Labor, Land, and Entrepreneurs

The economy was largely agricultural; most people lived and worked in the countryside. In Gutiérrez y Ulloa's report only 5,891 people were counted as occupied in nonagricultural activities. Most of them were either weavers (1,803), peddlers (1,738), or colonial employees (785). Nonagricultural activities were few and demanded only the most basic skills. Gutiérrez y Ulloa classified only twelve kinds of trades—weavers, hatmakers, bakers, blacksmiths, musicians, carpenters, shoemakers, tailors, construction workers, silversmiths, dyers, and painters—which provided for the simple necessities of colonial life. Moreover, it is quite possible that even skilled laborers spent some of their time working in agricultural activities. With such small numbers of artisans, most manufactures had to be imported, but foreign goods were scarce and expensive. As Barón de Carondelet complained,

In all America there is probably no city as high-priced as San Salvador, for all items of general consumption. Its long distance from the Atlantic makes it necessary to bring wine, oil, and other European goods over here through Guatemala. [In that city] they change hands at a high profit to the merchants. So when they are transshipped to San Salvador, there is an added expense of sixty leagues' transport cost, in addition to the alcabala. Next, the local merchant takes his cut in retail sales, so that the end results are excessive price levels.^[60]

It is worth mentioning that Barón de Carondelet expressed his dissatisfaction with Salvadoran prices as an argument to ask for a pay raise. Yet, there is no question about the isolation of the economy and the steep costs involved in transporting goods. The barón's comments also shed light on the demand side of the market. Demand for manufactured goods was so small that despite their high prices the stimulus was not enough for the creation of a small local industry. In fact, very few people were in a position of consuming European goods. The professional class was tiny, it included 4 lawyers, 4 physicians, 12 surgeons, and 7 druggists. The main city, San Salvador, had less than 15,000 inhabitants,

614 of whom were Spanish.^[61] The fact is that the economy was overwhelmingly rural and, by and large, devoted to subsistence agriculture.

The main exception to the overwhelmingly agricultural character of the economy was mining, iron in particular, which showed some dynamism, particularly in years when imports were impossible.^[62] Iron mining had started in Metapán, in the northwest, at the end of the seventeenth century.^[63] Although its existence was precarious and it faced the usual obstacles of lack of capital and technology, and a tiny market, it was the most advanced sector of the economy. Its importance should not be exaggerated, however. Mine owners, by and large Spanish immigrants with limited knowledge of mining, had to engage in other business activities in order to survive.^[64] Production fluctuated widely; in a good year, like 1806, production reached the mark of 1,000 quintales, whereas a bad year could mean no production at all. There was some value added; the average production of steel between 1803 and 1820 was 3,335 pounds, and by 1807 there were 45 blacksmiths operating in Metapán and 219 in the city of San Salvador.^[65]

There are no explicit data on how many people were employed in mining. Gutiérrez y Ulloa has no separate category for miners, which may suggest that it was not a full-time activity and that people who worked in the mines were classified under their main occupation, that is, jornaleros . The population of the district (4,203 inhabitants), however, had a completely different composition than in the rest of the country. It had the highest percentage of Spaniards (37.61 percent as opposed to the province average of 2.86) and the lowest of Indians (10.99 percent versus 43.06). Since Metapán's indigo production was not particularly prosperous, one can infer that iron mining was mainly a white and mestizo activity and that it was attractive enough to concentrate one-third of the Spanish population in a very small region.^[66] Iron mining was the most sophisticated economic activity, however low the level of technology employed. Unfortunately, the skills that were developed in iron mining were completely irrelevant after independence once the door was opened to foreign imports, and there was not a chance that the local production could compete.

