Preferred Citation: Jacobsen, Nils. Mirages of Transition: The Peruvian Altiplano, 1780-1930. Berkeley, CA:  University of California Press,  1993.

5 The Symbiosis of Exports and Regional Trade

The Altiplano's Commercial System Between the 1850s and 1920

Until the late 1850s the export of wool through Islay was controlled by only four companies of foreign origin operating from Arequipa—two British, one French, and one German.[86] For them, the import of manufactured goods from Europe was as important as their export business. In both activities the foreign houses still operated mostly in Arequipa itself. As importers they worked as wholesalers; as exporters they bought wool from middlemen directly in Arequipa or made a yearly venture to one of the annual fairs on the altiplano.[87]

In these circumstances independent Peruvian merchants had a considerable role to play in all stages of wool bulking prior to final exportation. Affluent men such as José Mariano Escobedo, an Azangarino resident in Arequipa, or the Areqipeño José María Peña often entered the wool trade only as one line of business among many.[88] Escobedo owned a number of haciendas in Azángaro and received large public works contracts from the government. In 1851 he began the wool trade as a partner of the German merchant Guillermo Harmsen.[89] Peña had owned gold mines in the Cordillera de Carabaya since before 1850s.[90] Sometime before 1865 he had formed a company with Eusebio Prudencio, a Bolivian, "for the purchase of chinchona bark and alpaca wool and the sale of merchandise in Soraicho,"


located in Huancané province from where the trade with the Bolivian lakeshore as well as the ceja de la selva could easily be organized. Prudencio was to take care of business in Soraicho while Peña arranged for the sale in England as well as the purchase of Peruvian and imported goods finding demand on the eastern rim of the altiplano.[91] Peña probably held similar contracts with traders from other wool-producing regions, and his mercantile operation spanned the whole altiplano.

Merchants with the necessary capital joined together with persons who could ensure a supply of wool from their own extensive estates. This was the case in the company founded by Manuel and José María Costas and Antonio Fernández, all of Puno, on April 15, 1853.[92] Fernández saw himself incapable of paying his share of the company's capital, so it was paid in by the Costas brothers as credit. The Costas brothers found it advantageous to join in a common enterprise with Fernández because he was owner and renter of numerous livestock estates and promised "to cede to the Society all sheep wools proceeding from his haciendas." These haciendas happened to be located west of Puno in the geographic funnel of the altiplano leading to the main mule road to Arequipa and thus could well serve as warehousing, washing, and packing points for the wools purchased by the company prior to their transport across the western cordillera.[93]

Only six years after the founding of the company Fernández admitted owing his partners the amazing sum of 53,832 pesos, 4 reales, a sum corresponding to more than 10 percent of the total value of average annual sheep wool exports from Islay during the 1850s and more than the value of the largest altiplano estates during those years. This debt represented cash withdrawals from the company's funds as well as sales on Fernández's own account of sizable quantities of company sheep wool as payment of private debts to the Arequipa export houses.[94] The size of such transactions suggests that a relatively small number of Peruvian wool traders, either individuals or companies, must have supplied a large share of all wool subsequently exported by the Arequipa houses. Despite the heavy debts incurred by their early partner Fernández, the Costas family continued its wool-trading business at least until 1925.[95]

Before the 1870s the tendency of the foreign houses to limit their mercantile operation largely to Arequipa and the concomitant strong position of Peruvian merchants such as Escobedo, Peña, and Costas also had consequences for the structure of southern Peru's credit network. During the 1850s and 1860s altiplano wool traders and hacendados depended on the Arequipa export houses for credit—for example, for their wool purchases or investments in real estate—considerably less than they would toward the end of the century. The large regional wool bulkers apparently


possessed sufficient working capital not to require advances from the exporters for purchasing large amounts of wool; thus, they could operate independently and decide when and to whom they would sell their wools. It seems to have been these regional bulkers who extended credit to their suppliers.

Another important source of credit existed in the altiplano during the third quarter of the past century. A small group of merchants, who partially overlapped with the regional wool bulkers, had become something like specialized bankers extending credit to dozens of shopkeepers, landholders, and magistrates. Antonio Amenábar was one such "merchant banker." Born in Córdoba, Argentina, between 1824 and 1826, he pursued a great variety of business ventures in Puno and Tacna, including transportation (he invested in the first metal cargo ship operating on Lake Titicaca) and collection of government taxes.[96] In 1865 his Puno stores contained goods, including imports, worth 40,839 pesos. At the same time he had outstanding credits, extended since 1860, amounting to 46,675 pesos (including interest). Among his fifty-four debtors, who owed him between 70 and 6,000 pesos principal besides interest, were members of the department's wealthiest and most powerful families—the Macedos, the Pinos, the San Romans, the Núñez, the Aguirres, the Tovars, and the Arésteguis. Some of them owned haciendas in Azángaro province.[97] Nine years later, in 1874, his will no longer listed merchandise from a store, which by then was possibly the property of his wife through a legal "division of goods."[98] But he still had outstanding credits amounting to 36,500 pesos, extended to twelve clients since 1871.[99]

On a smaller scale, some provincial traders also seem to have attempted a measure of specialization into such credit operations. A case in point is Pedro Palazuelos, hacendado and trader from Putina in Azángaro province. After his death, sometime before May 1865, his wife and son attempted to collect some 5,800 pesos in outstanding credits extended to nine clients, most of whom were prominent Azangarinos. Besides further, probably minimal debts by another nine clients, Palazuelos's heirs also tried to recover rented livestock and 6,000 pesos given as advances to Indian peasants for purchases of wool and slaughter animals.[100] The amount of general-purpose monetary credits extended by Palazuelos and the number of his debtors justify calling him a specialized creditor. But the borderline to the more general phenomenon of small money loans, practiced by many landholders and traders in the altiplano, seems blurred.

