Industria Del Tabaco

5/17/2018 Industria Del Tabaco

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B ou rb on I nt er ve nt io n i n t he P er uv ia n

Tobacco Industry, 17521813*

C A T A L I N A V I Z C A R R A

Abstract. D ur in g t he s ec on d h al f o f t he e ig ht ee nt h c en tu ry t he S pa ni sh C ro wnm on op ol is ed t he t ob ac co i nd us tr y i n i ts A me ri ca n c ol on ie s, c re at i ng v er ti ca ll y i n te g ra t ed o r ga n is a ti o ns w h ic h i n cl u de d f a ct or i es f o r t h e p r od u ct i on o f c i ga r s a nd

c i ga r et t es . A d e ta i le d a n al y si s o f t he r e gu l at i on s , o rg a ni s at i on a nd p o li c ie s a pp l ie dd ur in g t he P er uv ia n v ic er oy al ty s ug ge st s t ha t B ou rb on o ffic ia ls w er e e ffe ct iv em an ag er s. T he m on op ol y w as s uc ce ss fu l a t c ur bi ng c on tr ab an d a nd e xt ra ct in g r e nt s . T he e v ol u ti o n o f m o no po l y p ol i ci e s, h ow e ve r , r e fle c te d p ol i ti c al c on s tr a in tso n t he C ro wn s e ffo rt s t o r ai se r ev en ue s. T he a rc hi va l e vi de nc e s ug ge st s t ha t B ou rb on o ffic ia ls c lo se d t he t ob ac co f ac to ri es i n P er u i n 1 79 1 a s a r es ul t o f p ub li copposition.

Keywords: to bacc o, Bou rbo n re for ms , V ic er oya lt y of Pe ru , fis ca l r ev enu es ,contraband

R ec en t s tu di es o n t he e co no mi c h is to ry o f L at in A me ri ca a rg ue t ha t t he

b ur de ns om e l eg ac y o f S pa ni sh c ol on ia l i ns ti tu ti on s a ffe ct ed t he p at h o f

g r ow t h i n t he r eg io n. J oh n C oa ts wo rt h, f or e xa mp le , d i sc us se s h ow a w i de

a r ra y o f i n st i t ut i o na l c o ns t r ai n ts , i n cl u di n g t h e p o or p r ot e ct i on o f p r op e rt y

r i g ht s , o p pr e ss i ve r e gu l at o ry s y st e ms , a n d t h e u n pr e di c t ab i li t y o f e c on o mi c

p ol ic ie s r es tr ic te d S pa ni sh A me ri ca s p ot en ti al f or e co no mi c g ro wt h.1

C a ta l in a V i zc a rr a i s A s si s ta n t P r of e s so r i n t h e D e pa r t me n t o f E c on o mi c s, U n iv e rs i ty o f Vermont.

* I w ou ld l ik e t o e xp re ss m y a pp re ci at io n t o t he F or d F ou nd at io n, t he T in ke r F ou nd at io n,t h e L eo S . R ow e P an A me r ic an F un d, t he F ac ul ty o f S oc ia l S ci en ce s a t t he U ni ve r si ty o f C al ga ry , a nd t he C ol le ge o f A rt s a nd S ci en ce s a t t he U ni ve rs it y o f V er mo nt f or t he irfi na nc ia l s up po rt . I a m p ar t ic ul ar ly i nd eb te d t o R ic ha rd S ic ot t e a nd t hr e e a no ny mo usr e f er e es f o r t h ei r v a lu a bl e i n si g ht s . A l l t h e u s ua l d i sc l ai m er s a p pl y .

1 The last decade has witnessed an upsurge in the publication of works that address the roleo f i n s t i t u t i o n s i n s h a p i n g t h e r e g i o n s p a t h o f g r o w t h . T h e l a t t e r i s t h e r e s u l t o f t h e m a j o ri nfl ue nc e t ha t t he N ew I ns t it ut io na l E co no mi cs ( N IE ) h as h ad i n t h e fi el d o f e co no mi c

h is to ry . J oh n H . C oa ts wo rt h h as p io ne er ed t he a pp li ca t io n o f t hi s f r am ew or k t o L at inAmerica. See, for example, his Economic and Institutional Trajectories in Nineteenth-C e nt u ry L a ti n A m er i ca , i n J o hn C o at s wo r t h a n d A l an T a yl o r ( e ds . ) ,Latin America and theWorld Economy Since 1800 ( C am br id ge M A, 1 99 8) , p p. 2 3 54 . F or a d is cu ss io n o f t he l at e st r e s e a r c h i n L a t i n A m e r i c a n e c o n o m i c h i s t o r y a n d t h e i n fl u e n c e o f t h e N I E s e e C o a t s w o r t h , S t ru c tu r es , E n do w me n ts , a n d I n st i tu t io n s i n t h e E c on o mi c H i st o r y o f L a t in A me r ic a ,Latin American Research Review, v o l . 4 0 , n o . 3 ( 2 0 0 5 ) , p p . 1 2 6 4 4 .

J. Lat. Amer. Stud. 39, 5 6 7 5 9 3 f 2 0 0 7 C a m br i d ge U n i ve r s it y P r e ss 567d o i :1 0 . 1 01 7 / S0 0 2 2 21 6 X 07 0 0 2 84 2 P r i nt e d i n t h e U n i t e d K i n g do m


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D es pi te t he se s ug g es ti ve w or ks , w e a re f ar f ro m u nd er st an di ng t he p re ci se

m e ch a ni s ms b y w h ic h c o lo n ia l i n st i t ut i on s a ff ec t ed t h e n e wl y i n d ep e nd e nt

s ta te s. T hi s i s p ar ti al ly d ue t o t he f ac t t ha t, t o t hi s d ay , w e l ac k a c om pr e-

h en si ve p ic tu re o f t he S pa ni sh A me ri ca n c ol on ia l e co no mi es . O ne o f o urm aj or l im i ta ti on s i n t hi s r es pe ct i s t he r el at iv el y s ma ll n um be r o f w or ks o n

t h e A n d e a n r e g i o n . J o h n F i s h e r s w o r k o n B o u r b o n P e r u , f o r e x a m p l e , c a l l s

f o r f u r t h e r r e s e a r c h o n s e v e r a l i m p o r t a n t i n d u s t r i e s o f t h e P e r u v i a n e c o n o m y

t h at h a ve b e en n e gl e ct e d.2

O ne s uc h i nd us tr y i s t he t ob ac co t ra de . F ew e co no mi c a ct iv it ie s w er e

m or e v it al t o t he d ev el op me nt o f t he S pa ni sh A me ri ca n e co no mi es t ha n

t he c ul t iv at i on , m an uf ac tu re a nd c om m er ci al is at i on o f t ob ac co . T ob ac co

was the second most important export industry in Spanish America at the

time.3 The decision of the Bourbon monarchs to monopolise the industry

was a critical component of their plan to increase government revenues

t hr ou gh a r en ew ed c on tr ac t w i th t he c ol on is ts .4 The economic significance

o f t he i nd us tr y w as c er ta in ly c ri ti ca l f or t he e st ab li sh me nt o f t he Estanco,

b ut t he re w er e o th er c on si de ra ti on s t ha t m ad e t ob ac co a n i de al s ou rc e o f

g o v e r n m e n t i n c o m e . S i n c e i t w a s v i e w e d a s a l u x u r y g o o d , a t a x o n t o b a c c o

was perceived as a voluntary contribution, which was consistent with the

B o u r b o n v i e w t h a t i n o r d e r t o b u i l d a p r o s p e r o u s e m p i r e t h e C r o w n h a d t o

p ro mo te t he w el lb ei ng o f t he p op ul at io n a t l ar g e.5

The monopoly was first instituted in Cuba in 1717. Later, it was estab-

l is he d i n P er u, Ch il e, L a P la ta, N ew S pai n, C os ta R ic a, N ew G ra na da ,

P a ra g ua y a n d V e ne z ue l a.6 The literature overall focuses on the institutional

e v o l u t i o n o f t h e m o n o p o l y a n d p a y s l i t t l e a t t e n t i o n t o i t s e c o n o m i c r a t i o n a l e

a nd m ic ro ec on om ic a sp ec ts .7 I n pa rt icu lar , t he hi st or io gr aph y o n t he

P er uv ia n t ob ac co i nd us tr y a dd re ss es o nl y p ar ti al a sp ec t s o f t he t r ad e a nd i s

2

John Fisher,El Peruborbonico 17501824 ( L i m a , 2 0 0 0 ) .3 Total tobacco exports were behind silver with 13.6 per cent of the total during the free-t r a d e p e r i o d b e t w e e n 1 7 8 2 a n d 1 7 9 6 . T o b a c c o w a s f o l l o w e d b y c a c a o w i t h 7 . 8 p e r c e n t a n ds u g a r w i t h 5 . 5 p e r c e n t : s e e J o h n F i s h e r ,The Economic Aspects of Spanish Imperialism in America,14921810 ( L i v e r p o o l , 1 9 9 7 ) , p . 1 6 8 .

4 The Bourbons sought to transform the colonial consensus of the Habsburg period intoa s tr on ge r s t at e c ap ab le o f e xt ra ct in g h ig he r r en ts : s ee J oh n L yn ch , T he I n st it u ti on alF ra me wo rk o f C ol on ia l S pa ni sh A me ri ca , Journal of Latin American Studies, vol. 24,Q u i nc e n te na r y S u p p le m e n t (1 9 9 2 ), p p . 6 9 8 1 .

5 S e e C o li n M a cL a ch l an ,Spains Empire in the New World: the Role of Ideas in Institutional andSocial Change ( B e r k e l e y , 1 9 8 8 ) .

6

The Cuban industry, with the tobacco of best quality, was monopolised early on with thee x p l i c i t g o a l o f a s s u r i n g e n o u g h i m p o r t s o f C u b a n t o b a c c o l e a f f o r t h e f a c t o r i e s i n S e v i l l e .I n a l l o t h e r a r e a s t h e m a i n g o a l w a s t o i n c r e a s e fi s c a l r e v e n u e s .

7 The most important study of the tobacco monopoly is the work of Susan Deans-Smith,Bureaucrats, Planters and Workers : the Making of the Tobacco Monopoly in Bourbon Mexico (Austin,

1 9 9 2 ) . I n a d d i t i o n , s e e E d u a r d o A r c i l a F a r as,Historia de un monopolio: el estanco del tabaco enVenezuela (17791833) (Caracas, 1977). For a collection of essays on the tobacco industry in

568 Catalina Vizcarra


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r a r e l y b a s e d o n d a t a t h a t g o b e y o n d a f e w s c a t t e r e d y e a r s . T h i s a r t i c l e a i m s t o

fi ll t he se l ac un ae b y r ec on st ru ct i ng a nd a na ly si ng s ta te i nt er ve nt i on i n t he

P e r u v i a n t o b a c c o i n d u s t r y b e t w e e n 1 7 5 2 a n d 1 8 1 3 .8

O ne a sp ec t o f t he m on op ol y t ha t h as b ee n r el at iv el y w el l d oc um en te df or s ig ni fic an t p ar t s o f t he e mp ir e i s i t s e co no mi c i mp or t an ce a s a r ev en ue -

c o ll e ct i on a g en c y. I n t h e I b er i an P e ni n su l a, f o r e x am p le , t h eEstanco yielded

a b o u t 2 8 p e r c e n t o f fi s c a l i n c o m e , a n d i n N e w S p a i n i t b e c a m e t h e s e c o n d

s o u r c e o f r e v e n u e s f o r t h e C r o w n a f t e r s i l v e r , p r o d u c i n g o v e r 2 0 p e r c e n t o f

r ev en ue s i n i t s b es t y ea rs .9 I n t he P e ru vi an v ic er oy al ty , a s n ot ed b el ow , t he

m ag ni tu d e o f t ob ac co i nc om e w as a ls o i m pr es si ve , e sp ec ia ll y w he n c om -

p a r e d w i t h t r a d i t i o n a l s o u r c e s o f r e v e n u e s , l i k e m i n i n g . T a b l e 1 p r e s e n t s t h e

d is tr ib ut io n o f C ro wn r ev en ue s i n t he P er uv ia n v ic er oy al ty f ro m 1 75 0 t o

1810.10 G ro ss r ev en ue s f ro m t he t ob ac co m on op ol y s ur pa ss ed s il ve r f or a

g o o d p o r t i o n o f t h e p e r i o d u n d e r s t u d y . N e t r e v e n u e s r e p r e s e n t e d a r o u n d 1 5

p er c en t o f fi sc al i nc om e f or m os t o f t he p er io d. T hi s r es ul t c ha ll en ge s t he

t he e ig ht ee nt h c en t ur y s ee A gu st n G o n z al e z E n c i so a n d R a f a e l T o r r e s S an c h e z (e d s .),Tabaco y economa en el siglo XVIII ( P a mp l on a , 1 9 91 ) .

