'However long the guano deposits may last, Peru always possesses
the nitrate deposits of Tarapaca to replace them. Foreseeing the
possibility of the former becoming exhausted, the Government has
adopted measures by which it may secure a new source of income, in
order that on the termination of the guano the Republic may be able to
continue to meet the obligations it is under to its foreign creditors.'
These words form part of an assuring despatch from Don Juan Ignacio
Elguera, the Peruvian Minister of Finance, to the Minister of Foreign
Affairs, and was made public as early as possible after it was found
that the January coupon could not be paid. The assurance came too late
for any practical purposes, and it merely demonstrated the fact that
the Peruvian Government shared in the panic which had been designedly
brought to pass by its enemies as well as its intimate friends in Lima,
and their emissaries in London and Paris.
The despatch demonstrates two or three other matters of importance.
We are made to infer from its terms, and the eagerness with which it
insists on the undoubted source of wealth the Government possesses
in the deposits of nitrate, that it was unaware of the actual amount
of guano still remaining in the deposits of the north and the south.
We may also safely believe that the Peruvian Government did not
at the time of the publication of the despatch, dream of asking
the bondholders to sacrifice any of their rights; and further, in
its anxiety to save its credit with England, it was hurried into a
confession which it now regrets.
What spirit of evil suggested to President Pardo the idea of appealing
to the charity of his creditors, immediately after allowing his finance
minister to announce to all the world that the Republic was able to
continue meeting its obligations to its foreign creditors even though
the guano should give out, it does not much concern us to enquire. The
effect of such an appeal cannot fail to be prejudicial to the credit of
Peru; and men or dealers in other people's money will not be wanting
who will call in question the good faith of the finance minister
when he declared that the deposits of nitrate could continue what the
deposits of guano had begun but failed to carry on.
Other considerations press themselves upon us. In the midst of the
crisis, the President published a decree, announcing that he would
avail himself of the resolution of Congress which enabled him to
acquire the nitrate works in the province of Tarapaca. A commission
of lawyers was at once despatched to the province to examine titles,
and to fix upon the price to be paid to each manufacturer for his
plant and his nitrate lands. In an incredibly short time no less than
fifty-one nitrate makers had given in their consent to sell their works
to the Government, and the price was fixed upon each, and each was
measured, inventoried, and closed. The total sum to be paid for these
establishments was 18,000,000 dols. But they remained to be conveyed.
The civil power had displayed considerable activity; now that the
law had to be applied things became as dull as lead, and as heavy as
if they had all been made of that well-known metal. Negotiations had
also to be entered into with the Lima Banks, which is an operation as
delicate and as dangerous as negotiating with so many volcanoes, or any
other uncertain and baseless institutions of which either nature or a
civilisation supported by bits of paper can boast.
Still the world was comforted by the promise that next week all would
be well, or the week after, or say the end of the month, in order
to be sure. In the midst of this, General Prado, the possible future
President of Peru, is despatched to Europe on a mission, the nature of
which was kept a profound secret for three weeks.
Simple men, who believed in the despatch of the finance minister, knew
for certain that General Prado had gone to England to raise more money
on nitrate, in order that the Oroya Railway might be finished, and a
station-house built somewhere in the Milky Way, which it is destined
probably this marvellous line shall ultimately reach. And if London
would only lend Peru, say another £10,000,000, then Lima would rejoice,
and the whole earth be glad; the mountains would break out into psalms,
and the valleys would laugh and sing, for would not Don Enrique Meiggs,
the Messiah[5] of the Andes, once more return to reign?
At any rate it is quite certain that General Prado was announced to
sail on the 14th of March, when the last stroke of the pen was to be
put to the conveyance of the nitrate properties. Alas! the law's delay
continued, and General Prado did not sail. It is natural to suppose at
all events that Prado never meant to go to London without the nitrate
contracts in his pocket--which will supply a larger income to Peru
than the guano in all its glory ever did,--for the purpose of asking
the bondholders to be merciful. The General finally left Callao for
Europe on the 21st, amidst the forebodings of his friends, and the
ill-concealed joy of his foes, but without the nitrate documents being
signed. Still, before he could reach London the thing would be done,
and the result could be telegraphed. In the meantime the new minister
to Paris and London, Rivaguero, telegraphed to Lima some favourable
news, the precise terms of which, of course, were not allowed to
transpire, to the effect that an arrangement had been made satisfactory
to all parties.
