Hunefeldt C., Harris B. A Brief History of Peru

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Another important task Cáceres had to face was to end Indian resis-

tance in Peru’s central highlands, a movement he himself had initially

helped organize. By 1888, 45 of the most important haciendas in the

central highlands (about 10 percent) between Cerro de Pasco and the

province of Tayacaja (north of the Department of Huancavelica) were

still held by armed Indians. This occupation had begun in 1882 by a

decree issued by Cáceres, holding that Indian guerrillas were to punish

all those attempting to collaborate with the Chileans by occupying their

properties. Even after the war came to an end Indian guerrillas contin-

ued to take over more and more haciendas. What had begun as a patri-

otic effort had turned into a class confrontation. As president, Cáceres

now sided with landowners. Through negotiation and force the

Peruvian government sought to return these haciendas to their former

owners. It was not until 1902 that the last haciendas were recovered.

The reintroduction of the contribución personal—meant to replenish

empty state cof

fers—was another attempt to strengthen the hand of

landowners. Soon caudillo tactics were back in place. Cáceres had grad-

ually changed from the hero of resistance to an old-fashioned strong-

man. Having defended territorial integrity during the war, afterward he

handed over Peru’s most vital resources to the Peruvian Corporation.

Only 10 years after the Treaty of Ancón had been signed, new dis-

turbances were on Peru’s political horizon. Cáceres’s presidency ended

in 1890, but he had no intention of giving up power. He stage-managed

the selection of General Remigio Morales Bermúdez as his successor.

Shortly after taking ofﬁce, however, Morales Bermúdez died in 1894. A

provisional junta organized new elections, and Cáceres again won.

Nicolás Piérola, the leader of the Democratic Party and a long-standing

opponent of Cáceres, objected to the results of the 1895 elections, and

after a short civil war, Piérola took power in March 1895. Because of his

measures in the aftermath of the War of the Paciﬁc, Cáceres had lost his

support among peasants in the central highlands. Many earlier tayta

followers now sided with tayta’s enemies. The Partido Civil, which had

earlier supported Cácer

es, now supported Piérola. The old war hero

was on his way into permanent exile.

Modernizing Peru

In the wake of the War of the Paciﬁc, Peru needed economic and polit-

ical uplift, and fortunately, a new generation of positivist thinkers with

much common and practical sense emerged. They added a new dimen-

sion of technical knowledge to politics and the organization of eco-

A BRIEF HISTORY OF PERU

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THE WAR OF THE PACIFIC AND AFTER

nomic life by collecting and evaluating data on economic performance

and, perhaps most important, showing that successful politics need not

follow the whims of unversed individual strongmen. This new group of

technocrats was organized as the Geographical Society of Lima

(Sociedad Geográﬁca de Lima), founded in 1888 in imitation of similar

organizations in Europe and the United States. Aside from regularly

publishing a journal, the Boletín de la Sociedad Geográﬁca, the society

had a str

ong inﬂuence on natural resources research, evaluation of eco-

nomic feasibility projects, new scientiﬁc discoveries, and, last but not

least, the discussions on territorial boundaries. Prominent intellectuals

from the society and from the universities supported and often spear-

headed the government’s efforts to push Peru toward modernity.

The “Indian question” remained high on Peru’s government agenda.

There were two general opinions on this matter. The ﬁrst was based on

social Darwinism, which held there was a parallel between the biological

process of natural selection and the social process: The “strongest” and

“best” of humans were meant to survive and move forward. Under this

viewpoint the white race and culture were believed to work together to

achieve development, whereas Indians were doomed to cultural—if not

physical—extinction. Therefore, social Darwinists believed that in order

Lima in the late 19th century, following the War of the Paciﬁc (Christine Hunefeldt)

to develop, Peru needed to improve its racial stock by bringing in

European immigrants. In 1894 a law to encourage immigration was

passed, but the results were dismal. Few European immigrants reached

Peruvian shores, and those who did and were settled in the Amazon basin

soon departed when they found themselves cut off from any governmen-

tal help. Although the Peruvian government had promised to build roads

to connect these outlying areas to markets and cities, these promises

never materialized. Europeans wishing to immigrate to the Americas had

better options in the United States, Brazil, Argentina, and Chile.

