. WIEMERS, JR.

properties to secure them. Ownership of a large estate was not essential

to gain access to credit markets, even for agricultural credit.

Borrowers and Lenders

Who was supplying credit to hacendados, rancheros, and other bor-
rowers, and who was borrowing? Did terms of credit or security require-
ments differ sharply from one group to the next? These questions must be
addressed in order to determine whether large landowners had preferred
access to credit. It is not enough to observe that large landowners usually
secured larger mortgages, because contracts hacendados used to buy
properties from one another in the first place are included. The data indi-
cate that large and small landowners differed little from one another in
their ability to get credit, and displayed striking similarities in properties
they mortgaged. Credit relationships did follow broader social hierarchies,
however. The subordinate social position of small holders was reflected in
the sources and terms of credit, as well as amounts available to them. The
most noteworthy feature of secured borrowing was the importance of a
house as a potentially mortgageable asset and the widespread use of
houses as a source of cash, regardless of the debtor's occupation or social
position.
Three basic features of occupational distribution of credit are clear.38
First, hacendados were consistently involved in larger transactions, both
as creditors and as debtors, than members of other groups. Almost 6o per-
cent of agricultural mortgage debt in Orizaba was owed by hacendados,
and over one-third was owed to them. Large landholders dominated
mortgage markets almost by definition; the large amounts involved in the
sales of haciendas account for the bulk of the total mortgage debt of ha-
cendados. Second, merchants were clearly the largest single source of
cash for landowners. Merchants supplied about 15 percent of agricultural

38. Occupational assignments are based on detailed information extracted from con-
tracts, registers, and other published and unpublished sources for C6rdoba and Orizaba. In
all, approximately 3,000 observations of activities of 1,087 individuals were tabulated, and
assignments were based on available evidence. Of the 1,087 individuals, merchants ac-
counted for 12 percent; rancheros, 21 percent; hacendados and tenant farmers, 6 percent
each; professionals, 4 percent; clerics, 3 percent; and others, 4 percent. No assignment
could be made for 44 percent. John Tutino, in "Hacienda Social Relations in Mexico: The
Chalco Region in the Eve of Independence," HAHR, 55 (Aug. 1975), 503, argues that in
light of the mixture of enterprises members of the elite engaged in, "occupation"is an anach-
ronistic concept. This is a good point, and much of the evidence presented here supports it.
Lacking a precise alternative, however, I use the term here as a shorthand notation for the
mix of socioeconomic status and property holding that defined social position in the nine-
teenth century.
ORIZABA AND C6RDOBA, 1822-71 531

mortgage credit and almost 6o percent of funds recorded in loans.39 Third,

the role of the church as supplier of new capital to Orizaba and Cordoba
landowners in the nineteenth century was negligible. This is in strong
contrast to the situation in late colonial Guadalajara. The liberalism of
Veracruz has long been noted in nineteenth-century politics, and there is
no better measure of the difference between this region and Central Mex-
ico than the reversed roles of clerics and merchants in supplying credit to
landowners. 40
If merchants dominated cash lending, rancheros dominated borrow-
ing, at least in the number of transactions registered. About half of the
loan recipients of known occupation were rancheros, who owed about
one-fourth of all debt; and about 22 percent of borrowers of known oc-
cupation were hacendados, accounting for almost 40 percent of the total
amount borrowed. Some 35 percent of borrowers could not be identified
by occupation; they borrowed smaller than average sums. Although it is
clear that hacendados and merchants were preferred in credit markets, in
the sense that they borrowed greater amounts, small landowners were
not excluded. Loans were certainly not restricted to debtors with large
landholdings.
In fact, there is strong evidence that landowners preferred not to
mortgage their ranchos or haciendas unless absolutely necessary; more
often they used their houses to secure loans (see Table III). Fewer than 20
percent of the loans made to hacendados were secured by their hacien-
das, and almost one-third were secured by their houses or houses and
other properties. Almost 40 percent of ranchero loans were secured by
houses and only about one-fourth by their ranchos. Of course, larger
amounts were secured by more valuable properties, but there is little or
no evidence that ownership of a rancho or hacienda was what made a bor-
rower creditworthy. The choice of property to mortgage to secure loans
was remarkably similar for landowners of all sizes.
Despite these similarities, debt relationships did reflect social hier-
archies. Studies of credit from the point of view of the individual or the

