The Church in the Economy of Spanish America: Censos and Depósitos in the Eighteenth and Nineteenth Centuries

From 1535, when the Spanish crown issued the first of several decrees that prohibited the acquisition of land by any “church, monastery, or ecclesiastic,” to the end of the colonial period, the Catholic church, or, more correctly, the various branches and agencies of the Spanish church in America, managed to create a vast material base that ultimately reached into every corner of the newly converted Indies. Apprehensive of clerical power while at the same time convinced that restriction on rights to property would spare the church material concerns that might interfere with its spiritual mission, the crown sporadically opposed, but in the end was unwilling to limit, the income of an institution that provided the fundamental social cohesion in a disparate but pious empire. By the last third of the eighteenth century, however, the various elements that had permitted the church to flourish economically—crown support, creole largesse, Indian and Black labor—began to come apart. At first, because of the peculiar way in which the church was involved in colonial economy and society, the clergy and creole property owners stood against the crown, an alliance that emerged in the conflict over the expulsion of the Jesuits and the Consolidation of 1804. With independence, however, and the removal of the royal bureaucracy, the victorious but impoverished creoles began to look upon the church for their financial, as much as their spiritual, salvation; the erstwhile ally quickly became the foremost prey. Here again, an important explanation may be found in the peculiar way the church and creole landowners were economically interrelated.

The long-term development of ecclesiastical economy in Latin America from the cumulative buildup under crown protection to secularization by the later Bourbons and nineteenth-century liberals forms the political boundaries of this article. Within that, there is an attempt to sort out the often misunderstood position of the church as a lending institution, which in turn affects the interpretation of the church’s role in the economy; and finally, there is a discussion of the mechanism through which the creole landowners managed to free themselves from clerical debt and financial obligation to the church. It is this last process, less well understood than the acquisition of church lands, that set the stage for the rise of the landowning class to economic and political predominance in the nineteenth century.

In the long history of the church in America an abundant literature has been generated on the social and spiritual work of the clergy. Countless books, scholarly articles, and collections of documents reveal the remarkable story of evangelization, the prodigious construction, and the relentless growth of a vast organization that provided the conquered population, and its conquerors, with the basic services of health, education, and welfare, together with the sacraments that punctuated and gave meaning to life. The elaborate economic organization on which all of this rested, however, has attracted much less, and uneven, attention. The great agricultural enterprise of the Jesuits is well known; long series on tithe revenue have been put together from cathedral archives; a handful of convents have been studied in depth; and there is scattered information on income from alms, clerical fees, lay brotherhoods, and municipal subventions. The most important source of church wealth in America, however, is also the most confused and difficult to explain.

Our subject, then, is the tangled and controversial business of liens and loans, or what contemporaries called pious works, capellanías, censos, and depósitos, words that have either lost or changed their meaning in the last two centuries. The participation of the church in the economy, whether passively as the recipient of annuities, or actively as lender of money—the “bank of the colonial period”—has long been noticed, but the distinction between the two activities remains uncertain. And the distinction is important. If the church merely raked off 5-percent annuities on voluntary impositions made by others, then it appears—in an economic sense—parasitic. It appropriates revenue without actually investing money, and apart from the activity it may stimulate, such as the demand for candle wax or stone masons, it is not an agent in the formation or circulation of capital for colonial entrepreneurs. Indeed, in this view, far from supplying capital for the colonial economy, the church must be seen as impeding capital formation by appropriating surplus and then channeling that surplus, often in an ostentatious way, to solely spiritual ends.¹ If, on the other hand, the church did invest its capital through loans to colonial miners, merchants, and, above all, to landowners, then the institution served a vital economic function and should be seen as the precursor of modern banking in Latin America. An important implication here would be a close symbiotic relationship between the church and its preferred customers, the property-owning elite.

Let us first approach this question from the point of view of property owners, the peninsular and creole landowning class. Whether payers of annuities or recipients of loans, they were in both cases burdened with financial obligation. On one thing everyone agrees: by the end of the eighteenth century, rural and urban property was heavily laden with financial charges. Federico González Suárez, archbishop and historian, wrote that in colonial Quito “there was hardly a single urban or rural property that was not burdened with censos in favor of a religious house” and that with “the eighteenth century decline in prices many properties were not worth the value of their indebtedness and their yield could not cover the interest charges.”² In Venezuela and Chile, where the weight of the church was lighter than in the colonial core, clerical encumbrances were “a burden that affected … almost all rural and urban property.”³ Even the Jesuits’ estates, whose administrators were less inclined to contract debts than their lay contemporaries and made an effort to redeem those they inherited, were burdened in the eighteenth century.⁴ And, as we shall see, the overall burden of debt was even more pronounced in the opulent kingdom of New Spain.

Information on financial obligations borne by property usually surfaced when the crown attempted to squeeze donations out of its New World subjects. In 1709, for example, Philip V asked the landowners of New Spain for a “donativo gracioso,” and the landowners, in defending their inability to pay, were quick to point out that their generosity could already be seen in the large volume of censos, capellanías, and obras pías established on their property. The census published by Isabel González shows that obligations amounted to more than 42 percent of the total value of all ranchos and haciendas in Tlaxcala.⁵

In the late eighteenth century, the Bourbon reformers, interested in greater economic rationality and no great ally of either the creole landowners or the church, undertook an examination of the volume of total obligations charged on property in Mexico.⁶ From this period we have the first systematic reports, assembled by the intendants and summarized by Viceroy Revillagigedo. The partido of Cholula in 1790 had haciendas, ranchos, and mills valued at 788,942 pesos, and these properties were encumbered in the amount of 550,564 pesos.⁷ The subdelegate of Aguascalientes provided another example for the viceroy, who concluded that “the obligations borne by property are greater than they are worth and the interest charges amount to more than they yield so that the owners are really only administrators of the income of others.”⁸

If we now look at this same picture of financial charge and obligation from the church’s point of view, we lind that the clergy acknowledged and confirmed the volume and, like landowners, it had no need to draw distinctions between encumbrance and loan. Since interest rates on ecclesiastical loans were fixed not by the money market but by canon law and custom and consequently there was no advantage in turnover of capital, the church was generally not interested in the term of loans but rather in their security. Liens (or encumbrances) and loans both ordinarily yielded 5 percent, both were equally secure (or insecure), and both required a similar effort if it became necessary to force the payment of interest. Moreover, both liens and loans were treated the same in the 1804 Consolidation decree. Thus, property owners and the church both opposed the 1804 decree: the former because the law required them to redeem the capital value of the original encumbrance, whether loan or lien; and the latter because it preferred local creditors to the increasingly hostile and unreliable state, which was to assume interest payments, at 3 percent, on the paid-in capital. It should be noted in passing that in order to enlist the sympathies of the creole creditors, the church tended to emphasize its role as lender rather than mere recipient of annuities.

