The Commercial System until Mid-century

During the first three decades after independence, as landholder and merchant elites in southern Peru desperately tried to adjust their economic activities to the new political, commercial, and social circumstances, new trading patterns were gradually constructed, incorporating distinct spatial circuits, new groups of traders, and changed modalities of trade. By the mid-nineteenth century the various livestock and agricultural products from the northern altiplano and surrounding, ecologically distinct regions all fed into a complex trade based to a large degree on reciprocity. Trade for export and trade for local consumption were closely intertwined.

After 1824 European and North American merchants rapidly gained control over southern Peru's foreign trade, taking up residence in the cities of Arequipa and Tacna, from where they handled both the export of Peruvian and Bolivian goods and the import of European and North American manufactured goods.^[117] Despite its strategic importance the foreign mercantile community in southern Peru was small until mid-century. In 1827 Arequipa had at most forty British residents, and merchants from other nations could be counted on one hand. By the late 1850s Arequipa's

foreign community had grown to only about eighty members, thirty-six of whom were Germans and the majority of the rest English.^[118] Many of the foreign commercial houses in Arequipa were branches of larger companies established in Lima or Valparaiso. They often had partnerships or even closer ties with firms in London, Liverpool, Hamburg, or Le Havre.^[119]

Before the last quarter of the nineteenth century Arequipa's merchants relied on three channels for purchasing wools and other export commodities: direct delivery to Arequipa by producers, purchases from various types of independent Peruvian traders, and contracts at yearly trade fairs. Some Indian peasant wool producers from the altiplano carried their clip directly to the stores and warehouses of the foreign merchants in Arequipa, combining these sales with their annual trip to purchase necessary provisions from the coastal valleys, such as sugar, aguardiente, and dried chile peppers. But it was the producers of larger amounts of wool, owners of haciendas, who took greatest advantage of direct sales to the foreign exporters in Arequipa. The hacendados realized higher prices when they sold their wool in Arequipa, and the added cost of transport was minimal as they could rely on pack animals belonging to either their estates or their shepherds. The shepherds were obligated to accompany the wool transport without additional compensation, a service known as alquila . The only added cost for the hacendado lay in provisions for the accompanying shepherds and fodder for the pack animals, mostly the frugal llamas. Furthermore, direct sale to exporters in Arequipa spared the hacendados the inconvenience of having to deal with muleteers, considered troublesome and unreliable.^[120]

Far more frequent than direct delivery of the wool by producers to an exporter in Arequipa was the bulking of wool by one or more levels of Peruvian traders, who then sold large amounts to the export houses. These local, provincial, and regional wool purchases were often based on established clientele networks and involved credit transactions as well as sales of other commodities. The bulking of wools in the production zone and their transport to the coast was controlled to a large degree by altiplano hacendados and traders in this early phase, a pattern that was to change significantly only after the War of the Pacific. The atomistic nature of production—with thousands of Indian peasants supplying more than half of all raw wools as late as the 1870s—and all the expenses, uncertainties, and delays in communication and transportation made it difficult and potentially unprofitable for foreign merchants to attempt to control the trade circuits connecting the entrepôt and port cities with the interior. Newly emerging Peruvian merchants were left with much space to expand their own commercial operations in the interior and maintain a high degree

of autonomy vis-à-vis the export merchants. This constellation changed only during the last quarter of the century.^[121]

Juan Paredes was an important provincial wool bulker in Azángaro between the 1840s and early 1870s. Born in 1804 as the son of a muleteer, he inherited a string of mules and a modest liquid capital of two thousand pesos. By the 1840s Paredes had progressed from being a mere transport entrepreneur to undertaking varied trading activities on his own account. Based on a medium-sized estate inherited by his wife, he also began to move into landholding, parleyed his role as a trader and hacendado into political power in the province, and in turn used his power and influence during the last three decades of his life for a vast expansion of his family's landholdings.^[122]