On this, further delay takes place in the important nitrate
negotiations, and that in the face of a semi-official communication to
the effect that next week merchants might rely upon it that all would
be well and truly finished. In the stead of this, President Pardo
'reminds the Banks of an item which up to that period had never been
dreamed or thought of, except by the President himself, namely, that
they, the Banks, on the security of the nitrate bonds, would have to
supply to the Government so many hundred thousand dollars per month!
All at once the whole fabric of the nitrate business fell down.
Two things may be inferred from this: President Pardo hoped, believed,
perhaps knew, that the bondholders would give way, and he had become
convinced that he had made a mistake in buying the nitrate properties;
it is also likely that he knew for certain at this time that there
was guano enough for all purposes, without meddling with the important
nitrate matters, and thereby destroying a great and important national
industry. He may also have been desirous to bury, in an oblivion of his
own making, the honest compromise contained in the despatch of Don Juan
Ignacio Elguera. A further light may have dawned on the Presidential
mind, namely, that it will be perfectly easy for the Government to
treble the export duty on nitrate, without in the least damaging
the trade or dangerously interfering with the profits of the makers,
by which means the Peruvian Government would reap an annual income
without trouble, or any of the thousand vexations to which it has been
subjected in the export and sale of its guano.
That it was the original intention of the Government to raise a loan
on the 'purchase' of the nitrate properties, is evident from the terms
of the tenth article of President Pardo's decree, which may be thus
translated:--
'The establishments sold to the State shall be paid for within two
years, or as soon after as possible, that funds for the purpose have
been raised in Europe; payment shall be by bills on London, at not more
than ninety days, and at the rate of exchange of forty-four pence to
the _sol_,' etc.
Whatever value these particulars may possess or have given to them
by future events[6], they will serve to show some of the peculiar
features of the Peruvian Government, and to what shifts it can resort,
or is compelled to make under adverse circumstances, or circumstances
into which it may be brought by its enemies, or its own weakness, its
inherent lack of stout-hearted honesty, and its inaptitude for what is
known as business.
The nitrate deposits are well enough known. It is absolutely certain
that in the year 1863 there were sold 1,508,000 cwts.; and in 1873
5,830,000 cwts. In that year the Government acknowledged to have
received from the export of this article the sum of 2,250,000 dols.
Should the permanent sale of nitrate reach 5,000,000 quintals per
annum, there is no reason why the Government should not realise from
this source at least 10,000,000 dols. a year: should it only double its
present duties the amount would reach 12,000,000 dols.
The annual amount of nitrate which the fifty-one establishments
proposed to be bought by the Government are capable of producing, may
be set down at 14,000,000 cwts.
These establishments do not exhaust the whole of the nitrate deposits.
There are several large 'Oficinas,' as they are called, which have, for
their own reasons, refused to sell their properties to the State.
The region of these deposits is a wild, barren pampa, 3000 feet above
the level of the sea, and contains not less than 150 square miles of
land, which will yield on the safest calculation more than 70,000,000
tons of nitrate.
Why these establishments for the manufacture of this important
substance are called 'oficinas' it may not be difficult to say: it
is doubtless for the same reason that a cottage _orné_ at Chorrillos,
the Brighton of Lima, is called a rancho. Twenty years ago Chorrillos
was to Lima what the Clyde and its neighbouring waters were to the
manufacturing capital of Scotland. What Dunoon and its competitors on
the Scotch coast now are, such has Chorrillos become,--the fashionable
resort of rich people who have robbed nature of her simplicity and
beauty by embellishing her, as they call it, with art. All that remains
of the straw-thatched rancho of Chorrillos, with its unglazed windows,
its mud floors, its hammocks, and its freedom, is its name. An oficina
twenty or thirty years ago, was no doubt a mere office made of wood,
hammered together hastily, as an extemporary protection from the sun by
day, and the cold dews and airs of the night: in appearance resembling
nothing else but an Australian outhouse. An oficina of to-day is a very
different thing. Its appearance, and all that pertains to it, is as
difficult to describe as a great ironworks, or chemical works, or any
other works where the ramifications are not only numerous, but novel.
