Cotton Planters, The State, and Rural Labor Policy: Ideological Origins of the Peruvian Republica Aristocratica, 1895-1908

Abstract

In the Treaty of Ancón ending the War of the Pacific, the government of Peru signed away two provinces on the south coast and much of the country's future guano income. The settlement stripped Peru's treasury bare and exposed the narrow, extractive and agricultural base of the country's economy. A few years later the same Peruvian government, led by the hero of the Chilean war General Andrés Cáceres, signed the Grace Contract whereby the foreign debt was canceled and railway development for the next 66 years fell under the control of the foreign-owned W. R. Grace corporation. The economic and political consequences of these decisions were deeply felt in Peruvian society. Economically, they placed renewed emphasis on export agriculture and mining at the expense of primary industrial development and made stronger demands upon the rural labor force. Led by these sectors, modernization of the economy proceeded in a regional form, with accelerated growth in the coastal valleys and a few highland areas and stagnation elsewhere. A shift of population from the highlands to the coast accompanied this process.