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What a tangled web we weave, when debts we seek to retrieve

17 August 2016

In revising Gods, Gachupines and Gringos I have been filling in the “back-story” on some of the more inexplicable events in Mexican history, one of which was the selection of an Austrian archduke by a French Emperor to be the would be ruler of Mexico. 

The concept of monarchism itself doesn’t always make much sense to those of us outside those few countries that still have monarchs (and not even to most people in those countries), and why anyone thought Maximilian Hapsburg was ideal for the job still doesn’t make sense, but I’ll get there … eventually.  In the meantime, how the whole fantastical idea came together warrants a longer explanation than I gave in the first edition. 

Better call Benito!

Better call Benito!

After thirty years of mismanagement, foreign invasion and civil war, México had a bankruptcy lawyer as president. The Church land sales hadn’t brought in nearly the funds needed—with the Reform War, the government had been forced to sell land for whatever it could get. Like any lawyer representing an honest debtor, Juárez sought to negotiate with his creditors for more time.

The new government was willing to acknowledge the debts that it inherited from the past governments, but it was going to have to stop payments for the next two years. The United States would wait. They were on the verge of their own civil war and in no position to collect, nor could not afford an unfriendly nation on their border.


In The United States the Civil War was seen by many as “God’s punishment” for their own recent invasion of México, which was only one factor in its willingness to write down, or defer repayment of old debts. More importantly, the United States wanted to end the rebellion by economically isolating the Confederacy, which depended almost entirely on cotton exports for its revenue. Although the United State Navy could effectively blockade southern ports, the Confederates had access to their French and British buyers exporting cotton overland from Texas to Mexican ports. A friendly government in Mexico, was essential to the Lincoln Administration’s war aims.

England and France, both supporting the Confederacy, along with Spain and Prussia, were less forgiving. The four European powers “demanded” that México reform its government (which was the whole point of the new Republic under the 1857 Constitution) and pay off the debts incurred by the previous governments: immediately. Doing both at once was impossible.

The IMF's spiritual godfather, Jean-Baptiste Jecker.

The IMF’s spiritual godfather, Jean-Baptiste Jecker.

Most of the French debt was in the form of bonds, held by a Swiss banker, Jean-Baptiste Jecker. Like a modern “vulture fund1” manager, Jecker was not concerned about how the debt was repaid, or who collected it. That he was Swiss was of minor consideration. He took on a partner, the Duc de Morny, conveniently the step-brother of the French Emperor, Napoléon III 2. Should Jecker’s bonds be considered part of the French debt, and France, together with England and Spain, were to force Mexico to pay off those old bonds, Morny (and his step-brother) would turn a nice profit… all they had to do was make Jecker a French citizen. Done.

With Prussia — for unrelated reasons, friendly to the United States (and, seeing an economically stable México as a potential customer for its own growing manufacturing sector) — pulling out, the three remaining powers agreed to cooperate in the standard 19th century way of international bill collecting: taking over a few ports and pocketing the customs duties. While it would slow the recovery, the Mexicans — being in no position to militarily resist — agreed, withdrawing their naval and land forces from Veracruz and allowing a joint expedition to occupy the port in December 1861.

With the return of the yellow fever season, the Mexicans offered to temporarily move the foreign troops to a healthier climate, a move seen by theEnglish and Spanish negotiators as evidence that the Juárez government had been negotiating in good faith and doing the best they could under the circumstances.

Humiliating the Mexican government, or economically punishing them further, really wasn’t in their own interest anyway. Spaniards, after the restoration of relations in the late 1830s, had been returning to México and were again active in the business community. English-owned mines and haciendas were again showing profits. If this honest government collapsed there was no telling when they would be repaid, or if their citizens would be safe. The British and the Spanish sailed home, only to realize their governments had been used, out-smarted by Napoléon III.