The scarcity of cash threatened vital routine commercial transactions for many families. A dense network of small, reciprocal credit transactions, organized through ties of kinship and trust among friends, sprang up in


the towns and hamlets of the altiplano in an era of increasing trade. Such petty credit exchanges could shift imperceptibly into more hierarchical, asymmetric credit relationships, constructed by provincial traders who had somewhat more cash and were eager to profit directly from the cash scarcity or to build up a dependent clientele for mercantile endeavors.

With the increase in southern Peru's exports of wool and other raw materials, demand for transport animals rose during the middle decades of the nineteenth century. At least until the late 1860s a lively trade in mules from Salta kept up the supply of these animals. In June 1857, for example, the merchants Juan Bautista Coret and Telesforo Padilla from Salta and Simón de Oteira from La Paz passed through Puno with some sixteen hundred mules, which they hoped to sell on their march to Lima, a good part of them probably in the vicinity of Arequipa.[101] In Puno, de Oteira purchased another 540 mules from Fernando del Valle, a local hacendado and "merchant banker."[102] It appears that del Valle regularly acquired mules in order to let them regain their strength on his estates in Acora after their long trek from Argentina. He resold some of these animals to passing traders and kept enough for his own trains, with which he transported pisco from Moquegua to La Paz.[103]

During the third quarter of the nineteenth century the transport business concentrated in Arequipa and adjacent valleys as this city became the entrepôt for southern Peru's exports. Markham considered Arequipa's muleteers, whose increasingly numerous mule herds had taken over much of the city's fertile campiña from food crops, to be a "wealthy class of men" during the 1860s.[104] Of course, these mule trains did not enjoy a monopoly over southern Peru's transport requirements. Peasant landholders and hacendados transported much of their products on their own llamas. Specialized transport entrepreneurs in the altiplano working with llamas also continued to ply the trans-Andean routes.[105]

One of the reasons why the foreign merchants limited their activities largely to transactions in Arequipa itself lay in the extreme difficulties of transport between the coast and the altiplano. In the words of one foreign traveler, "Most of the roads are merely mule tracks and they are taken over passes of the Andes from 14,000 to 17,000 feet above the sea amidst snow and ice."[106] The regularly established mail covered the distance from Arequipa to Puno in three days, and pack trains needed at least five days for the same route.[107]

Between about 1860 and 1875 changes in the commercial structure of southern Peru began to affect the balance between the various social groups involved. The boom of wool exports and generally favorable commercial conditions during the 1860s led to the establishment of many new export


houses.[108] As early as 1862 the mercantile community of Arequipa and Islay was clamoring for a railroad connection between the Ciudad Blanca and its port.[109] On December 18, 1869, the Peruvian government commissioned Henry Meiggs, an American engineer involved in the nitrate business, to construct a railroad line from the Pacific coast via Arequipa to Puno. Choosing a termination point a few kilometers south of the established port of Islay, the line connecting Arequipa with Mollendo was opened for traffic on January 1, 1871. By 1873 the whole line of 351 kilometers to Puno, crossing the western cordillera at an altitude of about forty-five hundred meters at Crucero Alto, was completed.[110] From Puno regular boat services across Lake Titicaca connected this line with Bolivia, and by the early years of this century, a number of cargo ships had established regular links with a whole string of small ports, including Moho and Huancané in the north and Ilave, Juli, Yunguyo, and Desaguadero in the south.[111]

The northern section of the altiplano began to be integrated into this modern transportation funnel to and from the coastal port with the construction of the railroad line ultimately linking Cuzco to the Puno-Arequipa line. Meiggs received the government contract to build this line in December 1871. Branching off from the previously constructed line at Juliaca, about forty kilometers north of Puno, it pursues a northerly course and for some sixty kilometers straddles the border between Lampa and Azángaro provinces. This course, necessitated when powerful citizens of Lampa rejected the track's passing through their town,[112] gave rise to four railroad stations—Calapuja, Laro, Estación de Pucará, and Tirapata—conveniently located for large parts of Azángaro's livestock-raising zones. By the mid-1870s, before the financial crisis halted further construction, the railroad line had been completed for 131 kilometers to the town of Santa Rosa, close to the northwestern rim of the altiplano. All of the Peruvian altiplano had now been put into reasonable proximity of rail or boat transport; except for isolated hamlets in both cordilleras most locations lay within two days' journey on muleback from railroad stations or ports.[113]

