industrialización en paraguay
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State-Led Industrialisation: The Evidence on Paraguay, 1852-1870Author(s): Mario PastoreSource: Journal of Latin American Studies, Vol. 26, No. 2 (May, 1994), pp. 295-324Published by: Cambridge University PressStable URL: http://www.jstor.org/stable/157945.
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State-led
Industrialisation:
The
Evidence
on
Paraguay,
185
2-I
870*
MARIO PASTORE
In
the
last three
decades,
the economic
history
of
Paraguay
has
been
subject
to
an intense reexamination. It has
been
claimed that the state
in
Paraguay
led a
'spectacular
industrialisation effort'
in
the second
half of
the
nineteenth
century
and
that this effort was
prematurely
truncated
by
war.
One
author,
for
example,
has stated
that
From
I85
Z
on,
free circulation on the river Parana
permitted
a
rapid
increase of
exports,
mostly
under state control. The resources thus freed were devoted to
the
development
of
the
modern manufacture of industrial
goods
and
plant:
iron and
steel,
engineering,
shipbuilding, brickmaking,
etc.
A
railway
and a
telegraph
were
installed
without
incurring
an
external debt. The
experiment
was nevertheless
spoiled
by
the
war with the
'Triple
Alliance'
(1864-1870),
which
opposed
Brazil,
Argentina,
and
Uruguay
to
Paraguay,
and
resulted
in
the
demographic
and
economic
collapse
of the
country.l
These so-called
'revisionist'
hypotheses,2
however,
turn out to
be
*
This
paper
was
conceived when
the
author
was
visiting
Washington
University
in St
Louis.
An
earlier
version
was
presented
at the Latin American
ndustrialisation
ession,
X International Economic
History
Congress,
Leuven,
August
I990
and
the
L
Congress
of
the
US
Economic
History
Association, Montreal,
September
990.
Thanks are due
to
Douglass
North,
Enrique
Cardenas
and other
participants
n
the session
on Latin
American
Industrialisation,
as
well as to Richard
Salvucci,
Jacques
Barbier,
David
Landes
and,
especially,
Ricardo
Salvatore,
for their
comments,
questions
and
suggestions.
Partial
financial
support
was
provided by Washington University's
Center
in
Political
Economy,
the
Hewlett
Foundation,
and
the Mellon
Foundation.
1
See
Jean
Batou,
Cent
ans
de
resistanceau
sus-developpement.
'industrialisationde
fA4merique
latine
et du
Moyen-Orient
ace
au
defi
europeen,
770-187o
(Geneva,
1990),
p.
460.
Quoted
excerpts
are from Batou's
English summary,
pp. 45 -69. I thank David Landes for
having
called
this
work to
my
attention.
2
Though
Batou's
Cent ans is the most
recently
published
summary
of
revisionist
hypotheses
and
supporting
evidence available
in
secondary
sources
Vera Blinn
Reber's
'Modernization from Within:
Trade
and
Development
in
Paraguay,
I8I0-I870'
(unpublished
book
manuscript, Shippensburg University,
Carlisle,
PA,
I990)
is the
latest and most
thorough
statement
based
on archival
sources. From the
long
list
of
earlier contributions to this
'genre',
the most relevant for our
purposes
are
Thomas
L.
Whigham,
'The
Iron
Works
of
Ybycuf,
Paraguayan
Industrial
Development
in
the
Mid-Nineteenth
Century',
The
Americas,
vol.
35
(1978),
pp.
201-18
and
John
Hoyt
Williams,
The
Rise
and
Fall
of
the
Paraguayan
Republic
(Austin,
Texas,
I979),
both based
on archival research. No historiographical study of the Paraguayan revisionist school
Mario Pastore
is
at the
Department
of
Economics and Latin
American Studies
Program,
Tulane
University,
New Orleans.
J.
Lat. Amer.
Stud.
26,
295
324
Copyright
?
1994
Cambridge University
Press
295
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296
Mario Pastore
supported by only
a
very
general
description
of
foreign
trade
and state
investments.