If, however, it was unimportant at the time for either church or landowners to distinguish between various kinds of charges, it is necessary for us to do so if we are to understand the nature of colonial economy. The receipt of a loan of money at interest has a very different economic function from the mere obligation to pay annuities calculated on a sum of money that in fact is not transferred. The former is credit; the latter, only a burden. The problem then is to determine to what extent the church acted as a financial institution lending capital at interest and to what extent it merely soaked up 5-percent annuities off the top of the colonial economy.

The problem before us can be seen clearly in the well-known figures generated by Abad y Queipo as a result of the 1804 Consolidation decree, and later copied by von Humboldt, Mora, Lucas Alamán, and, indeed, everyone since who has taken up this matter in a serious way. Abad y Queipo, the bishop-elect of Michoacán, had served some twenty-two years in the court of wills and testaments and certainly knew a loan when he saw one. Yet a distinction between liens and loans—perhaps we should call them censos-grávamen and censos-préstamo—was not important in the case he was making, that is, a defense against the crown’s attempt to force the redemption of all capital whether in the form of capellanías, obras pías, censos, or loans.⁹ Abad y Queipo did not make a distinction between liens and loans but he did provide an estimate of 44.5 million pesos of what he called “capital in capellanías and obras pías,” which has led to a great deal of confusion. José María Luis Mora accepted these figures and incorporated them into a series of dubious calculations that gave a greatly enlarged picture of church wealth.¹⁰ Von Humboldt in the Political Essay repeated Abad y Queipo’s opinion that the church was rich not in land but in capital and gave wide publicity to the original figure of 44.5 million pesos.¹¹ By mid-nineteenth century, Lucas Alamán, expanding upon Abad y Queipo’s original estimate, wrote that church property in land and capital amounted to half the total in Mexico.¹²

Writers who follow these early observers have applied a conception of modern credit practice and its vocabulary to the very different practices of the colonial period. Thus, David Brading writes that “moreover the Church also acted as the colony’s land bank. By 1805 it possessed a capital of about 44 million pesos which was mainly invested in mortgages and loans secured upon urban and, more especially, rural property.” He adds that the explanation for the heavy burden can be found in the reciprocal needs of the church and the land-owning class. Haciendas required credit. “A bad harvest, a drought, a mining or commercial venture, a charitable donation, a daughter’s dowry, an annuity for a younger son, mere conspicuous consumption: all these expenses were met by mortgages charged upon haciendas, and although in the first instances such loans were usually granted for five-year periods, an almost perpetual extension was common.”¹³ In the same context, Brading refers to the 1790 Flon report on Cholula, where thirty-eight haciendas and seventeen ranchos worth 788,442 pesos were burdened with 550,504 pesos, which he implies were loans at interest.¹⁴

Doris Ladd’s Mexican Nobility at Independence makes clear that she believes the figures for clerical capital are credit. “Pious and chantry [i.e., capellanía] funds did not consist in holdings of land but rather in amounts of capital invested in land.” In a discussion of the “credit situation in New Spain” and the effect of consolidation, Ladd thinks Abad y Queipo’s 44.5 million to be credit (“in Mexico City alone the church administered some 7 million pesos of loan funds”), and restates Lucas Alamán’s opinion that the church’s principal wealth consisted not in property but in “capital lent at interest.”¹⁵ The underlying Spanish in Alamán’s work is, “capitales impuestos a censo redimible,” which, as we shall see, is not at all synonymous with money “lent at interest.”¹⁶

The role of the church in Mexican economy is a feature of the most recent academic work on tithe revenues in Puebla and Oaxaca. Arístides Medina Rubio writes that the “afán rentístico” of the church made it “the most important lender” in the colony of New Spain and he cites as evidence of lending Isabel González’s Tlaxcala en 1712, which in fact merely lists the entire range of pious works, capellanías, and censos.¹⁷ The Elías Trabulse et al. work on Oaxaca is in accord with Medina Rubio in few matters but does agree that the church was the “principal agricultural bank,” a conclusion that comes from observing that in eighteenth-century Oaxaca revenue from censos exceeded that from the tithe. The authors consider the censos to be loans at interest.¹⁸ Enrique Semo believes the “imposición de capitales a réditos” to be exactly equal to “préstamos hipotecarios.”¹⁹ William Taylor calls censos “mortgages” and gives the impression in his work on colonial Oaxaca, as I read it, that all censos were loans at interest.²⁰ Reinhard Liehr’s recent study argues that the “capital belonging to pious works and capellanías, [that is, the 44.5 million in Abad y Queipo] was administered in each bishopric by a special office called the Juzgado de Testamentos, Capellanías y Obras Pías and given in loans with a mortgage guarantee in the form of censos and depósitos irregulares.” Liehr believes that this and the amount of indebtedness listed in the Manuel de Flon report on Cholula are the results of clerical lending from “ecclesiastical bank capital” (capital bancario eclesiástico).²¹