8 The earliest article on Peru is Guillermo Cespedes del Castillo, La renta del tabaco en elvirreinato del Peru , Revista Historica v ol . 2 1 ( 1 95 4 ), p p . 1 3 8 6 3 . M a ur o E s co b ar G a mb o awrote his bachelors thesis on aspects of tobacco production in Sana : El tabaco en el Peruc o lo n ia l 1 7 52 17 9 6 , u n pu b l. B a ch t h es i s, U n iv e r si d ad N a ci o na l M a yo r d e S a n M a rc o s,1 97 3. C hr is ti ne H un ef e ld t a dd re ss es s om e a sp ec ts o f p ro du ct io n a nd d is tr ib ut io n i nC ha ch ap oy as i n E ta pa fi na l d el m on op ol io e n e l v ir re in at o d el P er u : el taba co enC h ac h ap o ya s , i n N i ls J a c ob s en a n d H a ns - J ur g en P u hl e ( e ds . ) ,The Economies of Mexico andPeru During the Late Colonial Period ( B e r l i n , 1 9 8 6 ) , p p . 3 8 8 4 1 7 . J o h n F i s h e r g i v e s a g e n e r a lo ve rv ie w o f t h e m on op ol y e nt er pr is e i n E l e st an co d el t ab ac o e n e l P er u borbo nico , inGonzalez Enciso and Torres Sanchez (eds.), Tabaco y economa, p p . 3 5 5 3 . A d di t io n al s e c-o n d a r y s o u r c e s i n c l u d e C a r l o s D e u s t u a P i m e n t e l , A s p e c t o s d e l a e c o n o m a p e r u a n a a fi n e s

d e l s i g l o X V I I I ( 1 7 9 0 1 7 9 6 ) ,Boletn del Instituto Riva Aguero, v o l . 8 ( L i m a , 1 9 6 9 1 9 7 1 ) , p p .1 3 5 3 08 ; S e re n a F e rn an d e z A l on s o, U n c a so d e r e pr e s ion d e l f r au d e e n l a R e al R e nt a d eTabacos de Lima durante el pero d o r e f or m is t a , Boletn del Instituto Riva Aguero, vol. 17( L im a, 1 99 0) , p p. 4 01 1 0 ; C at a li na V iz ca r ra , M ar ke ts a nd H ie r ar ch ie s i n L at e C ol on ia lS p an i sh A m er i ca : T h e R o ya l T o ba c co M o no p ol y i n t h e V i ce r oy a lt y o f P e ru , 1 7 52 18 1 3 ,u n p u b l . P h D d i s s . , U n i v e r s i t y o f I l l i n o i s , 2 0 0 1 ; a n d C a t a l i n a V i z c a r r a a n d R i c h a r d S i c o t t e , El c on tr ol d el c on tr ab an do e n e l P er u c o lo ni al : e l c as o d el m on op ol io d el t ab ac o,1 7 52 18 1 3 , i n C a rl o s C o nt r e ra s a n d M a nu e l G la v e ( e ds . ) ,Estado y mercado en la historia delPeru ( L i ma , 2 0 02 ) , p p . 1 8 4 2 11 .

9 F or a n o ve rv ie w o f i ts i mp or ta nc e a s a s ou rc e o f r ev en ue s s ee C at al in a V iz ca rr a, E lm o n o po l i o d e l ta b a c o e n h i s p a no a m er i c a c o l o ni a l , i n L u i s A l o n so A l v a re z , L i n a G al v e z

Muno z a n d S a n t i a g o L u x a n ( e d s . ) , Tabaco e historia economica: estudios sobre fiscalidad consumo yempresa ( s i gl o s X V II XX ) ( M a dr i d, 2 0 06 ) , p p . 2 3 1 4 4.

10 The data employed in these estimates were gathered from extensive records at the ArchivoG e ne r al d e I n di a s ( A GI ) i n S e vi l le a n d t h e A r ch i vo G e ne r al d e l a N a ci on ( A GN ) i n L i ma .M os t o f t he p r im ar y s ou r ce s u se d f or t hi s w or k c ov er t he m on op ol y p er io d u nt il 1 81 3.S o m e d a t a f r o m 1 8 1 4 o n w a r d s a r e a v a i l a b l e a t B i b l i o t e c a N a c i o n a l a n d A G N , b u t t h e y a r eq u i te d i s p e r s e a n d i n c o mp l e te.

Bourbon Intervention in the Peruvian Tobacco Industry, 17521813 569


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widely held view that the PeruvianEstanco p r od u c ed m e ag r e r e ve n ue s , a n d

was, overall, a failure.11

N ot wi th st an di ng , t he e xp la na ti on o f h ow t he B ou rb on s m an ag ed t o

c o n t r o l s u c h a d y n a m i c i n d u s t r y r e m a i n s e l u s i v e . I n p a r t i c u l a r , t h e d i s p e r s i o n

of t ob ac co p rod uc ti on an d i ts g re at s ig ni fic an ce f or d om est ic m ar ke ts

u nd er sc or e t he c ha ll en ge s o f c on tr ol li ng s mu g gl er s a nd i l le ga l p ro du ce rs .

H o w d i d B o u r b o n b u r e a u c r a t s m a n a g e t o e n f o r c e r e g u l a t i o n s i n s u c h a l a r g e

a nd v ar ie d i nd us tr y a nd g en er at e s iz ea bl e r en ts ? B as ed o n a n a na ly si s o f

m on op ol y p ol i ci es , t hi s a rt i cl e s ug g es t s t ha t B ou rb on o ffic ia ls h ad a g oo d

u nd er st an di ng o f t he m an ag er i al c ha ll en ge s o f t he i nd u st ry a nd d ev el op ed

s en si bl e s tr at eg ie s t o a dd r es s t he m. T he s uc ce ss o f t he P e ru vi an m on op ol y

o we d a s m uc h t o t he fi rm p ol it i ca l w i ll o f J os e d e G al v ez ( M in is te r o f t he

I nd ie s f ro m 1 77 6 t o 1 78 7) a s t o t he s ki l fu l h an dl i ng o f c on tr ab an d.12

I t t o o k a n u m b e r o f y e a r s f o r t h e P e r u v i a n m o n o p o l y t o a c h i e v e i t s p e a k .S oo n a ft er i ts i ns ti tu ti on i n 1 75 2, t he m on op ol y t oo k c on tr ol o f t ob ac co

p ro du ct i on a nd d is tr i bu t io n, t hu s a ss um in g t he p ow er t o d et er mi ne o ut pu t

q uo ta s a nd p ri ce s. I n t he se y ea rs , h ow ev er , t he Estanco d id n ot p ro vi d e t he

fi s ca l b o na n za t h at w a s a n ti c i pa t ed . I t w a s o n ly l a te r , u n de r G al v e z, t h at t h e

m on op ol y w as r ef or me d w it h t he i nt ro du ct ion o f a nu mb er o f po li ci es

Table 1. Fiscal Revenues in the Viceroyalty of Peru, 17501809 (annual averages, pesos)

Mining Trade Tributo*

TobaccoMonopoly

Revenues

TobaccoMonopoly

N e t R e v .

1750 59 178,438 453,722 350,210 325,164 141,2461760 69 260,612 838,813 496,327 400,000 163,7971770 79 309,843 794,619 278,895 414,314 183,0691780 89 562,924 798,014 983,030 920,875 375,9521790 99 867,219 1,076,197 671,384 268,9541800 09 771,127 980,769 643,771 291,170

* H ea d t ax l ev ie d o n t he I nd ia n p op ul at io n.Sources: D at a f or t he P er uv ia n t ob ac co m on op ol y c om pi le d f ro m t he Estados del Estanco,AGI, Lima 704, 766, 1102, 1112, 1228, 1229, 1230, 1231, 1232, 1233, 1234, 1236, 1237, 1238,

1 2 4 2 , 1 2 4 3 , 1 2 4 5 a n d C h i l e : 3 6 8 , 3 6 9 . T h e d a t a h a v e b e e n a d j u s t e d b y c h a n g e s i n i n v e n t o r i e s .The remaining columns come from Klein, The American Finances of the Spanish Empire: RoyalIncome and Expenditures in Colonial Mexico, Peru, and Bolivia, 16801809 (A l bu q u e r qu e , 1 9 9 8 ),c h a p . 3 .

11 The net revenue figures underestimate the importance of tobacco income. We should keep

i n m i n d t h a t a l l o t h e r r e v e n u e s l i s t e d i n T a b l e 1 a r e p r e s e n t e d i n g r o s s t e r m s . I n n e i t h e r c a s eh a ve b u re a uc r at i c c o st s b e en s u bt r a ct e d. S e e J a co b se n a n d P u hl e ( e d s. ) , The Economies of Mexico and Peru, p . 2 3 , f o r a n a l te r na t iv e a s se s s me n t o f t h e P e r u v ia n m o no p ol y .

12 G al v ez s e n t er p ri s e l e d t o t h e e x t en s io n o f s t at e i n te r ve n ti o n i n t h e i n du s tr y i n t e rm s o f g eo gr ap hi ca l l oc at io n ( it i s i n t he se y ea rs t ha t t he Estanco b e ca me o mn ip re se nt i n t her e g i o n ) , a n d t o a h i g h e r d e g r e e o f c o n t r o l . F o r a d i s c u s s i o n s e e V i z c a r r a , E l m o n o p o l i o d e lta b a c o .



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a im ed a t i nc re as in g r ev en ue s a nd c on tr ol li ng c on tr ab an d, i nc lu di ng t he

c en tr al i sa ti on o f m an uf ac tu re . A s F i gu re 1 s ho ws , t he y ea rs o f t he G al ve z

r e f o r m s ( 1 7 8 0 1 7 9 1 ) w e r e t h e m o s t s u c c e s s f u l i n t h e e x t r a c t i o n o f r e v e n u e s .

H ow ev er , t he r i se i n r ev en ue s w as n ot t he p ro du ct o f c en tr al i sa ti on p er s e

( t he e st ab li sh me nt o f f ac to ri es d i d n ot i m pl y m aj or c ha ng es i n t ra ns fo rm -

a ti on c os ts ), bu t r at her r es ul te d f ro m a m or e e ffe ct iv e co nt rol o f i ll eg al

m a rk e ts i n c o mb i na t io n w i t h h i gh e r p r ic e s.13

The archival evidence, including correspondence among high-ranking

o ffic ia ls , i nd ic at es t ha t t he B ou rb on s v ie we d t he c en tr al is at io n o f m an u-

f act ur e a s a m ea ns t o e xe rt be tt er c on tr ol o ve r t he fl ow of t ob ac co a nd

t ob ac co p ro du ct s, a nd t o e co no mi se o n t he c os t s i nv ol ve d i n m on it or in g

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

1770

1772

1774

1776

1778

1780

1782

1784

1786

1788

1790

1792

1794

1796

1798

1800

1802

1804

1806

1808

1810

1812

Pesos

F ig . 1 . Net Revenues of the Peruvian Tobacco Monopoly, 17701813. S o u r c e : The data comes from theE s ta d os d e l E s t a n co ( see Table 1). Revenues were adjusted by changes in inventories and administrativechanges in the viceroyalty in order to be able to compare with more accuracy the yields in the different phasespre-factory, factory, and post-factory periods. The data have been corrected for the separation of the viceroyalty ofRo de la Plata and the captaincy-general of Chile in 1776 and 1786 respectively, and the addition of Guayaquilin 1807. Guayaquil revenues have been subtracted from the total for the years 180710, but they are includedthereafter because they were no longer separately distinguished. Between 1807 and 1810 these revenues averaged

around 20,000 pesos annually. Adjustments have been made for Chile by subtracting revenues from the Chileanadministration and adding to the Peruvian accounts the revenues received by the Peruvian viceroyalty fromtobacco sales to Chile. Starting in 1794, there is no data on Chilean consumption, so the revenue figures includethe tobacco sent to Chile rather than that consumed. This implies that from 1794 Peruvian revenues areoverestimated.