Traffic on the line remained thin until the 1920s. One passenger train a day traveled in each direction between Arequipa and Mollendo, and only two per week ran between the entrepôt city and Puno, covering the distance of 350 kilometers in ten to twelve hours. Freight trains were no more frequent, and schedules changed often in accordance with traffic conditions. These frequencies remained basically unchanged until the mid-1920s.[114] The railroad operated at a loss during its first years. It was built not to accommodate already existing trade but to produce its own business through a major reduction in transport costs and an anticipated expansion


of trade. Such expectations by the government and southern Peru's business elite proved optimistic at best. In contrast to Mexico, where the shift from a slow and inefficient transport system to railroads contributed to strong economic growth,[115] southern Peru's growth of trade and production remained relatively modest. The modernization of the transport system failed to transform the relations of production in the countryside or to deepen the market. Railroad freightage grew primarily by concentrating commercial flows through the consolidation of the dendritic system, drawing business from muleteers. Railroads accelerated economic growth in Latin America most when the commodities to be moved were bulky items, such as minerals or grains, and when there were virgin resources (land, major untapped mineral deposits) in the production zone accessed by the rail link. Neither of these conditions prevailed in the case of the altiplano. Moreover, since transport costs represented only a small part of the FOB values of wools—no more than 15 percent by one estimate—a reduction in freight rates through the switch from mules and llamas to rail could produce only small savings for the producer.[116]

Paradoxically, when trade flourished, the modern transportation funnel rapidly reached its full capacity. British consuls repeatedly complained about bottlenecks caused by shortages of boxcars, the inefficient steamer service across Lake Titicaca, and insufficient warehouses in the port of Mollendo.[117] The Peruvian Corporation, the British proprietor of the Ferrocarril del Sur and the lake steamers since 1890, apparently adapted to southern Peru's business environment by keeping transport space scarce.[118] Yet railroad freight rates appear to have been relatively low compared to those of other lines in Peru.[119]

Nevertheless, traders and livestock growers in the altiplano frequently complained that the Peruvian Corporation's transport rates favored imports and Bolivian transit commodities over goods from the Cuzco and Puno highlands shipped to the coast.[120] During the first forty years the railroad, to be marginally profitable, depended on cargo to and from Bolivia, especially ores but also wool from the departments of La Paz and Oruro as well as imports for the urban market of La Paz. Despite wool's great importance for the regional economy, shipments of it from the Peruvian production areas, the core zone of the railroad's operation, never brought enough business for the down trips to break even. When the new La Paz–Arica line opened in 1914, Bolivian business on the Ferrocarril del Sur was sharply reduced, with "catastrophic effects" for the line's profitability. To compensate, in 1919 the Peruvian Corporation began a series of rate increases in excess of rising costs. In the following decade the company attempted to increase the tonnage of wool shipped by railroad from the altiplano to Mollendo. Until the mid-1920s it unsuccessfully


sought to establish a huge wool-production syndicate under its control in Puno and Cuzco, an undertaking meant to ensure increased wool shipments on the rail line. As late as 1932 the Ferrocarril del Sur drew only 7.4 percent of its total freight income from the transportation of wool.[121]

Llama and mule transport was not replaced by the railroad overnight. Pack trains were still needed to take wool and other livestock products from the estates and offline urban bulking centers to the warehouses at railroad stations and lakeside ports and bring back domestic and imported supplies, hauled up to the altiplano from the coast or Arequipa by railroad. Nor did transport animals disappear immediately from the old mule paths crossing the western cordillera. As late as the 1920s as much as 20 to 25 percent of exported altiplano wool was transported to Arequipa by llama or mule trains.[122] In particular, many owners of small and medium-sized haciendas, who wanted to benefit from direct sales to the export houses in Arequipa but were in no position to profit from day-to-day fluctuations of wool prices, preferred to use their own or their shepherds' llamas as inexpensive means of transport.

The new extractive enterprises that developed in the department of Puno beginning in the 1890s—gold mining in the cordillera and piedmont of Carabaya and rubber collection further down in the rain forest—brought muleteers and llama drivers additional business on the roads and trails that fed into the railroad line. The supply of mining and rubber companies in Carabaya and Sandia provinces proved profitable both for altiplano estate owners, who dispatched their own transport llamas or those of their colonos, and for professional muleteers, mostly from Arequipa, who plied these new circuits with strings of up to a hundred mules.[123]

After the mid-1890s, construction of improved roads, passable by four-wheeled vehicles, began in the Peruvian altiplano. The foreign-owned Inca Mining Company constructed a road from the Tirapata railroad station toward its gold mines at Santo Domingo on Río Inambari. For over ninety kilometers this road passed through Azángaro province, connecting its northern and eastern districts (Asillo, San Antón, and Potoni) more comfortably with the rail line.[124] Public road construction projects connected the capital, Azángaro, to the railroad station Estación de Pucará (a distance of some thirty kilometers) as early as 1896, and Azángaro with Asillo (about twenty kilometers) by 1916. During the 1920s the eastern part of the province around Muñani and Putina was incorporated into the road network both by a link to Azángaro town and through a more southerly direct connection to Juliaca via Huancané (see map 1.1).

