Republic of Peru
Republic of Peru is a country located on the west coast of South America. It fronts on the Pacific Ocean and is bordered by Ecuador, Colombia, Brazil, Bolivia, and Chile. Peru has an area of 496, 224 square miles, roughly twice that of Texas. It is the third largest country in South America. Thesis Statement: The purpose of this study is to focus on the economy, religion, politics and education of Republic of Peru since its independence in 1824. II. Background A. Political Divisions, Chief Cities, and Population
For purposes of political administration, Peru is divided into 23 departments and one constitutional province, Callao, having departmental status. The largest Peruvian cities, with their 1961 populations, are: Lima, the capital, 1,436,231; Callao, 155,953; Arequipa, 135,358; Trujillo, 100,130; Cuzco, 78,289; Chiclayo, 86,904; and Inquitos, 55,695. According to the 1961 census, 27 percent of the people lived in the coast (18 percent in the Lima-Callao area alone), 60 percent lived in the Sierra, and 13 percent lived in the Montana.
According to the same census (Mason 2001), 50 percent of the population Indian, 33 percent was mestizo (a mixture of white and Indian), 12 percent was white (mostly Spanish), and 5 percent was Negro, Japanese, or Chinese. Of the total labor force of 3,200,000, about 50 percent were engaged in agriculture in 1961. Other major occupational groups were: government and services, 15 percent; manufacturing, 13 percent; commerce, 9 percent; and mining, 2 percent. The population is increasing rapidly (Werlich 2003).
B. The People Peru’s population varies considerably according to economic, social, and cultural levels, and the part of the country inhabited. On the coast and scattered among the cities of Sierra and Montana live the white and mestizo population, within the general stream of modern Western Civilization. Their language is Spanish, their religion overwhelmingly Roman Catholic. They hold all positions of power in the political, economic, cultural, military, and religious life of the country.
The Indians, mainly Quechua and Aymara, and principally inhabitants of the Sierra, are in part incorporated in the Western cultural stream, but large segments of this population still live within their own cultural patterns. A salient feature of this pattern is the comunidad indigena (native community), which is the modern form of a primitive type of social and family organization called the ayllu. Land ownership, labor, and government are communal in these social groups. About 100 jungle tribes, only 25 of which are well known, live in the forest of Montana (Werlich 2003).
The total population of these tribes was estimated in 1961 at 100,000; but since they have little contact with the rest of the population, their national importance is small. They live in much the same way as their ancestors, gaining a livelihood from hunting, fishing, and primitive agriculture (Smith 2003). C. Labor and Social Welfare The total membership of Peruvian labor unions was estimated in 1964 at 605,000, most of whom were affiliated with the confederation of Peruvian Workers, which in turn is affiliated with the Regional Organization of inter-American Workers and the World Federation of Free Trade Unions.
Social insurance has provided compulsory health, maternity, invalidism, old age, and death insurance for certain groups of workers since 1936 (Smith 2003). Workers, employers, and government all contribute to the fund. Most farm workers are not covered. The social insurance system has been extended to office workers, public and private, since 1945. Most of the Indian population in the Sierra lacks sanitation and medical facilities. There is also a major dietary problem, and one of coca leaf chewing, among these people (Werlich 2003). III. Discussion A. ECONOMIC DEVELOPMENT.
Agriculture and Stock Raising. The coast along the Pacific produces the bulk of the export crops, on irrigated lands. Cotton, which is indigenous to Peru, and sugar are the most important, though rice and other food products are also grown here. Production of cotton lint rose from an annual average of 76,000 metric tons in 1948-1952 to 152,000 metric tons in 1964. The long staple native tanguis variety commands a premium over the average cotton grown in the United States. Cottonseed production was 248,000 metric tons in 1962. Sugar ranks second as a money crop.
Production rose from 470,436 metric tons in 1952 to 766,000 metric tons in 1964. Wheat, corn, barley, oats, potatoes, alfalfa, and cocoa are the chief crops of the Sierra (Smith 2003). The crop produced depends mostly on altitude. The potato, developed in Peru by Indians thousands of years ago, can be grown to approximately 14,000 feet; corn (maize) to 11,000 feet; wheat to 12,000 feet; barley to 13,000 feet; sugar cane to 8,000 feet; and bananas and oranges up to 6,000 feet. The Montana has areas of great potentiality, where almost anything can be grown, but is undeveloped because of its inaccessibility to markets.
