Guano Era
6.5 Peruvian Welfare Development
By means of an OLS regression we estimate two height trends, one for males and another one for females (Table 6.2). The results are adjusted with population weights for the racial composition of Peru calculated from the census of Peru in 1876 (Figure 6.1). Heights of male prisoners declined over the 19th century from around 162.4 to 161.4 cm. Although this decrease seems not to be very strong, it is nevertheless astonishing that Peruvian heights stagnated (or declined slightly) in a period of economic prosperity. However, lower class Argentines in the late 19th and early 20th century, similarly, did not benet from the Argentinean 'Golden Age', experiencing stagnating living standards instead (Salvatore 2004, 2007). Peruvian heights decreased strongly in the 1840s, improved only slightly afterwards, but remained below the level of the 1820s and 1830s. Frank (2006) detects a
6The same restrictions are applied to women and migrants.
similar sharp decline in the stature of Brazilian prisoners for the 1840s, but fails to deliver any specic explanations. Thus, the guano boom in Peru seems to have had no positive eects on the standard of living of the middle and lower social classes.
Female heights, in contrast, showed more variation between the dierent birth decades which might also be driven by the lower number of cases for females. Over the period 1830 to 1860, an increase in height of about 1 cm can be observed. However, due to the limited number of cases, we must be careful to interpret this development as an improvement in the standard of living of females. Middendorf (1893, p. 212) observed that women in general were quite small, but that their height increased during the years of observation. He explains this with a reference to nutrition and mentions that women started to comsume more meat.
Which might be the reasons for the poor height development of the lower social classes?
We argue that the disease environment, a shift in agriculture from foodstu to export crops, as well as rising prices are responsible for the stagnation in heights. The hygienic situation during the period under study was precarious. During the second half of the nineteenth century, mortality in Lima had been higher than the number of births, which put Lima on the seventh place of cities with the highest mortality at that time (Moreno 1897). Life expectancy at birth in the rst half of the 19th century was around 30 years and by 1859 it had risen to 30-32 for men and 32-34 for women only (Huenefeldt 2000, p. 21). Diseases and epidemics like smallpox in 1822 or yellow fever around 1855 could hardly be eradicated. Moreover, tuberculosis and dierent fevers were widespread. All eorts of dierent governments to improve the hygienic situation in the city failed. The main reason for this can be seen in the hygienic and health behavior of the inhabitants.
Higher income groups were aected as well, since residential quarters of higher and lower social classes adjoined (Moreno 1897) and water-borne diseases aected all classes (Peloso 1985). Food, particularly vegetables or bread, was often contaminated and transmitted dysentery. Until the late 1860s, when yellow fever attacked members of the legislature and the government made sustained eorts to improve the sanitary situation in Lima, the hygienic environment did not improve signicantly (Zárate Cárdenas 2006).
In contrast to the disease environment, the provision of foodstu was quite good.
The Creole cuisine relied heavily on meat. Moreno (1897) compares the meat consump-tion in Peru around 1890 with meat consumpconsump-tion in other countries and concludes that Limeños consumed a lot of meat in international comparison. While cattle was infrequent, sheep and mutton were preferred. Consumption patterns were similar across social groups (Gootenberg 1990, Peloso 1985) and low prices made basic foodstu like bread and meat aordable for the lower economic strata (Peloso 1985, Gootenberg 1990).
The guano boom beneted primarily a small elite in Lima and some foreigners. But it also transformed the governmental revenue structure. By 1861-1866 guano income accounted for 75 percent of government income. Expenses for education and health also increased, but did probably not trickle down to the lower social classes (Berry 1990).
Although real wages increased between 1855 and 1869 in response to a higher demand for domestic products, industrial employment declined around 40 percent (Hunt 1985). The appreciation of the exchange rate led to a ood of foreign imports that threatened the domestic industry. Substantially increasing food prices caused artisans to protest around the end of the 1850s and led to increasing criminality, which compelled the Parliament to discuss the question whether the death penalty should be reintroduced (Bonilla 1974).
