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Peru RECOVERY AND GROWTH, 1883-1930
![[PDF]](http://lcweb2.loc.gov/frd/cs/pdf.gif)
Figure 4 Peru's Northern Boundary
Disputes in the Twentieth Century
Source: Based on information from David P. Werlich, Peru: A
Short History, Carbondale, 1978,
171.
The New Militarism, 1886-95
After a period of intense civil strife similar to the
political chaos during the immediate postindependence
period half
a century earlier, the armed forces, led by General Andrés
Avelina Cáceres (1886-90, 1894-95), succeeded in
establishing a
measure of order in the country. Cáceres, a Creole and
hero of
the guerrilla resistance to the Chilean occupation during
the War
of the Pacific, managed to win the presidency in 1886. He
succeeded in imposing a general peace, first by crushing a
native
rebellion in the Sierra led by a former ally, the
respected
native American varayoc (leader) Pedro Pablo
Atusparía
(see Landlords and Peasant Revolts in the Highlands
, ch.
2).
Cáceres then set about the task of reconstructing the
country
after its devastating defeat.
The centerpiece of his recovery program was the Grace
Contract, a controversial proposal by a group of British
bondholders to cancel Peru's foreign debt in return for
the right
to operate the country's railroad system for sixty-six
years. The
contract provoked great controversy between nationalists,
who saw
it as a sellout to foreign interests, and liberals, who
argued
that it would lay the basis for economic recovery by
restoring
Peru's investment and creditworthiness in the West.
Finally
approved by Congress in 1888, the Grace Contract, together
with a
robust recovery in silver production (US$35 million by
1895),
laid the foundations for a revival of export-led growth.
Indeed, economic recovery would soon turn into a
sustained,
long-term period of growth. Nils Jacobsen has calculated
that
"Exports rose fourfold between the nadir of 1883 and 1910,
from
1.4 to 6.2 million pounds sterling and may have doubled
again
until 1919; British and United States capital investments
grew
nearly tenfold between 1880 and 1919, from US$17 to US$161
million." However, he also notes that it was not until
1920 that
the nation fully recovered from the losses sustained
between the
depression of 1873 and the postwar beginnings of recovery
at the
end of the 1880s. Once underway economic recovery
inaugurated a
long period of stable, civilian rule beginning in 1895.
Data as of September 1992
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