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The First Anglo-Peruvian Debt and its Settlement, 1822–49

Published online by Cambridge University Press:  05 February 2009

W. M. Mathew
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Extract

On 31 January 1849 the representative of the Peruvian government, General Osma, and the Committee of Spanish American Bondholders signed an agreement in London on the terms for settling debts to British investors which had been in default since October 1825. More than a year before, the Peruvian president had spoken of his administration's desire ‘to bring this matter at once to a termination, and revive the credit which the Republic lost in Europe almost at the same time as it came into existence’ Peruvian credit was, as hoped, restored by the act of good faith in 1849, and was further boosted by the government's growing income from the guano trade, which had been in operation for almost a decade. Having wiped the slate clean in 1849, Peru went on to expand its overseas debt commitments and become, in the space of a few years, the largest Latin American borrower on the London money market. The year 1849, therefore, marks a notable turning point in Peruvian financial history.

Type
Articles
Information
Journal of Latin American Studies , Volume 2 , Issue 1 , May 1970 , pp. 81 - 98
Copyright
Copyright © Cambridge University Press 1970

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References

1 Mensage que El Presidente De La Republica Del Peru Dirige A Las Camaras Legislativas de 1847 (Lima, 1847), p. 18.Google Scholar Copy in Public Record Office, London, Foreign Office Archives, Peru (cited hereinafter as F.O. 61), Vol. 115.

2 Jenks, L. H., The Migration of British Capital to 1875 (London, 1938), pp. 421–3.Google Scholar

3 See Chapter II (Peru In The Guano Age) of his book The Export Economies (Cambridge, Massachusetts, 1960).Google Scholar

4 Ibid., pp. 57 and 61. In another, very short, discussion of the question William H. Wynne gives, by implication at least, a somewhat similar explanation of the settlement. In 1848, he writes, ‘the bondholders obtained support from the Foreign Office. The British minister in Lima, duly instructed, pressed their claim for fairer treatment … The Peruvian Government replied that it was about to send a representative to London to negotiate a satisfactory settlement with the bondholders. It kept its word, with the result that on January 31, 1849, a formal agreement was concluded.’ Borchard, Edwin M. and Wynne, William H., State Insolvency and Foreign Bondholders (New Haven, 1951, 2 vols.), 11, 110.Google Scholar

5 Platt, D. C. M., Finance, Trade, and Politics in British Foreign Policy 1815–1914 (Oxford, 1968), pp. 346–7.Google Scholar

6 Platt does make two brief references to it in his article ‘British Bondholders in Nineteenth Century Latin America–Injury and Remedy’, Inter-American Economic Affairs, xiv (1960)Google Scholar, but he does not attempt any overall assessment of the British government's activities on this particular question.

7 F.O. 61/118, Adams, (British chargé d'affaires in Lima) to Palmerston, 10 10 1848.Google Scholar

8 Humphreys, R. A., Liberation in South America 1806–1827. The Career of James Paroissien (London, 1952), pp. 129–39.Google Scholar £450,000 was floated in 1822 and £750,000 in 1824. Secretan, J. J., Fortune's Epitome of the Stocks and Public Funds (London, 1826 ed.), p. 100.Google Scholar

9 F.O. 61/118, Adams to Palmerston, 10 Oct, 1848.

10 Rippy, J. Fred, British Investments in Latin America, 1822–1949 (Minneapolis, 1959), p. 20.Google Scholar The loans were floated at 88 per cent in 1822, 82 per cent in 1824 and 78 per cent in 1825. Secretan, loc. cit.

11 Humphreys, , op. cit., p. 128.Google Scholar

12 McQueen, C. A., Peruvian Public Finance (Washington, 1926), p. 85.Google Scholar

13 Haigh, Samuel, Sketches of Buenos Ayres, Chile, and Peru (London, 1831), p. 369.Google Scholar

14 Quoted in Jenks, op. cit., p. 117.

15 F.O. 61/16, Aberdeen to Willimott, 8 June 1829.

16 F.O. 61/118, Adams to Palmerston, 10 Oct. 1848. (In this despatch, Adams gives a history of the British government's activities on the question up to 1848.)

17 Ibid.

18 See Correspondence Between Great Britain And Foreign Powers, And Communications From The British Government To Claimants, Relative to Loans Made By British Subjects. 1823–1847, Parliamentary Papers (referred to hereinafter as P.P.) 1847, LXIX, 659–98.Google Scholar

19 Leon, (Peruvian foreign minister) to Wilson, , 15 July 1834, P.P. 1847, LXIX, 665.Google Scholar

20 Secretan, op. cit. (1833 ed.), p. 136.Google Scholar

21 Levin, , op. cit., p. 46.Google Scholar

22 F.O. 61/71, Wilson to Palmerston, 30 April 1840. See also Wilson to Ferreiros (Peruvian foreign minister), 18 Eeb. 1840, P.P. 1847, LXIX, 689–91.