39. The merchants in C6rdoba and Orizaba included both Mexicans and foreigners.
Most were small shopkeepers of Mexican, Spanish, or French descent. The grand financiers
of Mexico who came from this region, including the Escandons and Miguel Bringas, scarcely
figured in regional documentation except through family members or employees.
40. Greenow found that the share of clerics and clerical institutions in total lending was
important, but declining, between 1721 and 1820 (from 71 percent to 25 percent over this
period); Greenow, Credit and Socioeconomic Change, p. 40. Bazant, Alienation of Church
Wealth, pp. 76-78, describes the relative unimportance of ecclesiastical contracts in
nineteenth-century C6rdoba and Orizaba.
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ORIZABA AND C6RDOBA, 1822-71 535
family have revealed large amounts of intraelite or intraclan borrowing.4
This is part of the broader pyramid of credit shown above in Table II. Re-
lated by kinship or not, merchants and hacendados tended to borrow from
one another, forming a net of large cash transactionsin which examples of
intraelite or intrafamilialborrowing are easy to find. Thus almost 40 per-
cent of the total amount loaned between 1840 and 1871 in Cordoba and
Orizaba was borrowing by hacendados and merchants from one another.
Rancheros tended to borrow from rancheros, hacendados, and merchants,
and resorted to other sources of capital as opportunities arose; however,
their loans from merchants were limited to relatively small amounts.42
Professionals and churchmen formed part of the borrowing elite, though
clerics appeared more often as lenders than borrowers. Persons without
property, insofar as they appeared in formal mortgages and debts, were
tied to credit markets through their ranchero and hacendado patrons.
This pattern of lending represents the top of a pyramid of credit rela-
tionships extending from indebted peons and tenant farmersthrough large
and small landowners to the most prominent merchants, hacendados, and
politicians in the region. At the top was the merchant-financier, who usu-
ally marketed crops outside the region and who had access to information
on demand for the product. In the middle was the landowner, hacendado
or ranchero, who either grew the crop himself, or contracted and financed
production by small growers. At the bottom was the grower-the tenant
farmer, peon, sharecropper, ranchero, or Indian villager-who harvested
the crop and delivered it to the patron'sdoor.3
An avio contract between Tiburcio Nuln-ezand merchant Ramon Ortiz
shows how the system worked. Nuniiezreceived $200 from Ortiz and
agreed to deliver 40 arrobasof tobacco at $5 per arrobato him the follow-
ing year. Nunfiez'sdebt was secured by Nunfiez'sown avio contract with
41. Hyland, "Fragile Prosperity," pp. 394-395; Lindley, Haciendas and Economic De-
velopment, pp. 47-53. Both Lindley and Hyland note borrowing within families, but do not
extend the analysis beyond the individual families they analyzed to see if broader social prac-
tice is reflected. On the interlocking connections between economic and familial relation-
ships, see: Charles H. Harris, A Mexican Family Empire, the Latifundio of the Sdnchez
Navarros, 1765-1867 (Austin, 1975);and MarkWasserman, Capitalists, Caciques, and Rev-
olution: The Native Elite and Foreign Enterprise in Chihuahua, Mexico, 1854-1911 (Chapel
Hill, 1984). An interesting quiestion, far beyond the scope of the present research, would be
to what extent marriage, kinship, and compadrazgo relationships underlay credit relation-
ships. Greenow found few kinship linkages in Guadalajara,but she did not look at ritual
kinship. See Greenow, Credit and Socioeconomic Change, pp. 49-50.
42. The average value of merchant loans to rancheros was $1,547.52 (St. Dev. = 1,434.82,
N = 78) compared to $5,810.71 (St.Dev. = 8,o63.44, N = 78) for merchant loans to other
known occupations. The ranchero loans are significantly smaller: T = 4.59, significant at
.01 level.
43. Christian Carl Sartorius, Mexico about i850 (Stuttgart, 1961), pp. 177-178, de-
scribed credit in tobacco growing. Brading, Miners and Merchants, pp. 149-152, describes
a similar relationship in mining.
536 HAHR j AUGUST j EUGENE L. WIEMERS, JR.

