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State Enterprise in Bourbon Mexico: Profits, Policies, and Politics of the Tobacco Monopoly, 1765–1821

Published online by Cambridge University Press:  14 October 2011

Susan Deans-Smith
Susan Deans-Smith
Affiliation:
University of Texas at Austin
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Extract

In 1765, as part of a series of economic and political reforms implemented by the Spanish Bourbons in their American colonies, the tobacco trade of colonial Mexico was monopolized and its management placed in the hands of royal bureaucrats. By the 1790s, Mexico's tobacco monopoly was one of the largest organized industries in colonial Mexico (along with silver mining and textiles) and employed almost 20,000 individuals. In fiscal terms, tobacco revenues were second only to the silver tithe as the most valuable source of government income and accounted for almost one-fifth of total state revenues at the peak of its production. Its organization approximated a vertically integrated industry: Production and supply of tobacco leaf was regulated through a series of contracts that determined who produced tobacco, how much they produced, the prices paid for it, and where it was to be grown. The reorganization of the tobacco trade under Bourbon management resulted in the restriction of tobacco production to one small specific geographical area in southeastern Mexico: the two small villas of Orizaba and Córdoba in the modern-day state of Veracruz. The tobacco produced, in turn, was manufactured into cigarettes and cigars in six state-managed tobacco manufactories, the largest located in Mexico City, the political and commercial capital. Monopoly goods were marketed through government licensed stores throughout Mexico. Private trading and manufacture in tobacco goods became an illegal offense. Compliance with such regulations was enforced by a military corps employed by the monopoly administration, although contraband trade of tobacco was never eliminated.

Type
Articles
Information
Journal of Policy History , Volume 2 , Issue 1 , January 1990 , pp. 1 - 22
Copyright
Copyright © The Pennsylvania State University, University Park, PA. 1990

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References

Notes

1. For an excellent introduction to the political economy of state-owned enterprises, see Ramamurti, Ravi, State-Owned Enterprises in High-Technology Industries (New York, 1987).Google Scholar

2. See the discussion of Barbier, Jacques A. and Klein, Herbert S., “Revolutionary Wars and Public Finances: The Madrid Treasury, 1784–1807,” Journal of Economic History 41, no. 2, (June 1981)CrossRefGoogle Scholar, Cuenca, J. Esteban, “Statistics of Spain's Colonial Trade, 1792–1820: Consular Duties, Cargo Inventories, and Balances of Trade,” Hispanic American Historical Review, 61 (1981).Google Scholar

3. Mexico did not export tobacco, except in small quantities and only erratically to Peru and Chile.

4. An example of the calculation used is as follows: for 1787 the “profit” of the Mexico City manufactory reported was 30 percent, based on the formula: total cost of production = 3,516,568 pesos; total value of production = 4,274,368 pesos; profit = 757,799 pesos or 30 percent. But in order to arrive at the 30 percent, what is used is the sale value of the tobacco invested, 2,015,269 pounds at ten reales per pound = 2,519,086 pesos. Hence:

would have produced the following: total cost of production = 1,501,299 pesos (using the cost price of tobacco to the monopoly, not its sale price); total value of production = 4,274,368 pesos producing

5. In 1795 the monopoly accountant, Francisco Maniau y Ortega, concluded that between 1769 and 1794 the manufactory's profits had steadily declined from 50 percent to 27 percent, with an average for the period of 31 percent. In fact, such “profits” continued to be quite high. A recalculation of net profits made from manufactory production by substituting the cost price of leaf as opposed to its sale price shows a reverse trend—from 51 percent in 1769 to 65 percent in 1794, although by 1806 it declined again to 51 percent. In effect, a long-term trend toward decreasing profits from manufactory production occurred, but it was not nearly as severe as the monopoly bureaucrats perceived it to be.

6. Archivo General de la Nación (hereafter cited as AGN), Tabaco 495, report of Silvestre Díaz de la Vega, 10 July 1795.

7. AGN, Renta del Tabaco 67, administrator Raymundo Goméz to director-generals, 12 June 1786. At least two batches of such reports were found in the AGN and the Archivo General de las Indias, Seville (hereafter cited as AGI), which consistently reported the problems of the new manufactures; too little tobacco, too hastily rolled so that often consumers found their cigarettes had no tobacco, appalling taste and aroma, and cigarettes that would not stay lit.

