Bank of Mexico

The Bank of Mexico was the national bank of the United States of Mexico, founded in Mexico City in 1832 by President Andrew Jackson. Although Jackson distrusted banks and paper currency, by the end of his second term he had come to realize that the U.S.M.'s finances had become too complex for the nation to remain limited to silver and gold currency. Thus, he permitted the creation of the Bank of Mexico under the direction of Henry Aikens, who served as its president.

The Bank of Mexico was financed by an issue of stock, thirty percent of which was purchased by the Department of the Exchequer, and seventy percent of which was sold to private investors. By 1835 the government of France and French investors had purchased almost forty percent of the Bank's stock, a situation that President Jackson was unhappy about. However, Jackson recognized that unless he was willing to allow the bank's stock to be purchased by the British or the growing banking sector of the Northern Confederation (and he wasn't), the French were the only source of capital available to finance the Bank of Mexico.

The Bank of Mexico served the government as a depository and acted as its fiscal agent. It had a mandate to maintain the gold-silver ratio that Jackson had established in the 1820s, and to make certain that the flow of capital into the various Mexican states was both smooth and beneficial. It had the right to issue paper money against gold and silver deposits, as well as bills-of-trade and other commercial paper.

The Panic of 1836 was less severe in the U.S.M. than in Britain, France, or the Confederation of North America. This was due in large part to Aikens' direction of the Bank of Mexico. Aikens saw to it that the central bank maintained the liquidity of the U.S.M.'s private banks; as a result, from 1837 to 1841 not a single major Mexican bank failed due to lack of central bank support.

Contrary to the expectations of his followers, Jackson's successor, Miguel Huddleston of the Liberty Party, did not make any sweeping changes to the U.S.M.'s financial sector after his election in 1839. Aikens continued as president of the Bank of Mexico, and French investors continued to play a major role in the operation and funding of Mexico's banking system. Huddleston did encourage greater investment in the majority-Mexicano states of Durango and Chiapas, and Aikens and the rest of the Mexican financial community presumably did so.

Sobel makes no further mention of the Bank of Mexico after the Jackson and Huddleston eras, but it presumably continued to operate as the country's central bank. In all likelihood the Bank of Mexico came under the control of Kramer Associates and Petroleum of Mexico later on in the nineteenth century, as those companies came to dominate the U.S.M.'s economy.

Sobel's sources for the Bank of Mexico include William McCoy's Great Central Bankers of the Nineteenth Century (London, 1929); and Alexander Harper's Banking Policies in the United States of Mexico During the Aikens Years (Mexico City, 1950).