Paredes bought wool throughout the province either directly from producers, such as owners of small and medium-sized haciendas and indigenous peasant landholders, or from district-level wool bulkers, themselves frequently estate owners. In the four to six months prior to the wool clip in March or April, contracts were drawn up specifying how much wool a given producer or trader would deliver to Paredes once the new wool was available. The purchaser usually advanced a large percentage of the total price at the time of concluding a contract. The advances had the function of assuring supply and making it more difficult for the seller to demand a higher price for his wool at the time of delivery.^[123] Quantities purchased by provincial wool bulkers ranged from two quintales (200 pounds) to fifty quintales (5,000 pounds). Paredes in turn sold the wool to regional bulkers who handled larger volumes of wool, but at times he also sold directly to Peruvian or foreign merchant houses in Arequipa. These traders made contracts with Paredes in much the same way as he did with his smaller suppliers. They also advanced him a considerable share of the total purchase price months before delivery, funds that Paredes needed for advances to his suppliers. To function as higher-level, greater-volume wool bulkers, men such as Agustín Aragón from San Antón, Hermenegildo Agramonte from Cabanillas, and Mariano Riquelme from Azángaro needed access to greater amounts of liquid capital and possessed installations to wash the wool. Large sums of metallic currency, always scarce in the altiplano, were needed to purchase 500, 1,000, or more quintales of wool, since cash advances down the commercialization chain were vital to the business. Having facilities to wash wool strengthened the trader's bargaining position with the exporters.^[124]

Business relations were imbued with a sense of obligation, trust, and friendship because they were a natural extension of broader clientalistic ties permeating altiplano society. In his letters to Paredes the businessman José

Mariano Escobedo, an Azangarino native living in Arequipa and probably Paredes's most important wool-trading partner, routinely used the endearing address "My dear countryman and friend."^[125] The more-than-businesslike nature of the relationship between Paredes and his wool suppliers from the haciendas and pueblos of the province is evident in a letter that he received in 1845. Manuel Mestas, a small hacendado from Caminaca, informed Paredes that he would not be able to deliver the contracted 100 arrobas of wool. The supplier tried to placate Paredes as follows:

I ardently beseech your good heart that as a good friend you may consider the best way of extricating me from the stated problem for now because I find myself incapable of complying [with the contract] I seek with all satisfaction your kindness offering in my insignificance although I am not worth anything maybe I will be able to serve you some day in compensation for the favor for which I am asking you now, for which favor I hope by means of your angelical heart; the eighty arrobas and a bit more is soon ready to have them conducted to that capital [Azángaro] at your disposition according to the contract.^[126]

Mestas was clearly worried about consequences much graver than the simple loss of a business partner should Paredes take any serious steps about the impending breach of contract. Mestas belonged to Paredes's clientele and depended on him for goods and services that may have included access to foodstuffs from Cuzco and Arequipa as well as to imported goods, otherwise attainable only with difficulty or at higher prices; support in the pursuit or retention of local offices such as governor, mayor, or justice of the peace in his district; and intercession on Mestas's behalf in courts. Wool trade constituted only one aspect of the multifaceted relationship of men such as Juan Paredes and Manuel Mestas.

Economic benefits varied greatly according to the level on which a producer or trader entered the commercialization chain. The more directly one could sell wool to the exporters in Arequipa, the higher the price one could achieve.^[127] Scattered figures indicate that during the 1850s and 1860s provincial wool bulkers paid only between 28 and 38 percent of the FOB price of sheep wools in the port Islay to their suppliers in Azángaro. In 1862 Juan Paredes received 100 percent more for unwashed wool delivered in Arequipa than he paid for it in Azángaro and 160 percent more if he delivered it washed.^[128]

It was mostly the smallest wool producers, especially Indian peasants, and local traders who sold wool at the levels of the commercialization chain

furthest removed from Arequipa. Owners of haciendas and large-volume traders could take advantage of wool sales directly to Arequipa or at least to regional wool bulkers. The hierarchical trade system allocated greater benefits to large landholders and wealthy traders in the altiplano than to peasant landholders, marginal hacendados, and petty traders.

Annual fairs held in a number of altiplano towns combined religious celebrations around a patron saint with popular revelry and multifold trading activities. The most important of these, attended by tens of thousands of peasants, muleteers, wool traders, import merchants, and shopkeepers, was the fair at Vilque, a small town some thirty kilometers west of Puno on the road to Arequipa.^[129] Others were held at Pucará, on the road to Cuzco; Rosaspata, strategically located northeast of Lake Titicaca for the trade with Bolivia; and Crucero, a crossroad in the eastern cordillera whence the most important llama paths departed to the rich ceja de la selva of Carabaya.^[130]

The Vilque fair, established during the colonial period, possibly under the auspices of the Jesuits who owned nearby Hacienda Yanarico, was celebrated for two to four weeks around Pentecost in May to venerate "a Holy Christ whose miracles are famed even in the remotest places."^[131] Clements Markham has left us a colorful description of the fair in 1860:

Outside the town there were thousands of mules from Tucuman waiting for Peruvian arrieros to buy them. In the plaza were booths full of every description of Manchester and Birmingham goods; in more retired places were gold dusts and coffee from Carabaya, silver from the mines, bark and chocolate from Bolivia, Germans with glassware and woolen knitted work, French modistes, Italians, Quichua and Aymara Indians in their various picturesque costumes—in fact all nations and tongues. . . . The road was crowded with people coming from Arequipa to the fair at Vilque: native shopkeepers, English merchants coming to arrange for their supplies of wool, and a noisy company of arrieros on their way to buy mules, and armed to the teenth with horse-pistols, old guns, and huge daggers, to defend their money-bags.^[132]

The volume of business conducted at the fair during the late 1840s may have reached anywhere between 750,000 and 2 million pesos.^[133] As British Consul Wilthew wrote to the Foreign Office in 1859, the "success or failure of the fair is a matter of no small consequence for the commercial community," and "numerous contracts for the delivery of wool" were concluded.^[134]

The rise of the fairs in the decades after independence demonstrates the changes and continuities in southern Peru's commercial economy. On the

one hand, the gatherings at Vilque, Pucará, and elsewhere of people of "all nations and tongues," including mule traders from Argentina and a variety of Bolivian businessmen, demonstrated that transnational trade in the Andes had by no means disappeared entirely. But when the Andean commercial space had been in its heyday between the late sixteenth and mid-eighteenth centuries, there had been no need for fairs with such an enormous radius of participation as Vilque had in the mid-nineteenth century. The link between seller and buyer, even when it covered distances as vast as that between Cuzco and Potosí, had been secured through force (as in the repartos) or through tight-knit corporate or familial relations. The fairs responded to a tendency toward more individualized trading patterns and incipient competition, while personal, face-to-face contact and the establishment of relationships of trust was still deemed an essential element of trade. The rise of the fairs was thus intimately tied to the new import and export trade and the establishment of a group of foreign merchants outside of the long-established social fabric in southern Peru and at the apex of the postindependence commercial hierarchy. In an environment of highly insecure and expensive transport and communication the fairs constituted virtually the only means for these merchants to establish direct links to the great number of small producers and petty traders who controlled the major part of export commodities, especially wools.^[135] The fairs introduced an element of competition into a commercial environment in which large landholders and altiplano wool bulkers sought to monopolize the trading relationships of their local populations.

For the Indian livestock herders the possibility of selling their wool clip to competing national and foreign merchants at one of the yearly fairs offered a significant alternative to its sale to local traders and hacendados in their own district. The very existence of a distinct group of merchants with as yet no strong social ties to large landholders and other local elites in the altiplano damaged the stranglehold over trade exercised by such local elites. The loud protest of Puno's political authorities in the late 1820s over wool purchases by foreign merchants should thus be understood as more than mere concern about possible scarcities of the fiber. More important, it expressed the fear of losing local trading monopolies that had allowed hacendados, corregidores, or priests to impose their own terms of trade on the peasants. The repeated difficulties of local traders during the 1840s and 1850s to deliver the contracted quantity of wool may have arisen because small producers, especially Indian peasants, could afford to withhold their wool clip in the hope of selling at the next fair, probably for a better price.

Nevertheless, this competitive aspect of the trade fairs should not be exaggerated. The hierarchy of middlemen was absolutely indispensable for the Arequipa merchant houses to achieve the bulking of export commod-

ities and the bulk breaking of imports. It was with larger-volume wool traders that the exporters concluded the most significant contracts at Vilque and Pucará. The peasant producers usually did not have the cash reserves to hold their wool clip until the fairs and routinely saw themselves forced to sell to local mestizo or creole traders and hacendados. In fact, the web of obligations created by the wool trade was one of the processes through which the newly arising mercantile and landholding elite in the northern altiplano sought to reestablish a higher degree of control over the region's peasantry. Still, this elite control had become fragile in the postindependence decades, and the competitive elements introduced through the fairs contributed to greater peasant autonomy. The newly rising mercantile and landholding elite of the altiplano would consolidate their control over peasant commercialization only in the decades between the 1860s and 1890s.