By the late 1920s Puno's road network, with about two thousand kilometers of improved roads completed, was the most extensive in the whole republic. One observer explained this comparatively rapid progress as the


consequence both of the favorable terrain—the broad pampas of the altiplano—and the abundance of Indian labor pressed into the heavy chores of road building by local authorities and estate owners. These factors were important, but the new roads also underscored the departmental elite's influence in national politics during the first third of this century. Paradoxically, although the condition of altiplano roads was described as "excellent" as early as 1913, there still hardly existed any motorized vehicles. Only during the 1920s did trucks begin to assume an important role in transport to and from railroad stations. Just as in the case of railroads, construction of roads largely preceded effective demand.[125]

In spite of its modest impact on the scale of trade and on relations of production, the modernization of the transport system has to be considered the most important motor behind changes in the spatial patterning and the social and economic structure of trade in the altiplano.[126] Previously the role of towns in the bulking of wool and other commodities for export, as well as in the distribution of imported goods, had been relatively small since in a "landscape of uniform, primitive transportation" much wool could be transported from the producer to the entrepôt city, Arequipa, without being handled in towns, even though it passed through several layers of middlemen.[127] The switch of the predominant transport mode from llama and mule train to railroad and lake steamers brought about the rise of commercial centers, strategically located on the rail line or the lakeshore, where merchants handled the transshipment of goods flowing in both directions through the funnel. Puno, Juliaca, and Ayaviri benefited most from this new spatial pattern. Other important commercial centers owed their very birth to the railroad, among them Estación de Pucará and Tirapata in Azángaro province.[128] Some urban centers that did not share the advantage of being located on the rail line or the lakeshore managed to hold on to and even intensify commercial activity. This was true of Azángaro town and Putina in the eastern part of the province, which remained secondary centers of wool bulking because of their distance from railroad stations or ports.[129]

A growing number of traders, shopkeepers, and commercial establishments now set up business, and the penetration of trade by the Arequipa export houses intensified. These changes were already becoming noticeable by the mid-1870s, though the crisis and dislocation caused by the War of the Pacific retarded their full development until about 1890. Some of the new traders and shopkeepers had long been residents of the department of Puno; many others came from Arequipa, Cuzco, Tacna, and other parts of Peru, and quite a few came from overseas. Except for the entrepreneurs and engineers at the newly opened mines, foreigners settled in the largest


towns, principally Puno and—after the turn of the century—Juliaca, rapidly becoming the major wool-bulking center in the department because of its strategic location at the hub of the new transport lines. Combining wholesaling and retailing activities, many foreigners established well-stocked stores with adjacent warehouses where they sold imported and Peruvian merchandise and purchased "country products," mostly wool and hides but also gold, rubber, and coffee.[130]

Rodolfo Möller may stand as an example of foreign retailers in Puno. His Casa de Comercio de Efectos Ultramarinos y de Abarrote Möller y Compañía carried a great variety of foreign and domestic merchandise: ten bottles of "eau de Cologne, best grade," some hundred cans of different aniline dyes, 26 cases of Lion brand Norwegian beer, 27 varas of white narrow cotton flannel, 221 packages of white thread for "Chardio" sewing machines, kerosene from Tumbes, paper, silverware, scissors, and knives.[131] Möller had bought most items on credit from the import and export house of Enrique W. Gibson y Compañía in Arequipa.

The Peruvians, from both inside and outside the department of Puno, who had swelled the ranks of altiplano traders and shopkeepers since the 1870s spread more evenly through the towns of the region. In Azángaro newcomers settled especially in the capital of the province, some of the larger district capitals such as Asillo and Putina, and, of course, at the railroad stations Tirapata and Estación de Pucará, where warehouses and shops sprang up around the railroad tracks on what previously had been pastures.

Many of the newcomers first appeared in the altiplano as muleteers or itinerant traders from Arequipa or other surrounding regions with which Puno traditionally had maintained an active commercial interchange. One such man was Manuel Sixto Mostajo Yáñez. His father, an itinerant peddler from Arequipa, had frequently passed through Azángaro on his sales trips to Sandia, the piedmont region northeast of the province. Manuel continued this business. Sometime during the 1890s he married Victoria Enríquez, who belonged to an old hacendado family from Azángaro and was the niece (or even daughter) of the town's long-time parish priest, Mariano Wenceslao Enríquez. Mostajo now established his residence in the provincial capital, built—apparently with financial aid from Father Enríquez—a large house on the Plaza de Armas, and established a store, where he sold such goods as cloth, window glass, and the like.[132] He became wool-buying agent for the Arequipa export house of Ricketts and in 1903 received a contract from the Peruvian postal service to transport baggage and parcels from Azángaro to Sandia.[133] As early as 1901 Mostajo was so well integrated into Azángaro's provincial society that he became treasurer of the town's municipal council.[134] But he maintained his itin-


erant trading expeditions to the ceja de la selva and to the annual fairs at Pucará, Rosaspata, and Cojata until the end of his business career. In 1930 Mostajo ordered for such a peddling circuit items including woolen shawls, cheap felt skirts, cheap hats, Italian borsalino hats, cotton cloth, thread, aniline dyes, and even unassembled bicycles.[135]

Among long-time residents of Azángaro a growing number of hacendados diversified into wool trading and shopkeeping just as the Paredes family had done since the 1840s. Around 1890 the half brothers Bernardino Arias Echenique and José Sebastián Urquiaga inherited Hacienda Sollocota, a small livestock estate of colonial origin, around which they built a vast landholding complex. At the same time they went into business as alcohol merchants in Azángaro town, and at least Urquiaga also operated as a wool trader.[136]