The second theory concerning Indians aimed to “redeem” the indige-

nous race by teaching Indians to read and write, which would “raise”

them to Western cultural standards. According to this theory, Indians

were behind in their evolution but not unable to learn. The best ways

of making Indians learn, in this view, were obligatory military service,

inclusion into the tax system, and educational reforms.

While grand reforms and intentions regarding Peru’s natives were

laid out, the economy needed cheap labor, and white landowners

wanted to expand current estates and create new ones. Cheap labor

meant Indian peasants, and more land meant Indian land. Indians were

indeed fundamental to the expansion of coastal haciendas and planta-

tions. By the century’s end they would be joined by another cheap labor

force, Japanese immigrants. Still, none of these laborers joined this

labor market of their own free will. Through indebtedness, Indians

from the highlands were dragged to the coastal haciendas, and many

Japanese immigrants did not have the faintest idea of what would

become of them once they left their homeland.

Rebuilding the State

Peru managed to rebuild its ﬁnances by resorting to indirect taxation.

Tobacco, opium, matches, and salt were widely consumed, and new

taxes on them, in addition to the existing alcohol tax, provided the

Peruvian state with a substantial portion of its income. The success of

this form of taxation allowed the Peruvian government to reduce taxes

on exports, thus greatly expanding exports. It also allowed the aboli-

tion—once again—of the contribución personal in 1895. By the end of

the 19th centur

y the Peruvian state had doubled its income since the

end of the War of the Paciﬁc, and income would climb further over the

following years. The state no longer depended on private enterprise to

determine its budget, and private enterprise no longer depended on a

single export product such as guano but had diversiﬁed its investments

A BRIEF HISTORY OF PERU

156

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THE WAR OF THE PACIFIC AND AFTER

into sugar, cotton, wool, rubber, copper, silver, and eventually also

petroleum. The Peruvian state had gained a certain level of indepen-

dence in its decision-making processes and could use key institutions

to further sponsor economic development.

During Cáceres’s presidency (1886), organizations such as the

Chamber of Commerce of Lima and the Register for Real Estate (Registro

de la Propiedad Inmueble) came into being and promoted internal credit

transactions. The Lima’s Bolsa de Valores (stock exchange) showed signs

of economic impetus around 1896 and allowed for new patterns of invest-

ment and the creation of new enterprises. Economic progress was further

enhanced by the opening of several banks: the Banco Italiano in 1889, the

Banco Alemán Transatlántico in 1897, the Banco Internacional in 1897,

and the Banco Popular in 1899. Separately, the establishment of civil reg-

isters for baptisms and deaths, which took such functions out of the hands

of the church, completed a century-long secularization process.

When Piérola came to power in 1895, the push toward decentraliza-

tion came to an end, the contribución personal was abolished, and local

administration costs wer

e carried by a Lima-based budget. Only educa-

tion, health, and public works remained under the aegis of local state

dependencies, the departments. Piérola also created a professional army

under the guidance of French advisers.

Piérola’s initiative to create a salt monopoly in 1895 provoked some

Indian upheaval in the highlands. Until then, salt had provided many

peasant communities with a source of supplemental income. It was also

The “Democratic Caudillo”

resident Nicolás Piérola was known as the “Democratic Caudillo.”

U.S. historian Peter Klaren has noted that Piérola believed only a

strong hand at the helm of an authoritarian central government (guided

in measure by the tenets of Catholicism) could hold Peruvian society

together in the face of the nation’s geographical diversity and class and

racial divisions.A weak government would be doomed to failure when

confronted with these forces. Piérola was convinced he reﬂected the

popular will, but he insisted on ﬁrm control. Endowed with high energy

and possessed of an engaging personality that allowed him to appeal

successfully to the masses, he was well suited to the task of governing

in such a fashion as a devout Catholic (Klarén 2000, 201).

