Between independence in 1821 and the final settlement of 1887, Mexico defaulted on its debts with depressing regularity. Michael Costeloe's book, Bonds and Bondholders, is a narrative history of the British holders of that debt. It asks three questions. How were Mexican taxes translated into British interest payments? How did British bondholders defend their interests? Who were the bondholders, and why did they purchase Mexican securities?

The first chapter is about the actual bonds themselves. Much of the chapter is of interest only to collectors and scripophilists, but Costeloe's exhaustive research has allowed him to determine the details of every bond issue, rescheduling, and default. Costeloe's research shows that Mexico made interest payments—albeit sporadically—more than many historians have realized.

The second chapter concerns the mechanisms by which “pesos minted in northern Mexico ended up as pounds, shillings, and pence in the pockets of … bondholders throughout the British Isles” (p. xvii). In theory, Mexico's debts were secured by specific dedicated taxes: customs revenues or silver export duties. In order to insure that these taxes were actually collected, British investors tried posting agents in Mexican ports. Investors also appealed to the Foreign Office to protect their rights and halt the widespread smuggling of Mexican silver into Britain.

Unfortunately, the bondholders failed to create mechanisms that would insure steady repayments. Mexican governments refused to allow the bondholders' agents to take their posts. Widespread smuggling reduced the revenues from the export taxes. The British government refused to embargo Mexican exports. Costeloe provides evidence that, even more astonishingly, the Royal Navy was deeply involved in silver smuggling.

British creditors formed committees in order to negotiate with Mexican governments as a unit. The first of these committees was formed in 1830, three years after Mexico's first debt default. Chapter 4 details the history of the committees. The hope was that by negotiating as a unit, the bondholders could induce Mexican governments to begin payments on their outstanding debts. The committees met limited success. They negotiated several debt reschedulings with various Mexican governments, and at times succeeded in collecting interest, but these agreements invariably collapsed in the face of Mexico's endemic political instability.

Chapter 5 asks who were bondholders, and why did they hold Mexican securities? Although Costeloe lacks comprehensive statistical information, he provides anecdotal evidence to support the hypothesis that not all the investors in Mexican bonds were independently wealthy. The contemporary stereotype of widows and churchmen bankrupted by Mexican bonds appears to have had at least a grain of truth. Costeloe also provides two reasons why investors bought Mexican offerings. First, they believed that Mexico was a fundamentally rich country brought low by political instability. At some point responsible government would arise, or it would be imposed from the outside, and creditors would receive their payments. Second, after the initial defaults of the 1820s, Mexican bonds were cheap. Investors speculated on the possibility that interest payments might be met in the future.

Finally, chapter 6 explores the relationship between the bondholders and the British government. The British government only moved to support its citizens' claim against Mexico twice, in 1838 and 1862, and both actions were initiated by France. In 1838, the British sent a squadron to Veracruz and mediated an end to a war between France and Mexico over Mexican debts owed French citizens. In 1862, two years after Mexican soldiers raided the British legation in Mexico City and stole £120,000, the British supported a French invasion of Mexico; an action also undertaken in support of claims owed French citizens. In neither case did British action secure the rights of British creditors in the long term. The political economy of British passivity is an interesting topic for future research, given how many parliamentarians owned Mexican bonds.

In short, Bonds and Bondholders is an exhaustively researched and engagingly written narrative history of the British holders of Mexican debt. The book provides an immense wealth of institutional and biographical detail, and is an invaluable source for anyone interested in the history of British financial relations with Latin America.