Coffee, tobacco, sweet potatoes, sugarcane, cacao, bananas, yuccas, and tropical fruits are produced. Fruits and vegetables are grown in most part of Peru, but commercial production is confined mainly to grapes, olives, oranges, pineapples, pears, avocadoes, bananas, chirimoyas, and apples. Stock raising is centered in the Sierra, the sheep industry being by far the most important. Cattle, alpacas, and llamas, horses and mules, and various fowl are also raised in significant numbers (Smith 2003). Large quantities of wool, hides, and skins are exported.
Pig raising for the production of fats is important in the coastal valleys. Petroleum and Mining. Mineral products rank second to agriculture in economic importance. Petroleum is found in the northern sector of the coastal region and in scattered parts of the Sierra and Montana. Since 1880, when the first oil wells were opened on the coast, production has increased steadily. In 1903 production was 302,888 barrels; in 1964 was 23,122,502 barrels. However, petroleum’s share of Peru’s exports declined from 6 percent in 1957 to 1. 83 percent in 1936. The decline was due mainly to rising domestic demand.
In fact, Peru is now an importer of petroleum products. Talara, on the northern coast, is the main refining center. The 1950 mining law has encouraged continuing exploration, particularly in the Montana (Rachowiecki 2005). Copper, lead and zinc are the leading material products. Deposits are found throughout the Sierra, especially in the central part and in the south. The Cerro de Pasco Copper Corporation and the Southern Peru Copper Corporation are the principal concerns. The chief mining centers are Cerro de Pasco, Morococha, Caspalca, and Huaron.
A major portion of the mine4ral products are processed in local plants and foundries. Gold and silver are important copper by-products. Major guano deposits are found in several offshore islands and production averages well over 100,000 me5tric tons per year. Peru is also the world’s chief source of bismuth, an important producer of silver and gold, and produces antimony, tin, manganese, molybdenum, tungsten, and marble in commercial quantities. Large iron ore deposits are exploited near Marcona in Ica Department, south of Lima.
Production in 1953, the year extraction began, was 586,000 metric tons, rising to 4,347,000 metric tons in 1964. There are also coal deposits of good grade, notably in the Ancash region, north of Lima. Peru produced 111,000 metric tons of coal in 1946 and up to the present day ((Rachowiecki 2005). Forestry. The vast forests of the Montana are not greatly utilized because their products cannot be shipped profitably west to the coast. Products of high value are shipped by air or steamer from Iquitos, the commercial center of the upper Amazon basin.
The main products are rubber, balata, raw quinine, ivory nuts, mahogany, cedar, dyewoods, condurango, tara, ciebo (kapok), conaiba, quillai, bark, and cube (Rachowiecki 2005). Fisheries. Fishing is one of the leading Peruvian industries, with fishing companies, packing factories, and fishing fleets increasing in number every year. Fish meal accounts for over 25 percent of Peru’s export earnings. In 1964 the total catch was 9,130,700 metric tons. Electric Power. The installed capacity for generating electricity in 1964 was 1,123,000 kilowatts, only a fraction of the potential.
In the mid-1960’s the Peruvian government initiated a ten-year development program which includes a 400,000 kilowatt hydroelectric plant at Machu Picchu; and expansion of the Canon del Pate plant, near Chimbote from 50,000 to 100,000 kilowatts (Smith 2003). Manufactures.? Manufacturing in Peru, though still on a small scale, has made significant progress since about 1929. Activities are largely concentrated in the field of consumer goods, but a steady expansion in other branches has taken place.
Food and kindred products constitute the principal manufacturing line, followed by textiles, construction and building materials, leather and leather products, lumber, metal and metal products, chemicals and pharmaceuticals, glassware and tire and rubber products. The completion of the Canon del Pate power plant on the Santa River marked the beginning of steel production in the nearby Chimbote plant (Smith 2003). When the plants started production in 1958, capacit6y was 60,000 tons per year of steel ingots and rolled products.