Owners of strategically located haciendas were able to use their locations to purchase the production of smallholders in the surrounding area. This tendency was already observed by the Italian naturalist Antonio Raimondi in 1864 regarding an estate in Azángaro's district of Potoni, on the slope of the Cordillera de Carabaya: "Hacienda Potoni has as its object the collection of the sheep wool of the surrounding countryside and of the much more valuable alpaca wool produced in the immediately neighboring province of Carabaya."[137] In 1904 Mariano C. Rodríguez, a landholder and trader from Rosaspata, Huancané province, offered to sell altiplano products to Ricketts y Compañía in Arequipa. He explained that his Hacienda Huaranca Chico was located close to the Bolivian border and that there, on the estate, "one can easily buy all these products [wool, rubber, and chinchona bark]."[138] Access to smallholder production was a more crucial qualification for altiplano traders than was formal knowledge of commercial operations.[139] Rodríguez explained to Ricketts that his family used the income from livestock ranching "to comfortably supply our needs." For his business he spent no money on rent and little on wages because "we have Indians who work for us nearly free of charge. In this way I can utilize the profit from the business to capitalize [it] and to attend to unforeseen business losses."[140] While the operation of livestock haciendas was to provide the income for a comfortable life-style, Rodríguez hoped to use his commercial business as a source of capital accumulation.

Below the ranks of mestizo merchants and specialized itinerant traders flourished a complex and fluid world of peasant barter and trade. Exchange between altiplano peasant herders and agricultural producers of different ecological levels had been an important part of the structure of Andean society since prehispanic times. Trips by owners of livestock estancias from Azángaro to the ceja de la selva regions of Carabaya, Sandia, or the adjacent


valleys of Bolivia ordinarily served the purpose of exchanging wool, dried meat, hides, and other altiplano products for coca leaves, maize, and medicinal herbs for the herders' own consumption. But it was only a small step to trade more of such goods than one needed for family subsistence, particularly when the terms of trade developed favorably for livestock products.[141] If such a trip went well, the peasant from Azángaro could profit from the barter or sale of his or her products in the ceja de la selva and again on return to the altiplano from the sale of the surplus maize or coca leaves.

Tomás Lipa, a peasant from Putina, seems to have engaged in this kind of trade, frequently making trips to Caupolicán province in Bolivia. In 1888 he rented one sector of estate pastures of Hacienda Chamacca, district Azángaro, and promised the owners, Josefa González and her husband Lorenzo Aparicio, to take one mule loaded with goods on their account with him on each trip to Bolivia.[142] Nineteen years later, in 1907, his son Pablo Lipa extended a credit of 1,200 soles to the notary Filiberto Aparicio González, son of Lorenzo, who then handed the whole estate over to Lipa as security for a contractual period of four obligatory and five voluntary years.[143] Trade had permitted the younger Lipa to accumulate this large amount of cash and, with it, the temporary possession of a hacienda. Other peasants found an avenue to trade by opening tiny stores in their rural communities—selling a few pounds of coca leaves, sugar, and so on—or by selling to urban bulkers not only their own wool clip but also that of relatives and neighbors. As Benjamin Orlove has noted, such bartering and trading peasants "shade[d] imperceptibly into the traveling buyers."[144]

As trading networks in the altiplano became denser, the Arequipa export and import houses strengthened their position vis-à-vis the other groups involved.[145] The marketing of Peruvian wools overseas continued in the same manner for the whole period under consideration. Sheep wool was sold for the Arequipa export houses at auctions in London and Liverpool, whereas alpaca wool was disposed of "through the even more archaic system of private deals between handlers and manufacturers" in England.[146] In contrast, by the turn of the century Australia and New Zealand had established national wool auctions, and Argentina had developed an intermediate system in which export houses shipping directly to French manufacturers, purchasing agents of European houses, and consignment agents competed with each other.[147] In the Peruvian system prices were least responsive to local supply conditions, whereas the position of the exporters vis-à-vis the producer was strengthened.

Improved transport conditions and fast communication links (the telegraph) between the coast and the altiplano permitted the Arequipa houses to bring to bear their advantages—greater capital resources, links with the


European wool importers, and up-to-date information on prices and market conditions. Since the 1870s and particularly during the economic recovery after the War of the Pacific, companies such as Gibson, Stafford, Ricketts, and Braillard had established purchasing and sales outlets in the commercial centers and at key railroad stations of southern Peru's wool production zone, from Desaguadero in the south to Sicuani in the north and from Conima (Huancané province) in the east to Santa Lucía (Lampa province) in the west.[148]

Specific arrangements of market penetration varied greatly. In the most important centers the export houses opened branch offices. Some traders in the altiplano became their exclusive agents, handling all their sales and purchases through one Arequipa house. Among independent traders some concluded long-term contracts with the Arequipa houses, whereas others concluded contracts with varying export firms in Arequipa. Branch offices, agents, and large independent wool bulkers depended on three sources for their fiber purchases. Owners of small and medium-sized haciendas frequently offered their clip to the agents on a yearly basis and delivered it to agents' shops and warehouses on their own pack animals. Many peasant smallholders and colonos brought small amounts of wool to traders' shops on an irregular basis. And last, hundreds of itinerant traders, usually working firmly established circuits, combed the weekly markets in district capitals and communities as well as the yearly fairs for as much wool as they could find or could afford to buy and then sold it to the agents. Many small traders worked for only one agent and one export house.[149]

The owners of the largest haciendas preferred to deal directly with the Arequipa companies. José Guillermo de Castresana, an Arequipeño businessman and, from 1906, owner of Hacienda Picotani in Muñani district, regularly instructed the administrator of his estate when to expedite the wool clip to the railroad station Estación de Pucará and on to Arequipa.[150] Through social ties with one or the other export house, Castresana possessed information on wool price fluctuations and adjusted the transport schedule of the wools accordingly.