13

This finding is significant for the historiography because an important portion of ourk n o w l e d g e a b o u t t h e S p a n i s h A m e r i c a n e c o n o m i e s i s b a s e d , i n o n e w a y o r a n o t h e r , o n t h eTreasury accounts. If contraband had been as pervasive as so many scholars suggest, itwould be necessary to be quite suspicious of some of the general conclusions drawn fromt h e o ffi c i a l r e c o r d s . N o n e t h e l e s s , t h i s r e s u l t s h o u l d b e t r e a t e d w i t h s o m e c a u t i o n . I t r e f e r se x cl u si v el y t o t h e G al v e z e r a . A s n o te d l a te r , a r ch i va l e v id e nc e s u gg e st s t h at i n t h e e a rl y e i gh t e en t h c e nt u ry t a x e v as i on w a s r a mp a nt .



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t he d ai ly a ct i vi t ie s o f w or ks ho p m an ag er s a nd fi na l r et ai l er s.14 The states

a nt i- co nt ra ba nd p ol i ci es , h ow ev er , w en t w el l b ey on d t he c en tr al i sa ti on o f

m a n u f a c t u r e , a ff e c t i n g t h e i n d u s t r y a t a l l l e v e l s , i n c l u d i n g t o b a c c o p r o d u c t i o n

a nd d is tr ib ut io n. T he m on op ol y i nt ro du ce d h ig he r p ur ch as e p ri ce s f ort o ba c co l e af a n d m a de p r od u ct i on q u ot a s c o nd i t io n al o n p l an t er s p e rf o rm -

a n c e . I t a l s o i n c r e a s e d t h e s e v e r i t y o f p u n i s h m e n t s f o r s m u g g l e r s a n d a d d e d

t o t he n um be r o f m on op ol y p ol ic e i n t he p ro vi nc es , m ak in g c on tr ab an d

t r ad e m o re c o st l y. T h e r e su l t w a s h i gh e r r e ve n ue s .

The reforms, however, were short-lived. The evolution of monopoly

p o lic ie s de mo n s tr a te s imp o r ta n t limits to th e C r o w n s r e v e n u e - r a is in g e ff o r ts

f ro m t he 1 79 0s o nw ar ds . I n p ar ti cu la r, t he P er u vi an t ob ac co f ac to ri es w er e

c l o s e d , i n s p i t e o f t h e i r fi n a n c i a l s u c c e s s , a s a r e s u l t o f C h a r l e s I V s c a u t i o u s

a p pr o ac h t o c o lo n ia l a d m in i st r at i o n i n t h e t u rb u le n t y e ar s t h at f o ll o we d t h e

d e at h o f G al v e z a n d C h ar l es I I I. A l th o ug h t h is a r ti c le c a nn o t c l ai m t o p r o-

vide a definitive account of the rationale of the counter-reform, it does

p r es e nt e v id e nc e t h at s u g ge s ts t h at p o li t i ca l c o ns i d er a ti o ns e x pl a in , a t l e as t

i n p ar t , t he d ra ma ti c c ha ng e i n p ol ic ie s r eg ar d in g C ro wn m on op ol i es t ha t

o c c u r r e d i n t h e l a s t d e c a d e s o f t h e e m p i r e .

The origins of the Estanco

The Royal Order that authorised the creation of the Real Estanco i n P er u

g ra nt ed V ic er oy J os e A nt on io M an so d e V el as co f ul l d is cr et io n o ve r t he

d es ig n o f p ol ic ie s. A s a r es ul t , t he V ic er oy r eq ue st ed T om as C ha va qu ey

H er re ro s, a p ro mi ne nt a cc ou nt an t o f t he T ri bu na l d e C ue nt as i n L im a,

t o u n d e r t a k e a s t u d y o f t h e i n d u s t r y a n d t o f o r m u l a t e a p l a n w i t h a l t e r n a t i v e

r e gu lato r y o p tion s .15

C ha va qu e r ep or t ed t ha t t ob ac co c on su mp ti on w as e xt en si ve a mo ng t he

white population at the time. An important proportion of tobacco leaf

c on su me d i n t he P er uv ia n r ea lm , a pp ro xi ma te ly 8 00 ,0 00 mazos a year,

was produced in the northern coastal province of Sana.16 Nonetheless,

t o b a c c o o f b e t t e r q u a l i t y w a s p r o d u c e d i n t h e A n d e a n p r o v i n c e s o f J a e n d e

14 The costs of monitoring employees and protecting property are viewed by some scholars asb e in g l o we r i n a f a c to r y e n vi r on m en t t h a n u n d e r a n a l te r na t iv e s u b- c on t r ac t in g o r s y s te mo f p ut t in g- ou t t o a rt is an s. T he c a se o f t he P er uv ia n t ob ac co f ac t or ie s i s c on si st e nt w it ht h i s v i e w . S e e O l i v e r W i l l i a m s o n , T h e O r g a n i s a t i o n o f W o r k : A C o m p a r a t i v e I n s t i t u t i o n a l

Assessment ,Journal of Economic Behavior and Organisation, v o l . 1 , n o . 1 ( 1 9 8 0 ) , p p . 5 3 8 . F o ra lt e rn at iv e p oi nt s o f v ie w, s ee S te ph en M ar gl in , W ha t d o B os se s D o ? T he O ri gi ns a ndF un ct io ns o f H ie ra r ch y i n C ap it al is t P ro du ct io n , i n A nd re G or z ( ed .) , The Division of Labour : The Labour Process and Class-Struggle in Modern Capitalism ( L o n d o n , 1 9 7 6 ) , a n d D a v i d

L an de s, W ha t D o B os se s R ea ll y D o ? , Journal of Economic History, v ol. 46 , no . 3 ( 19 86 ),p p . 5 8 5 6 2 3 . 15 R e po r t o f T h om a s C h a v a qu e y H e rr e ro s , A G I, L i ma 1 2 29 .

16 Mazos w e r e s m a l l r o l l s o f t o b a c c o l e a f , t y p i c a l l y w e i g h i n g b e t w e e n 1 5 a n d 2 4 o u n c e s .



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B r ac a mo r os a n d C h ac h ap o ya s , w h ic h h a d a n e s ti m at e d a n nu a l p r od u ct i on

o f a bo ut 3 80 ,0 00 mazos. A s d es cr ib ed i n T ab le 2 , t he v ic er oy al ty a ls o c on -

s u m e d l a r g e q u a n t i t i e s o f s n u ff t o b a c c o i m p o r t e d f r o m H a v a n a a n d M e x i c o ,

a s w e l l a s t o b a c c o l e a f f r o m H a v a n a a n d G u a y a q u i l .Tobacco was generally consumed in the form of cigarettes, cigars and

limpiones.17 The most important consumption centres were Lima and the

G o be r na c ion d e C h il e . L i ma a c co u nt e d f o r a b ou t 4 0 p e r c e nt o f t h e m a rk e t,

f o llow e d b y C h ile (S a n tia go a n d C o n c ep c ion ), w h ic h to o k a r o u nd 3 5 p e r c e n t.

O t h e r i m p o r t a n t c e n t r e s w e r e A r e q u i p a , w i t h a m a r k e t s h a r e o f a b o u t 7 p e r

c e n t , a n d P o t o s a n d C u z c o w i t h 5 p e r c e n t e a c h .18 C h ile a n s c o n s u me d S a na

t o b a c c o a n d s n u ff e x c l u s i v e l y . A l l t h e o t h e r r e g i o n s c o n s u m e d t o b a c c o f r o m

C ha ch ap oy as , G ua ya qu i l a nd H av an a.19 This consumption pattern was

ma in ta in e d, w ith s ligh t v a r ia tio n s , th r o u gh o u t th e mo n o p o ly p e r io d.

C h a v a q u e s a c c o u n t o f t h e i n d u s t r y a l s o d r e w a t t e n t i o n t o t h e h i g h l e v e l o f

c o n t r a b a n d . T h e c o l o n i a l s t a t e c h a r g e d b o t h t h ealcabala a n d t h ealmojarifazgo

o n t he t ob ac co t rad e i n t he se ye ar s. B y co mp ar ing t he a mo unt of l eg al

t ra de w it h C ha va qu e s e st im at es o f t ot al t ob ac co c on su mp ti on , i t s ee ms

t h a t a r o u n d 7 0 p e r c e n t o f t o b a c c o w a s t r a d e d i l l e g a l l y . A s s h o w n i n T a b l e 2 ,

t he a ve ra ge a mo un t o f t ax es c ol l ec te d a nn ua ll y b et w ee n 1 72 5 a nd 1 74 3 w as

n o m or e t ha n 1 1, 00 0 p es os i n t ot al .20 C ha va qu e b el ie ve d t ha t a m on op ol y

o ve r t he t ob ac co i nd us tr y w ou l d i nc re as e r ev en ue s b ec au se i t w ou l d e na bl et he s ta te t o e xe rt b et t er c on tr ol o f c on tr ab an d a nd c ha rg e a h ig he r t ax r at e,

c o m m e n t i n g t h a t i t w o u l d p r o v i d e :

_a t oo l w it h w hi ch i t w il l b e p os si bl e t o d et er t he d ef ra ud in g o f t he R oy al R ig ht s

a nd a t t he s am e t im e a ch ie ve a s iz ea bl e i nc re as e t o t he R ea l H ac ie nd a. T hi s c an b ea ch ie ve d t hr ou gh t he e st ab li sh me nt , a t t he e xp en se o f H is Ma je st y, o f a R oy alM on op ol y o f a ll t yp es o f t ob ac co t ha t t hi s R ea lm p ro du ce s i nc lu di ng t he i mp or tso f t ob ac co f ro m M ex ic o a nd f ro m t he i sl an d o f H av an a, i na sm uc h l ea f a s s nu ff.This will result in annual revenues for His Majesty equal to 1,088,664 pesos

61

4 reales.21

17 L i m p i o n e s w e r e s m a l l b u n d l e s o f c h e w i n g t o b a c c o , a b o u t o n e i n c h l o n g .18 E s t i m a t e d f r o m E x t r a c t o q u e d e m u e s t r a , A G I , L i m a 1 2 3 6 - B .19 S l a v e s i n P e r u c o n s u m e d t o b a c c o p r o d u c e d i n S a n a.20 Tax rates did not exceed 0.05 reales permazo a n d d i d n o t c h a n g e t h r o u g h o u t t h e p e r i o d . A s

a w a y o f c o m p a r i s o n , f r o m 1 7 4 6 t o 1 7 5 0 , t h e t o t a l r e v e n u e s o f t h e R o y a l T r e a s u r y i n L i m awere 8,283,468 pesos : see John Te Paske, General Tendencies and Secular Trends in theE co no mi es o f M ex ic o a nd P er u, 1 75 0 1 81 0 : T he V ie w F ro m t he Cajas o f M ex ic o a ndL i m a , i n J a c o b s e n a n d P u h l e ( e d s . ) ,The Economies of Mexico and Peru, p . 3 3 7 .

21

C h av a qu e s e s t im a ti o ns w e re o v er l y o p ti mi s ti c . D u ri n g t h e m o no p ol y p e ri o d n e t r e ve n ue sf o r t h e C r o w n w e r e r a r e l y g r e a t e r t h a n 5 0 0 , 0 0 0 p e s o s . T h e r e w e r e t h r e e m a i n fl a w s i n h i sc a lc u la t io n s. F i rs t , h e a s su m ed t h at t o ba c co s m ug g li n g w o ul d v a ni s h w i th t h e c r ea t io n o f the Estanco. S ec on d, t he fi na l p r ic es h e c on si de re d i n h is c al cu la ti on s w er e m uc h g r ea te rt ha n p re -m on op ol y p ri ce s, y et h is e st im at es a ss um ed t he s a me l ev el o f c on su mp ti on a sb ef or e t he e st ab li sh me nt o f t he m on op ol y. F in al ly , h e d id n ot a cc ou nt f or b ur ea uc ra t icc o st s . R e po r t o f T o mas C h av a qu e y H e rr e r os , p . 3 .