Claude Raines and Gayle Sondergaard recreate (and simplify) French geopolitical machinations in the 1939 MGM production "Juarez"

Claude Raines and Gayle Sondergaard recreate (and simplify) French geopolitical machinations in the 1939 MGM production “Juarez”

Like his famous uncle, Napoleón III had ambitious plans to expand French power. With conquering swaths of Europe out of the question, he had focused on establishing colonies in Indochina and Africa. México was a tempting target for several reasons. The Pastry War had made France a laughingstock in Europe; Mexican silver mines and farms appeared to be a good investment; the United States, in the middle of its own civil war, was in no position to interfere and, for years, Paris had been the favorite refuge of Mexican exiles, both relics of the brief Iturbide empire, and “ultramontanists” — the extremist Catholics who pined for the old days when Church and State were one and the people unquestioningly obeyed their betters. The most prominent of the latter was the Archbishop of Mexico City himself, Pelagio Labastida. Having failed, despite his best efforts (and massive financial support) to prevent the Liberals from imposing Ocampo’s reforms, Labastida had exiled himself to Paris in 1857. He had his own connections to Napoléon III, having become a favorite of the ultramontane, Spanish-born Empress Eugenia3.

Others, like Juan Almonte, Morelos’ son who had made a name for himself as Santa Anna’s second-in-command, but had never given up his father’s dream of a racially egalitarian state, made the argument that a foreigner—not criollo, not mestizo, not indigenous—owing allegiance to no one but the state was the only way to create social equality. And, there were the rich criollos who simply craved stability, if it preserved their own fortunes.

A toutes les gloires de la France.

A toutes les gloires de la France.

And, the French textile industry needed cotton. A new Confederate States would be an ideal supplier. A convergence of interests — Napoléon’s brother’s financial investments, the Emperor’s own ambitions, the needs of French industry, the Empress’ religious convictions, the pan-European interest in stabilizing Mexico — made it worth calling in the Mexican exiles. Inventing the term “Latin America”, Napoléon could claim he was not looking at conquest, but that the powerful French military machine had a duty to protect those “Latin” (as in formerly ruled by Spain, which had been under the Roman Empire and was Roman Catholic, i.e., spoke a language descended from Latin) against the perfidious middle-class traditions and Protestantism of the English-speaking Americas: the United States and Great Britain in particular. Beefing up his military force in Veracruz, he began looking for a suitable candidate to act as his tool in Mexico. To save the “Latin” people, his choice would fall on a German-speaking prince.

1 A vulture fund buys up “bad debt”… usually bonds… at a discount, and pressure the issuer to repay the debt at the original value, or at least at something much higher than the “vulture” paid for the debts.

2 THE Napoleón abdicated in 1815. Napoleon II was the famous Napoléon’s four-year old son, “technically” the Emperor for a few days, while the Bourbon family, thrown out in 1794, figured out which of their surviving relatives was the next king. Another revolution in 1830 threw out the Bourbons, but kept the monarchy, putting a Bourbon cousin, Louis Philippe d’Orleans, on the throne. A THIRD revolution threw out the monarchy in 1848. Louis Napoleón, a nephew of the first Napoleon, did Santa Anna one better. He had staged a failed coup, he made a political comeback to be elected President of France in 1852, then overthrew his own government, making himself Emperor Napoleón III. México was not the only unstable country in the early 19th century.

3 Eugenia had a somewhat dubious background for an aristocrat. Her mother was a Scottish barmaid, who married an elderly Spanish nobleman. He died bankrupt, but, he left a title to his daughter noble enough among the older aristocratic families of Europe for whom the Bonaparte family were seen as upstarts and poseurs, to make her husband’s assumption of the title of Emperor acceptable.

One Comment leave one →
  1. 28 September 2020 12:19 pm

    I have to wonder if the author of the above has read my in-depth exposé of Maximilian I that was published a few years ago? It MIGHT be a great “addition” to your site, here, if readers might like to have another non-American view on their History. (“Sin Perdón: Acquiescence with Murder,” by David R, Stevens)

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