Between Silver and Guano: Commercial Policy and the State in Postindependence Peru
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Between Silver and Guano: Commercial Policy and the State in Postindependence Peru
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Originally published in 1989.
The Princeton Legacy Library uses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These editions preserve the original texts of these important books while presenting them in durable paperback and hardcover editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.
Product Details
| ISBN-13: | 9780691607856 |
|---|---|
| Publisher: | Princeton University Press |
| Publication date: | 07/14/2014 |
| Series: | Princeton Legacy Library , #1013 |
| Pages: | 246 |
| Product dimensions: | 6.10(w) x 9.10(h) x 0.60(d) |
Read an Excerpt
Between Silver and Guano
Commercial Policy and the State in Postindependence Peru
By Paul Eliot Gootenberg
PRINCETON UNIVERSITY PRESS
Copyright © 1989 Princeton University PressAll rights reserved.
ISBN: 978-0-691-07810-6
CHAPTER 1
Introduction: From Nationalist Elites to a Liberal State
By high noon, Saturday, the twenty-third of August, 1834, the gratings were locked tight on the swank boutiques along Lima's normally bustling commercial boulevard, the Calle de Bodegones. Around the block, from Mantas Street to Santo Domingo Square, a pall hung over the emptied storefronts of scores of limeño shopkeepers. Instead of customers, crowds of tense merchants milled in the plazas. Their sambos, black slaves, readied themselves with brickbats, should anyone dare break the peace, or venture out to sell or buy. Yet this was no day of rest for merchants, but one of action, political action.
0rbegoso Offends
The "movimiento mercantil" of 23 August — a general strike declared by Lima's merchant guild — was in progress. José Tiburcio Roldan, the consulado's elected chief, had warned his foes. His threat, borrowed from Chilean friends, was action "by reason or by force" if the new government of General Luis Jose de Orbegoso refused to heed their call. Ostensibly, the Peruvian merchants were out to destroy the hated "casas de martillo," public auction houses run by Thomas Eldredge and Samuel Tracy — two obstreperous Yankees whom the august Catholic consulado preferred to smear as "Jews" and "queers" instead. Ever since March, President Orbegoso had tried to elude the merchants' mounting petitions, pleas, and pressures (most recently, from the rostrum of Peru's National Convention itself) against the foreign auctions and their "ruinous" price falls. This on-and-off struggle had obsessed merchants for more than a decade now. The martillero's hammer continued to clang, and the merchants resolved to turn from reason to drama and force instead. That Saturday, not a single store opened for business in Lima. Merchant leaders — Roldan, Larrainzar, Oyague, and Oliveira — led a solemn procession of their followers through the streets of the capital to surrender their keys, en masse, to Lima's English, French, and North American trading houses, in the traditional sign of bankruptcy. Anxious liberal publicists and officials knew, however, that auctions seemed but a pretext for Lima's livid merchants. To free traders, the strike was a "scandalous uprising," a "motín comercial," a veritable "revolución mercantil" hatched to smash the whole array of liberal reforms enacted during Orbegoso's brief and beleaguered reign. Merchants were a "mob of chapetones out to suck our last blood of Independence." If Orbegoso failed to move resolutely and to jail these "subversives," his days were numbered. In this the liberals proved right.
Trouble had been brewing since February 1834, when yet another Peruvian revolution brought to Lima its first openly liberal government since the merchants had chased Bolivar out of Peru some eight years earlier. For Orbegoso, nothing worked as planned, neither with his free trade nor with his treasury. In March, Orbegoso had to shelve his first liberal tariff, swamped by a flood of political complications. One was his acceptance of a 79,763-peso loan from the national merchants' new Ramo de Arbitrios lending bank. This desperately needed cash came with strings attached: no revocation of the six-year ban on cotton textile imports, nixing Orbegoso's last hope for fiscal salvation. Meanwhile, Lima's foreign merchants, including Tracy and Eldredge (who paid modestly for their auction rights), would not supply the funds Orbegoso required to move his liberal program, even as they prodded for more and more liberal concessions. In May, the north's coastal planters, millers, and merchants even forced Orbegoso to reverse step and dispatch a mission to negotiate a protectionist trade treaty with his illiberal nemesis, Chile. Liberal dreams were floundering.