A BRIEF HISTORY OF PERU

158

tied into Indian religious practices. The most dramatic Indian uprising

occurred in the northern part of the Department of Ayacucho, when

about 1,000 men from Huanta killed their mayor and the subprefecto.

Future president Oscar Benavides—at the time a lieutenant—led the

militar

y expedition against this rebellion and captured its leader, Juan

Sánchez. Other reasons for these scattered rebellions were Piérola’s

monetary reform, which aimed to regularize the money circulating

within the economy; the rejection of governmental bonds to pay taxes;

and the labor drafts imposed on the indigenous population to carry out

governmental tasks (the faenas de república, or “work of the republic”)

without pay—for example, as messengers, police, carriers, and con-

struction workers. Even after Piér

ola’s presidency ended, successive

governments tried to prohibit the free use of Indian labor but failed, in

large measure because the state lacked the ﬁnancial resources to pay for

these services.

Overall, during 1895–99, Piérola followed in the footsteps of the ear-

lier civilista political and economic program. However

, unlike the

Partido Civil, he could not count on the abundant revenues obtained

from guano and nitrate. As president, Piérola concentrated power in

Peru’s capital city but left the more traditional highland provinces in the

hands of local powerholders known as gamonales; Lima’s government

depended incr

easingly on coastal plantation owners and foreign loans

and investments.

In a sense Peru shared in Europe’s belle epoque, when many Latin

American intellectuals and politicians looked to London and Paris for

examples to follow. For decades many more limeños traveled to London

and Paris than to the imperial capital of the Inca, Cuzco. This orienta-

tion went hand in hand with a neglect of domestic matters and a dis-

dain for the common people, especially Indians.

In 1899 Eduar

do López de Romaña (1847–1918) became president

based on a coalition between pierolistas and civilistas. Election results

in those days wer

e usually decided well before election day. Candidates

and their supporters would rally people, often imposing their candida-

cies by force, blackmail, or outright intimidation. Under the new elec-

toral law passed in 1895, illiterate citizens could not vote. Thus, in

1899, only 108,597 people, or around 2.5 percent of Peru’s population,

were eligible to vote. Only about half of these eligible voters actually

voted, and López de Romaña got the most votes by a very large margin.

López de Romaña’s successor in 1903 was Candamo, also a civilista.

Candamo died eight months after taking over the presidency, and the

Par

tido Civil imposed its chosen candidate, Augusto Bernardino Leguía

(1863–1932) in 1908. Leguía was followed by Guillermo Enrique

Billinghurst (1851–1915) in 1912 as a result of Peru’s ﬁrst workers’

strike in Lima. It was the ﬁrst time Peru’s masses had been sufﬁciently

organized to intervene in Lima’s “aristocratic” politics. Billinghurst was

not part of the oligarchy but a representative of the emerging middle

class. Civilistas, however, did not silently accept this turn of events, and

they or

chestrated a military coup in 1915 that put in power Oscar

Raimundo Benavides (1876–1945), restoring civilista dominance.

Another general strike over incr

eased costs of living in 1919 brought

Augusto B. Leguía back to power, in spite of his failures during his ﬁrst

presidency. This time he used popular discontent to gain the presiden-

tial chair. Although civilistas had brought him to power in 1908, Leguía

now faced civilista opposition in parliament. Claiming there had been

electoral fraud, he closed down the parliament and governed Peru until

1930 with only a per

functory bow toward democracy. When Leguía

exiled opposition civilistas in 1919, the Partido Civil disappeared from

Peru’

s political map.

Those in power between 1900 and 1919 were inclined toward liber-

alism and modernization. They intended to turn Peru into a more

European-like country, that is, into a better-organized, more prosperous,

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THE WAR OF THE PACIFIC AND AFTER

Views of Indians

entura García Calderón, a son of the former president Francisco

García Calderón, exiled to Chile at the end of the War of the

Paciﬁc, and a candidate for the Nobel Prize in literature, described

Indians in his compilation of tales La venganza del cóndor (1923) as a

species of aliens with prominent cheeks and dark skins, who ate one

another’s ﬂeas and fornicated with white llamas. His work was pub-

lished in several languages around the world.Yet García Calderón had

had little if any contact with Indians during his life.