Much less research on the church and economy has been carried out in Spanish South America, but the work we do have essentially fits the Mexican pattern. Writing of Lambayeque in the late seventeenth century, Susan Ramírez advances the view that “the founding of capellanías and obras pías by the hacendados and others [e.g., clerics and merchants] made additional capital available for backing projects.” This remark and the discussion that follows in her study apparently mean that Ramírez believes that individuals gave money to the church to establish chaplaincies and pious works, and that the church then lent this money back to property owners and called these “investments” capellanías and obras pías.²² Alberto Pardo has figures for the volume of colonial censos redeemed in the nineteenth century for Colombia. Pardo believes that censos “are what mortgage loans [préstamos con hipoteca] were called.”²³ Brito Figueroa lists all encumbrances together—obras pías, capellanías, censos—under the heading “capital usurario” in his work on colonial Venezuela.²⁴

One comes away from this literature, only a small portion of which is cited above, with an unmistakable impression of the church exercising a virtual monopoly in the credit market, lending enormous sums at interest, primarily to the creole landed class. Before attempting to determine whether or to what extent this was true, two problems, those of vocabulary and sources, must be quickly mentioned.

When property owners sat down with a notary or church official to work out contracts that would commit a certain annual interest, or rédito, to the church, they usually used the verb imponer. Thus, a hacendado in eighteenth-century Puebla “imponía una capellanía a cinco por ciento.” The property was then said to “recognize,” or reconocer, this obligation. The very same verbs were used to describe debt resulting from a loan. Thus, capital impuesto or capital reconocido are neutral terms and do not reveal whether the transaction was lien or loan. “Indebted” (endeudado) was rarely used; properties were burdened, or gravado, another unrevealing term. Hipotecado, which also may be the recognition of either lien or loan, became more common in the nineteenth century. Some terms were unambiguous: a préstamo or depósito (at times depósito irregular) were always loans of money in the modern sense. Censo, a word no longer used in its colonial sense, has caused the most trouble because it was both the generic term for all encumbrance or lien and also the common word for a loan, or préstamo. Even the apparently straightforward colocado a censo can mean either the imposition of an annuity or a loan.²⁵ The problem of vocabulary becomes more acute in translation. Imponer or capital impuesto are most commonly rendered as “investment” in English; censo becomes “mortgage,” colocado a censo, inevitably, “money lent” with the accompanying violence to meaning. Beyond that, the consolidación de vales becomes the “calling in of loans,” and we often read of the “circulation of capital” when nothing moves except the author’s imagination.

A related problem is the difficulty in determining the nature of the financial transaction in the sources themselves, it is, as a rule, exceedingly difficult, if not impossible, to tell from most documents whether an imposition has been made or a loan received. It is not clear from hacienda ledgers themselves where a censo redimible in favor of a certain convent may mean either loan or lien, nor from the accounts of convents where lists of “houses and principals” are found.²⁶ A recent book uses a 1790 libro de censos of the Convent of Santa María (Guadalajara), to assert that it had “some 190,000 in loans outstanding in that year.” But upon closer examination of his sources, Eric Van Young found that the convent’s accounts show only “principales,” without specifying which were censos-préstamos and which were censos-grávamen.²⁷ If the original sources are ambiguous, the general lists of censos and obras pías, such as the 1712 Tlaxcala inquiry or Manuel de Flon’s report on Cholula, are necessarily so.

Censos and Depósitos

What was the nature of this baffling array of censos, pious works, aniversarios, memorias, capellanías, and depósitos? All of them weighed upon property owners and all yielded revenue to the church. Included, but making up a part and perhaps only a small part, in the total were loans at interest. To understand this, it is necessary to go into some detail.

First, the censo enfiteútico: this device was used when a property owner transferred the use of property (dominio útil) to another person in return for an annual payment based on a contract that lies somewhere between a sale and a rental. The value of the property was expressed in monetary-terms and the annual payment usually amounted to 5 percent of that amount. Although the owner retained title of ownership and usually reserved to himself the rights of comiso, tanto, and laudemio (or rights to recuperate the property in case of default, preference in case the lessee decided to sell the lease to a third party, and to receive a certain fee in case of such a sale), the lessee had in fact considerable rights. The lease was long term: in perpetuity or for a specified three lives of 150 years. The lessee could improve the property, build houses, impose additional censos of other kinds, pass it on to his heirs, or sell his rights to the lease. Censos enfiteúticos were widely used during the colonial period. The church, regular and secular, commonly leased out its property in this way to avoid the problems of management and criticism; the Marqueses del Valle, i.e., the inheritors of the Cortés estates in New Spain, used it; as did a large number of indivdual property owners who, for one reason or another, wanted to be spared the problems of management while assuring themselves of a steady and relatively secure annual income. It is important to notice here that the censo enfiteútico may show up in the documents as an encumbrance that burdened property. Thus, for example, from 1614, when one Bartolomé de Cabrera decided to transfer lands through this instrument to a neighboring landowner, the 6,000-peso capital amount of the censo enfiteútico appeared from that time on as a censo that the property “recognized.”²⁸

Second, the censo reservativo or censo al quitar was very similar to the enfiteútico except that the property owner retained even less control over the property because he gave up the rights of both tanto and laudemio.²⁹

The third kind of censo was the most widely used and is the most ambiguous and confusing to interpret. The censo consignativo had a variety of uses. It was often synonymous with capellanía, which will be discussed below, and it served to guarantee annuities to individuals. In such a case, the owner imposed a censo, the capital value of which was calculated in monetary terms, on his property in order to guarantee an annuity, usually of 5 percent, on that capital value. If, for example, a landowner died with four heirs, the hacienda could be passed to the eldest son, but a censo consignativo would be imposed in order to provide income to the remaining three heirs. More commonly, property owners wished to establish a capellanía, but as was often the case, they lacked the cash to do so, a common occurrence in a specie-scarce economy. In this case also, a censo, expressed in monetary terms, was imposed on the property, and the yield—again usually 5 percent—went to a designated beneficiary, or to pay for masses for the dead.³⁰ Such contracts were common throughout the Spanish Indies and, in time, most property became burdened with one or more of the censos discussed above. And finally, the censo consignativo was also synonymous with depósito, or an ordinary loan at interest.

