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Arms, Guano, and Shipping: The W. R. Grace Interests in Peru, 1865–1885

Published online by Cambridge University Press:  11 June 2012

C. Alexander G. de Secada
C. Alexander G. de Secada
Affiliation:
C. Alexander G. de Secada is a doctoral candidate in Latin American history at Columbia University.
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Abstract

In this article Mr. Secada analyzes the origins of W. R. Grace and Company and its rise as a dominant actor in Peruvian economic history. He attributes this ascendancy primarily to the arms trade in which Grace engaged on behalf of the Peruvian government during the War of the Pacific (1879–84). Grace's early status as an intimate of the dominant Peruvian elite, its deft manipulation of its ambiguous position as an American shipping house, its imaginative construction of a nascent intercontinental trading network utilizing both sea and rail transport, and its willingness to invest its own capital in the development of potential product lines—all served to catapult the firm within a period of thirty years into a powerful trading house and foreign investor in Latin America.

Type
Articles
Information
Business History Review , Volume 59 , Special Issue 4: Business in Latin America , Winter 1985 , pp. 597 - 621
Copyright
Copyright © The President and Fellows of Harvard College 1985

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References

1 See Alfonso Quiroz's recent study, based on Crace documents, of international finance during the War of the Pacific in Historica 7 (1983): 2; Burgess, E. W. and Harbison, F. H., eds., Casa Grace in Peru (Washington, 1954)Google Scholar; the NACLA report (1975), on W. R. Grace and Company; the Grace Log (1918ff.), which was the official inhouse publication of the firm. On the role of multinationals in developing economies, see Kindleberger, Charles, Multinational Excursions (Cambridge, Mass., 1984)Google Scholar: The International Corporation: A Symposium, ed. Kindleberger, Charles (Cambridge, Mass., 1970)Google Scholar; and G. K. Helleiner's work on North-South technology transfers.

2 Because of the diverse trade names used by the Grace family interests, it is necessary to distinguish firm from person, and firm from firm. I use the term “Grace company” to mean the total collection of operations, whether in Lima or New York. It is synonymous with “Grace interests.”

3 See Register, W. R. Grace and Company Papers, Columbia University Manuscripts Collection [hereafter cited as Grace Papers]. The papers are not accessible for the period after 1918. Casa Grace in Peru and the 1975 NACLA report are the only studies of the firm to date.

4 Dictionary of American Biography (New York, 1963), 7:463; Grace Papers, oversize 4.

5 Box 23:78, Grace Papers.

6 Box 1; box 9:51, Grace Papers.

7 Bonilla, Heraclio, Los mecanismos de un control económico, vol. 5 of Gran Bretaña y el Perú (Lima, 1977)Google Scholar; see also Hunt, Shane, Growth and Gttano in Nineteenth-Century Peru (Princeton University: Wilson School Research Program in Economic Development, discussion paper 34).Google Scholar

8 Bonilla, Heraclio, “Auguste Dreyfus y el monopolio del guano,” Revista del Museo Nacional, 39 (Lima, 1973)Google Scholar; box 23:78, Grace Papers.

9 Bryce, Grace and Company to W. R. Grace, 21 July 1870, box 23:78; M. P. Grace to W. R. Grace, 20 July 1870, box 23:78, both in Grace Papers.

10 Box 45:123; M. P. Grace to W. R. Grace, 20 July 1870; balance sheet, Grace Brothers and Company (Callao), Oct. 1879, box 56:147, all in Grace Papers. Llaguna and Fernandez were Peruvian: Flint was American; Eyre was either British or American.

11 Cf. Bonilla, Los mecanismos, Hunt, Growth and Guano, Platt, D. C. M., Latin America and British Trade, 1806–1914 (London, 1972)Google Scholar; Rippy, J. Fred, British Investments in Latin America, 1822–1949 (Minneapolis, 1959)Google Scholar; Mathew, William M., “The Imperialism of Free Trade, Peru, 1820–1870,” Economic History Review 21 (Dec. 1968): 562–79Google Scholar; Thorp, Rosemary and Bertram, Geoffrey, Peru, 1890–1977: Growth and Policy in an Open Economy (New York, 1978).CrossRefGoogle Scholar Thorp and Bertram's study is excellent, but it focuses on the period after the War of the Pacific; Bonilla, Los mecanismos, 1–5.