8. As Marglin has observed, “the discipline and supervision afforded by the manufactory had nothing to do with efficiency, at least as this term is used by economists. Disciplining the workforce meant a larger output in return for a greater input of labour, not more output for the same input.” See Marglin, Stephen A., “What Do Bosses Do? The Origins and Functions of Hierarchy in Capitalist Production,” in The Division of Labor: The Labor Process and Class-Struggle in Modern Capitalism, ed. Gorz, André (New Jersey, 1976), 36.Google Scholar

9. Barbier argues that by 1795 problems reached “crisis proportions” as insurrectionary publications circulated in various cities and towns, including Mexico City, Caracas, and Quito. See Barbier, Jacques A., “The Culmination of the Bourbon Reforms, 1787–1792,” Hispanic American Historical Review 57 (1977), 67. Thus the tobacco workers' riot simply provided further evidence of colonial disorder and provided momentum to reforms that sought to reduce the number of people concentrated in one place in attempts to prevent further insubordination and outbursts.CrossRefGoogle Scholar

10. It is interesting from a comparative perspective that exactly the same discussion was raging in the case of the French Tobacco Monopoly, which did result in its temporary abolition, only to be reestablished by Napoleon in 1810. Once again, the lack of fiscal alternatives as opposed to any penetrating defense of monopoly was responsible for such a decision. See the discussion by Price, Jacob M., France and the Chesapeake, vol. 2 (Ann Arbor, 1973), 788–839.Google Scholar

11. AGN, Tabaco 149, Royal Order of 8 January 1795. I have yet to find a definition of “excessive”in the documents.

12. The workers' tareas consisted of a specified amount of cigars or cigarettes a worker had to produce each day in order to earn the maximum piecework rate for the work accomplished.

13. AGI, Mexico 2259, report of Hierro, de la Riva, 10 October 1776; AGN, Tabaco 241, report of accountant-general Maniau y Ortega, 7 October 1795; AGI, Mexico 2268 Maniau y Torquemada, Tomás Murphy to director-general, 11 January 1799; AGI, Mexico 2269, report of accountant-general Maniau y Torquemada, 11 December 1809.

14. AGI, Mexico 2302, report of viceroy, 29 February 1820.

15. On average, sales of cigars and cigarettes accounted for 98–99 percent of total annual revenues, with cigars accounting for approximately 14 percent compared with a massive 84–85 percent for cigarette sales. The year 1799 marked an upswing and increase in the production and sales of cigars in comparison with cigarettes. Between 1778 and 1809 cigar production increased by 56 percent compared with 48 percent for cigarettes; for almost the same period sales of packets of cigars increased by 61 percent, whereas sales of packets of cigarettes increased by 43 percent. For a more detailed discussion of cigar and cigarette production, see Susan Deans-Smith, chapter 5 “The Tobacco Manufactories: Rationale, Organization, and Production,” in Bureaucrats, Planters and Workers: The Making of the Tobacco Monopoly in Bourbon Mexico, 1740–1810 (forthcoming). A crude per capita expenditure calculation suggests that purchases of cigars and cigarettes moved together in that in 1793 per capita consumption of packets of cigarettes amounted to seventeen packets per year and had increased to nineteen packets by 1806; for cigars, the per capita consumption totaled two packets in 1793 and three packets in 1806.