Although censo consignativo was often used interchangeably with capellanía, the latter term was much more commonly used to describe the widespread practice of providing a living for a cleric. This instrument was also used to guarantee the payment of masses for the dead, as were aniversarios or memorias. Research in the Puebla cathedral archives persuaded Medina Rubio that by mid-eighteenth century, the capital of aniversarios alone amounted to nearly 800,000 pesos, four times the amount of capellanías.³¹ José María Luis Mora also placed emphasis on the importance of the capital amount that guaranteed “capellanías, obras pías, misas y aniversarios” in Mexico and he believed that von Humboldt’s estimate (i.e., Abad y Queipo’s) should be doubled to as much as 75 to 80 millions. Michael Costeloe discovered documents that list some 10,000 capellanías throughout Mexico at the beginning of the nineteenth century. At an average capital value of 3,500 pesos each, this works out to a total of 35,000,000.³² If we put this figure alongside the roughly contemporary Abad y Queipo estimate, which included in its total of 44.5 million the capital of capellanías, we can see that the bishop-elect undoubtedly underestimated the importance of this form of encumbrance. More important for the present argument, notice again that the 35,000,000 does not refer to loans but rather to the capital value of impositions on property that guaranteed the payment of annuities.

The procedure used to provide maintenance for daughters in convents was similar to that used in capellanías. Convents required dowries running from 3,000 pesos in the seventeenth century to 3,500 and eventually 4,000 pesos by the end of the colonial period. The dowry could be given to the convent either in cash or through an imposition, that is, a censo, on property.³³ Here again we may see a source of that enormous volume of income-sapping encumbrances so noticeable by the late eighteenth century.

Finally, there was the category called pious works (obras pías). These ranged from the gift of an entire hacienda to modest pledges to provide oil or candles for a favorite saint.³⁴ In church accounting and in lists assembled by crown officials, pious works were usually kept separate from other encumbrances and thus can be confused with liens and loans only with considerable effort.³⁵

The total capital volume of liens, that is, censos, capellanías, aniversarios, and pious works, and loans charged against property and whose interest went to support the church, is, of course, exceedingly difficult to quantify. There is no central registry, so information must be gathered from a multitude of notarial records, inventories, and church archives. Certain estimates of volume, especially for Mexico, have already been indicated. The Flon report says that nearly 70 percent of the appraised value of property in Cholula in 1790 was burdened by liens and loans.³⁶ In 1712 Tlaxcala, the comparable figure is 42 percent. In Venezuela, Brito Figueroa’s incomplete list shows a total of nearly 5 million in encumbrance, but we are not given the total value of property.³⁷ There is no doubt that throughout the Spanish Indies, property owners were saddled with an enormous burden of inherited and voluntarily imposed financial obligations to the various branches and agencies of the church. The yield, in the form of 5 percent interest, provided revenue, which, together with tithes and alms, the profit from innumerable haciendas and obrajes, and the faithful contributions of hundreds of lay brotherhoods and municipal councils, found its way into a veritable explosion of ecclesiastical construction in the eighteenth century, sustenance, and at times luxury for growing numbers of clergy, and the widespread organization that provided the sole services of health, education, and welfare in the colonial world. Our task now is to attempt to estimate the volume of money that flowed the other way, from cathedral courts and convent treasuries into the hands of private landowners and entrepreneurs in the form of credit. For if not all liens were loans, no one doubts that the church was in the business of lending money at interest. The question is, just how important an “agricultural bank” was it?

The best single study on church credit is still the 1967 work by Michael Costeloe on the juzgado de capellanías in the archdiocese of Mexico during the first half of the nineteenth century. There is, however, a fundamental problem in Costeloe’s analysis that needs discussion. We must recall that the juzgado received its income from two sources: (1) interest from capellanías that owners had imposed on their property, that is, an encumbrance sometimes called a censo, that yielded normally a 5-percent annuity; and (2) interest from the loans it made. These were called not capellanías, but depósitos. In one sense, from the juzgado’s point of view, the encumbrance that paid 5-percent annuity and the loans that paid 5-percent interest, can both be considered “investments,” and it is clear that Costeloe uses that term to describe both instruments.³⁸ In his discussion of the church’s “investment capital,” he explains: “Landowners who wished to make a pious gift or bequest to the Church sometimes were unable to raise the capital in cash and therefore would place a perpetual lien on one of their properties [a capellanía or censo].” He then continues: “The secular clergy in particular used this method for making their capital productive. Funds proceeding from capellanías and pious works were used as liens and were invested in every kind of real estate.”³⁹ The clergy, of course, did not “use this method”; the landowners who imposed the lien did. Farther along on the same page, Costeloe describes “a similar but more complicated and significant method of investment,” that is, lending money at interest. An example used to show that the “investment activity of the Church” was “extensive” is a list of “borrowers” who owed money to the church in the parish of Tulancingo. But this is a list of a variety of encumbrances (Costeloe’s table heading uses the term “mortgage”) that are not loans but rather are, as the document he cites puts it, “caudales de obras pías que se reconocen a favor de la parroquia de Tulancingo….”⁴⁰

What then was the volume of church lending? Costeloe has a figure of 4,244,000 pesos of outstanding “debts,” that is, what he supposes to be the result of loans, as of 1821. This figure is supported by capitalizing the 5-percent income in annuities from benefices and interest from loans. The 4,244,000, then, includes both; the amount of actual lending is concealed within the total. One way to resolve this question is to examine the source of lending capital available to the juzgado. When benefactors established capellanías or pious works through the donation of a sum of cash, or when, after the embargo of property and its subsequent sale because of default on interest payments, or when, as occasionally happened, a landowner in his last will and testament redeemed the capital value of outstanding obligation, the church found itself with a sum it frequently invested—I use the term now in its modern sense—in loans to property owners.⁴¹