Juan Limon, who had planted 40,000 tobacco plants on a part of Nuniiez's
Rancho San Lorenzo Sacatepec. Limon had agreed to receive $i2o avto
plus rent-free land for growing beans and tobacco. He was to deliver i20
arrobas of "tabaco principal" at i8 reales each, and to deliver lower
grades of tobacco at a discount of 2 reales per arroba from the "price cur-
rent among aviados" at the end of the harvest. So of the $200 Nunlez was
to receive from Ortiz, Nuniiez agreed to give $i2o to Limon to finance
his crop; Limon would then repay the $120 and receive at least an addi-
tional $150 from Nuniiez by delivering i2o arrobas of harvested tobacco at
i8 reales per arroba. Nuniiez, in turn, was to repay Ortiz with 4O arrobas
of tobacco, deducted from the avto at $5 per arroba, and would have the
rest of the crop (at least 80 arrobas) to sell to Ortiz or on the market, at the
price then current of $5.50 per arroba, for an additional $440. Ortiz
would net $20, or 10 percent, on his eight-month investment of $200,
Nuniiez would get $440 for tobacco harvested on his land, and Limon
would receive the avto, rent-free land for his beans, and $150 cash.44
Though few avto contracts were so explicit, the structure of this one is
typical, and illustrates how the credit pyramid worked. The merchant
made a modest investment in the ability of the ranchero to deliver to-
bacco, and received a market return on his investment. The ranchero, as
landowner-intermediary, used his access to land and connections with de-
pendents to obtain a more impressive gain on this small transaction, but
bore the risk that he would have to come up with a substantial amount of
cash to repay the merchant. The grower, needing land for his crops,
agreed to deliver tobacco at a hefty discount, less than half the market
price, in exchange for access to land, some credit, and the possibility of
earning cash on the side in the transaction.45
Credit relationships thus reflected broader social hierarchies. For bor-
rowers high in status, access to merchants' or hacendados' credit was di-
rect and routine; for borrowers at the bottom, access was often through
some intermediary, or, if direct from merchants, for limited sums and pur-

44. ANC 1849, p. 263. The 40,000 tobacco plants would have required about two
cuartillas of land, according to studies done at the time of the land reform. See agronomists'
reports in CAM, 126 (San Jos6 del Corral), pp. 206-207, and SRA Pefnuela23/5103, Dot.
Loc., pp. 17- 18. Rent on two cuartillas in 1849 would have been between $8 and $20 pesos
per year, so the grower earned $16o- 170, plus the avio. For rental rates, see ANOP 1848,
pp. 361-362, and ANOP 1847, p. loo. The market price is from ANOP 1850, pp. 619-621.
45. Sartorius reported that the principal benefit to the aviado in tobacco growing was
his ability to sell the lowest grade of tobacco to contrabandistas. Sartorius, Mexico about
i850, p. 178. Other examples of layered credit transactionsare: ANC 1840, pp. 68-71; ANC
1844, pp. 25-26; ANC 1844, pp. 124-127; ANC 1846, pp. 1-2; ANOP 1849, pp. 352-360;
ANC 1855, pp. 5-6; ANOP 1857, vol. 2, pp. 463-466; ANOP 186o, vol. 1, pp. 122-155;
ANC 1861 (Palma), pp. 4-7; ANOP 1864, vol. 2, pp. 16-18; and ANOP 1865, vol. 2,
pp. 151-158.
ORIZABA AND C6RDOBA, 1822-71 537

poses. At all levels, as Hyland has noted, credit was a mixture of business
and trust.46For mortgages on properties for given amounts of money, the
requirements placed on large and small landowners were remarkably
similar. The ability of small holders to get credit was not restricted, but
their subordinate position in the regional economy and society limited
the amounts available to them.

Interest Rates
The most obvious indicator of differences in access to credit between
groups would be the interest rates they paid. Contracts specifying inter-
est charges greater than the traditional 6 percent rate, however, were il-
legal in Veracruz until 1867, so rates above that level did not appear in
contracts.47Actual interest costs were probably higher, in the form of hid-
den charges, reduced loan amounts, or discounted prices.48A long-term
rate of 8 or 9 percent on well-secured mortgages and a short-term rate of
12 to 40 percent appears closer to actual practice.
The strongest evidence of hidden interest charges is the dramatic rise
in stated rates once restrictions were lifted. The average rate for agri-
cultural mortgages and loan contracts was 4.9 percent, including the io
percent of contracts written at an interest rate of zero. Once restrictions
were lifted, typical rates quickly rose to 1 to 3 percent per month, be-
tween two and six times the previous legal rate. The stated rate on loan
contracts in Orizaba and C6rdoba, including those with no interest, rose
from 3 percent per year for 1864-66 to 8 percent in 1867, 13 percent in
1868-70, and 17 percent in 1871.49Of course there were new contracts
being negotiated at traditional rates, but the same market forces that
produced this rise must have been at work before 1867. The actual rates
simply became legal and began to appear in contracts.
Scattered direct evidence indicates that for small holders with little
property to mortgage, hidden charges were exceptionally high. Ranchero