As the fogs of winter enveloped Lima, the assaults against the auctioneers and their liberal promoters grew only hotter. In July, the consulado attacked before the full National Convention: no liberal giveaways to foreigners. "We are the only ones," Roldan reminded sympathetic delegates, "who contribute to the upkeep of the state; everything comes from our sweat; we Peruvians carry the rifles that uphold the laws of the land." This time, they would supply the rifles to overturn simply the liberal laws they abhorred. Peru's president responded meekly with constitutional technicalities about "freedom of industry." He also confessed what everyone in this hostile (and inveterately nationalist) Congress already knew: his attempts to lower tariffs had done nothing to stem the bankruptcy corroding the regime, whose debt to foreigners from customs and mint advances now soared uncontrollably to more than 400,000 pesos. In mid-August, national merchants and nationalist officials blocked Orbegoso's next effort to lower prohibitive textile duties. Even the presence of two handpicked British merchants on the tariff commission, and the usual behind-the-scenes arm-twisting by U.S. and British diplomats, failed to do the trick. Instead, an uproar of backlash against "foreign meddlers" played right into nationalist hands. Liberals roundly denounced protectionists in Lima's polemicized press: nationalists were not even trying to make tariff policy anymore, but simply to starve Orbegoso of all funding and support. The strike of 23 August drove this point home.
From the interior, a far greater threat loomed by August. The armies of Gran Mariscal Agustín Gamarra, combined with those of the caudillos Bermúdez, La Fuente, and Salaverry, were again on the march, the same nationalists thought to be vanquished six months before. In Lima, accusations flew that the merchants would stop only at reviving their "routine of privileges, prohibitions, and monopolies; pining for antiquity and making war on the auctions." Surely, as many hinted, the protectionist ire had now turned into war against Orbegoso himself; that is, into direct support for the spreading gamarrista insurgents, now joined by motley provincials and the usual artisan types. Orbegoso had no monies or allies left to prosecute this civil war, nor as yet a single liberal promise fulfilled.
In September, the Consejo de Estado, the strongest authority in the land, hammered out a compromise on the auctions, sensing "this most alarming agitation" around them. Orbegoso desperately embraced this plan to regulate martillo sales, and expunge all foreign retail shops to boot. The consulado rejected the ploy, especially after the Consejo declined the merchants' hefty $6,000 bribe to halt the auctions altogether. 8 A small band of breakaway merchants, led by the maverick liberal Miguel Rivera (and suffering one reprisal after another for their liberal deviancy), fought back with lawsuits to annul the election of the "traitorous" consulado leadership. The usual threats and slanders flared, yet never a final verdict. For by October, even the legendary mercachifles, Lima's mulatto streethawkers, gossiped about how the top merchants were actively fueling an unstoppable revolution in the provinces. In December, Orbegoso fled Lima to battle the rebels in the far south, on the last turf to find the liberal faithful. The south, as usual, would not suffice. On New Year's Day, 1835, Lima's remaining militias mutinied to the cause of the fiery limeño Colonel Felipe Salaverry, the nationalist caudillo just past adolescence. This was a not unexpected present for Lima's nationalists. Yet an unprecedented round of bloodletting ensued, as Salaverry's men summarily executed the last loyalist sergeants of Callao.
As the new year began, so began a new regime. Abandoned liberals damned the merchants who helped topple republican Peru's first true liberal experiment, "those monopolists who also want to monopolize our government!" Roldan barely bothered to reply to his critics, who "if they are men at all, ... [are] fags and liars unfit for human society." All this mudslinging was gratuitous. For by then Salaverry had already banished the auctioneers, sealed his exclusionist trade pact with Chile, restored full import prohibitions, prosecuted foreign retailers, returned consulado favors in kind, and mounted a bitter crusade against all the foreigners rewarded and implicated in the crushed liberal regime. Another topsyturvy nationalist reign had begun for Peru, and the mayhem, epithets, and violence would persist unabated for years to come. But all this turmoil was about something: Peru's entry into the world economy.
