Guadalupe Victoria and a Personal Loan from the Church in Independent Mexico

Before the establishment of commercial banks in Mexico in the latter half of the nineteenth century, the aspiring merchant or impecunious landowner had few sources from which he could borrow capital. Funds were available within the country but the rich preferred speculation in government bonds and securities to investment in agricultural or industrial enterprises. Financial deals in which enormous interest rates were paid by the government to private individuals became almost a matter of public scandal and were widely condemned by politicians of all parties. The only institution to operate an extensive lending policy was the Roman Catholic Church which, through the offices of its Juzgado de Capellanías, continued after independence its practice of lending money to any person able to provide adequate security for a loan. Although the contractual terms demanded were by no means onerous to the borrower, nevertheless there was much criticism of these fiscal activities by the clergy. The liberals in particular attacked the Church’s control of the land which was a direct consequence of its lending operations. The Church’s defense against these attacks was based firstly on its rights under both civil and canon law, and secondly, on the benefits which the nation’s economy received from the widespread clerical investments. Furthermore, the clergy insisted that they were genuinely interested in utilizing their wealth for the advantage of the people and country as a whole. Hence their funds were invested by way of loans in every kind of industrial and agrarian venture.