Banco Nacional de San Carlos (1782)
Spain's first national bank, erected by royal cédula on 2 June 1782 to rescue the vales reales — a state paper that had fallen more than twenty-two per cent against coin — and to feed and clothe the army and navy of Spain and the Indies. It worked: the paper recovered to a premium. It also depended on silver exports and share dealing, was attacked in print by Mirabeau, and ended in 1829, its forty million reales becoming the capital of the bank that became the Bank of Spain.
Why this wins its question: English-language coverage of the Banco de San Carlos, where it exists at all, is a sentence about a precursor of the Bank of Spain. This object quotes the three objects of the founding cédula, including the clause binding the bank for twenty years to victual and clothe the troops of "España é Indias"; the finance minister's own narrative of why a state paper had fallen twenty-two per cent and how the bank pulled it back to a premium; the two American-silver dependencies — the wait for the caudales from America and the silver-export privilege the crown wanted it to hold exclusively; Mirabeau's suppressed pamphlet calling Cabarrús a new Law; and the concession, buried in a footnote by a later governor of the successor bank, that the early prosperity came mainly from share dealing and silver exports and could not last.
Claims
Every assertion below is bound to registered sources and carries its own confidence. Weight them; do not treat the page as uniformly authoritative.
The bank was instituted by the Real cédula of 2 June 1782, whose articles 2, 3 and 4 set out three objects, as summarised and quoted by Ramón Santillán: first, to form "una Caja general de pagos y reducciones, para satisfacer, anticipar y reducir á dinero efectivo todas las letras de cambio, vales de Tesorería y pagarés, que voluntariamente se llevaren al Banco"; second, to take on the asientos of Army and Navy inside and outside the kingdom; third, to pay all the obligations of the Giro in foreign countries at one per cent commission. Article 29 forbade the bank to depart from those three objects, but the crown reserved the right to give it other commissions and did, authorising it to support agricultural, industrial and commercial enterprises with advances repayable over terms of up to twenty years.
The provisioning object was transatlantic and was guaranteed by the king's word. The cédula pledged "su palabra Real de que por el tiempo de veinte años á lo ménos le encargaria los ramos de provision de víveres del Ejército y Armada y de vestuario de las tropas de tierra de España é Indias", the charge to begin by direct administration with the tenth allowed by law and to continue by asiento once prices had been verified. Feeding and clothing the forces of both hemispheres was written into the constitution of the bank as a twenty-year commitment.
The reason for the bank was a paper currency in trouble, and the account comes from the minister who presided over it. In his exposición to Charles III of 10 October 1788, the conde de Floridablanca explained that the costs of the late war exceeded the crown's ordinary revenues; that a loan of sixty millions contracted with the Cinco Gremios Mayores of Madrid was only half fulfilled; that recourse was then had to the creation of vales reales for ten million pesos; and that the sum, enlarged by further issues made against his opinion, produced his own gloomy prophecy — that paper, "que asi fué calificado por ley expresa", came to suffer a discount of twenty-two per cent and more when exchanged for coin. The bank was resolved upon "para evitar la total ruina del crédito del Estado, y facilitar al mismo tiempo el fomento y las operaciones del comercio".
By the minister's own account the rescue worked, and quickly. Floridablanca: "Tuvo efecto la ereccion del Banco: trescientos millones formaron su fondo: establecióse la reduccion á dinero de los vales y el descuento de letras, y, sosegando su imaginacion los tenedores, recobró su crédito el papel en tanto grado, que ya es menester pagar un premio para hallarle." A state paper trading at a fifth below par was brought back to a premium by an institution created to redeem it — the same minister who had called the bank one of the immortal works of the reign asking, in the same document, what would become of "treinta millones de pesos en papel" if the shareholders took fright and withdrew their capital.
The bank's business ran on American silver in two distinct ways. Unable to reduce to cash all the vales presented to it, the direction attributed the loss the paper still suffered to the scarcity of coin and asked the government to restrain the export of specie "hasta que llegasen los caudales que se esperaban de América"; the government replied by asking the direction to consider how to reconcile private trade with the export of silver, "que el Rey queria confiar exclusivamente al Banco". The bank did not wait for the privilege, began the trade under individual permits, and found in it a profit large enough to make it forget the objections to specie export it had been raising a moment earlier.
Santillán's judgement on where the early profits came from is in a footnote and is the harshest sentence in his account: the prosperity of the first years "procedia en su parte principal de la negociacion de acciones y de la extraccion de platas, operaciones ambas que no podian ser consideradas como permanentes en el Banco". He was right about the second: reporting the accounts laid before a later Junta general, he writes that "la rica mina de la extraccion de la plata se iba apurando, no habiendo dado en aquel periodo más utilidad que la de 2.917.919 rs. 27 mrs., baja enorme", which the direction blamed on contraband — an explanation Santillán rejects, since the same duties had not produced the same effect in earlier and more heavily taxed years.
The most damaging contemporary critique came from abroad and was suppressed. The bank's own direction dismissed a pamphlet by "un hombre asalariado, uno de aquellos miserables, cuya vida es una larga alternativa de delitos y castigos", without naming him; Santillán names him — the comte de Mirabeau. His work, Santillán writes, though written with heat and stained with personal accusations against Francisco Cabarrús, the bank's principal author and natural director, "á quien apellida nuevo Law, examina, sin embargo, á la luz de los más sanos principios la constitucion del Banco, y deduce la suerte que debia tener". The Spanish government asked the French to prohibit the pamphlet's circulation, "demanda que inmediatamente fué satisfecha".
The institutional verdict is equally blunt, and it is delivered by a governor of the successor bank rather than by an enemy. Santillán holds that the bank's disastrous course under Cabarrús is demonstrated "hasta la última evidencia" by the scandals that led to the removal and residencia of the directors in 1790, facts justly and severely qualified by the government "por más que luego se echara un velo sobre ellos, porque en realidad ni el Gobierno mismo estaba exento de culpa". His explanation of how so defective a plan was approved is that the organisation of the bank "era esencialmente vicioso", and that its approval by a numerous junta of authorised persons proves only "que la materia de Bancos era completamente desconocida entónces por las personas á quienes se consultó".
The bank ended by conversion rather than by failure, and the line of descent is explicit in the contract. An express condition of the transaction settled between the government and the Banco de San Carlos was that the forty million reales it received in payment of all its credits against the state were to form the capital of the new bank the king reserved to himself the right to erect "sobre bases más propias de estos institutos que las que tan malhadadamente se habian ensayado con el de San Cárlos". The royal cédula erecting the Banco Español de San Fernando was issued on 9 July 1829, the same date on which the transaction was approved.
What this evidence is, and what it is not. Everything above rests on one book: a documented institutional history published in 1865 by Ramón Santillán, who had been minister of finance and was governor of the Bank of Spain, the last in the line of institutions he was describing. Where it quotes the cédula of 1782 it quotes articles 2 to 4 and article 29; the cédula itself was not consulted here, and neither were the bank's Juntas generales, which are cited by Santillán rather than read. He is also an interested party in the argument he is judging — his case is that the Banco de San Carlos was badly constituted and that its successors were better — so his verdicts on Cabarrús and on the bank's organisation are reported as his, not as settled history.