16. AGN, Tabaco 358, José Luis Rodríguez to Puchet, 8 September 1797.

17. The protection of fiscal territory was clearly important. Traditionally and exceptionally, the monopoly remained autonomous in its decision making and fiscal audit. Royal Orders of 26 April 1765 and 25 February 1766 decreed that neither ministers of the Real Hacienda nor the Real Tribunal de Cuentas were to intervene directly or indirectly with the affairs of the monopoly. All affairs were ultimately to be approved by the Superintendencia General Subdelegado de Real Hacienda y Dirección in conjunction with the Contaduría General. Gradually and to different degrees, the monopoly came under closer scrutiny and intervention of the ministers of the Real Tribunal de Cuentas, not just regarding its accounts but on all matters of policy. In 1792, under the watchful eye of the viceroy Revillagigedo and at his suggestion, the Crown ordered the court of audit, the Tribunal Mayor y Real Audiencia de Cuentas, to examine the accounts of the tobacco monopoly. Díaz de la Vega as director-general requested that the court approach him through the viceroy acting as the superintendente subdelegado de real hacienda and complained that the court of audit was attempting to convert its function of audit into that of executive authority over monopoly affairs. It seems that the exemptions and the executive independence enjoyed by the monopoly and the excise disappeared after the 1790s. After Gálvez's death in 1787 the old ministry of the Indies was separated into two departments responsible for war and the exchequer, each subject to a different head, and by 1790 responsibility for colonial administration was distributed among the Spanish monarchy's five permanent ministries of War, Navy, the Exchequer, Justice, and the State. Only the Council of the Indies, charged with judicial review, fiscal audit, and political consultation, remained solely concerned with the Americas. See D. A. Brading, Miners and Merchants in Bourbon Mexico (Cambridge, 1971), 56–81. For the reorganizations following Gálvez's demise and the rule of Charles IV, see Jacques Barbier, “The Culmination of the Bourbon Reforms,” and Kuethe, Allan, “Towards a Periodization of the Reforms of Charles III,” in Iberian Colonies, New World Societies: Essays in Memory of Charles Gibson, ed. R. L. Garner and W. B. Taylor, 1986.Google Scholar

18. AGN, Tabaco 241, report of the ministers of the Tesoreria General de Exercito y Real Hacienda, 23 November 1795.

19. AGN, Tabaco 241, report of ministers of Real Tribunal y Audiencia de al Contaduría Mayor de Cuentas de México, 9 March 1796.

20. For a discussion of the strike, see Ladd, Doris, The Making of a Strike: Mexican Silver Workers' Struggles in Real Del Monte, 1766–1775 (Lincoln, Nebr., 1988).Google Scholar

21. For a comprehensive description, see the discussion in McWatters, D. L., “The Royal Tobacco Monopoly in Bourbon Mexico, 1764–1810,” (Ph.D. dissertation University of Florida, 1979), 207.Google Scholar

22. The small manufactory of Guadalupe, on the outskirts of Mexico City, was opened in 1800, only to be closed in 1825. Workers were reemployed in the Mexico City manufactory.

23. For a similar problem, see the superb discussion on textile production in colonial Mexico by Salvucci, Richard J., Textiles and Capitalism in Mexico: An Economic History of the Obrajes, 1539–1840 (Princeton, 1987).Google Scholar

24. What the monopoly operations illustrate, not surprisingly, is yet another example of an industry in late colonial Mexico that was based on extensive rather than intensive growth. The absence of any productivity growth implied that in the long run costs and relative prices would rise. On the limited productive capacity of the colonial economy, see Garner, Richard L., “Further Considerations of ‘Facts and Figments’ in Bourbon Mexico,” Bulletin of Latin American Research 6 (1987).CrossRefGoogle Scholar

25. AGN, Renta del Tabaco 67, director-general to Puchet, 14 March 1793.

26. AGN, Tabaco 241, Díaz de la Vega to Azanza, 31 March 1799.

27. Several descriptions already exist on the tobacco manufactory workers. The most comprehensive is contained in McWatters, “The Royal Tobacco Monopoly.” See also María Amparo Ros T, most notably La producción cigarrera a finales de al colonia: La fábrica en México (Mexico City, 1984), and “La real fábrica de tabaco ¿un embrión del capitalismo? Historias, 10.

28. Few increases were registered at the supervisory levels, and the practice of individual petition permitted some workers to improve their own position relative to others doing the same work but who may not have worked very long in the manufactory. Newly employed pieceworkers, however, suffered an absolute decrease when by the late 1790s they were hired at a rate that began at one and a half reales per tarea and climbed to three and a half reales compared to the rate that prevailed when the manufactories opened at between two and four reales. As such, the manufactory workers fared no better than other urban workers in colonial Mexico.

