Conclusiones preliminares
Capítulo 3. Situación de las TIC en México y el mundo
3.4 Marco Jurídico para el uso y desarrollo de las TIC
M
anuel Pardo (1834–98) was a descendant of an aristocratic colo-nial family. His grandfather had been an official of the audiencias of both Lima and Cuzco. Pardo was educated in Europe, and entered—as did many of his peers—a career in commerce and finance. For health reasons he spent a whole year in the city of Jauja in 1858, and it was probably in the Mantaro Valley that he conceived his future railroad pro-ject. There he observed how, for lack of adequate transportation, the rich produce of Lima’s hinterlands could not reach the urban market.
Railroads and Pardo’s presidency would go together in the Peruvian his-torical record, and the railroads are considered the main 19th-century achievement of his Civil Party (Partido Civil) (Contreras and Cueto 2000, 136).
A BRIEF HISTORY OF PERU
Pardo’s presidency was not without serious hurdles. He had inher-ited both an immense foreign debt, which inevitably prompted seri-ous financial problems amid decaying guano revenues, and unending small rebellions in the interior, largely waged by caudillos and the pierolistas.
Guano
Between 1840 and 1880 Peru exported approximately 10.8 million met-ric tons of guano at an average pmet-rice of £10 per ton. Thus, over the course of these 40 years, Peru earned around £100 million from the guano trade and became one of the wealthiest countries in Latin America. Moreover, guano was state owned; in other words, all the income from exporting guano went to the state coffers. Because these revenues were state administered, the Peruvian government had a unique opportunity to develop projects under its own auspices.
What did the Peruvian state do with the money obtained from sell-ing guano to Europe? The answer to this question is complex and mul-tilayered. It involves how guano was extracted, who participated in
Seabirds, seen here on one of the Chincha Islands off the coast of Peru, have flocked for hundreds of years on South America’s coastal islands, leaving thick deposits of guano. In the 19th century guano was mined as a hugely lucrative source of agricultural fertilizer. (Photo by Alejandro Balaguer/Andes y Mares)
what ways in the guano exports, and how British and Peruvian interests merged or conflicted in this export venture.
In contrast to ores or agrarian produce, guano was easily accessible and needed no heavy equipment or high capital investment. Packing guano and loading it on ships bound for Europe required only men, bags, shovels, and transportation. The men were mostly convicts or Chinese immigrants known as coolies, who provided cheap labor that accounted for about 4 percent of total production costs. Bags were eas-ily provided by small-scale textile workshops. Shovels were imported and paid for by money minted in Cerro de Pasco. The ships sailed under European flags.
Guano exports hugely enlarged the government’s fiscal revenues. In 1846 revenues obtained from guano accounted for less than 10 percent of state revenues (513,000 soles of 6.113 million soles). (The sol was established as the national currency in 1863.) Only five years later this percentage had risen to more than 25 percent (2.194 million of 7.636 million soles), and by 1872, to about 50 percent (34.566 million of 67.987 million soles) (Manrique 1995, 121). Such financial windfalls made it easy to get loans on the international financial markets and allowed Peru to borrow against future guano production, although this practice would eventually lead to a deep financial crisis.
The Impact of Guano Exports
Many Peruvian and non-Peruvian authors have discussed at length why Peru—having access to the tremendous resources provided by guano exports—did not achieve economic and political modernization.
Historians previously assumed that the guano revenues benefited mainly foreigners, but recently it has been convincingly argued that most rev-enues were retained inside the country. By analyzing state expenditures, U.S. economist Shane Hunt (1984, 51) has shown that 53.5 percent of the Peruvian budget was spent on expanding Peru’s civil and military bureaucracy, 20 percent on the building of railroads, 11.5 percent on transfer payments to Peruvians and 8 percent to foreigners, and 7 per-cent to reduce tributary impositions on poor people. The nature of these expenditures tells the story about the lost economic opportunity.