Liberal Peru and the Historians
Until recently, economic policy in Peru was synonymous with "export liberalism." No other economy of Latin America matched Peru in the fervor, simplicity, and tenacity of its liberal orthodoxy. And no country appeared so thoroughly dominated by the liberal politics of its export elites. For six decades after 1900, the "oligarchy," Peru's coterie of coastal planters and their urban kin, sustained a legendary capacity to deflect the nationalist and protectionist alternatives that by 1930, elsewhere in the region, had already corroded export liberalism. Peru's "liberal state" — in our economic sense alone — served mainly to facilitate unimpeded relations between national export elites and overseas interests and markets, ensuring the oligarchy its lopsided share of the fruits of Peru's open economy. The liberal complexion of Peruvian elites, moreover, dates as far back as historians usually venture. Liberal hegemony, by an even narrower Lima "plutocracy," appeared in full flower by the 1850s, fertilized by the renowned free-trade bonanza of the Age of Guano. As in the modern export experience, the fleeting benefits of the nineteenth-century boom reached few others in Peruvian society. Guano, then, makes our textbook case of export riches gone wrong.
Historians assign a special analytic significance to this, Peru's unbroken chain of elite liberalism. Incorrigibly liberal elites, they argue, locked that country into frustrating long-term cycles of intensifying dependence on foreign markets, finance, and technology, a growth syndrome that only exacerbated Peru's already marked disparities of income, power, and culture. Small wonder that Peru is also the paradigm of a country hobbled by its allegiance to free trade.
It is difficult to imagine a Peru without liberalism, a Peruvian state not run by and for powerful liberal elites. Yet, while overlooked, one such period did exist: the three-decade interregnum between independence and guano prosperity. From 1821 to 1852 (when a radical and durable free trade finally triumphed), Peru ranked as one of the most protectionist regimes in the hemisphere, armed with a complex array of nationalist economic strategies. Import bans and prohibitive tariffs shielded local craftsmen, farmers, and factories from the wave of cheaper imports that came with independence; foreign merchants faced an intricate network of nontariff barriers that hamstrung their maneuvers in the local economy; and the nascent Peruvian state tried every trick at its disposal to steer national development away from full dependence on the expanding world economy. Nationalist, even xenophobic, currents pervaded all strata of Peruvian society, translating into zealous policies and practices that kept foreign and liberal interests at bay. In the postindependence era, Peru's notorious liberal state and elites were nowhere to be found.
Peru's protectionist debut began mildly in 1821, with independence, although in the mid-1820s foreign occupiers, notably San Martin and Bolivar, had tried to reverse this trend with their quixotic proclamations of "free trade." By 1828, Peruvian nationalists and políticos had installed a full protectionist regime instead. Protectionism meant total bans on such common consumer imports as textiles and flours, 90-percent sumptuary tariffs for handicrafts, and ever-rising specific duties (100–200 percent) on agrarian staples. This "prohibitions" fervor was backed up by a gamut of navigation acts and commercial subsidies, repression of foreign-trader rights, and a comprehensive scheme for a regulated regional commercial system (with Chile) insulated from Atlantic markets. Through some dozen vociferous tariff debates until the late 1840s, the national thrust of trade policy held firm (although the vacillations and turmoil of Peru's weak state undoubtedly blunted its effect). Protectionism withstood major liberal counterattacks in 1832, 1834, and 1836–38 when liberal (20–40 percent) tariffs were briefly imposed, again from abroad. Nationalist agitation and trade policies reached their zenith between 1839 and 1841, with the autarkic dreams of the Gamarra Restoration. Some tariffs, notably on rustic textiles, now seemed obsolete; but the regime redoubled its efforts to favor national enterprise over pariah foreigners, particularly with its stress on native monopolies. By 1845, though, the venerable penchant for nativist exclusionism and prohibitions was waning. But novel strains of protection — privileges and impromptu 40-percent duties for new factories (and steeper effective ones for artisans and shippers) as well as the "Peru first" guano-export monopoly — now came to the fore. Between 1848 and 1852, sharp struggles broke out between Peru's last protectionists (winning momentary success) and a new breed of Peruvian export liberal. In the end, the liberals were to triumph with the uniform 20-percent Manchesterian free-trade laws of March 1852. It was fully three decades since San Martín had heralded a free trade for Peru.