29. For a comparable example, see the stimulating essay by Truant, Cynthia, “Independent and Insolent: Journeymen and Their ‘Rites’ in the Old Regime Workplace,” in Work in France: Representations, Meaning, Organisation, and Practice, ed. Kaplan, Steven L. and Koepp, Cynthia J. (Ithaca, 1986).Google Scholar For an equally stimulating analysis of the subordination of labor to capital and the imperfections of the process, see Price, Richard, “The Labour Process and Labour History,” Social History 8 (1983).CrossRefGoogle Scholar

30. Ludtke, A. L. F., “The Historiography of Everyday Life: The Personal and the Political,” in Culture, Ideology and Politics, ed. Samuel, R. and Stedman-Jones, G. (London, 1982), 44.Google Scholar The literature on worker response to changes caused by increasingly capitalist relations is immense. One provocative set of essays is contained in Kaplan and Koepp, Work in France. For a compelling analysis of resistance, its process and manifestations, see Scott, James C., Weapons of the Weak: Everyday Forms of Peasant Resistance (New Haven, 1985).Google Scholar In addition, the stimulating comments in Taylor's, William essay “Between Global Process and Local Knowledge: An Inquiry into Early Latin American Social History, 1500–1900,” in Reliving the Post, ed. Zunz, Olivier (Chapel Hill, 1985)Google Scholar, have influenced my analysis of monopoly development and responses at the local level. As Taylor acutely observes:

While capitalism, other economic structures, and the state conditioned social life, they did not simply determine it. The reciprocal (which is not to say equal) connections described in this essay depended on local responses and conditions—not just relentless pressure on external developments and authority. (171–72)

31. The letters and petitions are scattered throughout the Ramo de Tabaco, Ramo de la Renta de Tabaco, and Indiferente General in the AGN, and also in the Tabaco section of the Audiencia de Mexico sección in the AGI.

32. See the essay by Michael P. Hanagan, “Proletarian Families and Social Protest: Production and Reproduction as Issues of Social Conflict in Nineteenth-Century France,” in Kaplan and Koepp, Work in France, 451.

33. See Ladd's discussion on this particular point in The Making of a Strike, 119–23. Also Phelan, John Leddy, “Authority and Flexibility in the Spanish Imperial Bureaucracy,” Administrative Science Quarterly 5 (1960).CrossRefGoogle Scholar

34. AGI, Mexico 2313, director-general Hierro to viceroy Mayorga, 6 April 1781; Romana to Hierro, 9 April 1781.

35. AGN, Tabaco 515, Hierro to Revillagigedo, 13 April 1792; report of fiscal Posada, 27 April 1792.

36. AGN, Renta del Tabaco, directorate-general to Romaña, Betosolo, 2 September 1791. See also the Prevenciones de la Dirección General, que deben observarse exactemente en la Fábrica de Puros y Cigarros, 20 March 1792.

37. Lis, Catharina and Soly, Hugo, “Policing the Early Modern Proletariat, 1450–1850,” in Proletarianization and Family History, ed. Levine, David (New York, 1984), 212.Google Scholar

38. AGN, Tabaco 241, Díaz de la Vega to viceroy Azanza, 31 March 1799.

39. Ibid.

40. AGI, 2302, report of López, 10 November 1817.

41. These figures are based on a variety of reports for the individual manufactories in various years taken from the ramo de Tabaco, ramo de la Renta de Tabaco, Indiferente General in the AGN; from the Archivo Histórico de Hacienda, from the Audiencia de Mexico sección in the AGI, from the Archivo Notarial de Orizaba, and from statistics collected by McWatters, “The Royal Tobacco Monopoly.” For a further discussion of sources and interpretation, see Deans-Smith, chapter 5, “The Tobacco Manufactories: Rationale, Organization, and Production,” in Bureaucrats, Planters, and Workers: The Making of the Tobacco Monopoly in Bourbon Mexico, 1740–1810 (forthcoming).

42. Ramamurti, State-Owmed Enterprises, 281–82.