12 See Mathew, W. M., The House of Gibbs and the Peruvian Guano Monopoly (London, 1981)Google Scholar; Bonilla, Heraclio, Guano y burguesía (Lima, 1973), 20ff.Google Scholar

13 Ibid., 44–45; Bonilla, Los mecanismos, 96–102; Bonilla, Guano y burguesía, chaps. 3, 1; Hunt, Growth and Guano; Mathew, William M., “A Primitive Export Sector: Guano Production in Mid-Nineteenth-Century Peru,” “Journal of Latin American Studies 9 (1977): 35–57.CrossRefGoogle Scholar

14 Bonilla, “Auguste Dreyfus y el monopolio”; Rippy, British Investment, 128.

15 Thorp and Bertram, Peru, 1890–1977, 9–19: see also Mathew, “A Primitive Export Sector,” and Hunt, Growth and Guano.

16 U.S. Treasury Department, Quarterly Reports of Imports and Exports (Washington, D.C., 1880–1883)Google Scholar, tables 24–25.

17 Greenhill, R. G. and Miller, Rory, “The Peruvīan Government and the Nitrate Trade, 1873–1879,” Journal of Latin American Studies 5 (1973): 110–11CrossRefGoogle Scholar; House of Commons, Accounts and Papers (London, 1878), 72: 529–40Google Scholar; Greenhill and Miller, “Peruvian Government and Nitrate Trade”; Spencer St. John, “General Report of Peru” (1878), House of Commons, Accounts and Papers, 72: 526, 534. Incredibly, no one considered natural replenishment of guano a possibility, or the opening of new deposits.

18 E. I. du Pont de Nemours to W. R. Grace and Company, 23 Dec. 1876, Grace Papers, box 54:142. See also Coker, William, “The War of the Ten Centavos: The Geographic, Economic, and Political Causes of the War of the Pacific,” Southern Quarterly 7 (1969): 113–30Google Scholar; box 58:153–56, Grace Papers.

19 Grace Brothers to W. R. Grace and Company, 20 Jan. 1877, box 54:142; Grace Brothers to W. R. Grace and Company, 11 and 13 Sept. 1876, box 54:142; Grace Brothers to W. R. Grace and Company, 13 Dec. 1876, box 54:141; Grace Brothers to W. R. Grace and Company, 20 Jan. 1877; Grace Brothers to W. R. Grace and Company, 4 Jan. 1877, box 54:142—all in Grace Papers; Bonilla, Los mecanismos, 103, 172–73; Thorp and Bertram, Peru, 1890–1977, 39–52.

20 Stewart, Watt, Henry Meiggs: Yankee Pizarro (Durham, N.C., 1946)Google Scholar; Grace Brothers to W. R. Grace and Company, 4 Dec. 1876, box 54:141, Grace Papers.

21 Stewart, Watt, Chinese Bondage in Peru: A History of the Chinese Coolie in Peru (Durham, N.C., 1951).Google Scholar

22 W. R. Grace to M. P. Grace, date obscure [1870–71], box 23:78; Stewart, Chinese Bondage, 77–91, and passim.

23 Stewart, Chinese Bondage, 66–67.

24 Loveman, Brian, Chile: The Legacy of Hispanic Capitalism (New York, 1979)Google Scholar; Klein, H. S., Bolivia: The Evolution of a Multi-Ethnic Society (New York, 1982), chap. 2.Google Scholar

25 Cf. Bulnes, Gonzalo, La guerra del Pacifico, 2d ed. (Santiago, 1955)Google Scholar; Coker, “The War of the Ten Centavos”; de Secada, A. G., “The Role of the United States in the War of the Pacific,” unpub. MS (New York, 1981)Google Scholar; Sater, William F., “Chile during the First Months of the War of the Pacific,” Journal of Latin American Studies 5 (1977): 133–58.CrossRefGoogle Scholar

26 Pike, Fredrick, The Modern History of Peru (New York, 1967). 137Google Scholar; cf. Bonilla, Guano y burguesía, chap. 3. The ships were subsequently purchased by Chile and named the Cochrane and Blanca Encalada. Greenhill and Miller, “The Peruvian Government and the Nitrate Trade,” 107–30.

27 Qv. Mariano I. Prado to W. R. Grace, six letters, from 19 May to 22 Dec. 1876, catalogued correspondence; M. I. Prado to W. B. Grace, 19 May 1876, both in Grace Papers.