23 De Tristan, (Peruvian foreign minister) to Wilson, 29 Oct. 1836, P.P. 1847, LXIX, 669; Wilson to Ferreiros, 2 June 1841, P.P. 1847, LXIX, 696Google Scholar; Levin, , op. cit., p. 46.Google Scholar

24 This was undoubtedly the product of the generally friendly relations prevailing between Britain and the Confederation, arising partly out of the lowering of Peru-Bolivian import duties, and the ratification of a fairly liberal treaty of ‘Amity, Commerce and Navigation’ in 1837. See Mathew, W. M., ‘The Imperialism of Free Trade: Peru, 1820–70’, Economic History Review, Second Series, XXI, No. 3 (1968), 566–7.Google Scholar

25 Wilson, to Castilla, (then Peruvian foreign minister), 1 07 1839, P.P. 1847, LXIX, 680.Google Scholar

26 Wilson, to Castilla, , 15 04 1839, P.P. 1847, LXIX, 675.Google Scholar

27 F.O. 61/26, Wilson to Palmerston, 15 Jan. 1834.

28 F.O. 61/137, Wilson to Stanley, 9 June 1852.

29 The Times, 13 March 1847, p. 7.

30 Guildhall Library, London. Business Archives, MS. 11,047. Papers of Antony Gibbs and Sons, Ltd. (referred to hereinafter as Gibbs' Letters, with date). Extracts of correspondence between London Head Office and others concerning the firm's guano business by Henry Hucks Gibbs, 1840–56. Reference to purchase in Letter of 15 March 1842.

31 Levin, , op. cit., p. 54.Google Scholar Levin cites Jenks to the effect that the January decree was secured by diplomatic pressure in the interests of the bondholders. (Ibid., p. 55, n. 89.) Jenks, however, does not quite say this. ‘What assistance’, he writes, ‘British diplomacy rendered in arranging this matter, if any, is not known’ (op. cit., p. 120).

32 See F.O. 61/118, Adams to Palmerston, 10 Oct. 1848.

33 Levin, , op. cit., p. 55.Google Scholar

34 McQueen, , op. cit., p. 4.Google Scholar

35 F.O. 61/118, Adams to Palmerston, 10 Oct. 1848.

36 Ibid.

37 Ibid.

38 Ibid. See also The Times, 13 March 1847, p. 7.

39 F.O. 61/118, Adams to Palmerston, 10 Oct. 1848.

40 The Times, 24 July 1847, p. 6. What must have been particularly galling for them was that only four weeks after Yterregui had told the bondholders of his government's wish to have the talks moved back to Lima, and had heard of their objections to this, he had succeeded in drawing up a contract with the house of Cotesworth and Co. for the disposal of guano in Britain, whereby £120,000 was to be set aside from sales proceeds each year for the repayment of the debt. This proposed arrangement, however, was rejected by government and congress in Lima. F.O. 61/117, Robinson (chairman of the Committee of Spanish American Bondholders) to Palmerston, 5 June 1847; The Times, 22 July 1847, p. 6, and 9 Nov. 1848, p. 3; Gibbs' Letters, 16 April 11 June and 15 June 1847; Levin, , op. cit., p. 62, n. 116.Google Scholar

41 Levin, , op. cit., p. 62.Google Scholar

42 The Times, 24 July 1847, p. 6.

43 F.O. 61/117, Robinson to Palmerston, 5 June 1847.

44 F.O. 61/115, Palmerston to Barton, 14 June 1847.

45 F.O. 61/115, Palmerston to Barton, 16 Aug. 1847.

46 Mensage … A Las Camaras Lejislativas de 1847, op. cit., pp. 17–18.

47 Sec Craig, Robert, ‘The African Guano Trade’, The Mariner's Mirror, L (1964), 25–55.CrossRefGoogle Scholar

48 Gibbs' Letters, 11 Jan. 1847.

49 Ibid., 7 Feb. 1846.

50 McQueen, , op. cit., p. 36.Google Scholar

51 F.O. 61/118, Adams to Palmerston, 12 June 1848 and 10 Oct. 1848.

52 F.O. 61/118, Palmerston to Barton, 15 Jan. 1848. Circular reprinted in full in Platt, Finance, Trade, and Politics, op. cit., Appendix II, pp. 398–9.