The interrelationship between the export and import trades and the purely domestic exchanges, apparent in the business conducted at the annual fairs, can be explored in greater depth through the web of Juan Paredes's commercial transactions (fig. 2.2). His trade consisted of both the export and local sale of goods either produced on his own estates or purchased within the province and the purchase of goods from neighboring regions or imported from Europe for his own consumption or for resale in the province. Because the sparsely populated province of Carabaya had no group of locally resident traders, it depended on traders in the altiplano for goods from third regions. Thus, in Carabaya, Paredes sold not only the range of goods produced in Azángaro but also commodities bought in Arequipa or Cuzco.

Often Paredes's trade was triangular. For example, when Juan Bautista Zea from Arapa contracted to sell Paredes fifty arrobas of wool in early 1847, he also asked him to remit a carga (four to five arrobas) of maize. Although the wool would ultimately be sold for export in Arequipa, Paredes was purchasing the maize in Cuzco or Carabaya. There in turn he sold animals on the hoof, dried meat, or tallow in exchange for cereals or coca leaves.^[136]

The reciprocal nature of trade had much to do with the clientalistic, highly personal relations of business. But there was another powerful motive for reciprocity of trade relations—the scarcity of currency. By establishing long-term commercial partnerships in which one essentially paid for goods bought from a trade partner with other goods, the need for cash was reduced to a minimum. This practice was crucial in a society in which "we find ourselves very poor; such is the scarcity of coins that there is no money for anything," as the hacendado Andrés Urviola from Muñani

Figure 2.2.
Trading Network of Juan Paredes, Around 1850

wrote in 1867.^[137] Technically, reciprocal trade relied on current accounts kept by both trade partners about the goods purchased and sold to each other, and these accounts were normally adjusted once every year. Only a fraction of the total value of trade conducted between the two partners ever had to be paid in cash.

The commodity flow in Azángaro's interregional trade around 1850 was not all that different, then, from what it had been in the eighteenth century: maize, wheat, and coca leaves from Cuzco for livestock on the hoof from Azángaro. Wool shipments to Cuzco were now much diminished. Coca leaves, maize, and fruits from the ceja de la selva of Carabaya and Bolivia were traded for dried meat and chuño from Azángaro. The province's traders also profited from their position as middlemen in the export of such goods as chinchona bark and gold dust from Carabaya and in supplying that region with alcohol, sugar, and other provisions from Arequipa and Cuzco. For its own consumption Arequipa received dried meat, livestock on the hoof, tallow, butter, and cheese from Azángaro, while supplying the altiplano province with cane alcohol, wine, sugar, peppers, dried fruits, oil, and other agricultural products. But the new element in Azángaro's trade relationship with Arequipa lay in the fact that the latter city was becoming the entrepôt for the altiplano's exports of wool as well as for the import of European goods. The Peruvian altiplano's declining trade with the Bolivian urban and mining centers, the centerpiece of the region's commercial circuit during the colonial period, was gradually being replaced in a restructured circuit in which Arequipa functioned as the funnel for the region's production for export. Although not yet apparent to many contemporary observers, by the early 1850s Arequipa was on its way to becoming the hegemonic urban center of a reduced southern Peruvian space, a position the city fully achieved between 1870 and 1890, while Cuzco's decay continued.^[138]

Jean Piel has suggested that the first two or three decades after independence saw the Peruvian altiplano enjoying "a certain measure of regional prosperity based on agriculture."^[139] His view is founded on the rise of the region's wool exports beginning in the late 1830s, a period during which most other Peruvian agricultural regions remained stagnant. But earnings from wool exports did not represent an additional source of income for the altiplano above an otherwise steady level of earnings. Rather, these earnings had to replace income lost from trade in woolen textiles and other livestock products with High Peru and from raw wool sales to Cuzco. It is suggestive that in 1791 the sale of 7,500 quintales of sheep wool from the northern altiplano to the Intendency of Cuzco alone represented close to 50 percent of sheep wool exports from Islay in the very

favorable year of 1840, and these exports include production from provinces in Cuzco and Arequipa departments! If, for 1791, we add the substantial woolens woven in household production and obrajes in the northern altiplano and sold in High Peru, it is probable that the total volume of marketed wool in 1791, a year when southern Peru's colonial commercial circuit was already experiencing a crisis, may have reached or surpassed the volume exported in 1840.