The Arequipa houses regularly extended credit for wool purchases to their agents and independent traders, who did likewise with their suppliers. In 1920 the roughly ten wool-buying agencies in Santa Rosa every week received between six thousand and fifteen thousand soles in coins from their respective export houses in Arequipa.[151] By advancing a large share of the total value of wool, the traders hoped to secure supply. Wool buying was highly competitive on each level, between the Arequipa exporters, between agents, and between itinerant traders. The Arequipa houses attempted to gain complete control of local producing zones and were willing


to have their agents pay considerably higher prices for wool to the itinerant traders during an interim phase in order to ward off competition.[152]

The Arequipa houses exercised the predominant influence over short-term wool prices in the altiplano. Every week they cabled price quotations to the traders there, refusing to purchase any wool above that figure. The trader then calculated the cost of handling and freight as well as his profit margin to determine the price that he could afford to pay his suppliers. Although price quotations generally had to follow the prices established at the London wool auctions, the exporters could afford to vary the margins between the world market quotation and the price at which they purchased wool, particularly in a declining market.[153] In 1921, for example, the Sociedad Ganadera del Departamento de Puno, organized by hacendados at the height of the postwar crisis, complained that the prices for wool paid to them by the Arequipa merchants not only had declined precipitously since the boom years of the war but were even low compared with the prewar levels—for old clients, eleven pesos per quintal compared with thirty-five pesos before the war.[154] Yet prices paid for average Peruvian sheep wool at a British port stood at nearly the same level in 1921 as they had in 1913. The key to the exporters' strong position vis-à-vis their suppliers lay in their relatively plentiful working capital, which permitted them to accumulate stocks in their warehouses. Thus, as Appleby has observed, "In a falling market the Arequipa house might either suspend purchases or set extremely low prices until it could dispose of its stocks of high-priced wools."[155]

Producers and small traders were not totally defenseless against the price dictates of the exporters. Lively competition between houses such as Gibson, Ricketts, and Stafford permitted them to sell their wool to the highest bidder.[156] Nevertheless, many hacendados and wool traders preferred to maintain lasting commercial ties with one house because the exporters could bestow a number of advantages on long-time clients, including better credit terms, banking services, preferred treatment in the supply of imported goods, and guaranteed prices for wools during the three to six months between the contract and actual delivery.[157]

With the penetration of the wool trade in its primary bulking stages by the Arequipa export houses, direct credit links between these houses and the owners of larger haciendas, traders, and shopkeepers in the department of Puno became more frequent. Hacendados selling their livestock products directly to the exporters maintained current accounts with them by which they purchased imported goods on credit against the security of their next wool clip. Wills of hacendados often listed debts to the import and export houses.[158] Between the mid-1870s and early 1880s this growing credit


dependence led to a number of sales of urban real estate in the department of Puno by local traders and hacendados to the export houses in payment of debt, probably a consequence of falling wool prices.[159] However, prior to the 1920s merchants in Arequipa, Juliaca, and Puno rarely gained control of important landholdings in Azángaro province through debt foreclosures.

With the foundation of the Banco de Arequipa in 1871, modern bank credit made its appearance in southern Peru. Based on the capital of the regional oligarchy, the bank extended its operations to Cuzco and Puno.[160] Together with the increasing importance of the large import and export houses, banks slowly supplanted merchant bankers such as Amenabar or del Valle as credit institutions in the altiplano. This process is symbolized in a credit contract from 1875 in which a Puno shopkeeper received a credit of 1,700 pesos from the Banco de Puno—presumably a branch of the Banco de Arequipa—but relied on the merchant banker Fernando del Valle as cosigner for the loan, who in turn received a mortgage on real estate as security for his potential obligations against the bank.[161]

The Banco de Arequipa and its Puno branch fell victim to Peru's financial collapse of 1876. Only in the late 1880s did another bank begin to operate again in Arequipa, and Puno had to wait until the early 1920s before a branch of the Banco de Perú y Londres opened its doors.[162] Between the late 1890s and World War I Peru's reconstituted banking system remained cool toward agro-exporters; the banks pursued a stable money policy in opposition to export interests and considered agricultural mortgages a bad risk. In 1902 Wenceslao Molina, a professor of animal husbandry at San Marcos University in Lima and the heir to Hacienda Churura in Putina, outlined a program of measures necessary for the establishment of a modern livestock industry in Peru. Reflecting a general frustration of large agro-exporters with the credit system after the adoption of the gold standard, Molina demanded the establishment of agricultural mortgage banks, "which could fill the void left by the presently [existing banking institutions], which grant credits only to the merchants and keep them from the hard-working rancher."[163]

