Panama to Patagonia

by Charles M. Pepper

Peru is almost exceptional among the South American Republics for establishing and maintaining the gold standard. This is a brilliant and instructive chapter of financial history. The beginning was made in 1897, following the presidential election in the United States. General Pierola was President and was strongly in favor of the gold basis. Though Peru was a silver-producing country, a law was passed providing that gold should be the sole standard, that the customs duties should be thus paid, that there should be no further silver coinage, and that the ratio should be ten soles of silver, equal to the English pound sterling, or the Peruvian pound sterling, which is the exact equivalent in weight and fineness of the English pound and is known as the inca. It also was provided that silver should not be legal tender in amounts greater than $100, that no person should be permitted to bring more than ten soles into the country, and that the export duties on silver should be repealed.

Subsequent legislation strengthened this law, and the government by an arrangement with the banks called in and melted into bullion the redundant soles, itself taking the loss. There was opposition, especially in the Cerro de Pasco mining-region, where the output of silver was greatest. In the interior also the Indians, who had been accustomed to silver, could not be made to understand gold. But as they have few transactions in which a yellow coin is necessary, this was not a serious drawback. Silver enough remains in circulation, and at Arequipa and other interior commercial points gold yet can be had only by paying a slight premium. In the natural processes of commerce a considerable quantity of the minted gold of other countries is imported, the amount having reached $1,900,000 in 1903. No question exists that Peru’s gold standard has been immensely beneficial in maintaining the credit of the country abroad and in facilitating commerce at home.

Paper money, either bank emissions or national notes, is prohibited by the law of 1879. The currency which was in circulation in 1881 was converted into the internal debt. This internal debt grew out of the calling in of the paper currency and the liquidation of old accounts. The total is approximately $15,000,000. A small yearly disbursement is required for its service. Part of this so-called internal debt earns 1 per cent yearly interest, and the remainder receives no interest, being provided for out of a redemption fund which amounts to $125,000 annually. The liquidation has been regularly carried on since the bonds were issued under the terms of the law of 1888. The yearly fund appropriated for interest and the sinking fund remain stationary unless increased by Congress.

In the ten years following 1895 the banking capital of Peru increased at the rate of 150 per cent, while the deposit accounts ran up from $4,500,000 to $14,000,000. The banks pay dividends of 14 to 16 per cent. Volumes might be written about the causes which are leading to the commercial and industrial prosperity of the country and contributing to the political stability. The convincing evidence of the fact is the growth in the bank deposits.

In the chapters on Peru I have sought to show something of the country and the people, of the resources and the commerce, of the economic prospects and the political conditions, for all of them must be known if the country’s future is to be judged. What the joining of the Amazon to the Pacific means, what the new industrial life promises, what the governmental stability signifies, may find an answer in what has been written, for I believe in the destiny of Peru, but not an iridescent, dazzling destiny to be realized within a twelvemonth or a decade. Instead, a gradual growth to be attained by a plodding policy, sympathetic to the popular aspirations yet rock-rooted in sound principles of national progress. The Panama Canal helps to develop the Amazon section of Peruvian territory, vivifies industries, and strengthens already stable governments by contributing to their commercial prosperity. Its impression on Peru is deep and lasting, for under its beneficent influence the seeds of revolution will cease to germinate.

CHAPTER XII

ALONG COAST TO MAGELLAN STRAITS

Arica the Emerald Gem of the West Coast—Memorable Earthquake History—A Future Emporium of Commerce for the Canal—Iquique the Nitrate Port—Value of the Trade—Antofagasta’s Copper Exports—Caldera and the Trans-Andine Railway to Argentina—Valparaiso’s Preëminence among Pacific Ports—Extensive Shipping and Execrable Harbor—Plans for Improvement—No Fear of Loss from the Interoceanic Waterway—Coal and Copper at Lota—Concepcion and Other Towns—Rough Passage into the Straits—Cape Pillar—Punta Arenas, the Southernmost Town of the World—Trade and Future.

THE emerald gem of the West Coast is Arica, a day’s voyage from Mollendo. After days and weeks of rocky coast without vegetation and of the long chain of the naked Andes farther inland, the clumps of green trees and the bushy fringe of verdure along the sandy beach are a seeming paradise and a close one too. The huge cliffs which beetle over Arica do not appear so barren as those farther north, and the flat-topped hills do not limit the vision so entirely as to shut out the thread of valley which marks the line of the railway back to Tacna and the desert. On the highest hill is a great cross, but down on the level are ancient and modern windmills. The train is slowly puffing its way across the plain, while the bay is filled with rowboats and small launches. In all it is a charming, reposeful sight. The island fort at the base of the cliffs is rugged and stern, but it does not spoil the picture.