But Piel's assertion of regional prosperity in the department of Puno during the early independence period might be closer to the mark with regard to the peasant economy. The demise of the obrajes, stagnating production of precious metals, increasing difficulties of access to the Bolivian markets, rising costs of transportation and credit, and flat commodity and land prices affected the landholding and commercial elites of the altiplano but had much less effect on the peasants. The production and peddling of their traditional wares, foremost among them woolen textiles, continued to be a viable source of monetary income for their peasant household economy. Their greater autonomy minimized the effects of price declines for their textile wares, as price impositions by local or provincial power holders diminished. The opening of the wool trade and the appearance of a distinct social group of foreign merchants added further competitive elements into regional trade, as long as the exporters and the rising Peruvian trading hierarchy still eyed each other with as much distrust as cooperation. The rapid rise of alpaca wool exports, produced to a much higher degree by Indian peasants than was sheep wool, was especially important for indigenous livestock herders. In short, as altiplano elites struggled to recover prosperity within trading circuits undergoing major changes, the peasant economy was growing in autonomy.

During the eighty years between 1775 and 1855 the patterns of trade in the northern altiplano underwent a complex transitional crisis that affected the region's elites and the peasantry in notably different ways. It touched every major aspect of elite-controlled trade: commodity flows, the commercial space, the social composition of all commercial intermediary groups, and the way business was conducted. During the mid-eighteenth century the colonial commercial circuits based on the supply of High Peru's silver mining centers had brought modest prosperity to the interconnected elites of hacendados, kurakas, priests, and crown officials in Azángaro and neighboring provinces. But between the 1780s and the 1840s these circuits decayed. The late colonial recovery of silver mining bypassed the intendencies of Puno and Cuzco as the "Andean space" increasingly frayed, pulled apart by the growth of two poles, the Potosí–Buenos Aires axis and

the urban and mining economy of central and northern Peru, with southern Peru dangling in the middle.

These problems were exacerbated as silver mining went into a slump after 1800 and brief attempts at revitalization after independence definitely failed during the 1840s. In various waves since the 1780s, European industrialization intruded into the markets for the mainstay of the altiplano's livestock economy, woolen textiles. External price competition hastened the demise of the inefficient obrajes, as rebellions, the Wars of Independence, and succeeding civil wars disrupted trading routes and made markets insecure and capital and transport more expensive. Merchant and landholding elites tried to save as much as possible of the old trades in the decades after independence while eagerly grasping the opportunities afforded by export demand for wool, chinchona bark, and silver. But new trade circuits proved unstable at first. By the mid-1840s the old textile trade, the Bolivian markets, and the new export trade were all in crisis simultaneously. For a brief instant the only salvation seemed to lie in the difficult commercial exploitation of the montaña frontier to the east.

There is a certain irony about the economic situation of the northern altiplano elites during the decades after independence. On the one hand, their autonomy grew with the decay of the colonial trading circuits in which traders, muleteers, and estate owners from the Intendency of Puno depended on merchants from Cuzco, Arequipa, and Potosí or La Plata for their business. As the Andean space frayed, the northern altiplano became less of an "internal space." One might even say that the region's elites for the first time became visible historical subjects, distinct and separate from the merchants, hacendados, and officeholders residing in the cities of Cuzco or Arequipa. On the other hand, this increased autonomy did not coincide with growing prosperity; rather, it arose in an era of stagnating or falling commodity prices, insecure markets, expensive transport and capital, recurrent warfare, and the beginning of competitive trading practices introduced by foreign merchants. Most important, the temporary "liberation" of northern altiplano traders and hacendados from the colonial mercantile elites in the surrounding urban centers coincided with the growing autonomy of the region's peasantry. In contrast to creole merchants and hacendados, the northern altiplano's peasants continued to find sufficient markets in Cuzco, Arequipa, and even Bolivia for their cheap woolens and other artisanal and livestock products, as they were less affected by price competition. The peasants also profited initially from the introduction of competition in the emerging export trades for wool and chinchona bark.

By the mid-1850s high prices for Peruvian alpaca and sheep wools was signaling the beginning of a period of booming wool exports. At this time,

then, Azángaro and the northern altiplano had completed the readjustment from a colonial mining-supply economy to an economy based on exports. The region's landholding elite, intertwined with the traders and political authorities, sought alternative strategies of reestablishing their control over the indigenous population in order to maximize their exploitation of the peasantry. The expansion of haciendas and the concomitant integration of ever more Indian peasants into the estate economy was—among other causes—rooted in this attempt by hacendados to regain control over the peasant economy.