The western slope of the mountains is dry and barren, so that breadstuffs and provisions are imported from Ecuador on the north, or from lower Chili, far to the south. Yet no other country has contributed so much to the world's fertility; for here are the great deposits of guano and nitrates, more valuable than mines of gold and silver. These deposits yielded for over thirty years a net annual revenue of $20,000,000.
The eastern slope, rich and fertile, producing every tree and flower, all fruits and vegetables grown in any part of the world; in the mountains, mines of gold and silver, platinum and cinnabar, copper and tin, lead and iron, coal and petroleum, nitrates and asphalt: a bankrupt nation in the midst of untold wealth—such is Peru.
To bring the minerals down to the ocean, tens of millions of dollars were expended on thirteen roads; but though none of them were ever finished, they reached a few of the poorer mines. Seven of these roads were built by the government, the others by private parties.
The sales of guano and the production of gold and silver made Peru a proud and wealthy nation. Everything prospered until the war with Chili, from 1879 to 1883, ending in the defeat of Peru and the loss of a portion of her territory, including a large part of her guano deposit. She was unable to keep her railroads in operation, much less to extend them, or to pay the interest on her bonds; and thus bankruptcy followed defeat. At last, after fourteen years of default and six years of negotiation, a contract was concluded with Peru by Mr. M. P. Grace, of New York, in January, 1890, on behalf of the bondholders. The bondholders became concessionaires, and in consideration of the release of the bonded debt due to them by Peru, receive valuable concessions, of money, of mines, of railroads, of lands and of guano. These concessions include among other things a government subsidy of $400,000 a year, secured from the customs of Callao; the mines of Cerro de Pasco, which have yielded a yearly average of $2,000,000 for over one hundred years; the entire railway system (769 miles in length) of the state; a grant of 5,000,000 acres for the extension of the Lake Titicaca railroad; a grant of 4,500,000 acres for the extension of the Central or Oroya railroad to the navigable waters of the Ucayala, one of the main tributaries of the Amazon; the exclusive control of the guano deposit until 2,000,000 tons have been sold, from which they expect to sell at least 80,000 tons a year, which will net $1,000,000. The concessionaires on their part agree to liquidate the Peruvian debt, to repair the railroads, and construct 974 miles in extension of the existing system at an estimated cost of $16,000,000, and to assume certain other obligations to a limited amount.
This, perhaps the most remarkable settlement ever made between a bankrupt nation and its creditor, is due largely to Mr. Grace, and cannot fail to develop the resources of Peru and restore her days of prosperity.
TRADE RELATIONS WITH THE UNITED STATES.
It appears from the foregoing statement that all the carrying trade to and from South America, by water, is by foreign steamers; that only four of these are American lines; that the railroads are generally owned and operated by Englishmen; that the bankers and merchants are Englishmen or Germans; that many of the mines, cattle ranches, coffee plantations and other estates are owned by non-resident foreigners; and that the largest consumer of South American products is the United States, although this country sells few of its manufactures and products to South America.
The English steamers, in the usual course of trade, load with English dry-goods consigned to English houses in South America, where they are sold and the proceeds invested in coffee and other products, which are sent in the same vessels to the United States; there sold, and the money invested in our produce for carriage to England. The English therefore obtain the profits on manufacture, on the freight to South America, on the sale of the goods in South America, on the freight from South America to the United States, on the sale of those goods, and finally on the freight of the American breadstuffs carried to Europe. For the successful prosecution of any trade between two countries, it is essential that each shall produce what the other wants: Thus, we raise breadstuffs which are not grown on the Caribbean sea nor in the valley of the Amazon, nor in Peru or upper Chili, and we also manufacture goods required in all parts of South America, where they have few factories; there, coffee, wool, India rubber, cacao and other articles are produced, which we require. Here, therefore, are the factors necessary for a prosperous trade. Such a trade we formerly enjoyed with South America: In 1852, six hundred United States vessels entered the harbor of Buenos Ayres, or more than twice as many as those of all other nations combined; now only two per cent. of the shipping entering that harbor belongs to us. Our war came, iron steamers took the place of wooden sailing ships, we levied a duty on coffee and rubber, South America levied a duty on our manufactures, other countries subsidized lines of steamers, while we refused all subsidies; and our trade with South America rapidly fell off, as freights were carried cheaper in foreign than in American ships, and the trade of South America passed from the United States to England, Germany and France.
It is said that we cannot regain this trade, because we cannot, without protection maintain our own manufactures, much less compete with the Europeans in an open market; and therefore that it will be a waste of money to subsidize our vessels. But the larger the market the cheaper we can manufacture, and we can surely find a large and new market for our breadstuffs. It is worth while to make the experiment at least, to give our vessels the same subsidy and protection that has been given to the European lines, and to our merchants and bankers, an opportunity to regain the trade with South America. At first the odds will be greatly against us; but if we show the same energy and ability in cultivating trade with South America that our fathers exhibited, and that we have shown in other directions, we must ultimately succeed.