53 F.O. 61–118, Palmerston to Barton, 16 Feb. 1848.

54 F.O. 61/118, Adams to Palmerston, 12 April 1848.

55 F.O. 61/118, Maclean Rowe to Adams, 16 April 1848.

56 F.O. 61/120, Maclean Rowe to Bondholders' Committee, 12 April 1848.

57 F.O. 61/120, Memorial of 11 March 1848.

58 F.O. 61/118, Palmerston to Adams, 16 March 1848.

59 F.O. 61/118, del Rio (Peruvian finance minister) to Maclean Rowe, 11 May 1848.

60 F.O. 61/118, Adams to Palmerston, 12 June 1848.

61 F.O. 61/118, Maclean Rowe to Adams, 16 May 1848.

62 F.O. 61/118, Adams to Pardo, 29 May 1848.

63 F.O. 61/118, Adams to Palmerston, 12 June 1848.

64 F.O. 61/118, Pardo to Adams, 27 June 1848.

65 F.O. 61/118, Adams to Pardo, 30 June 1848.

66 F.O. 61/118, Palmerston to Adams, 16 Sept. 1848.

67 The chairman of the bondholders' committee had written to him on the subject in July, asking again for support. F.O. 61/120, Robinson to Palmerston, 13 July 1848.

68 Levin, , op. cit., p. 62.Google Scholar

69 Loc. cit. See also The Times, 9 Nov. 1848, p. 3.

70 F.O. 61/118, Adams to Palmerston, 12 Oct. 1848.

71 Levin, , op. cit., p. 62.Google Scholar

72 F.O. 61/118, Pardo to Adams, 27 June 1848.

73 The Times, 9 Nov. 1848, p. 3.

74 F.O. 61/118, Adams to Palmerston, 12 Sept. 1848.

75 F.O. 61/118, del Rio to Maclean Rowe, 13 Sept. 1848.

76 F.O. 61/118, Adams to Palmerston, 12 Oct. 1848.

77 Ibid.

78 McQueen, , op. cit., p. 36.Google Scholar

79 Fenn's Compendium of the English and Foreign Funds (8th ed., London, 1863), p. 293.

80 F.O. 61/120, Palmerston to Robinson, 11 Dec. 1848.

81 The Times, 5 Jan. 1849, p. 6.

82 Ibid.

83 Ibid. The terms of the settlement as described by The Times differ in one small detail from those outlined in certain other sources. In the 1854 edition of Fenn's Compendium the annual increment for the deferred bonds is cited as ½ per cent and not ¼ per cent. ½ per cent also appears to be the figure given in Anales de la Hacienda Pública del Perú, edited by P. E. Dancuart and J. M. Rodriguez (see Levin, , op. cit., p. 63, n. 119).Google Scholar

84 Ibid.; Gibbs' Letters, 17 Jan. 1849.

85 The Times, 5 Jan. 1849, p. 6.

86 Ibid.

87 F.O. 61/122, Adams to Palmerston, 12 Nov. 1849.

88 Secretan, , op. cit. (1833 ed.), p. 136.Google Scholar

89 Jenks, , op. cit., p. 121.Google Scholar

90 F.O. 61/118, Pardo to Adams, 27 June 1848. The price of Peruvian bonds in London in June 1848 ranged between 30½ and 36, compared with the 16½ already cited for March 1842. See The Economist, Prices of Foreign Stocks, editions for June 1848.

91 The Times, 5 Jan. 1849, p. 6.

92 Cited in Levin, op. cit., p. 62, n. 118.

93 All prices, unless otherwise indicated, come from The Economist. The maximum quotations for each day have been cited.

94 The Times, 21 Dec. 1848, p. 6.

95 Ibid., 22 Dec. 1848, p. 6.

96 Ibid.

97 Ibid., 23 Dec. 1848, p. 3. Some buying also appears to have been done on Peruvian government account. In October 1848 Adams observed that £40,000 (face value) had been liquidated. F.O. 61/118, Adams to Palmerston, 10 Oct. 1848. By June 1849 the total was estimated to lie somewhere between £100,000 and £200,000. The Times, 20 June 1849, p. 7. Some of this debt-retiring, however, may have taken place in the spring of 1849, for the price of Peruvian bonds started rising again in March, reaching a level of 68 towards the end of the month.

98 Taking the last quotation before the conversion.

99 The total amount sent in for conversion up to 19 June 1849, two weeks or so after the new paper was issued, came to £1,473,000, face value. The Times, 20 June 1849, p. 7.

100 Ibid., 5 Jan. 1849, p. 6.

101 loc. cit.