But how were the capellanías established? There is wide disagreement. Flores Caballero believes that capellanías “were generally established through the deposit of a sum of money” that fluctuated between 2,000 and 6,000 pesos.⁴² Brian Hamnett believes that “from the earliest times in New Spain, it had been the custom to donate in a legacy a sum of cash for the formation of a Pious Work or Chantry.” Therefore, he continues, “there was always a readily available supply of capital in the tribunal administering those funds.”⁴³ William Taylor, writing about eighteenth-century Oaxaca, found that some were established as liens but “generally consisted of a money grant of 2,000 to 3,000 pesos ….”⁴⁴ David Brading, on the other hand, found in the Bajío that in the establishment of capellanías “no money changed hands … the estate became liable to interest on the sum stipulated in the endowment.”⁴⁵ Richard Lindley agrees, and explains why in pointing out that New Spain was “chronically deficient in capital resources especially liquid capital.”⁴⁶ Costeloe himself writes that only occasionally were capellanías established through direct legacies of property or capital; more common was the endowment or imposition. The truth in this case undoubtedly does lie somewhere in between. Robert Knowlton, who looked closely at several cases, finds that both cash and impositions were used to establish capellanías, but the latter was more common. Germán Colmenares makes the point that cash-poor landowners were rarely able to establish capellanías with a sum of money unless they also had merchant or mining interests.⁴⁷ None of the historians cited has attempted to sort out the frequency of cash bequests relative to the imposición.

The matter consequently must be left quantitatively inconclusive, but it should be clearer now that the secular church, and especially the juzgado de capellanías charged with overseeing revenue from annuities and investing whatever capital came its way, was not awash in cash, a fact made apparent by an example Costeloe himself provides. In October 1837, no less a solid citizen than Lucas Alamán applied for a 4,000-peso loan, having learned that that amount was about to become available through the redemption of a lien. The loan was not awarded until a year and a half later “presumably because the sum … was not available.”⁴⁸ The other important point to draw from the preceding discussion is this: the juzgado de capellanías received revenue from capellanías, but when it invested, it made loans, that is, depósitos or préstamos or censos. Thus, when we are presented with lists of capellanías imposed on property by this or that hacendado, we are not in the presence of loans. When the documents specify “depósitos” or “préstamos,” a sum of money has been extended at interest; when the term used is “censo” or “censo redimible,” the meaning is ambiguous. Since few studies of church finance draw these distinctions, the picture we have been given up to now of the secular church as a vast agricultural bank is uncertain and undoubtedly exaggerated. The following example, typical of many in the literature, may help illuminate the problem. A study asserts that Gabriel de Yermo, the imposing late colonial planter, “borrowed” a “full total of 400,000 pesos from the pious funds and chantries.” Yet the author’s secondary sources merely say that Yermo’s estates “recognized” that sum. Even when one has the documents at hand, as Jean Pierre Berthe did in his study of the seventeenth-century plantation Xochimancas, it is difficult to determine whether a principal derived from a simple imposition by the former owners or an actual loan of money by the Convent of the Incarnation.⁴⁹

The most important lending agencies within the church, considerably more important than the juzgados de capellanías, were the feminine orders. Modern research on this subject has concentrated on Mexico, where Asuncion Lavrin’s extensive research has led the way. From the original foundations backed by wealthy patrons, the feminine orders grew steadily throughout the colonial years. The insistence that each postulant be supported by a dowry of between 3,000 and 4,000 pesos provided steady and cumulative income. The provincial elite occasionally left legacies of large rural estates to the convents, which then often let them at censo enfiteútico, the long-term lease discussed above. In the larger colonial cities, or at least in Mexico City, the convents preferred to invest in urban property. In 1813 the church owned 47 percent of all urban property in the viceregal capital, and of that, 65 percent was in the hands of the feminine orders. By the eighteenth century, convents had also become more and more involved in the business of lending money at interest.⁵⁰

The most comprehensive study we have of the feminine orders and their economic role treats the eighteen convents of Mexico City, which held, in 1744 (exclusive of their own buildings, jewels, and so forth) urban houses worth 4,203,330 pesos, censos of 1,150,775 pesos, and outstanding loans of 1,531,725 pesos.⁵¹ Convents of the feminine orders were not, of course, limited to Mexico City, but spread throughout New Spain and, for that matter, throughout Spanish and Portuguese America.⁵² In Mexico, fifteen of the twenty new convents founded in the eighteenth century were outside the capital. William Taylor believes that three of these “dominated the business of mortgaging rural estates in the Valley [of Oaxaca],” and Eric Van Young shows that the Guadalajara convent of Santa Mónica and the most important of all, Santa María de Gracia, were important lenders, even though it is impossible to determine their total volume.⁵³ Mario Góngora’s brief study shows that at the far end of the empire, as early as 1639, the nuns of two convents alone, La Concepción and Santa Clara in Santiago, held one-fifth of all censos burdening Chilean landowners.⁵⁴

Recent research and work in progress show that the wealthy urban confraternities were also engaged in lending money at interest. Lavrin’s study of El Rosario and Richard Greenleaf’s work on the Real Fisco of the Inquisition both reveal a larger scale of operation than previously suspected.⁵⁵

Because of the lack of central registries, and because of the widespread confusion over the various instruments of encumbrance and loan, anyone seeking numerical accuracy is bound to be frustrated. Three recent studies, however, make a beginning and, even granting the quantitative uncertainties, they are sufficient to modify sharply the older picture of clerical lending. All three center on the Guadalajara region toward the end of the eighteenth century and treat both secular and regular agencies. Richard Lindley’s still unpublished work shows that during the late colonial and early republican years the merchants rather than the church dominated the credit market. Some wealthy individual clerics lent money, but the church as an institution was not particularly active. Linda Greenow’s research on the same geographical region is also useful. If one deducts from her table, “A Classification of Lenders,” the figures for capellanías on the grounds that these were not loans but impositions, we have for the entire region of New Galicia 376,294 pesos lent in 1721-30; 442,507 pesos in 1761-70; and 235,584 pesos in 1801-10. This works out to between 24,000 and 38,000 pesos in loans each year, a volume that is in rough agreement with the recent study of Eric Van Young, which shows the total in agricultural loans made within the bishopric of Guadalajara between 1787 and 1794. These and Greenow’s figures indicate the volume of new loans extended over the specified years. They do not take into account any redemptions, so the actual figure in circulation at any one time would be different. Even then, an average lending of between 24,000 and 60,000 pesos a year from all agencies in the church in an important region does not seem large.⁵⁶