The first oficina whose acquaintance I had the honour and trouble
to make, was that of the Tarapaca Nitrate Company, situated near the
terminus of the Iquique and La Noria Railway, in the midst of a windy
plain 3000 feet above the sea, and beneath a far hotter sun than that
which beats on the pyramids of Egypt.
If you take a seat in the wide balcony of the house, where the manager
and the clerks of the establishment reside, and live not uncomfortably,
you look down almost at your feet on what appears to be an uncountable
number of vast iron tanks containing coloured liquids, a tall chimney,
a chemical laboratory, an iodine extracting house, a steam-pump,
innumerable connecting pipes, stretching and twisting about the vast
premises as if they were the bowels of some scientifically formed
stomach of vast proportions for the purpose of digesting poisons and
producing the elements of gunpowder, a blacksmith's forge, an iron
foundry, a lathe shop, complicated scaffolding, tramways, men making
boilers, men attending on waggons, bending iron plates, stoking fires,
breaking up _caliche_, wheeling out refuse, putting nitrate into
sacks, and other miscellaneous labour, requiring great intelligence
to direct and great endurance to carry on; and all beneath the fierce
heat of a sun, unscreened by trees or clouds, the glare of which on
the white substance which is in process of being turned over, broken,
and carried from one point to another, is as painful as looking
into a blast furnace. Beyond the great and busy area where all these
varied operations are carried on the eye stretches across a desert of
brown earth, which is terminated by soft rolling hills of the same
fast colour. The appearance of this desert is that of a vast number
of ant-hills in shape; and in size of the heaps of refuse which give
character to the Black Country in Mid Staffordshire. Perhaps the first
impression which this repulsive desert makes on the mind of a man
who has seen and observed much is that of a battlefield of barbarian
armies, where the slain still lie in the heaps in which they were
clubbed down by their foes; or it may be likened to an illimitable
number of dust-hills jumbled together by an earthquake. All this is the
result of digging for _caliche_, and blasting it out of the sandy bed
in which it has lain God only knows how long.
As the breeze springs up, and clouds of fine white dust follow the mule
carts and rise under the hoofs of galloping horses, the idea of the
battlefield with the use of gunpowder comes back on the memory, and is
perhaps the nearest simile that can be used. And this is an oficina!
one of the silliest and most inadequate of words ever used to denote
what is one of the newest, and may be the largest, as it is certainly
the most novel, of all modern industrial establishments.
The manufacture of caliche into nitrate of soda is not without its
dangers to human life, though these are fewer than they were when men
frequently fell into vats of boiling liquors, or broke their limbs
in falling from high scaffolding: the latter form of danger still
exists, and is almost impossible to guard against. I am free to say,
however, that if the guard were possible I do not believe it would be
used. There are some trades and processes which not only brutalise the
labourers on whom rests the toil of carrying them on, but which no less
degrade the mind of those who direct them; and the nitrate manufacture
is one of these. 'Joe,' one of the house dogs, fell into one of the
heated tanks of the oficina where I was staying, and his quick but
dreadful death made more impression on some than did the untimely death
of a man who was killed the day before at the same place. Another item
in the agitated landscape which stretches from the balcony where I
sat is a spacious burying-ground, walled in as a protection from dogs
and carts; but these are not its only or its chief desecrators. The
sky furnishes many more. This great oficina contains 1682 estacas;
can produce 900,000 quintals of nitrate a year, and was 'sold' to the
Government for 1,250,000 dols.
An estaca is a certain amount of ground 'staked out,' as we might say,
and contains about one hundred square yards of available land.
There are other oficinas of still greater value than the one mentioned
above; as, for instance, those of Gildemeister and Co., and which the
Government acquired on the same terms for the same sum.