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Table 2. Tobacco Industry and Colonial State Revenues in the Viceroyalty of Peru, 1725

San a(leaf/mazos)

Jaen deBracamoros

(leaf/mazos) (1)Guayaquil

(leaf/manojos)Havan

(leaf/man

Lega l Consumption 208,162 96,685 62,124 8,17Total Consumption (estimates) (2) 800,000 380,000 185,000 53,00C o s t a t p r o d u c t i o n a r e a s ( reales/unit) (3) 0.2 0.24 1.5 2.5Transportation costs to Lima (reales/unit) 0.26 0.40 0.66 2.42

Total Cost 0.46 0.64 2.16 4.92F i n a l P r i c e s i n L i m a ( reales/unit) 12 1.254 3 6 10 1Total Tax (reales) 4,163.24 2,900.55 1,863.72 259.53

Source: B a se d o n T o mas C h av a qu e y H e rr e ro s r e po r t, 1 7 46 , A GI , L i ma 1 2 29 .( 1 ) T o b a c c o o f t h i s k i n d w a s a l s o p r o d u c e d i n L u y a a n d C h i l l a o s ( C h a c h a p o y a s ) . I n t h e r e c o r d s a n y t o b a c c o b r

Jaen de Bracamoros. Total production in Chachapoyas (Luya and Chillaos) was 80,000 and in Jaen de Bracamoron e ar b y p r ov i nc e o f M o yo b am b a. T h is a r e a p r od u ce d a p pr o xi m at e ly 1 0 0, 0 00 mazos. L e ga l c o ns u mp t io n f r om were 58.68 pesos. The figures include data of the three areas.

( 2 ) T h es e a r e C h av a qu e s e s t im a te s .( 3 ) 8 reales i s e q u i v a l e n t t o a p e s o .


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C h a v a q u e p r e s e n t e d h i s r e p o r t t o t h e V i c e r o y i n 1 7 4 6 , b u t t h e i n s t i t u t i o n o f

the Real Estanco c am e s ix ye ar s l at er , o n 24 Ap ri l 1 75 2. Ac cor di ng t o t he

viceroy its establishment was delayed due to the disruption caused by an

e a r t h q u a k e i n L i m a i n t h e s a m e y e a r a s t h e r e p o r t w a s c o m p l e t e d . 22

The early years

The first Administracion General f or t he m on op ol y w as i ns ti tu te d i n L im a.

S h o r t l y a f t e r w a r d s , t h e m o n o p o l y e s t a b l i s h e d t h eAdministraciones Generales of

S a n tiago , T r u jillo , C u z c o, A r e q u ip a , H u a ma nga , C o n ce p c ion , A lto Pe r u and

Ro d e La Pl at a.23 All spheres of the industry were tightly regulated. The

r eg ul at io ns f ol lo we d t ho se o f t he S pa ni sh t ob ac co i nd us tr y c lo se ly . T he

h ig he st a dm i ni st r at i ve a ge nc y w as t he Real Junta de Tabaco. I ts p er ma ne nt

m em be rs c om pr is ed t he v ic er oy , w ho p re si de d o ve r i t, a m em be r o f t he

C hu rc h, a nd t he d ir ec to r o f t he Estanco. T h e Tribunal de la Direccion General

( a n a l o g o u s t o a n e x e c u t i v e c o m m i t t e e ) w a s f o r m e d b y t h e Estancos director,

i t s g e ne r al a c co u nt a nt , a n d t h e t r ea s ur e r .24

The state determined all prices and fixed agricultural production quotas.

L ic en se d p la nt er s w er e c om pe ll ed t o s el l a ll t he ir p ro du ct i on t o t he m on o-

p ol y. T he t ob ac co l ea f w as l at er t r an sp or t ed b y l ic en se d m ul e d r iv er s f ro m

t h e p r o d u c t i o n a r e a s t o t h e m a i n c o n s u m p t i o n c e n t r e s a n d s t o r e d a t m o n o -p ol y w ar eh ou se s. T he fi na l s al es o f t ob ac co l ea f a nd s nu ff w er e e nt ru st ed

t o l i c e n s e d r e t a i l e r s ( estanqueros) who earned a commission of between 5 and

1 0 pe r c ent o f t ot al s al es . A t t hi s e ar ly s ta ge t he m an uf ac tu re of t oba cc o

p r o d u c t s w a s l e f t i n t h e h a n d s o f a r t i s a n s , w h o t r a d i t i o n a l l y p r o d u c e d c i g a r s ,

c iga r ette s a n dlimpiones f o r do me s tic c o n s ump tio n.25

I ni ti al ly , t ob ac co p la nt er s r em ai ne d i n t he i nd us tr y a nd f or t he m os t

p a rt m a in t ai n ed t h ei r p r e- m on o po l y m a rk e t s h ar e s. I n a d di t i on , t h e c o lo n ia l

s ta te s et p ur ch as e p ri ce s h ig he r t ha n p re -m on op ol y l ev el s. I n 1 75 6, f ore xa mp le , t he a ve ra ge p ur ch as e p ri ce s f or bracamoro t ob ac co a nd f or S ana

l ea f w er e a ro und 0. 3 an d 0. 28 reales per mazo respectively.26 There were

d iff er en ce s i n t he a dm in is tr at io n o f t he t wo p ro du ci ng a re as , w hi ch w er e

t o a g re at e xt en t s ha pe d b y t he ir c on tr as ti ng f ac to r e nd ow me nt s. I n t he

p ro vi nc e o f S ana , w hi ch w as l oc at ed o n t he P er uv ia n c oa st a bo ut 7 00 k il o-

m et re s n or th o f t he c ap it al , t he p la nt er s i nc lu de d hacendados w ho o wn ed

l ar ge e xt en si on s o f l an ds , m ed iu m- si ze p la nt er s w ho e it he r p ro du ce d o n

their ow n lands or rent ed lands from t he hacendados, a nd s ma ll f ar me rs ,

22 S ee M an ue l A . F ue nt es ( e d. ), Memoria de los virreyes que han gobernado el Peru, v o l . 4 ( L i m a ,1 8 5 9 ) , p . 2 3 9 . 23 C es p e de s d e l C a st i ll o , L a r e nt a d e l t a ba c o , p . 1 3 9.

24 Theordenanzas o f 1 7 5 9 a r e i n A G I , L i m a 1 2 2 9 . 25 Ibid.26 As described in Table 2, costs in production areas were 0.2reales permazo for Sana leaf and

0.24 reales per mazo f o r B r ac a mo r o t o ba c co i n t h e p r e- m on o po l y p e ri o d.



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I nd ia ns a nd p oo r mestizos w ho c ul ti va te d t he ir l an d b y t he ms el ve s. T he

l ar ge st pr od uc ti on q uot a i n S ana in the 1760s w as 20,571 mazos.27 In

C ha ch ap oy as , o n t he o th er h an d, w hi ch w as a ls o l oc at ed i n t he n or th er n

r eg io n, b ut o n t he t r op ic al e as te rn s id e o f t he A nd es , a pp ro xi ma te ly 1 ,2 00k il om et r es f ro m L im a, m os t p la nt er s w er e I nd i an s a nd p oo r mestizos, w ho

r a re l y h a d p r od u ct i on q u ot a s e x ce e di n g 2 , 00 0mazos. T o ba c co c u lt i va t i on i n

Sana w as n ot o nl y c on ce nt ra te d i n a m uc h s ma ll er g eo gr ap hi ca l a re a t ha n

i n C h a c h a p o y a s , b u t i t w a s f a r c l o s e r t o r e l i a b l e a n d w e l l f r e q u e n t e d t r a n s p o r t

a r te r ie s . M a ri n e t r an s po r t w a s a v i ab l e m e an s o f t r an s po r ti n g t o ba c co f r om

Sana t o L i m a a n d f a r t h e r s o u t h t o C h i l e , w h e r e a s t h i s w a s n o t a n a l t e r n a t i v e

i n C ha ch ap oy as . F ro m C ha ch ap oy as , m u le s w er e t he o nl y p ra ct i ca l m ea ns

o f c ar ry in g l ar ge q ua nt it ie s o f t ob ac co o ve r t he m ou nt ai n p as se s a nd t he

s e v er a l da n ger o u s r iv e r c r o s sin gs .28

In Sana the factora o ri gi na ll y h ad o nl y o ne e mp lo ye e, t he factor who,

t og et he r w i th p la nt er s r ep re se nt at iv es , w as i n c ha rg e o f m on it or in g p ro -

d uc ti on i n t he r eg io n. T he y o rg an is ed t he r em it ta nc es o f t ob ac co l ea f t o

L im a, d is tr ib ut in g r ec ei pt s a mo ng l eg al p ro du ce rs , w hi ch e nt it le d t he

pl ant er s t o s el l t hei r pr od uct t o t he Direccion General. The Administracion

General p a i d t h e m i n c a s h s h o r t l y a f t e r t h e i r q u o t a o f t o b a c c o w a s d e p o s i t e d

a t t h e w a r e h o u s e i n L i m a . I n C h a c h a p o y a s , i n c o n t r a s t , t h e c o n t r a c t b e t w e e n

the cosecheros a nd t he c ol on ia l s ta te w as m u ch m or e h ie ra rc hi ca l. T he re w asn o r ol e f or p la nt er s r ep re se nt at iv es , l ea vi ng t he factor i n c ha rg e o f m os t

a dmin is tr a tiv e de c is io n s . T h efactor de c ide d p r o du c tio n q u o ta s a n d o r ga n is e d

t r a n s p o r t a t i o n o f t h e p l a n t t o L i m a .29

The monopoly expanded considerably in the years of Viceroy Amat

( 1 76 1 1 7 76 ) , e s pe c ia l ly u n de r t h e d i r ec t io n o f F e ij o o d e S o sa ( 1 76 7 1 7 74 ) .

I n t he se y ea rs , t he a dm in is tr at io n w as s tr en gt he ne d b y t he e xp an si on o f

t he b ur ea uc ra cy i n t he p ro du ct i on a re as a nd n ew estanquillos (fi n al r e ta iler s )

i n L im a a nd o th er p ro vi nc es . I n 1 76 7, f or e xa mp le , s ev en n ew e mp lo ye es(oneguarda mayor a n d s i xguarda veedores) were hired to control the production

pr oce ss i n Sa na . T he re w er e a ls o a nu mbe r o f i ns ti tu ti on al c han ge s i n

C h ac h ap o ya s , w h er e n e w o ffi ci a ls w e re e m pl o ye d t o s u pe r vi s e f o ur a r ea s o f

p r od u ct i on i n t h e r e gi o n : S e su y a, C h il l ao s , S i pa s ba m ba a n d G u ay a ba m ba .30

B y t he e nd o f A ma t s a dm i ni st r at i on t he Estanco h a d e s ta b li s he d t w oJuntas

Generales ( o n e i n L i m a , a n d t h e o t h e r i n C h i l e ) , t e n Administraciones Generales,

35Administraciones Particulares, 1 6 0estanquillos a n d 2 factoras.31

27 S e e E s c o b a r , E l t a b a c o e n e l P e r u , a p p e n d i x , p . X I I .28 Factor o f C h ac h ap o ya s t o Direccion de la Renta, J u ly 1 78 7, A GN , C -1 4, legajo 1 8. A ls o s ee ,

R ep ar os q ue r e su lt a n d e l as l is t as d e s em br ad or es d e t a ba co s r em it id as p or e l f ac to r d eC h ac h ap o ya s D n . B a lt a s ar C o ll a nt e s , 1 7 71 , A GN , C - 14 , legajo 617.

29 Otermn s r e p o r t t o G i l , J u l y 1 7 9 0 , A G I , L i m a 1 2 2 8 . . 30 Ibid31 S e e C es p e de s d e l C a st i ll o , L a r e nt a d e l t a ba c o , p p . 1 4 7 5 1.