46. Hyland, "Fragile Prosperity,"405.

47. Two developments culminated in new civil codes in the 186os. One was the French-
inspired civil code completed in the first two volumes in 1867. See Helen L. Clagett and
David M. Valderrama, A Revised Guide to the Law & Legal Literature of Mexico (Washing-
ton, D.C., 1973), pp. 64-65. The other was the Veracruz state code, the so-called C6digo
Corona. See Enciclopedia de Mexico, 12 vols. (Mexico City, 1968), III, 327. The code was
published in 1868 and went into effect May 5, 1869. See Fernando de Jesus Corona, C6digo
civil del estado de Veracruz-Llave (Veracruz, 1868). Interest rates above the traditional level
appeared for the first time in 1867; there were two such contracts in 1867, two in 1868, and
thirteen in 1869.
48. Obviously most contracts did not spell out such charges. Some examples are noted
below.
49. Calculated from ANO, ANC Protocolos. There were thirty-six mortgages between
1867 and 1871, including five with an interest rate of zero.
538 HAHR I AUGUST I EUGENE L. WIEMERS, JR.

Pascual Pulido paid 2i percent on a short-term loan in 1840.3? When

ranchero Pedro Torres could not deliver 50 quintales of coffee at the
agreed price of $5 to his creditor, he was required to guarantee not only
the delivery of the goods but also "profits which this sum ought to
produce today," or an additional $3 per quintal in cash.5' Such extraordi-
nary charges were not limited to poor debtors, but the evidence indicates
that like loan limits and security requirements, interest rates were related
to risk.52 Since direct evidence is lacking to analyze risk through interest
rates, the best direct evidence of the relative position of large and small
holders is their ability to repay debts.

Repayment, Defaults, and Foreclosures

The conventional view of credit repayment is that debtors were lax,
and collection was expensive and difficult. Andres Molina Enriquez wrote
in 1902 that hacendados "rarely" repaid their mortgage debts, in sharp
contrast to merchants and industrialists who, Molina said, routinely paid.3
In this view, mortgages simply mounted up, moved from owner to owner,
and constituted a progressively greater burden on agriculture.34 In this
view, delay in payment was even more pronounced if creditors did not
actively pursue payment. Ecclesiastical lenders paid more attention to
payment of interest than principal, and their records were not always as-
siduously kept.3 When repayment of loans has been examined, the con-
sensus is that most loans were either overdue or in default. Greenow
refers to a "permanent state of indebtedness" among the Guadalajara
population in the eighteenth century, and calculates that only 32 percent
of the amount borrowed between 1721 and 1820 was ever repaid.56 Lindley
notes that "long-overdue" loans were a "common feature of the credit
landscape."37
The notion that most debtors were delinquent is problematical. If it
were the case that a creditor could expect no repayment, there would
have been few loans in the first place. The data for Orizaba and Cordoba
suggest that the impression of rampant delinquency may be because of

50. ANC 1840, pp. 40-41.

51. ANC 1846, pp. 59-61.
52. Additional analysis of interest charges for all borrowers, based on discounting prac-
tice is found in related work of this author, "Interest Rates and Discounts in Nineteenth-
Century Mexico," unpublished ms., University of Minnesota, 1984.
53. Andr6s Molina Enrfquez, Los grandes problemas nacionales, (Mexico City, 9gog),
P. 94.
54. Brading, Haciendas and Ranchos, p. 91.
55. Costeloe, Church Wealth in Mexico, p. 78.
56. Greenow, Credit and Socioeconomic Change, p. 28.
57. Lindley, Haciendas and EconomiiicDevelopment, p, 41.
ORIZABA AND C6RDOBA, 1822-71 539

