Peru's Burden of Military Expenditures

Abstract

IT would, perhaps, be difficult to find a country in South America or elsewhere which, over a period of an entire century, has suffered more deeply from wars and revolutions and the accompanying burden of armaments and war indebtedness than has Peru. This is the year in which Peru celebrates the 100th anniversary of her independence from Spain, and the history of the century that is closing is a long and mournful record of one of the richest countries of South America, dwarfed in its economic, educational and political development by military activities and expenditures. In this century Peru was engaged in seven different foreign wars and a dozen or more serious internal revolutions or insurrections. She had two score of rulers, most of whom came into office by violence and were deposed in the same way, and not one of whom was a civilian until Manuel Pardo came into office in 1872. Prior to the War of the Pacific (1879-83), her economic progress was negligible except for some railroad construction which had been carried on during the very brief breathing spells between civil and foreign wars. It was not that the government of Peru nor its people were suffering during this period from poverty, for the country was blessed with rich deposits of guano, a natural fertilizer which at little cost could be gathered from the islands along the coast, and exported and sold in all the markets of the world. During a period of forty years, from 1840 to 1879, Peru had the unusual distinction of running its government practically without recourse to taxation of any kind, for in this time she exported 12,000,000 tons of guano, and the national treasury received net profits therefrom of about $400,000,000. This money was largely squandered on current expenditures with nothing to show for it, according to a statement of President Billinghurst in 1913, except twenty warships costing $5,000,000; a penitentiary costing $850,000; an exhibition garden and palace, $3,000,000; and a bridge, $300,000, making a total of $9,150,000. She had likewise spent the proceeds of over $150,000,000 in loans secured chiefly by liens on future profits from sales of guano. By 1873 her finances had reached a state of hopeless bankruptcy, for her budget of expenditures was over two and one-half times her current income. While in this condition, the disastrous War of the Pacific broke upon her, she and Bolivia joining forces against Chile over a dispute concerning the nitrate beds, then under the sovereignty of Peru. The economic value of these nitrate deposits was just becoming recognized and they promised to be a source of wealth rivaling even guano. The war lasted from 1879 to 1883. Peru was completely vanquished by Chile and her nitrate provinces were taken from her. She found herself in a state of utter bankruptcy, carrying the enormous foreign debt of $268,000,000 owed to British, French and Dutch bondholders, upon which there had been prolonged default.