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I n s pi te o f t he i mp ro ve d a dm in is tr at i on , l eg al p ro du ct i on d i d n ot c ha ng e

s ig ni fic an tl y i n t he p er iod . N et r eve nu es f or t he C row n i nc re ase d on ly

m ar gi na ll y. T he l at te r fl uc tu at ed f ro m a n a ve ra ge o f 1 41 ,2 46 p es os i n t he

fi rs t d ec ad e o f t he Estanco t o a n a ve ra ge o f 1 83 ,0 69 p es os i n t he 1 77 0s .32

N on et he le ss , t he n et r ev en ue s o f t he m on op ol y c on st i tu t ed a g oo d p or t io n

o f t he v al ue a dd ed o f t he i nd us tr y e ve n a t t hi s e ar ly s ta ge , w hi ch , a s s ho wn

in Table 1, was the least profitable for the Crown. On the basis of

C ha va qu e s fi gu re s i t c an b e e st i ma te d t ha t t he i nd us tr y s v al ue a dd ed w as

a bo ut 6 52 ,8 17 p es os a nn ua ll y i n t he l at e 1 74 0s . N et m on op ol y r ev en ue s

were equivalent to around 21.6 per cent of this figure, which signals a

r e la tiv e ly e ff e c tiv e a dmin is tr a tion .33

Galvezs reform and the battle against contraband

A critical turning point in the administration of the Estanco c am e i n 1 77 6,

with the appointment of Jose de Galvez as Minister of the Indies. Shortly

a f te r ta k ing o ffi c e , Galv e z s e n t visitador J o se A n to n io d e A r ec h e t o L i ma t o

e v al u at e t h e P e r uv i an R e al H a ci e nd a a n d o t he r r e ve n ue - ge n er a ti n g a g en c ie s .

The viceroyalty was facing a deep financial crisis at the time due, among

o t h e r r e a s o n s , t o t h e a d m i n i s t r a t i v e s e p a r a t i o n o f t h e v i c e r o y a l t y o f R o d e l a

P l at a. P ub li c o ffic ia ls w er e t hu s u nd e rs ta nd ab ly e ag er t o i nc re as e r ev en ue s

f r om a n y a v ai l ab l e s o ur c es .

U nd er t he a us pi ce s o f G al ve z a m aj or r ef or m o f t he m on op ol y t oo k

p lac e, w hi ch s tr on gl y e nd or se d t he ad opt io n of t he M exi ca n s ys te m.34

N ot s ur pr i si ng l y, o ne o f t he t w o d i re ct or s o f t he M ex ic an m on op ol y, J os e

d e l a R iv a Ag uer o, w as as si gn ed t he m is si on of r ef or mi ng t he P er uv ian

Estanco.35 De la Riva and tw o ot her monopol y offici al s arr ived in Peru

i n 1 77 9. T he ir e ar ly r ep or ts e xp re ss ed c on ce rn s a bo ut t he h ig h l ev el s o f

c on tr ab an d i n t he v ic er oy al ty a nd t he ir h op e t ha t, w it h t he c or re ct p ol ic y

32 S e e T a b l e 1 .33 These figures are derived from Table 2, using average final prices for each product. These

a re t he b es t e s ti ma te s t ha t c a n b e o bt ai ne d, a lt ho ug h t he y a re c le ar ly c on ti ng en t o n t h ep r e c i s i o n o f C h a v a q u e s a s s e s s m e n t s , a n d o n t h e a s s u m p t i o n t h a t t h e i n d u s t r y d i d n o t g r o w

s u b s t a n t i a l l y d u r i n g t h e e a r l y y e a r s o f t h e m o n o p o l y .34 G al v e z h i ms e lf h a d p l ay e d a s i gn i fic a nt r o le i n t h e e v ol u ti o n o f m o no p ol y p o li c ie s i n N e w

S pa in . A s visitador general o f M ex ic o, i n t he 1 76 0s , h e h ad b ee n r es po ns ib le f or s ev er ali m po r ta n t p o li c y m e as u re s , i n cl u di n g t h e m o ve t o wa r d c e nt r a li s at i on o f m a nu f ac t ur e : s e eDeans-Smith,Bureaucrats, Planters and Workers, c h a p t e r 1 .

35 D e l a R iv a t o G ar do qu i, M ar ch 1 79 6, A GI , L im a 1 24 2. S ee a ls o O te rm n s r e p o r t t o G i l ,July 1790, AGI, Lima 1228.



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a d ju s tm e nt s , t h e P e ru v ia n m o no p ol y w o ul d p r od u ce r e ve n ue s c o mp a ra b le

t o t h o s e i n M e x i c o .36

The reform of the Estanco, w hi ch t oo k t he c om m is si on er s a ss es sm en ts

a s i ts p oi nt o f d ep ar t ur e, c on si st ed o f s we ep in g c ha ng es t ha t i nc lu de d t hec en tr al is at io n o f m an uf ac tu re a nd a f ul ly r en ew ed a dm in is tr at io n o f t he

p ro du ct i on a re as . T he c en tr al i sa ti on o f m an uf ac tu r e w as c on ce iv ed o f a s

t h e c o rn e rs t on e i n t h e s t at e s b a tt l e a g ai n st c o nt r ab a nd .37 I n a le tte r to J o s e

de Galv e z , a S p a n is h p u b lic o ffi c ia l dis c u ss e d h o w _

to b a c c o a llo w a n c e s to

p r od u ce r s o f limpiones and c ig ar et tes w il l a lw ay s s er ve as a c loa k f or t he

g r ow t h o f c o nt r ab a nd .38 The director of the Peruvian monopoly, Alfonso

S a n t a d e O r t e g a , a g r e e d e n t i r e l y w i t h t h i s a r g u m e n t . I n a l e t t e r t o t h e v i c e r o y

h e s us ta in ed t ha t t he s ol ut i on f or t he u nc on tr ol l ab le l ev el o f c on tr ab an d

i n t h e P e r u v i a n v i c e r o y a l t y w a s t o e x p a n d t h e m o n o p o l y t o t h e m a n u f a c t u r e

o f to b a c c o p r o du c ts .39 I n a d d i t i o n , M i g u e l d e O t e r m n , l i k e S a n t a d e O r t e g a ,

t o o k t h e p o s i t i o n t h a t s t a t e m a n u f a c t u r e o f c i g a r s a n d c i g a r e t t e s w a s e s s e n t i a l

be cau se o f t he d iffi cu lt ies of m on it or in g t he w or ksh op s a nd r et ai le rs

stores.40

B ef or e c en tr al is at i on , t he re w er e 8 6 l i ce ns ed cigarreros ( w o rk s ho p m a n-

a ge rs ), a nd a l ar ge r n um be r o f l i ce ns ed r et ai le rs , w ho w er e r eq ui re d t o b uy

t ob ac co l ea f a t m on op ol y w ar eh ou se s. T he j ob o f m on op ol y s up er vi so rs ,

who visited the workshops and retailers stores regularly, consisted ofc h e c k i n g a c c o u n t s a n d i n v e n t o r i e s a g a i n s t t h e m o n o p o l y w a r e h o u s e s b o o k s

( wh ic h r ec or d ed s al es t o a ll w or ks ho p o wn er s a nd t ob ac co a ll ow an ce s t o

a ll r et ai le rs i n t he v ic er oy al ty ). M on it or in g c os ts w er e q ui te h ig h b ec au se

i t w as i mp os si bl e t o d is ti ng ui sh b et we en l eg al a nd i ll eg al t ob ac co a t t he

workshops and retailer stores. Under the new system, the private workshops

were banned and licensed retailers were only allowed to sell manufactured

p ro du ct s. P ac ks o f c ig ar s a nd c ig ar et t es w er e s ta mp ed w i th a s ea l o f o ri gi n

at t he st at e f act or ies . Il leg al m anu fa ct ur er s t hu s fa ced a hi ghe r r is k o f d et ec ti on . S mu gg le rs c ou ld a tt em pt t o d is gu is e t he ir p ro du ct s, b ut t hi s

would be costly.41

36 H i s c o m p a n i o n s w e r e M i g u e l d e O t e r m n ( w h o b e c a m e d i r e c t o r o f t h e P e r u v i a n Estanco in1 7 8 3 ) a n d M a r c o s A l o n s o G a m e r o . B o t h w o r k e d f o r t h e M e x i c a n m o n o p o l y p r i o r t o t h e i ra p po i nt m en t a s D e l a R i va s a s s is t a nt s .

37 D ea ns -S mi th a rg ue s t h at t he re w er e t wo r ea so ns f or c en tr al is at io n i n M ex ic o : p ro fit -a bi li ty , a nd p ro vi si on o f e mp lo ym en t f or t he u rb an p oo r. I n t he P er u vi an d oc um en tst he re a re a n um be r o f r e fe re nc es t o p ro fit ab il it y , b ut s oc ia l c on si de ra t io ns d o n ot fi gu re

prominently. Deans-Smith,Bureaucrats, Planters and Workers, p . 1 4 4 .38 O r ti z d e L a nd a zu r i t o G al v e z, M a dr i d, 2 3 A p ri l 1 7 76 , A G I, C h il e 3 6 9.39 Otermn s r e p o r t t o G i l , J u l y 1 7 9 0 , A G I , L i m a 1 2 2 8 . 40 Ibid.41 These monitoring problems were in some respects analogous to those faced under the

p u tt i ng - ou t s y st e m i n e i gh t ee n th - ce n t ur y E n gl a nd . T r av e ll i ng f r o m s t a ti o n t o s t a ti o n t os u pe r vi s e w o rk e rs i mp l ie d h i gh m o ni t or i ng c o st s . A c co r di n g t o O l iv e r W i ll i am s on , h i er -a rc hy ( t he c en t ra li se d o wn er s hi p o f e qu ip me nt a nd i nv en t or ie s, t og et he r w it h c lo se



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Monitoring costs at the state manufactories

D e s p i t e t h e i m p r o v e m e n t i n t h e c o n t r o l o f t h e fl o w o f t o b a c c o a n d t o b a c c o

p ro du ct s, t he f ac t or ie s c re at ed n ew c ha ll en ge s. F ac to ry w or ke rs h ad t o b e

m on it or ed c lo se ly a nd o ffe re d t he r i gh t i nc en ti ve s i n o rd e r t o a ss ur e g oo da nd f ai th fu l p er fo rm an ce . M on op ol y o ffic ia ls w ho w er e a wa re o f t he se

m on it or i ng p ro bl em s i ns ti tu t ed a n um be r o f i nc en ti ve s t o r ed u ce t he c os ts

o f s u p e rv is ion .

The monopoly established two factories, one in Lima and another in

Trujillo. The latter was created in order to manufacture tobacco products

f or t he D io ce se o f T r uj il l o, w he re t he p ro du ct i on a re as w er e l oc at ed , s o a s

t o s av e i n t ra ns po rt at io n c os ts .42 The factory in Lima produced cigars,

c iga r ette s a n dlimpiones f o r t h e r e s t o f t h e P e r u v i a n v i c e r o y a l t y .43

Productionwas organised in five offices : grinding (labor del picado), manufacture of

c i ga r et t es , m a nu f ac t u re o f c i g ar s , m a nu f ac t ur e o f limpiones, a n d t h e w o m e n s

o ffic e ( wh ic h p ro du ce d c ig ar et te s) . A n a dd it io na l o ffic e w as i n c ha rg e o f

p ac ki ng a nd s ta mp in g. T he re w as a c hi ef s up er vi so r ( fiel ) f or ea ch m aj or

o ffic e, w ho s up er vi se d t he w or k o f t he f or em en /w om en ( sobrestantes). Each

sobrestante o rg ani se d a nd m on it or ed hi s o wn g ro up o f w or ker s, m os t o f

whom were piece-workers. A certain degree of division of labour took place

i n t he pr od uc ti on o f c ig ar et tes , b ut n ot i n t he p rod uc ti on o f c ig ar s a ndlimpiones. T he p ro du ct i on o f c ig ar et t es s ta rt ed i n t he g r in di ng o ffic e, w he re

l ea ve s w er e s el ect ed an d t he n g ro und i n or der t o p rep ar e t hem f or t he

r ol le rs . T he c ig ar et t e r ol l er s w er e i n c ha rg e o f c ut t in g t he p ap er a nd r ol l in g

t he c ig ar et tes . T he s tam pi ng a nd pa cki ng o ffice w as t he l ast s top i n t he

p r o du ctio n c h a in.