peculiarities in the records rather than the behavior of debtors. While

registry of contracts was required, notation of cancellation was not. If
a debtor could produce a document to show a debt had been paid, it
mattered little if the original contract had been noted as cancelled. For
example, Col. Francisco Mairquez paid $6ooo on an 1846 debt to Orizaba
merchant Leandro Iturriaga in 1851, but this was not noted until 1856,
based on examination of a receipt.58 If a completed contract was un-
challenged, or there were no subsequent legal disputes over it, notation
of cancellation was neither necessary nor important.
In the case of the Orizaba mortgage registry, cancellation practice
changed dramatically when the records were transferred to the public
property registry in i868. The percentage of contracts that remained un-
cancelled rose from 29 percent in 1840-65 to 42 percent in i866, 63 per-
cent in 1867, and 73 percent in i868. There were also sharp differences
between notaries in recording cancellation. In Orizaba, over 6o percent
of mortgages and loans were cancelled in the original documents; in
Cordoba, only one-third were so noted. If noncancellation were taken as
evidence of default or delinquency, the implied default rate in Orizaba
would be 38 percent, and about 68 percent in Cordoba, either of which
would have destroyed the credit market. Lenders do not make loans
under such circumstances.
To analyze repayment, two approaches are used here. First, character-
istics of cancelled contracts are examined as if they represent all contracts,
revealing uniform patterns of repayment across occupational and property
types, and indicating that long-overdue loans were quite exceptional. Sec-
ond, cases of known default are examined. With both methods, the evi-
dence suggests that debts were routinely repaid and defaults were rela-
tively rare.
The repayment data for cancelled mortgages and debts on properties
are shown in Table IV. For all mortgages, the average length of time to
cancel was 7.5 years. For agricultural mortgages in Orizaba, cancellations
are noted in 57 percent of the contracts; the mean time to cancel was
7.1 years. Loans in Cordoba and Orizaba were generally shorter; the
mean time to cancel was 3.7 years, and 52 percent were cancelled. Most
mortgages were cancelled in this general time frame, with the exception
of hacienda and industrial property mortgages, which were cancelled in
12 to 13 years, on the average.
The average times to cancel tell only part of the story, however. As
is clear in Figure 2, for those contracts in which repayment data are
complete, cancellation was usually much quicker. For all mortgages in

58. ANOP 1846, pp. 312-315.

540 HAHR I AUGUST I EUGENE L. WIEMERS, JR.

TABLE IV: Mortgage and Loan Repayment by Property Mortgaged

Orizaba Obligacionespor reales

Mortgages Agricultural Mortgages C6rdoba and Orizaba
1822- 1868* Orizaba, 1822-1868* 1840-1871**
Length Term Length Term Length
(Yrs) (Yrs) (Yrs) Delay3 (Yrs) (Yrs) Delaya
(St. Dev.) (St. Dev.) (St. Dev.) (St.Dev.) (St.Dev.) (St. Dev.) (St. Dev.)
[N] [N] [N] [N] [N] [N] [N]
House 7.5 0.7 3.2 5.0 1.7 4.4 2.6
(9.2) (0.5) (1.3) (4.5) (2.1) (7.0) (2.6)
[631] [3] [2] [2] [143] [108] [98]
House + 1.7 4.6 1.5 1.6 3.8 2.3
Other (1.3) (6.2) (0.6) (1.5) (3.9) (2.2)
Property [7] [5] [4] [22] [13] [9]
Hacienda 12.7 4.2 12.0 2.1 3.6 5.1 0.8
(10.5) (2.7) (11.5) (2.0) (2.3) (7.8) (0.4)
[46] [28] [39] [22] [10] [6] [3]
Rancho 6.0 2.5 5.9 2.5 2.0 3.1 2.0
(8.2) (2.3) (6.1) (1.8) (1.6) (3.6) (1.9)
[46] [76] [51] [36] [56] [38] [31]
Land 5.2b 1.1 3.5 2.5 1.3 3.7 2.3
(9.3) (1.0) (4.4) (2.4) (1.4) (3.8) (2.1)
[33] [30] [28] [20] [28] [17] [12]
Crop 1.6 3.9 4.5
(2.0) (5.3) (4.1)
[10] [7] [3]
Llenos 2.2 2.8 3.4 0.6 2.0 2.3
(2.7) (1.8) (2.0) (0.4) (3.1) (1.8)
[5] [3] [3] [13] [6] [4]
Industrial 12.1
Est. (14.5)
[38]
Other 5.1 - 0.9 1.6 3.8
(8.2) (0.8) (1.9) (4.7)
[58] [11] [11] [6]
None 1.3 2.0 2.2
(1.5) (4.0) (2.3)
[44] [23] [14]
Total 7.5 2.5 7.1 2.4 1.6 3.7 2.5
(9.4) (2.4) (8.4) (2.1) (1.8) (5.6) (2.5)
[873] [150] [128] [85] [337] [229] [180]
Source: *RPPO, Libro de hipotecas y censos, 1822-1868, second set limited to mort-
gages on agricultural property. **ANO, ANC Protocolos, 1840-1871, excluding contracts
originating from sale of urban property.
3Delay = Length/Term. Excludes five contracts where delay exceeds 15. See note 62.
bIncludes crop mortgages.
"Includes mortgages not tied to particular properties.
ORIZABA AND C6RDOBA, 1822-71 541