Silver mining was a relatively late and unsuccessful development. Silver was discovered in the northeast of the province (near Gotera) in 1781. Excited with the prospects Captain-General Gálvez lent money to Domingo Sánchez Espino, the miner who had made the discovery, and granted him a repartimiento of 200 Indians. The inhabitants of the region opposed the arrangement rather strenuously, and by 1793 the mine was shutting down for want of labor.^[67]

Agriculture was, by far, the main employer. But in the countryside, too, labor was chronically scarce, although the peculiarities of indigo

production made it possible to keep a certain balance. Harvest time was the main period when indigo entered into open competition for labor. Only then were large groups of people mobilized for indigo production. During the harvest in late September and October, and in November, the month of the fairs, indigo was the main preoccupation of Salvadorans. All other activities came to a halt in order to satisfy its needs. During the early 1800s Salvadorans are said to have concentrated so much on the production of indigo "as to neglect the growth of other articles of first necessity," presumably food.^[68] The strain was felt at every level of Salvadoran society. For the small elite it created a serious conflict. Since very few people had administrative skills, they had to wear many hats: they were public officials, retail merchants, and indigo planters. At the end of the rainy season they had to emphasize the latter role. All the officials of the Alcaldía de San Salvador were involved in the harvest in some way or another and had to ask the authorities in Guatemala for permission to abandon their posts. Priorities had to be established, and they chose to perform their public duties from their estates since they had to be present to supervise the harvest.^[69] The result was that the local government was paralyzed during the months of the harvest. This highlights another major bottleneck of the economy: the scarcity of entrepreneurial talent. From the point of view of the labor force it was also necessary to bend the rules. People engaged in the harvest could ask to be exempt from jail sentences.^[70] Not only was production of food and other articles of basic consumption neglected for the sake of indigo, but the administration of justice and the normal performance of municipal duties suffered as well.

The peculiarities of the production of indigo and the small size of the nonagricultural sector of the economy shaped the organization of agricultural labor. The agricultural techniques used to produce indigo were very simple. Land was not even plowed. The ground (preferably located in a warm area) had to be cleared and the brushwood burned sometime in February or early March, before the beginning of the rainy season. Then, in March, the seed (which resembled that of mustard) was broadcast over the ashes. Sometimes cattle were brought to the fields to break the ground and mix the soil and the seeds with their feet. When the planter was late in clearing the ground he had to plow lightly, broadcast the seed, and wait for the rain to pack it. Weeding, when done, took place between April and June and again in August. By the end of September or the beginning of October, when the rainy season was almost over, the buds were about to open and the leaves were rich in indigo. The jiquilite leaves were cut four inches above the ground, tied in bundles, and taken to the obraje for processing. Although the indigo plant or jiquilite was a perennial, it was most productive in its second

and third years after which the land was cleared and the process started all over again. The cultivation of indigo falls clearly within the category of "traditional agriculture" as defined by the economist Theodore Schultz. Agricultural methods had remained unchanged for such a long time that they had reached the fixed state at which, given the level of technology, resources are used most efficiently and people know how to adapt to changes in the market and in the climate. This reasoning also applies to the processing of the dye, which saw little change over the centuries.

Collecting the leaves and processing them required considerable amounts of manpower. Two large brick tanks of about four square meters were used to process indigo for the market. The leaves were left to ferment in the first tank until their color turned light green. This stage took about ten or twelve hours. The fermented liquid was then transferred to the second tank. It was most important to make the transfer when the fermentation had reached the optimum level. The puntero , the person who made this crucial decision, checked the liquid often until he was certain that the right level of fermentation had been reached. In the second tank the fermented liquid was stirred by hand or by horse power while its color gradually changed to light blue and then to a darker blue. Throughout the process the fermented leaves expelled an unpleasant odor and attracted flies. After much stirring under the hot sun the hard labor of the workers was rewarded when a purplish sediment sank to the bottom of the tank and the water became clear. Then it was only a matter of draining the water and letting the sediment (a purple-colored mud) dry under the sun. The final product, looking like a porous piece of purple-blue plaster, was packed in leather "seroons." Once filled with indigo each seroon weighed 150 pounds.^[71] The seroons, simple leather bags lined with a straw mat, were perfectly suited to be carried by mules. Each mule carried two seroons, one on each side.