Alfonso Quiroz's recent work on Peru's financial institutions confirms Molina's critique. Yet despite their unwillingness to finance agricultural improvements, banks did play an increasing role in export financing. With the help of the banks, bills of exchange finally became common in the wool export business, a first step in alleviating the chronic cash shortage in the altiplano. But only large traders and producers benefited from the introduction of this financial tool.[164] The hacendados' reliance on credit from the export houses increased their multifaceted dependence on these merchants, and they inevitably resented their relative weakness.[165] Whenever


earnings from wool exports declined, hacendados experienced the uneven distribution of the benefits from the trade particularly keenly and—as after the brief slump of 1901–2—called for measures "to throw off the yoke of the export houses."[166] This conflict of interest intensified in the period of the sharp slump of the early 1920s.[167] Prior to this date, however, long periods of improving market conditions muted the conflict and left the hegemony of the export houses untouched. In the words of the owner of a small hacienda in Azángaro, "the wholesalers were in charge."[168]

If hacendados had reason to complain about the uneven distribution of benefits from the wool trade, the indigenous peasants entering the market with small amounts of wool found themselves in a much more disadvantageous position. Although competition sometimes led wool exporters and their agents in the altiplano to outbid each other to secure the production of a large hacienda, the indigenous smallholders rarely received this benefit.[169] This was just one of the economic consequences of the sociocultural domination of the Indian smallholder by the social groups controlling the commercialization of wool.

Wool traders in the altiplano automatically classified sheep wool into "estate wool" and "common wool." Estate wool was presumed to have longer and finer fibers, to be of a uniform white color, and to contain less hay and dirt. The wool bought from Indian estancia owners was automatically downgraded as being dirtier and having shorter fibers and a greater admixture of black wool.[170] Thus, peasants received considerably less for their wool than did estate owners. In 1920, for example, woolbuying agents in Santa Rosa paid five soles less per quintal of sheep wool to peasants than they did to hacendados, at a current price of fifty-five soles per quintal, a discount of nearly 10 percent.[171] When buying wool from Indians, the traders at times used rigged scales. They discounted one pound in every quintal for dirt, wetness, and the weight of the rope holding the bales together, although such weight losses were calculated in the basic price for unwashed wool. When peasants wanted to sell wool or hides to merchants, they were often met at the outskirts of town by alcanzadores , who sought to persuade the approaching Indians to sell their goods to a particular merchant, a persuasion that could take the form of money advances, alcohol, or brute force.[172] Once in the store, they were obliged to buy alcohol, sugar, or maize at inflated prices.[173]

In some parts of the southern highlands, the bulking of wools produced by peasants could be organized in a fashion similar to the colonial repartos de bienes. In a village of Chumbivilcas province in Cuzco department, peasants protested in 1882 that "in certain seasons of the year [wool traders] from different towns come to our huts . . . and force an exces-


sively small price for this commodity on us. At the time of the wool clip they capriciously snatch [the wool] from us, weighing a quintal as an arroba. When for this very reason we are incapable of paying the whole debt which they force us to contract, they double our losses by charging usurious interests, and end up secretly taking all our livestock from us."[174] In Puno's Chucuito province the authorities themselves practiced a forced system of wool bulking as late as 1920. A few weeks before the shearing season, in December or January, the district governor would distribute money, lent to him by wool traders, to the Indian livestock herders, obliging them to deliver a specified amount of wool. If they refused to accept the conditions, the governor employed the communal authorities to deposit the money for the wool at the peasants' hut, and the latter knew that they "had to come up with the equivalent amount of wool."[175] Mayors and subprefects entered the wool business precisely because they had power over Indian herders and thus could guarantee supplies to exporters.[176]

Imposing low prices and securing supplies for specific traders and authorities were the goals of these methods of deceit and force. Such schemes were practiced again and again by those with leverage over Indian peasant producers. They subverted an intrinsically competitive market into a myriad of monopolistic relations of appropriation. But they were no longer the very precondition of peasant market participation, as repartos de bienes still might have been during the eighteenth century.

Between the 1850s and 1920 Indian livestock herders increasingly came to view market transactions with hispanized traders as important regular parts of their household subsistence economy. Their margin of autonomy in exchange relations was diminishing as the dendritic system matured after the War of the Pacific. As late as the 1850s and 1860s a legend flourished among Puno's elite that Indian peasants had buried about ten million Bolivian pesos, their receipts from increasing wool sales, money that thus "vanished from circulation."[177] In other words, there existed a sphere of monetarized circulation among the peasants that lay outside the control of the altiplano traders.

Over the next sixty years both pull and push factors brought the peasants into increasing dependence on hispanized traders. The everdenser network of itinerant traders and wool-buying agents, especially after 1890, made it more difficult to escape their purchasing pressures. The diminishing land base in the parcialidades, caused by hacienda expansion and population increase, led to smaller average livestock herds for most peasant families. Fiscal measures sought to capture more of the peasants' monetary income from wool sales. Between 1867 and the 1890s governments in Lima undertook repeated attempts to collect the contribución


personal , a new head tax that replaced the contribución de indígenas. A new alcohol consumption tax established in 1887, excise taxes on alcohol, sugar, and tobacco introduced in 1904, and the broadened collection of the contribución de predios rústicos after 1902, which in Azángaro primarily affected peasants, were at once means and expression of a more effective control over the peasantry, especially after the 1890s. The railroad and telegraph and the establishment of rural police posts in each province after 1895 made it easier to quell uprisings or discourage them before they were undertaken.