FIGURE 2: Cancellation of Mortgages and Loans

100

90 .

() 80- ....

C
O~~~~
70 /

CD 60 /

a, 50-
0

Ca 40 . Orizabamortgages
.)
C 30 -- Orizaba and C6rdoba loans

E 20 ................. Orizaba
E agricultural
mortgages

10-

2 4 6 8 10 12 14 16 18 20+
Years until cancellation

Source: See Figure 1. Limited to cancelled contracts.

Orizaba, half of those cancelled were repaid in three years or less; for ag-
ricultural mortgages, half were repaid in five years or less (these were
larger and longer-term contracts); for loans in both towns, half were can-
celled in two years or less. Payment patterns, in terms of time needed to
repay debts, are virtually identical for agricultural and nonagricultural
properties. Results for occupational breakdowns show similarly uniform
results. 5
Agricultural and nonagricultural debtors were also comparable in
their ability to keep their agreements. In Table IV and elsewhere, "term"
of a contract refers to the length of time agreed upon by the contracting
parties for repayment. For agricultural mortgages, the average term was
about two and one-half years, with many contracts for less than one year;
for loans in Cordoba and Orizaba, the average was about one and one-half
years. "Length" refers to the amount of time needed to repay the debt. It
is calculated for contracts where cancellation has been noted in the mort-
gage or notarial registry. In both term and length, most mortgages were

59. For loans, the average merchant debt was 2.7 years in length; for hacendados,
4.8 years; for rancheros, 3.6 years.
542 HAHR I AUGUST I EUGENE L. WIEMERS, JR.

FIGURE 3: Delay in Payment-Orizaba and C6rdoha Loans

50-

45-

40- d
Ae dbtors

35
r{Hacendados
() 30 Rancheros

(D 25 _.

a. 20

15 **:

10
5 .. ... ....,.

0-
1 2 3 4 5 6 7 8 9+
Delay (length/term)

Source: ANO, ANC Protocolos 1840-i871, excludiiig *orbain

property sales.
Limited to contracts of knownitermianidlength.

similar, with the exception of hacienda and industrial mortgages, which

were significantly longer.6' If the ratio between length and term for each
contract is calculated, the result is a measure of how well agreements
were kept, called "delay" in the tables. This is a "deadbeat indicator,'
showing the relative ability of debtors to pay within the time originally
established.
An examination of "delay" reveals an underlying consistency in debtor-
creditor relations not revealed by examination of either the terms or re-
payment of contracts alone. Greenow notes that few contracts in Guadala-
jara were fulfilled on time and asks why lenders "repeatedly" specified
two-, three-, or four-year limits on loans "in the face of consistent delin-
quency by borrowers. "6' This analysis indicates that even if repayment
were not always prompt or punctual, it was predictable, and borrowers
and lenders recognized the difference between short- and long-term
agreements. Both for agricultural mortgages and for loans, delay in pay-
ment followed similar patterns for large and small borrowers, and was not

6o. Industrial mortgages in Orizaba were signiificanitly loiiger thaln other mortgages;
T = 2.o8, significant at .05 level; for hacienda mortgages, T = 3.48, significant at .oi level.
6i. Greenow, Credit and SocioeconomnicChange, p. 54.
ORIZABA AND C6RDOBA, 1822-71 543