Quantitative
data on the
behaviour
of
exports
and
imports,
on
government revenues, expenditures
and
investments,
as
well as on
the
nature and
volume of
output produced
by
state
enterprises
are,
in
general,
rather
meagre
and
unreliable.
Thus,
the
hypothesised
connection
between
state
exports
and
state
investments
cannot be
verified
empirically.
Similarly,
the data
do
not
suggest
that the economic
growth
that did take
place
was industrial in
nature,
nor do
they
support
the
claim that
the
expansion
of the
communications
infrastructure had
much economic
importance.
Furthermore,
revisionist
authors themselves have
begun
to
question
previous
assertions
regarding
the extent of
industrial
growth
and
population losses resulting from the war; the deleterious economic
consequences
of
the war
may
also have
been overstated.3
A
careful look at the
evidence,
however,
suggests
that
these contentions
hold even
though
the
agricultural export
boom
appears
to
have
furnished
is
yet
available,
but its evolution
may
be traced
in
M. S.
Alperovich's
'La
dictadura del
Dr. Francia en la
historiografia
del
siglo
XX',
Estudios Latinoamericanos
(Wroclaw),
vol.
5
(I979), PP. 87-99,
Sergio
Guerra
Vilaboy,
Paraguay,
de la
independencia
la dominacidn
imperialista,
18II-I870
(Havana,
1984)
and Reber's Introduction
in
'Modernization
from Within'. Paraguay's revisionist school is related to Argentina's, analysed in Tulio
Halperfn
Donghi's
El revisionismohistdrico
argentino
Buenos
Aires,
1970).
Revisionist
hypotheses
have dominated the field of nineteenth
century
Paraguayan
history
in
the
last three
decades.
Their
influence
on
general
syntheses
of
nineteenth
century
Latin
America has been
widespread
as
well,
and
is evident
in,
for
example,
David Bushnell
and Neill
Macaulay's
The
Emergenceof
Latin America
in
the
Igth
Century
(New
York,
1988).
3
Thomas L.
Whigham,
for
example,
now
acknowledges
that his earlier claims of
industrial
development
may
have been too
sanguine.
See The Politics
of
River Trade:
Tradition and
Development
n the
Upper
Plata,
1780o-870
(Albuquerque,
New
Mexico,
1991),
pp.
71-2.
Also,
Vera
Blinn
Reber
persuasively argues,
in 'The
Demographics
of
Paraguay:
a
Reinterpretation
of the Great
War,
I864-1870',
Hispanic
American
Historical
Review,
vol.
68,
no. 2
(May I988),
pp.
289-319,
that
previous
estimates
suggesting
a
population
loss of over
50
per
cent
may
be overstatements. She instead
suggests
that the war
'actually
cost
Paraguay
between
8.7
and
i8.5
per
cent of
its
prewar population' (p.
290).
While
granting
Reber's
point
that the
magnitude
of
Paraguay's
population
loss
has been
exaggerated,
in
'Some
Strong
Reservations:
A
Critique
of Vera
Blinn
Reber's
The
Demographics
of
Paraguay:
A
Reinterpretation
of the Great
War,
I864-1870 ',
Hispanic
American
Historical
Review,
vol.
70,
no.
4
(November I990),
pp.
667-78,
Thomas
L.
Whigham
and
Barbara
Potthast
attacked
her
estimate,
which
they
misrepresented
as the lower bound
of
the interval she
proposed
(p.
667).
However,
Whigham
and Potthast failed to notice one of the weakest
points
in
Reber's
estimate,
that
is,
that it is based on
a
non-linear
regression
with
very
few
degrees of freedom. Finally, that the economic devastation caused by the war may have
been overstated
as well
may
be
gleaned
from
'El
Paraguay
segun
Wisner',
Revista del
Instituto
Paraguayo
(39-I903), pp.
763-73.
The
present
article concerns itself
with the
question
of
state-led
industrialisation
only.
War-induced
population
and economic
losses
are
more
appropriately
discussed
in
connection
with the
post-war
period
and
lie
outside its bounds.
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State-led Industrialisation n
Paraguay 297
the state
with
more resources
than
had
previously
been
thought.