Thus, despite the guano boom the economic situation of large parts of the Peruvian society did not improve and it is likely that the increasing food prices had additional negative eects. Therefore, stagnating heights during the period of economic prosperity are not surprising.
Over the course of the 19th century food production was increasingly substituted by the production of export crops like sugar or cotton. The latter saw an enormous increase in prices during the U.S. American civil war. Peloso (1985) states that this development aected predominantly the pattern of food allocation. Prices for foodstu increased as a result of the Dutch disease, i.e., an appreciation of the exchange rate due to the ex-port boom, the replacement of agricultural production by the cultivation of cash crops, and an increasing population in Lima from the second half of the 19th century. Indian communities in Tarma, near the silver mines of Cerro de Pasco, traditionally cultivated
potatoes, alfalfa, and corn (to produce chicha - a fermented beverage). But Tarma's landlords seized the opportunity to take these lands in order to cultivate sugar and distil aguardiente which was in great demand at the mines (Peloso 1985). This is only one of numerous examples that show the shift in Peruvian agriculture from the production of foodstu to either export products for European or U.S. markets. Especially Lima and Callao beneted from this development (Smith 1987). Particularly the poor, in contrast, may have suered from this development.
In sum, enrichment and impoverishment accompanied each other (Bonilla 1974). While the protein consumption in Peru was quite good among all social strata, the unfavorable disease environment, the replacement of agricultural production by export products, and the worsening economic situation for large parts of the population probably led to stag-nating heights.
How do Peruvian heights perform in international comparison? Figure 6.2 compares Peruvian heights to heights of immigrants in Peru. 7Peruvians were shorter than immi-grants from Colombia and Chile and had almost the same height as prisoners born in Ecuador. Even if we control additionally for the birth decades, Peruvians remain the shortest (Table 6.3). On average, they were 1.8 cm shorter than prisoners born in Colom-bia, and 0.8 cm shorter than prisoners born in Chile. However, these dierences are not statistically signicant. Spanish- and Italian-born prisoners are signicantly taller, around 2.8 cm and 3.0 cm, respectively. These dierences can be explained by the social composition of Italian and Spanish prisoners. 65 percent of the Italians and 83 percent of the Spanish are classied as skilled or professional according to their occupation. Among the Peruvians, only 46 percent are classied as skilled or professional.8
Was the guano boom responsible for stagnating living standards of the lower classes?
The relationship between resource abundance and economic growth has been studied ex-tensively by various scholars, for instance, Sachs and Warner (1995, 2001), Isham et al.
(2003), and Torvik (2002). A negative association is induced through various mechanisms.
7Information on the year of immigration is not available from the prison sources.
8See section 6.6.2 for the classication of occupations.
First, the Dutch disease may lead to a downturn in the manufacturing sector which im-pedes economic development and future growth perspectives. Rent-seeking behavior may also inuence the development of a resource boom negatively (the 'resource curse'). If the appropriation of the rent is the society's principal aim, this causes a distortion of the factor markets and policies. Likewise, oligarchic policies are frequent in resource rich economies and may hamper economic growth (Bulte, Damania, and Deacon 2004).
Besides the relationship between resource abundance and economic growth, only Bulte, Damania, and Deacon (2004) scrutinize the eect of natural resources on social indica-tors like the Human Development Index, the Human Poverty Index, the percentage of undernourished population, the percentage of underweight children, and life expectancy at birth. The authors nd a small, but still substantial, negative impact on these social indicators for the late 20thcentury. If this relationship holds for earlier periods, the guano boom-induced Dutch disease and rent-seeking behavior may also have led to stagnation in living conditions of the lower social classes.
To conclude, despite the wealth of the country, the export boom beginning in the 1840s had no positive impact on the living standards of great parts of the Peruvian population.
While prices rose signicantly during the guano era, wages did not match this develop-ment, at least not in all sectors of the economy (Gootenberg 1990, Hunt 1985). Increasing food prices and unemployment led, together with an unfavorable disease environment, especially in the urban areas of Lima and Callao, to negative impacts on the height de-velopment. Peruvian heights remained throughout the period under consideration on a low and stagnating level.