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Peru had no viable system in the 19th century. It had government by
oligarchs and the military. Its history was complicated by three foreign wars, all of
which it lost. In the War of the Pacific (1879-83), Peru lost the nitrate rich province of Tarapacá. That meant the loss of nitrates and money it brings. The 1840s saw a boom in guano (bird droppings) exports which people bought for fertilizer. By the 1870s, the value
of guano exports reached $100 million, a lot of money for Peru. The guano trade also meant
foreigners and railroad building. Peru was light hearted about foreign credit, thinking
that it could borrow all it wanted and pay the debts with guano. To mine the guano, Peru
imported Chinese laborers.
In the 19th century, the country experienced very small industrial development with a small spurt of activity in the 1890s. This development occurred before the country could sustain them.
Ramón Castilla, the dominant figure from 1845-1861, tried to clean up the finances. He abolished ecclesiastical privileges. He partially abolished involuntary peonage. These liberal measures did not break the system
Most presidents were military men. In the first fifty years of independence, Peru had forty revolts. The liberals created the Civilista Party, dedicated to civilian government, in the 1870s.
In 1889, the external debt was £45 million but annual revenue was less than £7 million. That meant that there was no money for economic development. In 1890, the foreign creditors organized the Peruvian Corporation in London. Peru ceded its railroads to the Corporation and agreed to extend the lines, gave it the free use of seven ports. Ceded the right of navigation on Lake Titicaca which was the way into Bolivia. The Corporation got some payment in guano. It also got land and colonization grants. It was to receive £89,000 in thirty-three payments, guaranteed by the customs receipts of the port of Callao, the chief port.
The War of the Pacific, which saw Lima sacked by Chilean troops, shocked the nation and its intellectuals. Manuel González Prada said that it showed that all was rotten. González Prada was strongly anticlerical and believed that the Church was the critical element in the conservative coalition which was keeping the country backward. He lamented that nothing was done for the Indian, the majority of the population, and that there were no public schools. José Carlos Mariátegui, a Marxist, wrote critical essays about the regime and influenced civilians through his teaching at San Marcos University. He was sent to Europe on a scholarship to get him out of the way. He returned in time to see President Augusto B. Leguía (1908-12, 1919-30) dedicate the country to the Sacred Heart of Jesus. Leguía was considered liberal at the tome but he did become more conservative with time.
In sum, 19th century Peru was a backwater of the Western world.