The Value of Land

If indeed an improvement in the economic conjuncture for altiplano livestock products constituted the major motivation for the rapid increase of

land purchases by Azángaro provincial elite, then this improvement should be reflected in rental rates of estates and the price of land itself. Rental rates paid for Azángaro livestock haciendas, in spite of problems with the data base,^[37] show a remarkably clear development.^[38] From just over 8 percent of productive capital in soles m.n. (just over 10 percent in pesos) during the 1850s, the mean rate jumped to just under 10 percent in soles m.n. (just over 12 percent in pesos) in the 1860s. During the following twenty years it stagnated, and only during the 1890s does a new rise become visible. The rate climbed from 12 percent in soles m.n. during the 1890s to 15.6 percent in the following decade and 22 percent between 1910 and 1917, nearly three times as high as during the 1850s. The average annual lease paid on a hacienda fully capitalized at 1,000 OMR jumped from 80 soles m.n. in the 1850s to 220 soles m.n. during the boom years of World War I.^[39] At that time an hacienda produced as much in annual leases without any livestock capital as it had done sixty years earlier when fully capitalized.^[40]

The increased profitability of operating a livestock estate during the 1860s, expressed in rising rental rates, coincided with the first postindependence push toward hacienda expansion in Azángaro. When southern Peru's wool export economy went through its phase of retraction, from about 1873 until the mid-1880s, rental rates stanated and hacendados scaled down land purchases, reaching an extremely low level between the mid-1870s and 1885.^[41] Growing income from wool exports after the mid-1880s—preceding the recovery of the international conjuncture for wool by about ten years because of the devaluation of the Peruvian currency—was reflected in renewed increases in rental rates beginning in the early 1890s. These increases in turn set the stage for the new wave of land purchases by new and old hacendados, which climaxed during the five years preceding World War I.

Continuous sets of rental contracts for one and the same estate spanning the greater part of the period from the 1850s to the 1910s exist only for small, usually church-owned fincas.^[42] Soñata, one such small, church-owned finca, was located in the parcialidad Cacsani in Arapa. Because of its favorable situation on a bend of Río Azángaro, the finca in 1913 could dedicate 100 of its total 668 hectares to crops. On the remaining second- and third-class pastures it could maintain about 1,070 sheep.^[43] Surprisingly, the rent charged by the church on Soñata reflected the general rise of rental rates with a considerable lag. After neglecting even to charge the tenant for excess pastures in 1860, the rate stayed unaltered at 10 percent (in terms of pesos) until the 1890s. Only after 1901 and then again in 1914 did the annual rent paid for Soñata participate in the general upward trend of rental rates.

The explanation for this "unorthodox" finding has to be sought in the slower-than-average rise of minimum rental rates. Small fincas, often undercapitalized and equipped with an insufficient colono labor force, too little water, and inferior pastures, did not partake in the growing profitability of hacienda operations during the 1860s and the years between 1890 and 1920 to the same extent as large ones did. For such estates the church could find renters only at below-average rates.

It proves more difficult to determine the development of land values during this sixty-five-year period. The most obvious problem consists in the scarcity of information on the size of landholdings, mentioned in notarial contracts only since the early twentieth century. The measurement of property, carried out primarily by nonprofessional agrimensores, was required for the inscription of landholdings into the departmental land register, established in 1889. Although these measurements purported to be exact down to the last square meter, their reliability is rather low, and they could vary by 25 percent or more.^[44] Until the 1890s the rare mention of a landholding's size merely gave its approximate perimeter or its length and width by kilometers. Thus, it is not possible to determine the development of the average hectare prices over a longer period of time.