At the beginning of the guano era the Peruvian governmental appa-ratus was small, amounting to only three ministries with a few dozen bureaucrats each. The demands of the guano boom, however, rapidly expanded almost all branches of the Peruvian government and added hundreds of state-employed workers. Both police and military forces,
THE AGE OF GUANO
for example, were increased in numbers and had their powers extended to the provinces, which had the side effect of substantially reducing the autonomy and power of caciques. With money from the guano trade Peru became one of the strongest military powers in South America and one of the first nations on the continent to own armored steamships.
The Peruvian navy was strong enough in 1866, for example, to fight to a standstill a Spanish fleet that had attacked Callao.
In addition to providing such benefits, however, the employment rolls of the expanding state apparatus were also used as patronage to recruit and reward followers. Such hiring abuses led to high levels of inefficiency and corruption. Investing more than 50 percent of state revenues in an inefficient state administration stifled progress.
Previous loans and the accumulated interest on them further drained state resources. In 1822 and 1824 the Peruvian state contracted two loans in London in the amount of £1.81 million. Succeeding govern-ments were unable to repay them, and by 1848 these loans and the principal and interest had increased Peru’s debts to £5.38 million—
three times the initial loan. Recognizing Peru’s sudden economic wind-fall, the British bondholders of the debt exerted great pressure to make Peru repay the outstanding loans. In 1849 the Peruvian government signed a treaty by which Peru agreed to repay these loans through new bond issues backed by future sales of guano. With this treaty Peru was readmitted to the international financial community and could obtain new loans. However, new loans soon had to be used to repay old loans and accumulated interest, and old loans and new loans eventually ate all available fiscal resources.
In 1869 the minister in charge of Peru’s economics, Nicolás de Piérola, signed a contract with the French businessman Auguste Dreyfus by which Dreyfus became the only agent allowed to extract guano. Until then a large group of Peruvian consignment agents had been in charge. With the money he gained by exporting guano, Dreyfus made new loans to the Peruvian government. With £11.92 million loaned by Dreyfus to the administration of José Balta in 1870, the gov-ernment began the construction of railroads. In the end guano deposits were greatly depleted; the railroads were left unfinished; and Peru faced an external debt of £35 million, an amount that required an annual interest and principal payment of £2 million, which then was the entire annual budget.
In addition to the British bondholders many native Peruvians held long-standing claims on the government. Under pressure from such claimants the Peruvian government recognized this internal debt. The
A BRIEF HISTORY OF PERU
government acknowledged the nation’s obligations to its own citizens, such as those who had supplied funds for the patriot armies during the wars of independence. Over time more and more claimants pre-sented larger and larger claims. In 1851 the state-recognized internal debt amounted to 4.88 million pesos; by 1858, it had grown to 23.2 million pesos, or five times the annual budget of 1850 (Contreras and Cueto 2000, 125). Governmental corruption lay at the heart of much of this drastic increase. The state also acted intentionally to transfer public savings to private hands in the hope of promoting investments.
The state’s recognition of an internal debt was intended to foster the development of an entrepreneurial middle class and to forestall suspi-cions harbored by nationalists about the government’s relations with foreign capitalists.
Rather than becoming revenue producers, as hoped, Peruvians con-tinued to receive money from the state. Peruvian historians Carlos Contreras and Marcos Cueto (2000, 133) have calculated that each Peruvian cost the state five times more a year than he or she contributed to the state. During the boom the gap was filled by guano revenues. Who gained from these state-earned distributions? According to Peruvian his-torian Alfonso Quiroz in his 1987 book, La deuda defraudada, a total of 2,028 people received state bonds; however, two-thirds of the total bond value was held by only 126 people, mostly large land owners and mer-chants and some state bureaucrats. Money thus obtained from state cof-fers was only marginally invested in productive ventures, such as a few banks and small textile and food industries. In large measure the money was reloaned to the state. For lenders this was a less risky investment with higher yields than investing in industrial development, at least until the Peruvian state went bankrupt. In a sense the Peruvian guano age suffered from what contemporary economists would call the “Dutch disease.” Abundance of money lowered prices for imported goods and increased labor costs, whereas the high profitability of guano exports increased the borrowing price of money (that is, interest rates).