FIGURE 4: Delay in Paynient-Orizal)a AgriculttIral Mortgages

40-

36_

32 -Aldebtors

28X Hacendados

24 - Rancheros

CD 20 '

0- 16-

12

8-

0
1 2 3 4 5 6 7 8 9+

Delay (length/term)
Source: RPPO, Libro de centsos y hipotecas, 1822- i868. Liiimited to coiltracts
of known term anid lenigth secuired i)y agrictultuiral property.

markedly different from debtors in general (see Figures 3 and 4). Most
contracts were cancelled in less than twice the contracted term, and i5 to
30 percent were paid "on time. 'Consistency in delay of payment also sug-
gests that marketplace conditions were the obstacle to prompt repay-
ment, rather than unreliability of borrowers, and that those conditions
were the same for both large and small landowners. Borrowers and lenders,
or buyers and sellers of property, must have known their ability to pay,
and discounted risks of "delinquency" wheni they negotiated. Repayment
was thus not a matter of "delinquency" at all, since repayment of debtors
and buyers of property was so consistent. "Delinquency" would imply
that there was some form of deviance. What is striking about debt repay-
ment is that few deviants are evident, and few differences in repayment
behavior are to be found.62

62. In calculating the delay variable in Table IV, five conitr-acts halve been exeltuded from
the calculations. Of the ninety agricutlttural imortgages for whliich delay couild he calctulated,
eighty-five showed delay of less thani io. Delav exceedled a valtue of 15 in five shor-t-term
contracts. Virtually all the variationi of delay by property type. contract type, and occuipationi
was due to these five outliers. The same conitr-acts were excltudled fromiithe obligaciones por
reales data, but all are incltuded in the initervalized displav of delay ill Figulres 3 alnd 4.
544 HAHR I AUGUST I EUGENE L. WIEMERS, JR.

Foreclosures could result from unpaid debts, but they were not typi-
cal. Of the 443 obligaciones analyzed for Cordoba and Orizaba for the
1840-71 period, only 3.2 percent were cancelled by legal adjudication of
the mortgaged property to the creditor in payment. The total amount
of defaulted debt was $43,461, or about 4 percent of the total amount of
debt contracted.63 Delay for adjudicated debts averaged 3.8, higher than
for most contracts, but certainly all contracts with excessive delay of pay-
ment were not foreclosed. An alternative to foreclosing a contract was to
subrogate it to another creditor, but there is no indication that this was
generally used for delayed payments. The mean delay for subrogated con-
tracts was 2. 1, or about the same as for most other contracts.64
There were property cessions resulting from debts not previously reg-
istered in the notaries. There were thirty-one judicial property sales re-
corded in these notarial registers as payments for debts, totaling $120,495,
or less than 3 percent of the total property mortgaged in the same pe-
riod.65 If these are added to the judicial cancellations recorded in the
loans analyzed here, the total number of judicial property transfers for
debt payment (not including judicial sales to settle estates) still numbers
only forty-four, or about three such sales every two years. Taking into ac-
count that the time period under study includes three major wars in the
region, and the property losses and transport disruptions involved in
them, this record is not extraordinarily high.66 The difficulty and expense
of a judicial property sale may have been the chief reasons more debts
were not foreclosed, but whatever the case, it was not expected that loan-
ing money to a property owner who was unlikely to pay would result in
a cession of the property. Foreclosure was apparently not an effective
mechanism to acquire property.67