The only way to use the large data base of notarial sales contracts for measuring changes of land prices consists in determining the average price of land per transaction. For most categories of sales the mean purchase price per transaction declined from the 1860s or 1870s to the 1880s and 1890s. In all cases it grew between the 1890s and the first decade of this century. These changing average price levels can be interpreted in two ways: either land prices fell between about 1870 and 1890, or the mean size of land parcels offered for sale went down. Individual property histories suggest that even during the difficult years between the late 1870s and early 1880s land prices did not decline. Thus, it would seem that the mean size of land parcels offered for sale tended to decline between the 1860s and the 1880s or 1890s, an early indication of the impact of population increase on Azángaro's landholding pattern. Of course, we cannot exclude the possibility that land values had already begun to climb in the 1860s or 1870s and that these increases merely failed to show up in mean sales values because of the reduction of the mean size of land parcels. It is equally possible that the size reduction continued after the 1890s but was now covered up by a stronger increase of prices for land. One might interpret the peculiar development of the mean purchase price per transaction as the outcome of a scissorlike configuration between land values and mean size of land parcels offered for sale: until the 1880s or early 1890s decreasing

average size had a stronger impact on mean purchase prices than did the increasing land value; this relation was reversed after 1900.

Prices for land organized in estates underwent sharp increases between the 1850s and 1920, generally by between 100 and 200 percent (table 6.3). Increases occurred both in the early phase, from the late 1850s to the 1880s, and in the second half of the period, from the 1890s. Haciendas whose value temporarily declined (Loquicolla Chico, Huañingora) had experienced a decline in their livestock population.^[45]

The crucial variable in the appraisal of pastureland was its livestock carrying capacity. We can piece together a set of figures covering a longer time span for the value of the unit of land required to feed one sheep year-round plus the value of the sheep itself (table 6.4). This had been the conventional measure in the appraisal of estates since the colonial period. Of course, the actual size of this unit varied according to the carrying capacity of the land. In all, the price of a unit of top-quality pastureland required to feed one sheep plus the sheep itself increased by about 250 to 300 percent between the 1850s and the second decade of the present century.^[46] One can again discern two waves of price increases, one prior to the 1890s, probably during the 1860s, and a second, showing a considerably greater rise, between 1902 and World War I.

This price development for land was closely linked to prices for live sheep, which rose at about the same rhythm as land values (table 6.5). Livestock prices were the key factor directly influencing the value of pastoral land in the altiplano. The values of sheep and cattle, in turn, are directly related to the prices of the products derived from them, and here wool is crucial for the altiplano. The two phases of price spurts for sheep occurred when wool prices rose between the late 1850s and early 1870s and again between the mid-1890s and World War I. Livestock prices did not, however, participate in the slump of the 1870s and 1880s; they merely stagnated. This stagnation probably reflected domestic inflation in Peru but might also indicate that the tradition of price conventions, immune to short-term market forces, still had some influence on livestock prices. The impetus for increases in the price of land, during the 1860s and again between about 1895 and the end of World War I, came, transmitted by livestock prices, from heightened demand for the altiplano's most important commercial product, wool.

The preceding discussion of rental rates and prices for land is based on information concerning haciendas or land in the hacienda sector. The development of market prices for peasant lands is much less clear. Moreover, the very notion may be flawed. Consider the constitution of Hacienda

Lourdes in Potoni district between 1880 and 1901.^[47] The eight distinct estancias and fincas making up the new estate had been purchased by Adoraida Gallegos for no more than 4,600 soles m.n. Yet in 1901, less than ten years after most of the parcels of land were purchased, an appraisal gave Hacienda Lourdes' value as 12,156 soles m.n., not at all unlikely for an estate extending over 11,719 hectares. Only a small part of this jump of nearly 200 percent in the value of the integrated landholding over the purchase price of the individual estancias reflects the general price trend. The greater part resulted from the higher unit value of land organized in estates, with a stable resident labor force and its own livestock capital, compared with unincorporated peasant land. The formation of Hacienda Lourdes illustrates the economic advantages enjoyed by Azángaro's owners of estates over peasant landholders.