During the boom Lima and other coastal cities benefited most from guano revenues, sometimes through the internal debt mechanism but more often simply because more money entered the economy. For example, real salaries increased on average 3 percent annually.
However, with more money circulating in the cities came inflation, and inflation further accentuated economic differentiation. Between 1856 and 1869 the accumulated price inflation surpassed 100 percent. As a result labor conditions and standards of living worsened. Lima’s arti-sans were the first to react when in 1858 they marched through the
THE AGE OF GUANO
A BRIEF HISTORY OF PERU
city’s streets protesting against elite consumption patterns. Suddenly enriched, Lima’s elites resorted to imports. Doors, windows, pianos, shoes, and clothes came from Europe, leaving Lima’s artisans (most of them descendants of former slaves) without work and income.
Slavery and Indian Tribute Reassessed
One important expenditure of the Peruvian government during the guano boom was money spent on effectively abolishing slavery. Seven percent of guano revenues were set aside, and the government bought the liberty of 25,505 slaves from slave owners for 300 pesos each. In theory there were no slaves in Peru, as slavery had been abolished by General José de San Martín in 1821. Shortly after San Martín’s procla-mation, however, former slaves were put under the tutelage of their owners. At first this tutelage lasted until the former slaves reached age 21, but in 1839 it was extended until age 50. Decrees, intentions, and reality were revealed in the state abolition expenditures. A simple cal-culation shows that the Peruvian government paid 7.65 million pesos to slave owners, money that was largely spent after 1854 on expanding sugar and cotton plantations.
A public square in Lima, decorated for the July 28 celebration of independence day in 1868 at the height of the guano boom (Library of Congress)
The other component of social expenditure was the temporary abo-lition of the Indian tribute, which until around 1840 had represented 25 percent of state revenues. After 1840 the Peruvian state made several attempts to reform Peru’s tributary system, but each met political resis-tance. No party or leader wanted to support such unpopular actions.
President Castilla abolished the tribute in 1854. The reform imple-mented in 1866 by Manuel Pardo, Peru’s minister of economics (and later its first civil president), was short lived. Pardo wanted to make tax collection uniform by taxing all Peruvians, not only Indians. According to his plan all male Peruvians between the ages of 21 and 60 were to pay the equivalent of 12 days’ labor in a year in taxes. The experiment lasted less than a year and ended with the ouster of President Mariano Ignacio Prado.
Despite attempts, the Indian tribute was not replaced with a more efficient and ethnically neutral taxing system. To the contrary, the same Indian tribute abolished in 1854 was reintroduced in 1885. Between 1854 and 1885, however, abolishing the tribute had long-term conse-quences for mining and agriculture in the highlands. It also at least par-tially explains why coastal plantation owners could not use Indian labor and resorted to importing Chinese laborers to work on their fields: Once the Indians had no need for cash to pay their tribute, they largely could engage in their own endeavors.
One of the peasants’ few monetary needs was money to fulfill com-munal religious duties, including buying candles, providing dresses for statues of the local patron saint, and paying the services of a priest.
Many hacienda and mine owners were aware of this cyclical need for money and visited the peasant communities (or sent a hired intermedi-ary) knowing when such festivities were scheduled to take place.
Subsequently hacendados or their agents would entice the peasants involved to accept gifts or money. In exchange the ensnared peasants would find themselves obligated to work off the value of the gifts or loans by laboring in a mine or on a hacienda. This form of hiring labor-ers has been called enganche (meaning a “hook”). Often such practices were endorsed by or even organized with the help of local political authorities. Once entrapped by this system, workers saw their debts constantly increase.
The abolition of both the Indian tribute and slavery meant a retreat of Indians and former slaves from the labor market, leaving plantation owners on the coast and hacienda owners in the highlands with a labor shortage, and the state with lower income from internal taxation. As landowners’ complaints became louder, the Peruvian government
THE AGE OF GUANO
A BRIEF HISTORY OF PERU
sought to replenish the labor supply. First Peru invited European immi-grants, who according to contemporary thinking would also improve Peru’s racial profile. Then—once it became clear that Europeans were a demanding rather than obedient labor force—Peru organized, in