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Peru The Colonial Economy
With the discovery of the great silver lodes at Potosí
in
Perú Alto (Upper Peru--present-day Bolivia) in 1545 and
mercury
at Huancavelica in 1563, Peru became what historian
Frederick B.
Pike describes as "Spain's great treasure house in South
America." As a result, the axis of the colonial economy
began to
move away from the direct expropriation of Incan wealth
and
production to sustain the initial Spanish population
through the
encomienda system to the extraction of mineral
wealth. The
population at Potosí in the high Andes reached its apogee
in 1650
at about 160,000, making it one of the largest cities in
the
Western world at the time. In its first ten years,
according to
Alexander von Humboldt, Potosí produced some 127 million
pesos,
which fueled for a time the Habsburg war machine and
Spanish
hegemonic political pretensions in Europe. Silver from
Potosí
also dynamized and helped to develop an internal economy
of
production and exchange that encompassed not only the
northern
highlands, but also the Argentine pampa, the Central
Valley of
Chile, and coastal Peru and Ecuador. The main "growth
pole" of
this vast "economic space," as historian Carlos
Assadourian
Sempat calls it, was the Lima-Potosí axis, which served as
centers of urban concentration, market demand, strategic
commodity flows (silver exports and European imports), and
inflated prices.
If Potosí silver production was the mainspring of this
economic system, Lima was its hub. "The city of the Kings"
(Los
Reyes) had been founded by Pizarro as the capital of the
new
viceroyalty in 1535 in order to reorient trade, commerce,
and
power away from the Andes toward imperial Spain and
Europe. As
the outlet for silver bullion on the Pacific, Lima and its
nearby
port, Callao, also received and redistributed the
manufactured
goods from the metropolis for the growing settlements
along the
growth pole. The two-way flow of imports and exports
through Lima
concentrated both wealth and administration, public and
private,
in the city. As a result, Lima became the headquarters for
estate
owners and operators, merchants connecting their Andean
trading
operations with sources of supply in Spain, and all types
of
service providers, from artisans to lawyers, who needed
access to
the system in a central place. Not far behind came the
governmental and church organizations established to
administer
the vast viceroyalty. Finally, once population, commerce,
and
administration interacted, major cultural institutions
such as a
university, a printing press, and theater followed suit.
The great architect of this colonial system was
Francisco
Toledo y Figueroa, who arrived in Lima in 1569, when its
population was 2,500, and served as viceroy until 1581
(see
table 3, Appendix). Toledo, one of Madrid's ablest
administrators and
diplomats, worked to expand the state, increase silver
production, and generally reorganize the economy by
instituting a
series of major reforms during his tenure.
Native communities (ayllus) were concentrated
into
poorly located colonial settlements called
(
reducciones-- see Glossary)
to facilitate administration and the
conversion of
the native Americans to Christianity. The Incaic
mita
system was shifted from performing public works or
military
service to supplying compulsory labor for the mines and
other key
sectors of the economy and state. Finally, various fiscal
schemes, such as the tribute tax to be paid in coin and
the
forced purchase of Spanish merchandise, were levied on the
indigenous population in order to force or otherwise
induce it
into the new monetary economy as "free wage" workers. In
these,
as in many other instances, the Spaniards used whatever
elements
of the Andean political, social, and economic
superstructure that
served their purposes and unhesitatingly modified or
discarded
those that did not.
As a result of these and other changes, the Spaniards
and
their creole successors came to monopolize control over
the land,
seizing many of the best lands abandoned by the massive
native
depopulation. Gradually, the land tenure system became
polarized.
One sector consisted of the large haciendas, worked by
native
peasant serfs in a variety of labor arrangements and
governed by
their new overlords according to hybrid Andean forms of
Iberian
paternalism. The other sector was made up of remnants of
the
essentially subsistence-based indigenous communities that
persisted and endured. This left Peru with a legacy of one
of the
most unequal landholding arrangements in all of Latin
America and
a formidable obstacle to later development and
modernization.
Data as of September 1992
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