Repeated sales of peasant lands reveal rather peculiar price developments. On April 24, 1908, for example, the peasant woman Teresa Quispe Huarcaya from parcialidad Curayllo in Arapa sold Estancia Collini Accohuani to José Albino Ruiz, politician and owner of the large Hacienda Checayani in Muñani, for 200 pesos. "More than twenty years" earlier she had bought the estancia from Marta Huarcaya for the same price.^[48] In a

similar case, the Indian peasant Marcelo Sacaca in 1888 had purchased estancia Pachaje Chico in Putina for 1,600 soles en quintos bolivianos (soles q.b.) with money inherited from his mother-in-law Juliana Quenallata. Nearly twenty years later, on June 22, 1907, two granddaughters and coheirs of Juliana Quenallata, Jacoba and María Mejía Machaca and their husbands, sold their share in Pachaje Chico to Manuel Esteban Paredes Urviola, a member of one of the largest landholding clans and the only medical doctor of the province, on the basis of the 1888 transaction, without any price increase.^[49] But in other cases peasant land underwent surprisingly large price increases over short periods. On June 25, 1910, Francisco Adrián Toro Nafria, a merchant and hacendado from Asillo, bought Fundo Quisini, located in parcialidad Jila or Supira (the notarial contracts are contradictory) of the San Antón district, from the peasant Damaso Hispanocca Vilca for 50 soles m.n. Two months later, on August 13, 1910, Toro Nafria resold the land to Pablo Anco Turpo and his wife Victoriana Turpo Ccallasaca, peasants from San Antón, for 150 soles m.n., a 200 percent gain, diminished only slightly by the fees for title deed and sales tax.^[50]

Such contradictory price developments for individual peasant landholdings reflect the social position of both parties to the transactions. Where the landholding was resold without any price increase even after several decades, the seller was an Indian peasant and the purchaser a hispanized large landholder. The speculative gains, by contrast, were realized by hispanized large landholders reselling (or trading) a property to peasants. These price developments, then, have their common explanation in the social dominance of one contracting partner over the other.

The nature of prices for land changed slowly in the altiplano. Around 1850 prices for land, like rental rates and livestock prices, still had a strongly conventional character. Short-term economic fluctuations did not easily disturb this pricing structure. Within the region all people involved in transactions over land or livestock shared a common understanding about these pricing rules. Phrases such as "according to the conventions used in this department" or "customarily fixed at" appeared often in notarial contracts. This is not to say that land values and livestock prices bore no relation to market conditions; rather, major secular economic changes were required to prompt readjustments in those conventional prices. Thus, for example, the conventional price for one adult sheep remained at four reales between the beginning of the nineteenth century and the 1850s.^[51] Rental rates for estates continued to be calculated on the same basis of 10 percent of livestock capital during the 1850s just as they had in the 1770s.^[52] The few examples at our disposal to analyze land values in this early period suggest the same type of stability.^[53]

During the following sixty years the impact of market conditions on land values became more pervasive, and convention gradually lost strength as the basis for determining prices and lease fees on land and livestock. This development was aided by the growing technical capacity to measure the quality and extension of land. But it had its causes in the increasing awareness of the impact of market fluctuations on land values and income levels among some of the region's landholders, itself a consequence of the link to the world market for wool. This process, by which prices for pastureland came to reflect market conditions for the altiplano's livestock products, was far from complete by 1920. Azángaro's pricing structure for land remained ambiguous during the early years of this century, leading at times to seemingly erratic prices for one and the same landholding. This ambiguity allowed members of the socially dominant groups to draw extra profit from land transactions with peasants and tradition-bound landholding institutions such as the church.

To summarize the development of land values in Azángaro: The value of estates generally rose between 100 and 200 percent from the 1850s to about 1920, with prices for top-quality pastureland rising by up to 300 percent. First-class haciendas, endowed with the best pastureland, sufficient resident labor, and, most important, extensive acreage, experienced a steeper rise in their value than did smaller estates with scarcer natural and labor resources. By contrast, the price for peasant land does not reflect market conditions because in most cases it was shaped by the social constellation between buyer and seller rather than general price trends. Still, for estates the link between wool exports, livestock prices, and land values explains why old and new landholders adjusted their purchases of land to the rhythm of the regional wool export economy: earnings from estate operations followed this rhythm.