28 C. R. Flint to Campbell (of Furth & Campbell), 21 July 1879, Grace Papers; see also Dennis, W. J., Tacna and Arica (New York, 1967), 123–4.Google Scholar

29 C. R. Flint to Herreschoff Boat Company, 27 June 1879, and invoice, 20 July 1879, box 56: 147, Agents, Lay Torpedo Company, to W. R. Grace and Company, 10 Aug. 1879, box 56: 147; W. R. Grace and Company to J. C. Tracy, 8 Oct. 1879, box 56: 147—all in Grace Papers.

30 C. R. Flint to Col. E. Lara (Lima), 25 June 1879), Grace Papers.

31 W. R. Grace and Company to Grace Brothers, 9 June 1879; W. R. Grace and Company to E. Roberts, Credit Lyonnais (New York), 20 Jan. 1880, both in Grace Papers.

32 Erricson to W. R. Grace and Company, 7 July 1880, Grace Papers.

33 Invoice at New York, 20 June 1879; Snyder to Brother, 1 Oct. 1879; C. R. Flint to E. Lara, 14 June 1879, both in Grace Papers.

34 W. R. Grace and Company to Grace Brothers, 20 Sept. 1879; W. R. Grace and Company to Grace Brothers, 20 Aug. 1879; W. R. Grace and Company to Grace Brothers, 20 Sept. 1879, all in Grace Papers.

35 W. R. Grace to M. P. Grace, 30 May 1879; contract for manufacture of Herreschofflaunch #3, New York, 17 Oct. 1879; W. R. Grace and Company to Grace Brothers, 19 June 1879; C. R. Flint to Grace Brothers, 10 Aug. 1879—all in Grace Papers.

36 W. R. Grace to Grace Brothers, 15 Dec. 1879, Grace Papers.

37 See box 56, Grace Papers.

38 W. R. Grace and Company to Baring Brothers (Liverpool), 1 Dec. 1879, Grace Papers.

39 W. R. Grace to Grace Brothers, 21 Dec. 1879; W. R. Grace and Company to J. W. Grace and Company, Aug. 1879, both in Grace Papers; see Foreign Relations of the United States (Washington, D.C., 1875–82), and Jessup, Phillip, American Neutrality and International Law (New York, 1928).Google Scholar

40 Box 56; W. R. Grace and Company to Grace Brothers, 9 April 1880, contract for launch, 17 Oct. 1879—all in Grace Papers.

41 Rowley to W. R. Grace and Company, 5–9 June 1879; C. R. Flint to Michael P. Grace, 30 June 1879; W. R. Grace and Company to Mssrs. Frazar, Company, 31 Dec. 1879; see also W. R. Grace and Company to J. E. Wards and Company (New York), 9 Dec. 1880—all in Grace Papers.

42 C. R. Flint to Edmond Robert (Valparaiso), 21 Dec. 1880, Grace Papers.

43 W. R. Grace and Company to J. W. Grace and Company, 21 July 1880; W. R. Grace and Company to J. W. Grace and Company, 17 Nov. 1880, Grace Papers.

44 W. R. Grace and C. R. Flint to Marcellus Hartley, 9 Jan. 1882; W. R. Grace and Company to Manuel Llaguno (Lima), 30 Sept. 1880; W. R. Grace and Company to Grace Brothers, 10 Jan. 1882—all in Grace Papers; see also Miller, Rory, “The Making of the Grace Contract: British Bondholders and the Peruvian Government, 1885–1890,” Journal of Latin American Studies 8 (1976): 73–100.CrossRefGoogle Scholar

45 W. R. Grace and Company to Grace Brothers, 31 July 1880, Grace Papers.

46 Michael P. Grace to Noel West, 20 Sept. 1880; W. R. Grace and Company to William M. Irons, 3 Oct. 1881, both in Grace Papers.

47 See my “Role of the United States in the War of the Pacific.”

48 W. R. Grace and Company to Michael P. Grace, 11 Feb. 1880, Grace Papers.

49 W. R. Grace and Company to Baring Brothers, 22 Dec. 1879; W. R. Grace and Company to Grace Brothers, 9 Jan. 1882, both in Grace Papers; Miller, “Grace Contract,” 80ff.