63. Ransom and Sutch, in their analysis of credit in the cotton South following the Civil
War, took a 5 percent default rate to be a reasonable estimate of the actual rate. No study of
actual repayment of debts to merchants was available to them. See Roger L. Ransom and
Richard Sutch, One Kind of Freedom: The Economic Consequences of Emancipation (Cam-
bridge, 1977), pp. 242-243. They, too, argue that failure to pay on time is not equivalent to
default. See their "Credit Merchandising in the Post-Emancipation South: Structure, Con-
duct and Performance," Explorations in Economic History (New York), 16 (Jan. 1979),
73-74.
64. This figure of 2.1 (St. Dev. = 3. o, N = 15) excludes one outlier where delay = 38.5.
65. The total value of property adjudications registered in the C6rdoba and Orizaba no-
taries to pay agricultural debts was $120,495. The estimate of percent of property mort-
gaged is based on total value of mortgages in Orizabaof $3,853,321 between 1840 and 1868.
This is a conservation estimate, because comparable totals for C6rdoba are not available.
66. Protests over damages to crops or livestock were common, especially to tobacco,
which represented ready cash to a passing army. Protests are recorded in ANOP 1847,
pp. 338-340; ANC 1857, pp. 1-2; ANC 1858, pp. 229-230; ANC 1859, pp. 64-65, 67-69,
-12-121; ANC 186o (Palma),pp. 27-28; andANOP1866, vol. 3, pp. 1-17.
67. Harris, A Mexican Family Empire, pp. 154-155, describes the use of foreclosure as
a land acquisition weapon by the Sanchez Navarros. The inefficiency of this mechanism is
ORIZABA AND C6RDOBA, 1822-71 545
Conclusions
This analysis shows a functioning credit market in Cordoba and Ori-
zaba, where the terms facing most debtors, the requirements of property
to secure debts, and the ability of most debtors to meet those terms were
well-defined and related to risk. Among all contracts, those secured by
houses clearly predominated, and houses were commonly used even to
secure agricultural loans to hacendados or rancheros; ownership of large
landed estates was not required for access to credit markets. In value, the
large, long-term mortgages used to finance the purchase of large proper-
ties such as industrial sites or haciendas were the most important single
type; but the overwhelming number of contracts, both for property trans-
fers and for loans, were smaller, short-term agreements. In contract can-
cellation, there was remarkable uniformity in the ability of debtors to
repay their debts. This is not to say that the terms or results of debt con-
tracts could not be harsh, nor their outcomes unfortunate. Steeply dis-
counted crop prices for small debtors were common, and conditions im-
posed by creditors to ensure their profits and collect their debts could be
rigorous. Nevertheless, most debtors paid their debts, and a surprisingly
large number paid on time. Most debtors operated on a relatively equal
footing (given the obvious differences in their property holdings), and
most contracts were liquidated without foreclosure or judicial process.
Merchants, hacendados, rancheros, and other property owners thus
faced about the same terms in contracting debt; and if ability to repay
debts is an indication, their chances of success in agriculture were about
as good as in anything else. Credit charges were an unavoidable fact
of landownership, as they are today for most large assets, but current
charges were not so burdensome as to prevent debts from being routinely
liquidated. There is no evidence that making loans to farmers was much
different from making loans to anyone else, nor that, from the point of
view of resource allocation, agriculture was a drain on the resources of the
region. Neither did making loans to agricultural enterprises necessarily
result in lower returns or greater delays than loaning to other businesses.
The consistent proclivity of merchants, miners, andoother entrepreneurs
to move assets into agriculture was not a drain on the economy, but rather
simply another direction their resources took in a generally risky and un-
stable economic environment.
When Alberto Garcia Granados wrote in 1892 that before the arrival
of "la paz" (the Porfirianpeace) no capitalist could invest in rural enter-

described in the case of that family'sdispute with the Elizondo family, pp. 155- 161. As the
smaller landowners of C6rdoba and Orizaba did, the Sanchez Navarros preferred land pur-
chase to foreclosure on loans to obtain the lands they wanted.
546 HAHR I AUGUST I EUGENE L. WIEMERS, JR.

prise, except at usurious rates, because of high transport costs and risks of
war, and that the only people seeking funds to borrow were "propietarios
arruinados," he was arguing more on rhetorical than factual grounds.68
Certainly the portrait painted here for the large and small holders of
Cordoba and Orizaba was not so bleak. For most of the time before the
railway was completed in the region, debt contracts for sale of property
and for loans for agriculture were regularly liquidated, and repayments
were predictable. Perhaps this picture would suffer by comparison with
post-Porfirian credit structures, but certainly not because the behavior of
individuals had improved nor because a new "progressive" landowner
arose. Uniformity in length, term, and delay, as well as amounts bor-
rowed, indicates that it was the general economic climate of high risks and
transport costs that militated against the performance of agricultural en-
terprises, not a fundamental weakness of agriculture or landowners. That
the market functioned as well as it did, despite warfare and economic
chaos at the national level, is remarkable. That later writers would have
an interest in portraying conditions as much worse than they had in fact
been is not remarkable, because this version of the past provided one of
the chief rationales for Porfirianeconomic policy.

68. Alberto G. Granados, "Del cr6dito agrfcolaen Mexico," BSAM, 16, 47 (1892), 740.