The Church in the Colonial Money Market

If the volume of church lending shrinks the closer it is examined, no one doubts that various agencies of the church, individual clerics, the juzgado de capellanías, confraternities, and especially the regular orders, were active in the business of lending money at interest. Was church lending, however, as important as current scholarship suggests and did it exercise a “monopoly” on credit? Is it possible, as Abad y Queipo remarked, that “for every 2,000 pesos lent, only one came from non-ecclesiastical sources?”⁵⁷ These questions are best treated within a general discussion of credit systems and colonial money markets. The outlines of this can at least be set out.

Commercial credit, that is, loans from merchants to producers or to each other, was present from the beginning, and, of course, mining was commonly dependent on advances from silver merchants or associates. Góngora’s document from 1639 demonstrates that apart from 900,000 pesos in liens and loans that burdened landowners, they also owed to “live and deceased” merchants an additional 733,000 pesos. This latter sum was guaranteed not by land but by less formal and scattered instruments and paid interest rates, or “daños,’’ of around 10 percent.⁵⁸ Examples of commercial credit abound for the eighteenth century. Enrique Florescano points out that Puebla merchants financed the cotton growers of the Veracruz coast; indeed, throughout New Spain merchant capital was indispensable to agriculture.⁵⁹ Robson Tyrer’s research in the notarial archives of León (Mexico) between 1780 and 1790 revealed that out of 175,000 pesos in loans secured by mortgage and obtained by landowners during those years, 106,000 pesos (68 percent) came from miners and merchants. Linda Greenow’s work on Guadalajara shows that nonecclesiastical credit rose from 40 percent in the 1720s to 75 percent of the total recorded in the notarial registers in 1801-10.⁶⁰ Richard Lindley shows in detail just how this network of credit worked. The merchants of Guadalajara who supplied “a large portion of the credit used to finance local agricultural and mineral production” advanced cash and often textiles in return for produce. Cloth and rudimentary manufacturers were then extended throughout the lower rural economy in exchange for labor services and sharecropper or peasant produce. This is a picture easily repeated, and it is clear that credit extended first by peninsular and local merchants and, after independence, by the British, was the commercial lubricant in the machinery of agricultural production throughout Latin America.

Interest rates in this system depended to a large extent on definitions and measures of relative value. Lindley believes the real interest rate was much higher than 5 percent; Knowlton reports that rates might have run to 24 percent a year.⁶¹ Obviously, as one follows the spread of this system out into a landscape of pulperías and hacienda stores, the higher the rates. Private lenders and merchants likewise dominated the flow of credit into Chilean agriculture in the eighteenth and early nineteenth centuries.⁶²

Within this colonial economy, central registries of debt and preference often did not exist, informal, private deals were frequent, real interest rates were disguised and often high, and cash was an exceedingly scarce item and much in demand. In this money market, the church, and especially the convents and the chaplaincy courts, offered a limited number of loans to those able to meet the strict requirements, at an interest rate that rarely if ever varied between the mid-seventeenth and mid-nineteenth centuries from 5 percent, a rate determined not by the market but by custom and canon law.

Out of the controversy over the lawfulness of interest on loans, which had long divided the clergy, the church, by the sixteenth century, had come to accept the position that 5-percent interest could be charged on loans in those cases where risk was involved (damnum emergens) or when the lender forwent the chance of earning money himself on the money he lent (lucrum cessans)—what today is sometimes called opportunity cost.⁶³ In Spanish America, the 5-percent rule on loans seems to have been broadly accepted by the church.⁶⁴ The interest on capital imposed by property owners to yield annuities, however, varied with time and place. Góngora reports a 7-percent rate in the sixteenth century; while property owners in Peru after the devastating earthquake of 1687, on other occasions in Ecuador and New Granada in the eighteenth and nineteenth centuries, and nearly everywhere after the destructive Wars of Independence, petitioned successfully that the rate on liens be lowered to 3 percent.⁶⁵ But if rates varied on liens, 5 percent remained remarkably constant for church loans over a long period of considerable economic change and the development of an increasingly active money market.

When we examine the church, then, are we in the presence of an institution that had an “afán rentístico” and that bears resemblance to a modern bank? In the economic sphere, the church had a dual function: it was both the consumer and generator of wealth, and the former was far more important than the latter. The church built up, over the course of its development in America, a vast economic institution for social and spiritual ends. It did not pay interest on the gifts or deposits it received, as a modern savings bank does, and then endeavor to maximize the yield on its investments.⁶⁶ Rather, it was fundamentally a consumer of income through the enormous volume of ecclesiastical construction, the maintenance—sometimes lavish—of its clergy, in expenditures for health, education, and welfare, and of course, in the administration of spiritual services.

If anything was left over from consumption, the church, naturally enough, strove to find safe investments. Whereas it was inclined to accept whatever voluntary impositions property owners cared to create, and thus accept the fact that annuities would lag or even disappear, the church was much more circumspect about the business of lending cash. In these cases, church officials made careful searches of titles and went to some pains to establish the credit worthiness of potential borrowers.⁶⁷ This in practice meant that, as a rule, security in the form of property, and usually rural property, was required to guarantee church loans. Moreover, the fact that the church offered money at a percentage well below the going rate meant two important things: (1) it could pick and choose when selecting customers; and (2) because of the strong demand for its scarce cash, extra-economic criteria came into play. Thus, loans were awarded on the basis of kinship, they were used to favor those especially pious families whose children entered the priesthood or nunnery or might be expected to make wills favorable to the church, and they were used to secure political influence or protection.⁶⁸ In none of this is it possible to find an effort to maximize yields. The fundamental policy was the search for financial security and this led inevitably to loans to the most reliable owners of real property, which is to say, the landowning elite of Spanish America.⁶⁹ Here, then, is additional explanation for elite-church solidarity in the face of Bourbon policy in the late eighteenth century. But the fact that these same creole landowners were quick to abandon and then urge the destruction of their source of credit in the nineteenth century testifies to the tenuousness of that connection.