An expansion program completed tons of crude steel and 250,000 tons of rolled steel. Foreign Trade. Peru’s exports consist mainly of primary products; imports are chiefly manufactured goods and machinery. The value of total Peruvian exports was $162,387,000 in 1948; $234,100,000 in 1952; $736,000,000 in 1966. The leading exports in 1966 were copper, fish, metal, sugar, cotton, iron, lead, silver, zinc, petroleum, and coffee. The value of total Peruvian exports was $167,737,000 in 1948; $287,500,000 in 1952; $817,000,000 in 1966.
The leading imports in 1966 were nonelectrical machinery, transport equipment, metal manufactures, chemicals, pharmaceuticals, foodstuffs and beverages, and textiles. Before World War I trade with the European countries was greater than with the United States. This situation changed during the war, when trade with the United States increased considerably. In the 1960’s the United States continued to supply a major share of Peru’s imports (41 percent in 1965), but trade with other countries was increasing (Werlich 2003).
West Germany has supplanted the United Kingdom as Peru’s second largest supplier (12 percent in 1965). In 1965 the United States and West Germany took almost 50 percent of Peru’s exports (35 percent went to the United States). Other major Peruvian trade partners include Japan, the Netherlands, Argentina, the United Kingdom, Belgium Luxembourg, Italy, Canada, and Chile. In 1961 Peru became a founding member of the Latin American Free Trade Association (LAFTA) (Smith 2003). Currency, Banking, and Public Finance. In 1931 the gold value of the Peruvian sol, the basic monetary unit, was fixed at 0.
421264 grams of fine gold (equivalent to $0. 279998). Peru abandoned the gold standard in 1932. Fluctuations in the exchange value of the sol follow fairly closely the demand for Peruvian exports. The average dollar exchange rate declined from $0. 40 in 1929 to $0. 1875 in 1939. During the inflationary period of World War II and the postwar years it decreased still further, and controls, restored to in 1941, failed to restore the sol’s former real value. The elimination of controls in 1949 introduced new variations until the sol was stable at 26 per dollar.
Inflation ad budget and trade deficits caused devaluation to 36. 40 per dollar in 1967. The sol is divided into 100 centavos. The government issues the following coins: nickel sol and half sol pieces; 5, 10, 50, 100, and 500 soles (Smith 2003). Besides being the only bank of issue, the Central Reserve Bank of Peru exercises the usual functions of central banks in other countries. Other state banks, organized to maintain and promote economic progress in their respective fields, are the Industrial Bank, the Agricultural Bank, the Mortgage Bank, and the Mining Bank.
There are several important domestic banks, among them the Banco de Credito del Peru, the Banco Popular del Peru, the Banco Internacional del Peru, the Banco Gibson, the Banco Wiese, the Banco Continental, the Banco Union, and the Banco de Lima. Branches are maintained by leading United States, Canadian, and European banks. Public Finance.? During the first half of the 19th century Peruvian finances were aided by a considerable increase in revenues from the state guano monopoly, particularly during the 1840’s and 1850’s.
But in the 1860’s, guano revenue began to decline and the government borrowed abroad and increased taxation to cover its expenditures. The War of the Pacific (1879-1883) aggravated the country’s financial plight, since Peru lost large nitrate and guano deposits to Chile. A slow recovery followed, but new financial depressions were endured in 1913-1915 and 1921-1922 (Mason 2001). From 1922 to 1930, thanks largely to foreign investments and government expenditures, there was a marked recovery. A new period of financial stringency, accompanied by a steadily mounting debt, began in 1930 and lasted almost to the outbreak of World War II.
During the war and post war years, despite early shortages and severe inflationary trends, the Peruvian economy expanded noticeably. The gross national products rose from 32,214,000,000 soles in 1950 to 64,659,000,000 soles in 1964. The 1964 draft budget called for expenditures of 17,418,200,000 soles as compared to expenditures of 3,524,500,000 in 1953. During the same period revenues rose from 3,248,400,000 soles to 17,874,400,000 soles. The public debt totaled 7,626,500,000 soles in 1958. The foreign debt has shown a proportionate decline in relation to the internal debt.
Interest and sinking fund payments on the foreign debt were suspended in 1931, but were resumed in part in 1935, and in 1945 arrangements were made to restore them in full. Service on the internal debt has been met regularly. Peru is a member of the International Bank for Reconstruction and Development and of the International Monetary Fund. Loans and assistance funds from these institutions and from the United States Export-Import Bank have been obtained for developmental and currency stabilization purposes (Mason 2001).
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