D i s c i p l i n e w a s a n i m p o r t a n t f e a t u r e o f t h e o r g a n i s a t i o n o f w o r k w i t h i n t h e

t ob ac co f ac to ri es . A c ri ti ca l p oi nt t o s tr es s h er e i s t ha t d is ci pl in e w as n ot

i n s t i t u t e d f o r c o o r d i n a t i o n p u r p o s e s o r a s a m e a n s t o e x t r a c t g r e a t e r l e v e l s o f

work effort, but to improve the administrations capacities to control quality

s u p e r v i s i o n a n d d i s c i p l i n e ) d i s p l a c e d o th e r f o r m s o f o r g a n i s a ti o n b e c a u s e i t e c o n o m i s e d o nt r a n s a c t i o n c o s t s . I n W i l l i a m s o n s v i e w , t h e p u t t i n g - o u t s y s t e m w a s g r a d u a l l y r e p l a c e d b y am o r e e ffi c i e n t s y s t e m b a s e d o n a g r e a t e r d e g r e e o f c o n t r o l : t h e r e d u c t i o n o f e m b e z z l e m e n t a n d s h ir k in g a r e c r uc i al t o i m pr o ve p e rf o rm a nc e , a n d u n de r g r ea t e r d i sc i pl i ne i l le g al m a r-k et s a re l es s l ik el y t o e xp an d. A s m en ti on ed a bo ve , i t w as p re ci se ly t he r ed uc ti on o f m o n i t o r i n g c o s t s t h a t m o n o p o l y o ffi c i a l s h a d i n m i n d w h e n t h e y d e c i d e d t o i n t e g r a t e i n t o

t h e m a n u f a c t u r e o f c i g a r s a n d c i g a r e t t e s : s e e W i l l i a m s o n , T h e O r g a n i s a t i o n o f W o r k .42 N o n e t h e l e s s , t h i s f a c t o r y w a s q u i t e s m a l l . T h i s a r e a p r o d u c e d n o m o r e t h a n 7 t o 8 p e r c e n t

o f t h e m o n o p o l y s r e v e n u e s a t t h e t i m e . I n i t s fi r s t y e a r i t h a d o n l y fi v e e m p l o y e e s . D e l aR i v a t oSuperintendente General de la Real Hacienda, N o v . 1 7 8 1 , A G N , C - 1 4 , l e g a j o 6 2 1 .

43 B y 1 7 8 8 , t h e L i m a f a c t o r y e m p l o y e d 6 2 2 w o r k e r s , 4 7 2 o f w h o m r o l l e d c i g a r e t t e s , w h i l e 1 2 1m a nu f ac t ur e d c i ga r s , a n d 2 9 limpiones. Otermn s r ep or ts t o G il , N o. 1 6 2 1, A GI , L im a1229.



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a n d c o n tr a b a n d.44 All workers, including top employees, had to comply with

a r el at iv el y s tr i ct s ch ed u le . W or k s ta rt ed e ve ry m or ni ng a t 7 a .m .. T ob ac co

a nd p ap er w er e d is tr ib ut ed t o c hi ef s up er vi so rs b y t he fiel o f t he g r in di ng

o ffic e b ef or e 7 :3 0 a .m .. A ft er wa rd s, c hi ef s up er vi so rs d i st ri bu te d t he r aw m at er ia l t o t he ir f or em en , w ho i n t ur n g av e t he m t o t he p ie ce -w or ke rs i n

a cc or d an ce w i th t he ir q uo ta s. A t 1 0 a .m . t he f or em en r ep or t ed t o t he c hi ef

s up er vi so r o n t he fi na l a ll oc at io n o f t he r aw m at er ia l, a nd r et ur ne d a ll t he

t ob acc o t hat w ou ld n ot be u ti li sed t ha t d ay t o t he g ri nd in g offi ce .45 The

r a t i o n a l e f o r s u c h a s t r i c t s c h e d u l e w a s t o c o n t r o l t o b a c c o c i r c u l a t i o n . I t w a s

d i ffi c u l t , u n d e r s u c h a s y s t e m , f o r a n e m p l o y e e t o e m b e z z l e r a w m a t e r i a l , o r

t o a ss ig n t oba cco o f b et te r q ua li ty o r g rea te r q uan ti ty t o a pa rt icu lar

worker or group of workers, for distribution took place simultaneously

a cr os s o ffic es a nd w or ke rs . I n t hi s w ay , t he m on op ol y s ou gh t t o p re ve nt

f r a u d :

N ei t he r i n t he o ffic e o f c i ga r s, n or i n t he o ffic e o f c i ga r et t es , w i ll t he a d mi n is t ra t orp er mi t a ny r es er va ti on o f p ap er o r t ob ac co f or w or ke rs w ho w er e n ot p re se nt a t t he t im e o f t he d is tr ib ut io n ; n ot f ol lo wi ng t hi s r eg ul at io n w ou l d p er mi t f ra ud a nda bu s e f r om t h e c hi e f s u pe r vi s or sand foremen

_

46

S an ct io ns f or e mp lo ye es a nd p ie ce -w or ke rs w ho d id n ot c om pl y w it h

t h es e r e gu l at i on s w e re s e ve r e. F o r e x am p le , c h ie f s u pe r vi s or s a n d f o re m en

who were late, with no good excuse, paid a fee equivalent to their daily salary.

H ow ev er , t he a dm in is tr at or w as r es po ns ib le f or i nf or mi ng t he d ir ec to r

when an employee committed this fault for the third time, in which case

t he d i re ct or p un is he d t he e mp lo ye e e it he r w it h s us pe ns io n o r p er ma ne nt

e x cl u si o n f r om t h e s t at e m a nu f ac t or i es . P i ec e -w o rk e rs l o st t h ei r tareas, a n d

r is ke d b ei ng e ra se d f ro m t he r os te r o f t ob ac co w or ke rs .47

B eh av io ur a t w or k w as h ea vi ly r eg ul at ed a s w el l : d ri nk in g, g am bl i ng a nd

e ve n m i no r d i st ra ct i on s w er e p ro hi bi t ed . I n t he e ye s o f t he c ol on ia l s ta te ,

good or der was essent ial t o cont rol fr aud and maintain the qualit y of t ob ac co p ro du ct s. T he re w er e a n um be r o f r eg ul at io ns p re ve nt i ng a ny k in d

o f i nt im ac y, o r f am il ia ri ty , b et we en f ac to ry e mp lo ye es a nd operarios who

c o ul d g e ne r at e c o ns p ir a ci e s a g ai n st t h e s t at e m a nu f ac t or i es :

B ei ng u se fu l a nd c on ve ni en t t he t ra ns fe re nc e o f t he fieles and sobrestantes, not p er mi tt in g t he m t o s ta y i n t he s am e o ffic es f or a ny s ig ni fic an t l en gt h o f t im e s o a s

44 P i e c e - w o r k e r s h a v e g o o d i n c e n ti v e s to c o m p l y w i th p r o d u c ti o n q u o ta s , b u t p o o r i n c e n ti v e s

t o p r o d u c e g o o d q u a l i t y p r o d u c t s . A s a l e g a l m o n o p o l y , t h eEstanco c o n s i d e r e d n e c e s s a r y top r o d u c e g o o d q u a l i t y p r o d u c t s w h i c h w e r e p e r c e i v e d a s e s s e n t i a l f o r t h e s t a t e t o b e a b l e t oc o m p ete w i th c o n tr a b a n d to b a c c o.

45 E xp ed ie nt e s ob re l as i ns t ru cc io ne s q ue d ev en g ua r da r l os e la vo ra nt es d e l a f ab ri ca d et a v a c o s , 1 7 8 7 , A G N , C - 1 4 , Administrativo ( A d m . ) 1 1 .

46 I n I ns tr uc ci on q ue d eb e o bs e rb ar e l a dm in is tr a do r y d em as e mp le ad os e n l a r e al f a br ic ad e p u r o s c i g a r r o s y l i m p i o n e s d e L i m a , 1 7 9 0 , A G N , C - 1 4 , A d m . 1 5 . 47 Ibid.



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t o a v oi d a ny c l os e l i nk s w i th t he w or k er s a n d o t h e r p r ej u di c es f r om b e in g i n fli c te don the Estanco

_, t he a dm in is tr at or w il l t ak e c lo se c ar e o f t he se m od ifi ca ti on s,

c o ns i de r in g t h e t y pe o f r e sp o ns i bi l it i es o f e a ch o f t h es e o ffi ce s , a n d t he c a pa c it i eso f t h e e m pl o ye e s

_

48

G u a r d s c o n t r o l l e d t h e e x i t f r o m t h e f a c t o r y b u i l d i n g a n d s e a r c h e d a l l w o r k e r s

f or a ny p os si bl e s ig ns o f f ra ud . S an ct i on s i mp os ed o n t ob ac co w or ke rs f or

t he se c as es w er e h ar sh . S t ea li ng t ob ac co a nd /o r p ap er r e g ar dl es s o f t he

a m o u n t w a s p u n i s h e d w i t h a l a r g e m o n e t a r y f e e , a n d p e r m a n e n t e x p u l s i o n

f ro m t he s t at e m an uf ac to ri es .49 Archival records and secondary sources

s u gg e st t h at t h es e r e gu l at i on s w e r e r e pe a te d l y e n fo r ce d .50

B eyo nd d is ci pl ine an d sa nc ti on s, d id t he co lo ni al st at e i ns ti tu te an y

p os it iv e i nc en ti ve s i n o rd er t o r ed uc e m on it or in g e ffo rt s ? A cc or di ng t o

d oc um en ta ry e vi de nc e, m on et ar y i nc en ti ve s, t he m os t c om mo n m ea ns

u s ed t o e n ha n ce p e rf o rm a nc e e l se w he r e, w e r e n o t s i gn i fic a nt . E v en t h ou g h

De l a Riva r ecog ni sed t he im portance of a well pai d bureaucracy, the

b u d g e t c o n s t r a i n t s f a c e d i n t h e e a r l y 1 7 8 0 s d u e t o l o c a l u p h e a v a l s ( t h e T u pac

Amaru rebellion) and the wars of American Independence put restrictions

o n t he u se of h ig h s al ar y p ol ici es .51 F ac to ry w or ke rs w er e t hu s p ai d t he

sam e w ag e rates that they had received at t he ar tisanal w orkshops.52

M an ag er ia l j ob s d id n ot f ar e a ny b et te r. T he m aj or it y o f i nd iv id ua ls h ir ed

f or t he se p os ts w er e q ui te e xp er ie nc ed i n t he t ob ac co b us in es s, b ut m os t o f t he m r ec ei ve d l ow er a nn ua l i nc om es a t t he f ac to ri es t ha n t he y h ad a s

independent cigarreros.53 O ve ra ll , f ac to ry m an ag er s a nd t ob ac co w or ke rs

48 Ibid. 49 Ibid.50 F e rn an d e z A l on s o, i n U n c a so d e r e pr e s io n d e l f r a ud e , p . 4 0 5, c i te s a n u mb e r o f c a se s

a nd s ou rc es r el at ed t o t he e nf or c em en t o f a nt i- co nt ra ba nd r eg ul at io ns . D oc um en ts o ne x p u l s i o n a n d o t h e r p e n a l t i e s i m p o s e d o n f a c t o r y w o r k e r s c a n a l s o b e f o u n d i n A G N C - 1 4 ,

C o n te nc i o s o, 9 1 1 .51 E l v is it ad or g en er al E sc ob ed o , J an . 1 78 3, A GI , L im a 1 23 1. M on op ol y o ffic ia ls a rg ue dt ha t h ig h s al ar ie s w er e c ri ti ca ll y i mp or ta nt t o a ch ie ve t he ir o bj ec ti ve s. T hi s fi nd in g c h al l en g es L i nd a S a lv u cc i s v i ew o f B o ur b on a d mi n is t r at i on . A c co r di n g t o S a lv u cc i , t h ec h a n g es i n tr o du c e d b y J o s e d e G al v e z i n M e x i co r e fl e c te d v e r y l i m ite d p e r s p ec ti v e s o n th ep a r t o f B o u r b o n o ffi c i a l s o n h o w t o b u i l d a n e ff e c t i v e b u r e a u c r a c y . I n p a r t i c u l a r , s h e r e f e r sto th e s a l a r ie s o f e m p l oy e e s a n d m a n a g er s a s th e f o r e mo s t e x a m pl e o f G al v e z s i n e p ti tu d e .As she puts it : In spite of the fact that his explicit objective was to improve the Crownsc o n t r o l o f t h e l o c a l g o v e r n m e n t , h e d i d n o t e n v i s i o n b u r e a u c r a t i c s a l a r i e s a s a n i m p o r t a n t i nc en ti ve t o i nc re as e p ro du ct iv it y o r t he w il li ng ne ss t o s er ve t he C ro wn

_ I nd ee d,

S a l v u c c i e x t e n d s t h i s v i e w t o t h e e n t i r e a d m i n i s t r a t i o n : A s a c o n s e q u e n c e o f t h e B o u r b o n

r e f o r m e r s c o n c e p tu a l m i s ta k e , th e b u r e a u c r a ts c o n ti n u e d i m m e r s e d i n c o r r u p ti o n_

S e eL i n d a S a l v u c c i , C o s tu mb r e s v i e j as , h o m br e n u e v o s : J o s e d e G al v e z y l a b u r o cr a c i a fi s c a lN o v o hi s p a na (1 7 5 4 1 8 0 0 ), Historia Mexicana, v o l . 3 3 , n o . 2 ( 1 9 8 3 ) , p p . 2 4 9 a n d 2 5 2 .