As we move into the faster paced economy and more rationalist climate of the late eighteenth century, church lenders began to acquire an increasing number of urban houses for rental income. Whether this was a matter of shifting their investments from loans to property, or the conversion of voluntary impositions whose capital the church had acquired through gift or foreclosure (concurso) into houses, is not clear.⁷⁰ Although holding to the 5-percent rule, church lenders also began in the late eighteenth century to insist on fixed time periods, usually 5 to 7 years, for loans.

For three centuries the church was successful in building a vast economic organization designed to generate revenue for social and spiritual ends. When one combines the 10-percent tithe on agricultural production, fees for clerical services, municipal contributions in the form of labor and goods, voluntary gifts of alms and property, the sale of indulgences, and, above all, the smothering array of capellanías, memorias, pious works, and censos that blanketed property owners and extracted annuities from them, the enormous economic burden this represented becomes obvious. Demands for revenue and voluntary contributions were spread throughout colonial society; for if it is true that clerical fees and the costs involved in celebrating the church calendar extracted a large proportion of lower-class income, the propertied classes paid the tithe and the bulk of annuities.⁷¹ It can also be observed that once the great wave of evangelization had been spent, the church became, especially in the course of the eighteenth century, an urban church, with its back turned on the countryside that generated the revenue for its existence. While the city streets filled with priests and the episcopal elite enjoyed a princely style that astonished von Humboldt, little of this opulence was found in the rural hinterland, where an ever-spreading ecclesiastical proletariat attended to the routine of parish life.⁷²

Secularization

The church’s enormous economic empire of property and fiscal machinery came under attack in the eighteenth century as the Bourbon state placed successive demands for cash contributions upon the church in America. Details in this long process of secularization are well known. In 1767 the Jesuits were expelled, their properties confiscated and eventually sold to individuals. One hundred and nineteen Jesuit haciendas were taken over by the crown in Mexico, perhaps 97 in Peru, more than 100 in New Granada, over 60 in Chile, and several, including great estates, in Córdoba and Mendoza.⁷³ The attack on the regular clergy begun by the Bourbons was continued by the republican governments. In the 1820s and 1830s, all the new regimes took steps to dispossess the orders. In Guatemala the remaining regulars were expelled in 1829, the most important of whom were the Dominicans, whose property was sold between 1831 and 1837. In Peru and Bolivia some regular property was transferred to Beneficencia and the new public schools.⁷⁴ By the 1860s the male and female orders throughout America had either been forcibly destroyed, as in Mexico, or had simply withered away, as in Peru. In all these cases, church land passed into private hands at a fraction of its appraised value.

The tithe, which as we have seen, was an important source of income for the secular church, produced an impressive volume of revenue by the late eighteenth century. The economic and social upheaval associated with independence led to a drop in tithes; and then, with political separation from Spain, two major tendencies developed. First, the new republican government began to claim a larger share of tithe revenue than had traditionally gone to the crown. In addition to the royal “ninths” (actually two-ninths of one-half), the new states, desperate for operating revenue, also appropriated the amount accruing to vacant sees, and in Colombia, if not elsewhere, developed a deliberate policy of keeping sees vacant for that purpose.⁷⁵ As Michael Costeloe shows in one of the few studies of the nineteenth-century tithe, civil authorities in the archbishopric of Mexico soon began receiving a larger share than did the church, while a parallel study for the bishopric of Guadalajara reveals that some 45 percent of the tithe was retained by the state in 1831.⁷⁶ Second, while the civil proportion of the tithe grew at the expense of the church, the total volume of tithe continued to fall into the 1860s. This was not because the tithe was abolished, but because the republics would not, as the Spanish state had, back the collection with legal coercion: the liberals were inclined to leave payment to the individual conscience, a practice that brought sharp declines in Mexico after 1834, Chile in 1854, and Peru in 1855. Since declining tithe revenue meant less state revenue, liberal policy to some extent was a triumph of ideology over necessity; but if national treasuries suffered, the individual landowners who generally dominated the national governments were relieved of the “odious burden.”

A far greater burden lay in the millions of pesos in capellanías, censos, pious works, and loans that had accumulated over the previous three centuries. There was first of all some effort to restrain property owners from imposing new voluntary obligations. In 1796, the crown levied a 15-percent tax on the capital value of new capellanías, and several republican governments continued this practice in the 1820s. And, toward the end of the eighteenth century, convents began to invest money received from redeemed censos in the purchase of urban rental property. All of this together with a certain volume—perhaps 12,000,000 pesos in New Spain, considerably less elsewhere—of redemptions forced by the Consolidation of 1804, meant that the total amount of obligations that so burdened American property had leveled off and even perhaps decreased a bit by the end of the Spanish regime.⁷⁷ Nevertheless, the total weight of indebtedness to the church, in part the result of loans, but more because of annuity-producing liens, remained almost overwhelming.

The new republican governments, dominated as they were by this very propertied class, lost little time in relieving the burden of debt. In Mexico an argument was made that because of the destruction of war, property could not bear the 5-percent rate; in Peru the interest on censos was reduced in 1825 from 5 to 2 percent.⁷⁸ At the same time, in the change from royal to republican administration, records disappeared, owners dragged their heels in the payment of annuities and, given the changing political climate, there was little the church could do to force payment.