In the view of Lima’s elites, Peru’s Indians were considered part of

the rich natural resources of the country.At the same time, however,

they were the source of all the country’s woes. In 1901, for example,

Manuel Candamo (1842–1904), president of the Peruvian senate and

future president of Peru, was convinced that Peru’s problems had

nothing to do with legislation but rather with its people, a challenge

that would eventually be resolved through race mixing (Bosadre 1983,

VIII: 102).

and better-educated nation. Several important measures were taken in

order to implement these progressive ideas. In 1900 the Mine Code

replaced the Old Ordinances of 1786. The new code guaranteed secure

investments and promoted more investments and the concentration of

mine ownership as well as the expansion of commercial agriculture.

Also encouraging this process was an 1890 decree that froze taxes on

exports for 25 years. Foreign experts were invited to help improve

Peruvian mines, agrarian technologies, and irrigation projects. In 1902

the Peruvian government established the National School for

Agriculture (Escuela Nacional de Agricultura).

The founding of new governmental agencies to promote progress went

hand in hand with a denationalization of national resources. More enter-

prises became foreign owned. As more regions became specialized in

more export products, the earlier regional division of labor also changed.

Economic Changes

Shifts in Ownership of the Mines

Many smaller Peruvian mines passed into foreign hands, especially the

rich silver and copper mines in the central highlands of Cerro de Pasco,

which became the property of the U.S. Cerro de Pasco Corporation,

founded in New York in 1901 with money from some of the biggest U.S.

fortunes, such as the Vanderbilts, Hearsts, and Morgans. In less than

three months, these interests bought up to 80 percent of the mines.

Other foreign companies followed suit. The Vanadium Company, for

instance, began monopolizing resources around 1907, and the Peruvian

Corporation alone, with a working capital of £19 million, only £2 mil-

lion less than Peru’s national budget, demanded preferential treatment

in the use of railways to lower transportation costs and monopolized

mineral reﬁneries.

By 1920 the Cerro de Pasco Corporation and Northern Peru Mining,

another U.S. company, working in La Libertad, controlled almost all

Peruvian copper, silver, and gold. Through purchase, fraudulent legal

maneuvering, and manipulation of their reﬁning monopoly, U.S. com-

panies gradually became the owners of most mining enterprises.

Moreover these mining companies bought large tracts of land as a way

to solve the labor problem. By depriving peasants of their small plots of

land, the companies gave them no choice but to sell their labor to the

mines. Total copper production rose from 275 tons in 1890 to 12,213

tons in 1905 and to 32,981 in 1920.

A BRIEF HISTORY OF PERU

160

A similar chain of events happened to the oil ﬁelds in northern

coastal Peru, where they became the property of British and U.S. com-

panies. The International Petroleum Company, founded in 1913,

bought the oil ﬁelds in Brea and Pariñas (Piura), which later came into

the hands of Standard Oil of New Jersey. Between 1905 and 1919 the

labor force working on Peru’s oil ﬁelds more than doubled, from 9,651

to 22,000 men, and oil exports came to represent around 10 percent of

Peru’s total exports. These companies worked as enclaves in the

Peruvian economy; that is, they had little effect on Peru’s internal econ-

omy, and technology and engineers came from abroad.