The markets for this new substance are England, Germany, the United
States, California, Chile, and other countries. It is as a cultivator
a formidable competitor of the guano, and is esteemed by scientific
men to be much more valuable. Its price is set down at £19 the
ton, although £12 and £12 10_s._ is its present market value. The
acquisition by the Peruvian Government of this industry was patriotic,
even if it were not wise. It was done with the intention of paying the
foreign creditors of the Republic. Since then Peruvian patriotism has
assumed another form and complexion, and what was done in an honest
enthusiasm of haste is already being repented of in a leisure largely
occupied with the contemplation of a patriotic repudiation of national
duty and debt.
The arguments by which 'prominent' Peruvians are fortifying themselves
for a step which at any moment may be taken, are neither moral nor
convincing, except to themselves. 'Peru must live,' they say, which
does not mean a noble form of poverty, but an altogether ignoble form
of extravagance, and even wasteful magnificence. We must have our army,
our navy, our President, his ministers, our judges, our priests, our
ambassadors, our newspapers, stationery, bunting, gas for the plaza
on feast days, wax candles for our churches by night and by day, a
national police, gunpowder, jails for foreign delinquents, and railways
to the Milky Way, to show to neighbouring republics and all the world
that Peru is a fine nation.
There is not one of all these splendid items which, so far as the
people are concerned, could not be dispensed with.
But to live, they reiterate, is the primary object and purpose of all
nations, and especially republican nations, forgetting, or, what is
much more likely, never having known, that death is preferable to a
shamed life, and that there are times when it is clearly a duty to die.
The next argument now rapidly gaining ground in Lima is that although
the guano has been hypothecated, this was contrary to Peruvian law,
which distinctly lays down that nothing movable _can_ be hypothecated;
and as guano is clearly movable stuff, which can be proved to the
meanest capacity--the capacity, namely, of a holder of Peruvian
bonds--the Government has been breaking its own laws for a generation
past, and it is now time that this illegal conduct should cease. This
is backed up by reminding all men, and especially Peruvians, who
will derive great comfort from it, that England having recognised
the primary fact that it is the first duty of a man to live, has
abolished imprisonment for debt in her own dominions, and therefore
she could not exert her power to make Peru pay what she owes, if Peru
officially declares that she is unable to do so. These and other like
arguments are being openly discussed in the Peruvian capital. Another,
and perhaps the most formidable of all these specious pleas is, that
England has recently let off Turkey, and therefore there is no reason
why she should not let off Peru.
It is only fair to say that there are a few thoughtful men in the
City of Kings who, ambitious for their country's honour, would fain
see some arrangement made that will enable Peru to pursue her present
policy of internal improvement, and help these men, who for the most
part are very wealthy, to remain peaceably in office for say ten years
longer--or say six--but at least, for God's sake as well as your own,
they appealingly persist, let it not be less than four years (in the
which there shall be no hearing or harvest for bondholders and dupes of
that stamp).
There is no doubt that, in the words of 'a Daniel say I,' if the
bondholders would not lose all, 'then must the Jew be merciful,' let
them insist on their pound of flesh, and everything denominated in
their bond, they will share the fate of Shylock. The only part of that
cruel rascal's fate which they need have no apprehension of sharing is,
being made into Christians.
It is unquestionably to be feared that if the present Government,
and the one that succeeded it in August last under the presidency of
General Prado, cannot defend the country from revolt, great disaster
will follow not only to the republic, but most certainly to the
bondholders.
Revolt is not only possible, it is expected. An armed force led by
determined men from without, aided by traitors within, and backed by
unscrupulous persons who would be willing to risk one million pounds
sterling on the chance of making two millions, might easily--or if
not easily, yet with pains--bring back the corrupt days of Balta and
Castilla, and, with shame be it said, such people can find a precedent
for their proposed scheme in houses of high standing, the heads
of which are doubtless looked upon as irreproachable ensamples of
cultivated respectability.
[Since writing the above, General Prado has once more assumed supreme
power in peace, but there have followed two attempts at revolution
within the space of three little months.]
FOOTNOTES:
[5] 'Haber aparecido en el Peru el hombre que sin
profanacion de la palabra se puede llamar el _Mesias_ de los
ferrocarriles para la salvacion de la Republica Peruana.'--El
Ferrocarril de Arequipa, Historia, &c., Lima, 1871, p. lxxxi.
[6] Written off Alta Villa, April 25, 1876.