My husband and I were reading about the Treaty of Guadalupe Hidalgo since it was in the news recently. He is from Mexico and learned about it at University, but he remembers being taught that the Treaty is considered invalid by the Mexican government because the US never paid the sum of $15 million. The (English) wikipedia article on the treaty implies that the money was paid, but gives no source. Is there confirmation that the treaty was honoured?
When the war began, Mexico had suffered years of instability. The national debt was ballooning, and heavy taxes and tariffs failed even to meet interest payments. Debts owed to foreign citizens were over $55 million (in 1846 dollars), and government debt to Mexican citizens was close to another $100 million.
Virtually all debt payment ceased during the war. When it ended in 1848, therefore, Mexico was in the grip of an extremely dire debt crisis. Foreign nations were threatening their own interventions against the prostrate nation, and its own bankers and moneylenders were agitating for a quick settlement. After fighting almost to the last possible moment, the Mexican government capitulated and accepted the indemnity for a vast cession.
Along with the $15 million indemnity, the U.S. government agreed to assume $3.25 million of debt owed by Mexico's government to American bondholders. (Most of this money went to wealthy speculators, who had snapped up these bonds at a fraction of their face value during Mexico's prewar debt crisis.) In actuality, the U.S. government approved just over $5 million in claims.
The payment of the indemnity to Mexico was made in five annual installments, paid in gold, along with 6% interest, after a first installment issued immediately after ratification. A third of this first installment was paid in hard currency, and in U.S. Army surplus weaponry handed over to the Mexican government. The other two-thirds were paid in checks against the U.S. Treasury. The remainder of the installments were paid on time, and with interest they totaled $16.4 million.
source: U.S. Dept of the Interior, 1926 - Cost of Territory Purchased by the United States, p 250
So the money did go to Mexico's government - but it didn't stay long. Most of it was spent on immediate needs, and much of the rest went to paying the government's most powerful bondholders. Ewen MacKintosh, the British consul in Mexico, had made a fortune as a broker of debt. He served as an important go-between during peace negotiations, and made sure that his interests were well-served. $600,000 of the first $3 million went directly to pay off his bonds at face value. Most of this, MacKintosh gambled on further investments which didn't pay off in the postwar turmoil - he declared bankruptcy in 1850 and died a decade later in humble circumstances.
The remaining installments were transferred through large banks (Baring Brothers, Corcoran & Riggs, N.M. Rothschild & Sons, Howland & Aspinwall, Lionel Davidson), who also took cuts to pay off the bonds they and their most important clients held. $3 million was thus shaved off before a single cent reached Mexico. And as I noted, the money that did reach Mexico City vanished to service debt. Just enough remained to keep the army fed while it put down a secessionist movement in the Yucatan and tried to push back against the Comanche and other Native American nations in the north.
So, while the money was paid, and much of it was at least legally held by Mexico for a time, virtually none of it could be put to productive use. Mexico went through 16 finance ministers in the next decade, partly due to continued political crisis but mostly because the job of sorting out Mexico's economy had become inhumanly difficult. It was this debt crisis that led directly to the 1861 intervention by the European powers and subsequent conquest of the nation by France - which was made possible in large part by conservative Mexicans who held government debt and hoped a monarchy propped up by a great power would pay it.