Once the season was over most people (that is, those who were not merchants or owners of haciendas) could forget about indigo. They went back to the tierras comunales, ejidos , and small holdings to engage in subsistence agriculture and petty manufactures, and the haciendas themselves again became sleepy places devoted to the production of foodstuffs and to raising cattle. Competition for labor was high again during the planting season of corn in February and March, which coincided with the planting season of jiquilite.^[72] But the situation was not as bad as in the last quarter of the year because not all jiquilite had to be replanted the same year and planting did not demand as much labor as harvesting. In fact, indigo production did not call for a social organization unrelated to the rest of the economic activities. It required only temporary arrangements during three months of every year. The ten-

sions between the market and nonmarket sectors of the economy were eased by this feature. Labor was scarce indeed, but the export sector put pressure on it at most during one quarter of the year. The strains on the social fabric did not have to be permanent.

Institutions like debt peonage, so important in other parts of the continent, did not flourish. The repartimiento system was very well suited to satisfy the labor needs of the indigo producer during the harvest season. During the hectic month of the harvest a variety of labor arrangements were available. The producer of six pounds of indigo per year obviously did not hire outside labor, whereas the large producer was forced to do so. Small growers could rely on their families or on the cooperation of their neighbors to obtain the help needed to grow and process indigo. Large producers needed more labor and, therefore, had to use different arrangements. To satisfy their needs, they employed slaves, wage labor, repartimiento Indians, tenants, share croppers, or a combination thereof.^[73] Labor shortages had been a common complaint throughout the eighteenth century. At the beginning of that century the crown prohibited the employment of Indians in the production of indigo, but avoiding this prohibition was not unusual.^[74] However, the prohibition was lifted in 1737 and the use of repartimiento Indians became widespread. A document signed by the Alcalde Mayor de San Salvador provides an idea of the use of this institution. It shows the amounts of Indian labor allocated in 1785 under the repartimiento system.^[75] According to the document 3,284 Indians were assigned to 78 indigo haciendas distributed all over the territory of the province. These numbers suggest that the availability of labor through this system was not the same for all producers. The alcaldes mayores, who were in charge of allocating Indian laborers to the various producers, were involved in the business themselves. The consequence of this arrangement was that those who held official appointments or were closely connected with the bureaucracy had better access to Indian labor. In fact, only big hacienda owners received the services of repartimiento Indians whereas the small producers had to find labor wherever they could. Thus, the scarcity of labor went hand in hand with unequal access to it. The existence of peones acasillados (resident workers) did not solve the labor shortage because these workers were too few in number. The cultivation of indigo did not require constant attention and, therefore, it was not necessary to secure a year-round labor force of any size. Incidentally, this also explains why slavery was not an important institution. In a time when capital was scarce, it was not a good idea to invest in slaves who would be fully employed only a few months every year. Wage labor was the only other category of labor available in large numbers, but it was not a dependable solution. Free laborers knew that they

were in the best bargaining position and took advantage of it. It was a recurrent complaint that they received wages in advance and then did not show up to work.^[76]

The living conditions of agricultural labor are hard to assess. Working in indigo obrajes was most unpleasant. The process involved the fermentation of jiquilite leaves that turned fetid, released gases, and attracted clouds of flies. The rewards for agricultural work were meager. There is no precise information on food intake. One can make educated guesses by looking at the information available on food production, assessing its reliability, and comparing it to other countries. Gutiérrez y Ulloa's figures for the province of San Salvador give a per-capita consumption of maize of 80.82 kilograms, an amount that seems small when compared to data available for Mexico during roughly the same period. Harry Cross estimated the consumption of maize by peasants of a Mexican hacienda in the middle of the nineteenth century, and using his data it is possible to estimate a yearly per-capita consumption of maize of 156.11 kilograms, almost twice as much as in the Salvadoran case.^[77] It is also known that the average consumption for all Mexico during the period 1800–1810 was 133 kilograms. There are also data on consumption in Mexico City.^[78] The lowest average consumption recorded is that of 1823, only 46.6 kilograms, a smaller figure than the intendente's, but the Mexican datum cannot be taken at face value. The consumption in Mexico City in 1822 had been 102 kilograms, and in 1824 it was 96.2 kilograms. This suggests that the consumption of 1823 was extraordinarily low and was probably complemented with maize stored from the previous year. Also, the European/criollo population of Mexico City ate wheat. The above comparison does not make it impossible to accept Gutiérrez y Ulloa's figure, but does suggest that it is a low estimate and that there are reasons to believe that the Salvadoran peasant ate less maize than his or her Mexican counterpart.