But this greater reliance on market transactions did not mean the abandonment of the traditional goals of the peasant economy: subsistence of the family in the context of communal solidarity. Cash received for livestock products from traders paid for the considerable expenses of festivities, such as those for a community's patron saint, a baptism, a wedding, or a funeral. Indian livestock herders from the northern altiplano perhaps made cash purchases of commodities such as salt, pottery, or alcohol with which to maintain long-standing barter relationships in neighboring areas as the montaña in Bolivia's Larecaja province. As the parity of exchange values between bartered goods remained constant for longer periods of time, during phases of increasing prices for wool and hides it was advantageous to purchase barter goods with cash received for livestock products.[178]

Indian peasants held back much wool from the export trade even during boom years. Other livestock products, including tallow, sheepskins, and dried meat, entered the dendritic system of monetarized trade in even smaller proportion. Besides direct consumption in the peasant household, these goods continued to serve as means of exchange in traditional barter relationships. For example, each May after the shearing season the colonos of Hacienda Picotani abandoned their estate and went down to the valleys of Sandia to provision themselves with maize, coca leaves, and other foodstuffs in exchange for livestock products and homespun baizes.[179] During the World War I boom peasants from around Juliaca refused to sell any serge to the merchants to whom they sold raw wool, as they were taking increasing amounts of this home-woven cloth 150 kilometers farther north to Sicuani, their traditional spot for provisioning with maize.[180]

Indian livestock producers did not object to being integrated into the market, as they had come to rely on cash as part of their family subsistence strategy. What they objected to was the force and deceit that traders and authorities routinely imposed in the "marketplace." However, they did not accept such exploitation fatalistically. Indians "give life to business in this region," as wool trader Francisco Rodríguez of Santa Rosa wrote to Ricketts in 1918, and this market position allowed them to use ruses, tricks, and


plain common sense to countermand and limit their exploitation at the hands of unscrupulous traders.[181] Indians mixed hay and dirt into the wool, moistened it, and even poured sugar water over it to increase the weight.[182] In 1932, when Bolivian customs agents began to collect export duties on wool, alpaca herders from south of the border ceased to sell their wool to Peruvian traders in border towns such as Cojata and Moho, instead establishing relations with merchants in Puerto Acosta on the Bolivian side.[183] Peasant herders sought to adjust their sales both to the rhythms and requirements of their household economy and to market fluctuations.

During the 1920s, a period of unstable wool prices, traders again and again complained about "the absence of the Indians" from weekly markets or annual fairs. "The Indians held back [their alpaca wool] in expectation of price improvements, they only sold amounts indispensable for satisfying their most pressing needs," wrote the Ricketts's agent Hipólito Sanchez from Moho in Huancané province in September of 1926.[184] They tried to sell the wool during the season of highest prices, September through December, coinciding with the months of the agricultural cycle when last year's harvested food began to get scarce. Before celebrations such as carnival or patron saints' festivities, wool sales increased, as did alcohol purchases.[185]

Peasants considered trading a complex skill entrusted only to the most experienced and honored family members, an activity in which sons were trained from a tender age, when they accompanied their fathers on expeditions to distant market towns or subtropical valleys. To give some stability and predictability to trading in those alien environments, the peasants sought long-lasting trading relationships with compadres (their children's godparents, whom they sought out as protectors). A trader might have as many as six hundred compadres among peasants selling him wool.[186]

But resistance always proved fragile. The very compadre to whom the peasant had entrusted himself over many years for his wool sales might exploit that dependence. And the attempt to hold the wool clip until prices were high collapsed when there was a prolonged price slump or when food was scarce because of crop failures. Then the reverse pattern was set in motion: peasants had to market their wool as fast as possible, whatever the losses. They sheared the animals before term, bringing shorter fibers to market; the price they received would be doubly low on account of the inopportune season of sale and the low quality of their wool.[187] Of course, poor peasants, with scarce resources of land and animals, faced these problems more frequently than did affluent comuneros and colonos. And alpaca herders, such as those high up in the Cordillera de Carabaya, with


their undisputed control over the know-how of producing the cameloids' precious fiber, may have had a more stable market position than did sheep-wool producing comuneros from the altiplano proper.

Through the tremendous intensification of the competition for land, the wool market may have driven forward this type of social differentiation among the peasantry. But comuneros and colonos had a number of countervailing strategies at their disposal that assuaged such effects of the wool market before 1920. For better or for worse, the prosperity of the altiplano's indigenous livestock herders—as well as of hacendados, transport entrepreneurs, traders, and administrators—had become linked to the vagaries of international demand for wool, just as they had depended on the fortunes of the mining centers in Upper Peru until the end of the colonial era.


5 The Symbiosis of Exports and Regional Trade

Preferred Citation: Jacobsen, Nils. Mirages of Transition: The Peruvian Altiplano, 1780-1930. Berkeley, CA:  University of California Press,  1993.