By mid-century, or shortly thereafter, the triumphant liberals provided themselves with temptations too great to refuse. In Mexico the Reform forced the transfer of remaining secular and regular property into private hands and, more important, the July 12, 1859, decree enabled landowners to redeem clerical obligation by paying approximately one-third of its capital amount.⁷⁹ In Colombia an 1851 law made it possible for owners to redeem debts by paying one-half of their value to the government in devalued bonds and other instruments or coupons. The civil government, like the Bourbons in the 1804 decree, then took over the obligation to pay interest to the church, which it did in government paper of rapidly decreasing value. Subsequent Colombian legislation made it easier yet for hacendados. By 1863 capellanías and censos were redeemed by paying from 25 to 10 percent of their value in bonds of the public debt. By 1871 landowners had rid themselves of some 3,677,000 pesos in debt by paying the state a “pittance.”⁸⁰ In Peru, laws similar to those in Colombia were passed in 1852 and 1864. No figures on censo redemptions are available, and it would be difficult to obtain them. Often the obligations simply evaporated in bureaucratic confusion or the documents were lost or disposed of in “a most irregular manner.”⁸¹ In Chile a law was passed in 1865 that enabled landowners to redeem censos and capellanías by paying 40 to 50 percent of their capital value. Between then and the end of the century, rural and urban landowners got out from under some 17,000,000 pesos in clerical debt.⁸²

It is difficult to overstate the importance these measures had for the wealth and growing power of the landed oligarchy in the late nineteenth century. Landowners, through their dominance of the machinery of republican government, gave themselves what amounted to a massive capital gain. Political affiliation had little to do with the process; liberals and conservatives alike were quick to free themselves of long-standing incomesapping debts to the church.⁸³ Nor was there much hesitation over the destruction of what has been held to be their foremost credit institution. If one looks closely at the nature of the landowners’ obligations, however, it appears that only a part of the total was actually the result of monetary loans; thus they had much to gain in paying off liens but little to lose in the disappearance of a credit supply. Beyond that, other sources were becoming available. British merchants supplied commercial capital, and formal banking institutions came into existence everywhere. In 1856, “a docile instrument in the hands of landowners,” the Caja de Crédito Hipotecario, lent long-term, low-interest (5-8 percent) loans to Chilean hacendados. In Peru, two mortgage banks, the Banco Hipotecario and the Banco Territorial Hipotecario, designed to lend to the larger haciendas, were established in 1869-70.⁸⁴ In the Cauca Valley in 1873, the landowners who wrote the laws to free themselves from clerical debt now became stockholders in the Banco de Cauca,⁸⁵ The church-dominated creole landowners of the eighteenth century were becoming the liberal capitalists of the nineteenth.

Conclusion

The church in Spanish America developed, over the course of the colonial centuries, a vast economic organization designed to generate income for social and spiritual ends. With that primary purpose acknowledged, it is also true that the creation of an ecclesiastical economy had a fundamental impact on the larger economy and society in which it was embedded. Our discussion of censos and capellanías touches on this larger problem and has implications for the importance of the church in the Spanish American economy and more generally in its role in economic development.

By all accounts the enthusiasm displayed by colonial landowners to encumber their property in support of the church was unusual. Nothing like it existed in Catholic Europe where the Ancien Régime church was certainly rich but where, including even in mother Spain, its wealth lay more in the direct ownership of land than in claims upon the earnings of private owners.⁸⁶ The contrast with England is instructive. Although G. E. Mingay concludes that “perhaps one-half of the country was held under strict settlement,” that is, encumbrance to guarantee dowries and portions to heirs, these arrangements represent transfers of private capital among individuals and thus have a different economic function than do annuities to the church. Only miniscule amounts of capital, apparently, were imposed to benefit the English church.⁸⁷

Here surely is one explanation for the peculiar nature of the Spanish American countryside in the eighteenth century. The widespread voluntary imposition of censos and capellanías was a crushing economic burden. Their existence also created legal tangles that inhibited subdivision of property; at the same time, because such a high percentage of property value was commonly encumbered, a buyer could acquire land (or urban property) through the payment of an often small equity while agreeing to assume the service of clerical annuities. Hence, there was a frequent turnover of property while the actual cash yield of the new owners was frequently scant. Properties owned by the Society of Jesus offer another interesting counterexample. In the first place, the astute Jesuit managers refused gifts of properties that were excessively burdened with censos, and endeavored to pay off those they did accept. Second, and more important, the Order, whose own income of course was destined to social and spiritual ends, felt no compulsion to impose over its haciendas the income-sapping obligations to the church that were so common among the economically insouciant private owners.⁸⁸

The church’s appropriation of agricultural income is complicated and little studied. Undoubtedly it drained the countryside where the overwhelming majority of the people lived and worked, for the benefit of colonial capitals.⁸⁹ No doubt the majority of pious works and annuities as well as tithe income ultimately went to a handful of high church dignitaries in the episcopal centers and to finance the often splendid liturgical celebrations. At the same time, however, it is true that the eighteenth-century wave of ecclesiastical construction provided the equivalent of public works in modern states and, apart from giving salaried employment to its own clerics, it provided jobs to hundreds of masons, carpenters, and roofers. New churches and convents led to a parallel demand for decorative arts and thus to the need for embroiderers, silversmiths, and a wide range of other artisans.⁹⁰ A certain amount of church income was dispensed as charity, and the church was responsible for virtually the entire range of health, education, and welfare, since taken over by the modern state. Finally, various agencies of the church did accumulate capital and then lend money to a variety of landowners and entrepreneurs, a practice that had at least the potential for economic stimulation.

The main purpose of this article has been to question the conventional understanding of clerical lending and to argue that the “banking” activity of the church was much less important than is normally supposed. This interpretation, which must be left quantitatively inconclusive, throws into high relief a picture of the church as a consumer of colonial wealth rather than as a financial intermediary. With independence the creole property owners ascended to political power in the new republics and by mid-century they had passed legislation that enabled themselves to remove the inherited burden of clerical debt, thus ending a cycle that had begun in the sixteenth century. This insufficiently appreciated process, as much as the acquisition of church lands, underlay the landowners’ rise to prominence as new markets opened in the late nineteenth century.

Author notes