52 C i g a r e t t e r o l l e r s e a r n e d , o n t h e a v e r a g e , fi v e reales a d a y, a n d c i ga r m a nu f ac t ur e r s s i x.53 O ffic ia l r ep or ts d is cu ss t he i nc om e o f s om e o f t he se w or ks ho p m an ag er s. F or e xa mp le ,

f o rm e r w o rk s ho p m a na g er D n . A n dr es Z a va l a e a rn e d a n a v er a ge a n nu a l i n co m e o f 2 , 5 87p e s o s a s a n i n d e p e n d e n t cigarrero, a n d D n . M a n u e l D e l a R o c h a 1 , 9 3 5 p e s o s . A s e m p l o y e e s



16/27

h ad l im it ed m on et ar y i nc en ti ve s t o d ev el op v es te d i nt er es ts i n t he s ta te

manufactories.

The colonial state, however, provided a number of non-market goods

t h a t c o m p e n s a t e d s o m e w h a t f o r t h e l a c k o f s u c h i n c e n t i v e s . P r i n c i p a l a m o n g t he se w er e j ob s ta bi l it y a nd s ec ur i ty . I nd ee d, i n p ra ct i ce , b ur ea uc ra ts w er e

a dm it t ed t o a n e xc lu si ve c lu b t ha t c ou ld g ua ra nt ee l i fe ti me e mp lo ym en t.

S t ab i li t y a n d p r om o t io n s w e re g e ne r al l y b a se d o n p e rf o rm a nc e , a n d a c co r d-

i ng t o t he r os te r o f f ac to ry e mp lo ye es t he se p ri nc ip le s w er e r el ig io us ly

applied.54 Another, though more subtle, mechanism that might have

h el pe d r ed uc e m on it or in g e ffo rt s w as t he d is co ur se t ha t n ur tu re d l ab ou r

r e l a t i o n s w i t h i n t h e f a c t o r i e s , i n e ff e c t a n i n f o r m a l s y s t e m o f c o n t r o l . D e a n s -

S mi th , i n he r w or k o n t he M ex ic an t ob ac co m on op ol y, i ll us tr at es h ow

p a t e r n a l i s m f u n c t i o n e d a s a c o n s t r a i n t o n t h e w o r k f o r c e :

M an uf ac to ry a ut ho ri ty w as p re se nt ed i n t he g u is e o f p at er na li s m. T he i nf or ma lname g iv en t o th e man ufa ctor y i n Mex ico Ci ty w as t he Ho use of t he Ki ng ; i nr e sp o ns e t h e w o rk e rs u s ed t h e t er mEl Rey Padre ( t he F a t he r - Ki n g ) w h e n r e f e rr i n g t o t he ir e mp lo ye r. T he m an uf ac to ry f un ct io ne d a s a m ic ro co sm o f c ol on ia lS p a n i s h h e g e m o n y , i n w h i c h t h e i d e a l s o f p o l i t i c a l a ut h o r i t y a n d r e l i g i o us o r t h o d o x y were constantly promoted and upheld. Supervisors at all levels were instructedth at t he ad mi ni str ato r as we ll a s the direccion general w ou l d c on s id e r w or k er s p e ti t io n s o r g r ie v an c es . G r ie v an c es w e re c h an n el e d f r om w o rk e rs t o s u pe r vi s or s ,

t h e a dm i ni s tr a to r , t h e direccion general, a nd u lt im at el y t he v ic er oy a nd m on ar ch . I ns o d oi ng , g ui de d b y i ts u nw ri tt en c on st it ut io n, t he c ol on ia l s ta te e nc ou ra ge dn eg ot ia ti on a nd c om pr om is e a nd c re at ed a c ha nn el t hr ou gh w hi ch t o a bs or bconflict.55

This system created a sort of family atmosphere within the factories,

which is generally considered to be very effective in increasing the costs of

opportunism.56

o f t h e f a c to r y t h ey e a r ne d o n ly 3 0 0 a n d 7 0 0 p e so s r e sp e ct i ve l y. E s co b ed o t o G al v ez , F e b.1 7 8 4 , A G I , L i m a 1 2 3 1 , a n d E l v i s i t a d o r g e n e r a l E s c o b e d o , J a n . 1 7 8 3 , A G I , L i m a 1 2 3 1 .54 E v i d e n c e f o r t h e P e r u v i a n m o n o p o l y c a n b e f o u n d i n R e y n o d e l P e r u , 1 8 1 1 , w h i c h g i v e s

t he h is to ry o f a ll m on op ol y e mp lo ye es i n g re at d et ai l, A GN , C -1 4, A dm . 4 2. S ee a ls o N om in a d e h oj a d e s er vi ci os r e al es r en t as e st a nc a da s , 1 80 6, A GN , C -1 4, A dm . 3 7 ; a nd N o m i n a d e e m p l e a d o s m a y o r e s y m e n o r e s q u e e n e s t a f e c h a s i r b e n e n l a r e n t a d e l t a b a c od e l os r ey no s d e P er u y C hi le c on e xp re si on d e s us o fic io s, n om br am ie nt os y s ue ld osfijos_

, 1 7 8 0 , A G N , C - 1 4 , A d m . 5 . F o r M e x i c o , s e e D e a n s - S m i t h ,Bureaucrats, Planters andWorkers, p . 4 2. S ec on da ry s ou rc es s ug ge st t ha t t hi s w as t he c as e f or t he b ur ea uc ra cy i ng en er al . F or B ue no s A ir es , f or e xa mp le , s ee S us an M ig de n S oc ol ow , The Bureaucrats of Buenos Aires, 17691810 : Amor al Real Servicio ( D u r h a m a n d L o n d o n , 1 9 8 7 ) .

55

I t c a n b e a s s um e d t h at t h e P e ru v ia n f a ct o r ie s e x pe r ie n ce d s i mi l ar m e ch a ni s ms g i ve n t h at t h ey f o ll o we d c l os e ly t h e M e xi c an o r ga n is a t io n i n m o st r e s pe c t s. I t m u st b e e m ph a si s ed ,h o w e v e r , t h a t n o d i r e c t e v i d e n c e o f t h e u s e o f s u c h m e a n s o f i n f o r m a l c o n t r o l s w a s f o u n di n P e ru v ia n d o cu m en t s. O n M e xi c o, s e e D e an s - Sm it h , Bureaucrats, Planters and Workers,p . 2 0 4 .

56 Ann Carlos and Stephen Nicholas, for example, in their work on the Hudsons BayC o m p a n y , a r g u e th a t o n e o f th e m o s t e ff e c ti v e m e c h a n i s m s i n d e a l i n g w i th a g e n c y p r o b l e m s



17/27

The reforms upstream

N on e o f t he se r ef or ms , h ow ev er , w ou ld h av e s uffi ce d i n t he b at tl e a ga in st

c on tr ab an d w it ho ut m od if yi ng t he o rg an is at io n a nd r eg ul at io ns o f t he

p ro du ct io n a re as . D e l a R iv a s ta te d t ha t t he l at te r w as e ss en ti al b ec au ser e gi s t er e d p l an t er s w e r e h e av i ly i n vo l ve d i n c o nt r ab a nd :

I t w i l l o n l y b e p o s s i b l e t o c o n t r o l t h e p l a n t e r s , w h o a r e s o e m b r o i l e d i n c o n t r a b a n das to be smuggling half or more of their crop, with the resguardo (monopoly police)

_I n o rd er t o e mp ha si se e ve n m or e t he n ec es si ty o f t he se e xp en se s, I

r em in d y ou r l or ds hi p o f t he c on si de ra bl e e xp en di tu re s m ad e i n N ew S pa in t oc o mb at t he i l li c it e x tr a ct i on o f t h e c r op s o f C o rd o va , O r iz a ba , a nd Z o ng ol i c a

_

57

B eg in ni ng i n 1 78 0, t he m on op ol y h ea vi ly m on it or ed a ll a sp ec ts o f t he

p ro du ct i on p ro ce ss i nc lu d in g t he l oc at io n a nd t im i ng o f p la nt i ng a nd h ar -vest.58 B u t , m o s t i m p o r t a n t l y , i t i n t r o d u c e d a n u m b e r o f b u i l t - i n i n c e n t i v e s i n

t h e c o n t r a c t s w i t h t h e t o b a c c o p l a n t e r s t h a t i n c r e a s e d t h e o p p o r t u n i t y c o s t o f

e ng ag i ng i n c on tr ab an d. O ne o f t he m os t i mp or t an t m od i fic at i on s i n t hi s

r es pe ct w as t he i nc re as e i n t he p ur ch as e p ri ce f or g oo d q ua li ty bracamoro

t oba cco f ro m 0. 4 t o 1 r ea l pe rmazo, a n d f o r S a na l ea f fr om a rou nd 0. 3 t o

0.6reales.59 Another important change was the conditioning of future quotas

o n p la n te r s p e r f or ma n ce .60

I n a dd i ti on , t he m on op ol y e st ab li sh ed m u ch h ar sh er p en al t ie s f or i l le ga la ct iv it ie s. A cc or di ng t o t he r eg ul at io ns t ha t p re da te d t he r ef or ms , e ac h

p lan te r w as r eq ui red t o p ut f or war d so me c ol la te ral , w hi ch i s t yp ic al o f

c on tr ac ti ng s ys te ms w he re t he re i s n o e ffe ct iv e t hi rd p ar ty e nf or ce me nt .

U nd er t he n ew r eg ul at i on s, h ow ev er , t he c ol l at er al w as e li mi na te d a nd t he

p la nt er s f ac ed m uc h h ig he r p en al ti es a nd a f ul ly r en ov at ed e nf or ce me nt

was the institution of an informal system of control that adapted employees values tot h e c om pa ny s g oa ls . S ee t he ir A ge nc y P ro bl em s i n E ar ly C ha rt e re d C om pa ni es : T he

C as e o f t he H ud so n s B ay C om pa ny , Journal of Economic History v ol . 5 0, n o. 4 ( 19 90 ),p p . 8 5 3 7 5. 57 D e l a R i v a t o A r e c h e , n o . 1 9 0 , 1 7 8 1 , A G I , L i m a 1 2 3 0 .58 Thetenientes reconocedores ( n e w l y a p p o i n t e d o ffi c i a l s ) w e r e i n c h a r g e o f s u p e r v i s i n g a l l a s p e c t s

o f c u l t i v a t i o n : t h e s u i t a b i l i t y o f t h e l a n d f o r t o b a c c o p r o d u c t i o n , i t s p r e p a r a t i o n , p l a n t i n g o f t h e s e ed b ed s , t r an s pl a nt i ng , e t c . u n ti l t h emazos w e re d ep os it e d i n t he factora. A l l d e ta i lsa bo ut t he p ro du ct io n p ro ce ss a re i n C ir cu la r a ne xa c om un ic ad a a l os t en ie nt es r e-c on oc ed or es d e lo s c in co p ar tid os d e C ha ch ap oy as , s ig ne d b y Gr eg or io Z uniga,S e p t e m b e r 1 7 8 7 , A G N , C - 1 4 , l e g a j o 6 2 0 .