The fact that labor was ill rewarded even though it was scarce points out one of the main characteristics of the economy of the province: its very low productivity. This is not surprising given the lack of capital and the difficulties in trade that will be discussed later. Moreover, the use of coercion further depressed salaries. The main features of the labor force at this time were its scarcity, the seasonality of labor requirements, its low productivity, and the presence of coercion. There were mechanisms that eased the problems. Indigo production imposed a rhythm of life that alleviated tensions. During harvest time there was tension between town and country, between subsistence and market agriculture. Individuals had to change their roles. Public officials became producers, subsistence farmers became hired or forced laborers, producers of food became producers of cash crops. At the end of the season, however,

everything went back to normal. The jiquilite plants were left in the fields to grow their new leaves undisturbed. Labor, land, and landlord came together in the haciendas. There were somewhere between four and five hundred haciendas in the territory of the province.^[79] The organization of indigo production was not uniform across the province. Haciendas had very different sizes, and labor arrangements varied widely. Indigo was produced by both small and large growers. The reports of the tithe collectors of the partidos of Tejutla, Suchitoto, and San Vicente in 1804 give an idea of the differences in the relative importance of the producers. Table 1 shows that there were many more small producers than large producers. According to the tithe data 62 percent of the producers had an output of less than 100 pounds whereas only 10 percent had an output of more than 1,000 pounds. This result is consistent with the estimate made in 1782 by exporters of indigo who figured that the planters whose output was between 6 and 100 pounds per year accounted for approximately two-thirds of the producers, and the rest of the production was in the hands of the large landowners who produced thousands of pounds every year.^[80] The inequality was quite marked. Although indigo production was not necessarily synonymous with wealth, wealth was almost always synonymous with indigo production. This was true for a long period of time, and in the middle of the nineteenth century it was still the case. From this fact it can be inferred that there were no economies of scale in indigo production. The sheer size of the productive unit did not deter-

mine its profitability; the persistence of small units indicates that they were profitable. The geographic distribution of indigo production was more even than the interpersonal distribution. All the partidos of the province produced indigo (see table 2). Furthermore, most of them produced a significant amount of the dye. The two most productive partidos produced 27 percent of the indigo, and their population was 11.4 percent of the total of the province. The five most productive partidos produced 55.96 percent, and their population was 48.9 percent. Even though productivity was uneven, indigo production was distributed across the country following the same pattern as the distribution of the population. Production per head ranged between 0.36 to 7.6 pounds while the average was 2.96 pounds. Indigo was important in every corner of the country.

Salvadoran haciendas produced indigo for the world market and foodstuffs for the local market and self-consumption. Since the nonagricultural sector was small the local markets for food were limited. There was no industry to speak of, no major mines, no big cities. The towns were closely connected to and highly dependent on agricultural production. The haciendas had cattle and produced a little maize, beans, and

indigo. Cattle raising was important not only for the meat but also because indigo was shipped in leather seroons, thus the demand for hides was high. Cattle was both raised locally and imported from Honduras.^[81] People who lived in the hacienda all year round devoted most of their time to food crops, both for their own subsistence and for the market, to feed the urban population. The population figures given by Gutiérrez y Ulloa in his report throw some light on the importance of the urban market. Gutiérrez y Ulloa classifies people according to their occupations. As mentioned above, only 5,891 people worked in activities outside of agriculture. This figure includes craftsmen who devoted part of their time to agricultural activities. Using this figure it is possible to find a high estimate of the surplus that had to be extracted from the agricultural sector. The average family size, according to the intendente's data, was 4.08, so, if only the head of the family worked, the total number of people who lived outside agriculture would have been 24,035. This means that, at most, only 15 percent of the population had to be supported by the surplus of the agricultural sector. There are many reasons why this is a high estimate. First, as has been noted, some craftsmen were also peasants. Second, Gutiérrez y Ulloa probably undercounted the number of people who lived in the countryside. (The head tax gave Indians an incentive to hide whenever heads were counted.) In any case, even if the haciendas were the only suppliers of food to the cities, the demand for year-round labor in the haciendas could not have been very high. Moreover, haciendas were not the only suppliers of food; Indian comunidades were important competitors in that market. The majority of the population was engaged in subsistence agriculture outside the haciendas. During the period of the indigo harvest they had to be brought in.