Agrarian Enterprises in the Central Highlands

Economic concentration also occurred with the once highly productive

agrarian enterprises in the central highlands. After the disasters of the

war many hacienda owners looked for support from Lima’s plutocracy

to overcome the nation’s crisis in the countryside. An alliance led to the

formation of large cattle-raising associations (sociedades), but soon the

provincial land and cattle owners found themselves excluded from

he boards of these associations, replaced by the most powerful families

in Lima (Prado Ugarteche, Mujica y Cavassa, Gallagher, Gallo Porras,

Barreda y Laos, and Alvarez Calderón, among others). By 1914 the rail

line to Huancayo was complete, and the international demand for wool

was at its peak. Consequently, just when rewards were highest, most if

not all properties had been transferred to outside hands. Gradually

these owners aggressively sought community-owned lands in an effort

to increase revenues still further and to augment the number of avail-

able laborers. In and around the La Oroya reﬁnery toxic fumes and river

contamination poisoned peasant lands and animals. Peasants without

land became peasants who had to sell their labor to survive. Land,

mines, and regional commerce were now in the control of investors in

Lima and New York. Cerro de Pasco, once a part of the Department of

Junín, lost its intraregional links with the Mantaro Valley and in 1931

became administratively a separate department.

Plantations on the Central and Northern Coast

The War of the Paciﬁc had devastated small and medium-size agrarian

enterprises on Peru’s central and northern coast. Chilean troops had

imposed high assessments on these properties, and the Chinese laborers

had ﬂed the countryside. The destruction of agrarian properties in these

regions required high investments to restart production. Domestic capital

161

THE WAR OF THE PACIFIC AND AFTER

was scarce, and the only source left was external credit. So in the aftermath

of this war land became concentrated in few hands, and most landed prop-

erty became foreign owned. Big money came from Germany

(Gildemeister), England (Grace), and Italy (Larco), as well as from com-

mercial enterprises (Duncan & Fox, Graham & Rowe, Prevost, and

Kendall). Foreign owners had the necessary international contacts to

obtain money to rebuild, expand, and modernize their properties. Most of

these huge enterprises encompassed hundreds of square miles, some

extending well into the Peruvian highlands, often for the single reason of

obtaining cheap labor. They expanded irrigation systems and railroads

and used steam engines to transport their sugar and cotton to the Paciﬁc

ports.

Some smaller landowners tenaciously resisted handing over their

properties; however, few could in the long run keep their properties.

Often, larger landowners resorted to violence to convince their smaller

counterparts to sell their land. Cutting off the water supply and harass-

ing the ﬁeld laborers were common methods to obtain a property trans-

fer. When Peruvian nationals retained ownership, they often depended

on the larger enterprises to process their sugarcane. The results of these

events were the consolidation of large haciendas and the building of

strong agro-industrial enterprises on these haciendas. A new elite

emerged, the so-called sugar and cotton barons. There were also

regional shifts. Whereas during most of the 19th century, Lima had

been the main sugar-producing department, the Department of La

Libertad on the northern coast gained preeminence toward the turn of

the century. Between 1894 and 1912 Lima’s sugar production decreased

from 37.2 percent to 22.3 percent in terms of total national production,

whereas La Libertad increased its share from 30.8 to 43.8 percent.

Cotton production and commerce also depended on foreign capital.

Foreign merchant houses loaned short-term money to producers with

future harvests as the guaranty for repayment. If harvests failed, mer-

chant houses took over the land. It was only in the 1930s that cotton

producers ﬁnally gained access to internal ﬁnancial resources. In

smaller coastal cities, such as Pisco, Chincha, and Cañete, commercial

enterprises processed raw cotton from local haciendas into exportable

cotton ﬁber and oil. Rice production during this time period was

mainly oriented toward the internal market, and rice became one of the

most important ingredients in Peruvians’ diet.

During World War I (1914–18), sugar and cotton prices rose dra-

matically, as did most other raw materials, providing further incentives

to expand production and production sites, even after prices leveled out

A BRIEF HISTORY OF PERU

162

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THE WAR OF THE PACIFIC AND AFTER

in the early 1920s. By 1918 Peru had surpassed the productivity levels

of Hawaii, the most advanced sugar-producing site. Expansion contin-

ued well into the 1930s. Gradually some of the revenues obtained from

sugar, rice, and cotton exports was invested in urban ﬁnancial ventures,

such as banking and insurance companies. The Banco Internacional del

Perú, the Banco Alemán Transatlántico, the Banco Popular, the

Cutting sugarcane (Reproduced with permission of the General Secretariat of the Organization

of American States)