59 The opportunity cost of selling the leaf in the black market is the official purchase price.Thus this measure increased the opportunity cost of engaging in contraband. Also, theEstanco r e se rv ed t o i ts el f t he r ig ht t o d ec id e e x- po st t he p ri ce f or t ob ac co t ha t d id n ot

c o m p ly w i th m o n op o l y s ta n d a rd s .60 This rule implied that planters who engaged in illegal activities or who did not produce

t ob ac co a cc or di ng t o t he instrucciones, r is ke d l os in g t he ir p ro du ct io n q uo ta s. Se e C o nd i ci o ne s d e l a n u ev a c o nt r a ta , a n d I n s tr u cc i on q u e h a n d e o b se r va r l o s c o se c he r osd e t ab ac os d e la p ro vin ci a de S ana p ar a e l c um pli mie nt o d e l a c on tr at a c on la R ea lHa ci end a, 1 77 9 , r epr odu ce d in E sc ob ar Ga mb oa , E l t ab ac o e n e l P er u colonial,1 7 5 2 1 7 9 6 , a p p e n d i x , p p . V I I I a n d X X I I I .



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s ys te m. A n i m po rt an t n ew c la us e d et ai le d h ar sh er p un is hm en ts f or s mu g-

g li ng : f ou r y ea rs o f i nc ar ce ra ti on f or a ny f ra ud t ha t i nv ol ve d m or e t ha n

twelvemazos.61

E ffe ct iv e e nf or ce me nt , h ow ev er , d ep en de d n ot o nl y o n t he m at ri x o f i nc en ti ve s, b ut a ls o o n t he e ffic ac y o f t he a dm in is tr at io n. C on se qu en tl y,

t he m on op ol y m od i fie d t he a dm in is tr at i on o f t he p ro du ct io n a re as . A t t he

t i m e o f t h e r e f o r m s , f o r e x a m p l e , C h a c h a p o y a s h a d a t o t a l o f f o u r o ffi c i a l s :

the factor a nd t hr ee m on op ol y g ua rd s, w it h a t ot al b ud ge t o f 9 00 p es os .62

I n a dd it io n t o h ig he r w ag es f or c ur re nt p os it io ns , t he m on op ol y c re at ed

se ver al n ew o ffic es . T ot al e xpe nd it ur es f or t he ne w ad mi ni st ra ti on i n

Chachapoyas rose from 900 t o 9,750 pesos annually.63 In Sana, the

Administracion General of Trujillo was dissolved and merged with the

factora i n L am ba ye qu e, w hi ch w as at t he ce nt re of t he p rod uc ti on a re as :

the partidos o f L am ba ye qu e, S ana , a nd C hi cl ay o. T ot al e xp en di tu r es i n t he

a r e a i n c r e a s e d f r o m 6 0 t o 6 , 7 4 0 p e s o s a y e a r .64

I n a dd it io n, t he m on op ol y c on ce nt ra te d p ro du ct io n q uo ta s i n f ew er

h a n d s . B e f o r e t h e r e f o r m s t h e n u m b e r o f p l a n t e r s i n S a na w a s a p p r o x ima te ly

8 7 , w h i c h c o n t r a s t s w i t h o n l y 3 7 p l a n t e r s i n t h e e a r l y 1 7 8 0 s . A c c o r d i n g t o t h e

r os te r o f r eg i st er ed p la nt er s t he t op t hr ee h ad q u ot as o f 1 00 ,0 00 mazos, a n d

t he n ex t t hr ee h ad q uo ta s b et w ee n 3 0, 00 0 a nd 5 0, 00 0mazos.65 The top six

p l a n t e r s , t h e r e f o r e , h a d l e g a l r i g h t s t o p r o d u c e 6 0 p e r c e n t o f S a n a s o u tp u t.66

There were also attempts to concentrate production in Chachapoyas. In

S i pa s ba m ba , f o r e x am p le , t h er e w e re a r ou n d 7 2 p l an t er s r e g is t er e d i n 1 7 81 .

In 1788 we find only 45, in spit e of the fact that total legal production

i n t h e a r e a w a s a b o u t f o u r t i m e s l a r g e r t h a n i n 1 7 8 1 . I n t h e o t h e r partidos the

a rc hi va l e vi de nc e a ls o s ug g es ts i nc re as in g c on ce nt r at i on t hr ou g ho ut t he

decade.67

The monopoly also instituted therondas volantes, w h i c h c o n s i s t e d o f g r o u p s

o f g u a r d s w h o i n s p e c t e d t h e a r e a s s u s p e c t e d o f h e a v y c o n t r a b a n d , t h e m o s t i m p o r t a n t o f w h i c h w a s t h e o n e c o n t r o l l i n g t h e M a r a non , a r iv e r th a t p a s s es

t hr ou gh C ha ch ap oy as a nd c on ne ct s w i th c on su m er c en tr es i n t he A nd ea n

r eg io n. I n t he 1 78 0s , t he c ol on ia l s ta te s pe nt 1 1, 40 0 p es os a y ea r t o p ol ic e

th is r o u te . M o r e o v e r , th e mo n o p o ly h ir e d e mp lo y e e s to p a tr o l tr a n s p o r ta tio n

61 Ibid. 62 6 0 0 p e s o s f o r t h e factor a n d 1 0 0 p e s o s f o r e a c h guarda veedor.63 D e l a R i v a t o A r e c h e n o . 1 9 0 , 1 7 8 1 , A G I , L i m a 1 2 3 0 . 64 Ibid.65 D n. F er na nd o P an to ja i n C hi cl ay o, D n. M ig ue l P ar ed es i n F er r ena fe , a nd D n. B en it o

Antonio Caldas in Sana . T h e s i s e o f q u ot a s r o s e s u b s ta n ti a ll y . T h e m a x i mu m q u ot a i n t h ep r e - f a c to r y p e r i o d w a s 2 0 ,5 7 1mazos. S ee E sc ob ar G am bo a, E l t a b ac o e n e l P e r u c o l o n i a l ,p p . 1 0 3 5 .

66 Although all of them had been tobacco producers in the 1770s, many of the old promi-n e n t p l a n t e r s w e r e n o t r e g i s t e r e d i n t h e 1 7 8 0 s .

67 The roster of tobacco planters and their respective quotas of production for the 1780s canb e f o u n d i n A G N C - 1 4 , l e g a j o 6 1 9 .



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r o u t e s t h a t c o n n e c t e d t h e p r o d u c t i o n a r e a s t o L i m a . B e f o r e t h e r e f o r m s , o n l y

fi ve e mp lo ye es t oo k c ar e o f t he se r ou te s, w it h a t ot al e xp en di t ur e o f 2 ,4 00

p es os a y ea r. I n 1 78 0, fi ft ee n n ew e mp lo ye es w er e a dd ed w i th t ot al s al ar i es

o f 1 0 , 0 0 0 p e s o s .68

O ve ra ll , t he a nt i -c on tr ab an d r ef or ms c ou l d b e s um ma ri se d a s f ol l ow s .

F i rs t, t he m on op ol y v er t ic al l y i nt e gr at ed d ow ns tr ea m i nt o t ob ac co m an u-

f a c t u r e , w h i c h a l l o w e d f o r b e t t e r c o n t r o l o v e r t h e fl o w o f t o b a c c o p r o d u c t s .

I n a d d i t i o n , t h e f a c t o r y s r e g u l a t i o n s i n c l u d e d a c o m p l e x s y s t e m o f i n c e n t i v e s

a n d s a n c t i o n s d i r e c t e d t o t h e c o n t r o l o f f r a u d . S e c o n d , t h e s t a t e i n s t i t u t e d a

s e ri e s o f o r ga n is a ti o na l c h an g es i n t h e p r od u ct i on a r ea s . P r om i ne n t a m on g

t he se w er e t he i nc en ti ve s d ir ec te d t o t ob ac co p la nt er s s uch a s a h ig he r

p u rc h as e p r ic e f o r t h e t o ba c co l e af , q u ot a s b a se d o n p l an t er s p e rf o rm a nc e ,

a nd p en al ti es f or t ho se p la nt er s w ho p ro vi de d p oo r q ua li ty t ob ac co a nd

e ng ag ed i n c on tr ab an d. I n a dd i ti on , t he s ta te i mp ro ve d i t s a dm i ni st r at io n

b y c on ce nt ra ti ng t ob ac co p ro du ct io n i n t he h an ds o f a f ew p la nt er s, a nd

s ig ni fic an tl y i nc re as in g t he n um be r o f m on op ol y p ol ic e i n t he p ro vi nc es .

E ac h o f t he se c ha ng es a ct ed t o m ak e s mu gg li ng a ct iv it y r is ki er a nd m or e

c o s t l y . T h e n e t e ff e c t o f t h e s t a t e s r e f o r m s , b o t h u p s t r e a m a n d d o w n s t r e a m ,

was to provide much more effective deterrence to smugglers than had been

t h e c a s e i n e a r l i e r y e a r s .

The evidence on contraband

There is substantial evidence in support of the thesis that the reforms of

1 78 0 l ed t o a r ed uct ion i n co nt rab an d. A s m en ti one d a bo ve, ac cou nt s

o f t he p re va le nc e o f c on tr ab an d p ri or t o t he e st ab li sh me nt o f t he f ac to ri es

a r e a b un d an t . D e l a R i va s c o mm i ss i on e n co u nt e re d w i d es p re a d s m ug g l in g ,

e s p e c ia lly o f bracamoro t o b a c c o . W e c a n i n f e r c o n t r a b a n d l e v e l s b y c o m p a r i n g

e st im at es o f c ig ar et t e a nd c ig ar s al es b ef or e a nd a ft er 1 78 0, w hi ch a re i ll us -t r a t e d i n F i g u r e 2 .69 E s t i m a t e s o f l e g a l c i g a r e t t e s a l e s i n c r e a s e d s u b s t a n t i a l l y

d ur in g t he 1 78 0s , i n s pi te o f t he r is e i n t he fi na l p ri ce o f t ob ac co p ro du ct s.

I n te re s tin gly , th e A dmin is tr a c ion de C a ja mar c a , w h ic h w a s th e n e a r es t to th e

68 Areche to Galvez, July 1780, AGI, Lima 1230.69 These figures for the pre-factory years were derived by calculating the amount of tobacco

n e c e s s a r y t o p r o d u c e a p a c k o f c i g a r e t t e s o r c i g a r s a n d d i v i d i n g t h e a m o u n t o f t o b a c c o l e a f s a le s b y t h at fi g ur e . F o r e x am p le , c i ga r et t e s w e re m a de e x cl u si v el y w i th bracamoro tobacco

a n d a p p r o x i m a t e l y 4 1 . 1 2 p a c k s o f c i g a r e t t e s w e r e m a d e f r o m o n e mazo. I n t h e p r e - f a c t o r y y e ar s, t he n um be r o f mazos ofbracamoro s o ld w as m ul ti pl ie d b y 4 1. 12 i n o rd er t o e st im at e l e g a l c i g a r e t t e s a l e s . T h e r e i s o n l y a s c a t t e r e d s e r i e s o f l e g a l s a l e s o f bracamoro t o b ac c o i nt h i s e a r l y p e r i o d , w h i c h e x p l a i n s t h e b r e a k s i n t h e g r a p h . D u r i n g t h e f a c t o r y y e a r s , t h e r e a r ea c tu al fi gu re s o n c ig ar e tt e a nd c ig ar s al es , p lu s s al es o f t ob ac co l ea f . A ss u mi ng t ha t a ll o f t h i s l e a f w a s c o n v e r t e d l e g a l l y i n t o c i g a r e t t e s a n d c i g a r s ( f o r h o m e c o n s u m p t i o n o n l y ) , a ne s t im a te o f p r od u ct c o ns u mp t io n c a n b e d e ri v ed .


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