Besides the haciendas the main productive units were the ejidos and the communal lands. The ejidos were lands allocated to the municipalities so that each town had land for future expansion, for cultivation of food crops, and for pasture. The communal lands were assigned to the Indian communities for them to grow food. There was often confusion about the difference between the status of both kinds of land, although it is clear that they were not private property and were managed in a communal fashion. During the colonial period and well into the nineteenth century there were terrenos baldíos , land owned by the state which was kept uncultivated. It is not clear how much land can be included in each of the four categories described above. Browning estimates that haciendas comprised about one-third of the territory of the province, but he is less specific about the other forms of land tenure.^[82] It is clear, however, that land was abundant and that haciendas were only one among many different forms of land tenure. In fact, much land

remained unclaimed in the form of terrenos baldíos. This land was not claimed for production until the second half of the nineteenth century when the national government offered it for sale and even gave it away. By that time land was becoming scarce due to the entirely new set of circumstances brought about by the increase in trade along the Pacific coast.

Capital, in contrast, was a relatively scarce resource. This situation, together with colonial regulations, helped to determine the merchant-controlled system of financing described above. The financing of indigo became the primary market activity around which gravitated all others. Until 1782 the Guatemalan merchants were the main source of credit for the indigo producers. The merchants supplied loans of an estimated 1 million pesos per year in clothing and other merchandise and in cash.^[83] These loans were meant to sustain the growers until the crop, which was pledged as collateral, was ready, and they amouted to the value of almost the entire crop at local fair prices. Captain-General Matías de Gálvez devoted his attention to the plight of the indigo growers. He was concerned with the fact that "rare is the indigo grower who does not have his growing crop mortgaged to the merchant, and for this advance it is common practice to pay one real less [per pound] than the price at the fair."^[84] The average price of the best quality of indigo between 1779 and 1783, the years of Gálvez's tenure, was 13.6 reales per pound, and the average price of the worst quality was 8.1 pesos. This suggests that the interest rates charged by the merchants were, at least, between 7.4 percent and 12.3 percent. This was only part of the effective rate because the goods advanced as part of the loan were "so exorbitantly priced that all the growers of indigo are hombres perdidos !"^[85] Financial capital was scarce, and the growers had to pay dearly for it.

The response of the captain-general was to create the Montepío de Cosecheros de Añil. One of the main problems of the Montepío was the high rate of default. What was meant to be an institution for seasonal credit became a long-term lender. Borrowers repaid only one-fourth of their loans plus interest every year. They defended the practice arguing that it allowed them to make necessary investments.^[86] The capacity of the Montepío to have an impact on seasonal credit and free the growers from the merchants eroded rapidly. Notwithstanding this problem, the Montepio did have a certain impact. The bitter opposition of the merchants and the strong support of the growers for the survival of the Montepio prove this point. When in 1794 the governor conducted an inquiry to determine the future of the Montepío he asked for the opinions of the different groups affected, and the reactions of such groups were what could be expected. For the merchants, who were not only lenders but also exporters of the dye, it was impossible to see the benefits of the

Montepío, and they recommended its abolition. For the growers and provincial merchants the importance of the services rendered by the Montepío was very clear, and hence they recommended its continuation, albeit with some organizational changes^[87] . But from then on the economic situation of the economy eroded rapidly. First trade with Spain was interrupted and later, in 1804, Spain decreed the consolidation of church debts. With that decree one of the main alternatives to merchant credit was practically eliminated. Moreover, the decree put pressure on indigo planters who used their influence to obtain loans from the Montepío to pay the principal of what they owed to the church. By the time of independence the average loan was seven years' delinquent in payment of interest.^[88] The church and the Montepío were crippled as lenders, and after independence the conditions that had given an advantage to the Guatemalan merchants dissipated. As a result, the colonial period left a weak legacy of credit institutions.