In many respects, Peru's initial protectionism seems to be just one instance of a wider, still unstudied phenomenon: the prolonged resistance of postindependence elites and states, across Latin America, to the new possibility of free-trade integration with the rising North Atlantic economy. Peruvian protectionism found important counterparts from 1820 to 1860 in Mexico, Colombia, Bolivia, Argentina, and Paraguay, to name some obvious cases. Larger trends were surely working against the new commercial order glimpsed in the 1820s with the collapse of Spanish mercantilism. The political turmoil, depression, and war capitalism that bedeviled nearly all the new republics weakened incentives for would-be export sectors to press for liberalism. Similar balance-of-payments crises prompted emergency stabilization measures, with profound protectionist effects. In most countries, neomercantilist ideologies and monopolies still enjoyed prestige as stopgap fiscal remedies (or among colonial corporate cliques, such as artisans and merchants, who survived independence with greater viability than their liberal foes). In some areas, local interests emerged with a new freedom to voice their own policy needs, often at odds with the cosmopolitan liberals in capitals and ports. Yet, beneath the era's chaotic nationalist policies, a conflict was sharpening between hoary colonial economic norms, practices, and interests (all of which enjoyed a postindependence resurgence) and those, Bourbon-inspired, which by the 1870s would definitively pull Latin America into a liberal world economy. It was, as one historian puts its, Latin America's "long wait" between colonialism and, as many now see it, the "neocolonial" order. Few analyses deal with this thorny and protracted transition from colonialism to liberalism. Even so, recent theorists and historians alike now regard this shift as the portentous change of the nineteenth century — the groundwork for Latin America's modern, dependent, and export societies.
For Peru, the historiography downplays the early protectionist regime, even as a sign of this inherently conflictual process of forging new relationships to the world economy. An extended bout of protectionism fits poorly with recent "dependency" interpretations of the era, which depict liberation from mercantilist Spain as the springboard for Peru's rapid and inevitable subjection by British free-trade imperialism. In this scenario, early British "control" over Peru's weak economy, and diplomatic pressures unleashed against an even feebler state, crushed local opposition to incorporation into a British liberal world order. The protectionist decades also contradict a broader (and by now conventional) view of Peruvian elites as congenitally impaired for the tasks of modern nation-building. Peru's infirm ruling cliques and state, so the argument goes, were incapable of economic nationalism or, for that matter, any form of national development. They proved all too willing to accommodate to the needs, profits, and coercions of North Atlantic capitalism — at the expense of broader and long-term national interests. With this liberal propensity ingrained from the start, the quick adoption of free trade now stands as the first open expression of the long, unnational legacy of republican elites. Their liberal compact would bring compounding ruin and disgrace to Peru as the century unfolded: from the squandered opportunity of guano resources to the disastrous denouement of war with Chile. And when historians do recognize signs of postindependence protectionism, it is ascribed to struggles by beleaguered underclass artisans, their quixotic attempts to survive the flood of imports unleashed precisely by this furtive liberal matrimony of local and foreign elites.
(Continues...)
Excerpted from Between Silver and Guano by Paul Eliot Gootenberg. Copyright © 1989 Princeton University Press. Excerpted by permission of PRINCETON UNIVERSITY PRESS.
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Table of Contents
- FrontMatter, pg. i
- CONTENTS, pg. v
- PREFACE, pg. vii
- CHAPTER 1. Introduction: From Nationalist Elites to a Liberal, pg. 1
- CHAPTER 2. Beleaguered Liberals, pg. 18
- CHAPTER 3. The Protection of Elites, pg. 34
- CHAPTER 4. Nationalist Caudillo Politics and Liberal State-Building, pg. 68
- CHAPTER 5. Fiscal Politics: From National to Liberal Finance, pg. 100
- CHAPTER 6. Conclusions: Nationalism, Dependency, and the Peruvian Nation-State, pg. 138
- STATISTICAL APPENDIXES, pg. 159
- NOTES, pg. 175
- SELECT BIBLIOGRAPHY, pg. 211
- INDEX, pg. 227