PERUVIAN WATERWAYS AND RAILWAYS
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The rubber industry of the Iquitos and tributary territory is to Peru what the fur trade of Oregon was to the United States in the period between 1830 and 1850. The populating of the vast inlying country, the trans-Andine slopes and the river basins, means to Peru what the settlement of the Rocky Mountain region extending to the Pacific meant to the people of the United States. If the hardy pioneer class is lacking, and it is, the Peruvian national instinct is not wanting. Enlightened public men are seeking to find expression for it. Immigration, colonization, are the only means. Access, transportation facilities, ways of getting in and out, must precede colonization. Therefore the railway policy. But imperative reasons of state polity require that the development shall converge from the Amazon toward the Pacific instead of from the Continental Divide toward the Atlantic. Hence the inestimable value of the Panama Canal as an incentive, a stimulating cause, an influencing factor in the national advancement. It fixes the Pacific coast as the unchanging goal toward which all Peruvian industrial growth must tend.
It is desirable to have an intelligent grasp of the present railway systems of Peru, their management, and their bases of extension. The total length is about 1,400 miles. Most of them are of the standard gauge of 4 feet 8½ inches, and with few exceptions they are the property of the State. However, substantially all of them are operated by the Peruvian Corporation of London under the sixty-five years’ lease executed by the government in 1891, when the English bondholders assumed the foreign debt and took over the railways in compensation. This was the substance of the contract that relieved Peru from a crushing burden, though it also entailed heavy responsibilities which were viewed with misgivings that afterwards were justified. The contract included huge land grants, a practical monopoly of the guano deposits for a long period, exclusive rights of navigation on Lake Titicaca, and freedom from burdensome taxation.
Some of the provisions in this agreement were very evil for Peru, and some were bad for the bondholders. Always it will be a subject of controversy whether the government or the Peruvian Corporation has been most at fault in the non-fulfilment of the conditions. The disinterested observer must admit that both have been to blame. Both entered on obligations which they could not meet,—the Peruvian government to pay annually £80,000, or approximately $400,000, to the corporation; and the corporation to make important extensions of the railways, particularly toward the Amazon, and to plant colonies. For the latter purpose it received a grant of 1,100,000 hectares, 2,750,000 acres of land, in the fertile Chanchamayo valley.
The corporation taunted the government that but for its lease of the railways they would have been abandoned and have become nothing more than trails over the mountains. On its part the company was as monumental an exhibition of English incompetence and mismanagement as can be found in foreign lands, where there are so many monuments of incompetence made possible by confiding English investors and dull-witted London directors. When the disagreements with the government got acute, its officers exerted themselves principally to blacken Peruvian credit in London and to keep other capital out. Their success for several years was satisfying to the resentful sentiment of the managers and stockholders, if not profitable to their pocketbooks.
The Peruvian Corporation, not on account of progressiveness of its own, but through the enterprise of the American capitalists who acquired the Cerro de Pasco mines and built the railroad to connect with the line to the coast, and whose industries are furnishing it with traffic, began to earn money. Nominally it represents a capital of $100,000,000. While this capital is inflated, in the new and improving conditions of Peru there is a prospect for earning a reasonable return on the actual value of the leased railways. The corporation and the government have reconciled some of their differences, and the remaining ones may be compromised and the coöperation which is so essential be secured.
I have noted that the physical feature of the Peruvian railway lines is their general direction from the coast straight to the Andes, and that the policy of the government is to supply them with a backbone by filling in links along the intercontinental location and to extend the transcontinental outshoots so as to secure the through rail and water outlet from the Amazon to the Pacific. Definite measures of legislation have been adopted in furtherance of these plans. The law passed in 1904 with the purpose of encouraging foreign capital, set aside the proceeds of the tobacco tax to the amount of $1,000,000 annually after 1905 as a guaranty for capital invested in railway building. The returns do not indicate that the income from tobacco will reach this amount for some years, yet the value of the legislation in establishing a fixed railway fund is very great.
The government took energetic measures, and the extension of the existing line from Oroya to Huancayo was assured, as also the one from Sicuani to Cuzco. That leaves between 300 and 400 miles to be built across savagely broken country from Huancayo to Cuzco, in which the engineering difficulties are serious. But while it is ultimate rather than immediate, the closing up of this section is inevitable, and though the local traffic will not pay the government can afford to aid the enterprise just as the United States government helped the transcontinental lines by subsidies and bonds. The impetus given to railway building in Bolivia which insures through connection from Lake Titicaca to the border of Argentina makes it imperative that Peru, for strategic reasons of the greatest significance, shall reach Titicaca in time to become linked with the general system.