Resources
available to
the
state
seem
to
have been underestimated
until
now because
little
attention had been
paid
to the fact that
(i)
the
agro-
export
boom
may
also have stimulated
the
private
domestic
economy
and
thereby
increased
fiscal
revenues,
(ii)
the
state did resort to
foreign capital
markets
in some
measure,
and
(iii)
the terms of trade
may
have
improved.
However,
although
the
state had
greater
resources at its
disposal
than
had
been
thought,
it
may actually
have invested
only
a
portion
of the
boom's
proceeds
with
the
aim
of
expanding
the
country's
export
and
military
capacity.
More
specifically,
the state seems
to have aimed at
expanding
the
boom's
rents,
appropriating
them,
and
defending
them from what
it
perceived as the competition of predatory neighbouring states. Many of
the
rents
that
accrued
to
the
state,
however,
were
simply dissipated.
In
conclusion,
the evidence
suggests
that
the
state
sought
to attain different
aims
than has been
suggested,
and achieved
considerably
less than
it
set
out to or
than has been claimed. These
alternative
hypotheses,
in
turn,
are
consistent
with
a
different
economic
theory
than
that
underlying
'revisionist'
hypotheses.4
This article is
organised
as follows. The first
section
begins
by
describing
the
agroexport
boom
and the fiscal revenues derived
from it
and
other
sources; then it examines government expenditures, in particular, state
investments.
The second section
analyses
the
money
stock,
the
price
level,
the
exchange
rate and the
balance of
payments,
as well as the
government's
monetary
and
exchange
rate
policies,
and their
effects.
The last
section
presents
the conclusions.
4
Revisionist
authors
usually
resort
to
dependency
or Marxian
heory
when
they
rely
on
theory
at all.
Early
applications
of
dependency
theory
include Richard
Alan
White's
Paraguay's
Autonomous
Revolution,
I810-184o
(Albuquerque,
New
Mexico,
1978)
and
Whigham's
Iron
Works
of
Ybycuf'.
A
relatively
toned-down version
of
dependency
theory is apparent in more recent works like Batou's Cent ans and Reber's
'Modernization
rom within'.
Among
Marxist
analyses,
an
early
one
is Oscar
Creydt's
Formacion
istdrica
e
la nacidn
araguaya
Moscow,
I963);
a
more recent one is
Guerra
Vilaboy's Paraguay,
e a
independencia
la dominacion
mperialista,
hich
specifically
cites
(p.
90)
V. I. Lenin's 'Sobre
el
impuesto
en
especie',
in
Obras
escogidas
Moscow,
I96
i),
as
relevant
to understand he
state
capitalism
hat
allegedly
obtained
in
early
national
Paraguay.
John Hoyt
Williams's Rise and
Fall
is
apparently
unconcernedwith
theory
and
only
seeks
to
provide
an
accurate
description
based
on
archival evidence.
However,
descriptions
mply
some
theory,
even
if
ad
hoc
or unstated.So do
interpretive
judgements
such as
Williams's
categorisation
of
early
national
Paraguay
as a case of
'state
socialism'
(pp.
92-5),
previously
advanced
by
Pelham Horton
Box,
Origins
f
the
ParaguayanWar (New York,
1930),
p. 12. The theoretical framework underlying the
alternative
hypotheses put
forth here
is the new institutionaleconomics based
on
the
work
of
Ronald
Coase,
Douglass
North and
Oliver Williamson.For
a
good summary
of its main
tenets
see
Jeffrey
Nugent
and M. K.
Nabli,
The
New
Institutional conomics
and Economic
Development
Amsterdam,
I989).
For
space
constraints these alternative
hypotheses
can
only
be formulatedhere.
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Mario Pastore
Agricultural
export
boom,
fiscal
resources and state investments
This section reviews the evidence available
in
secondary
sources
on
state
fiscal resources and
expenditures.
I will first consider
government
resources obtained
through
direct state
exports,
taxation,
government
borrowing
abroad
and
improvements
in
the terms of trade. Then
I
will
review the data
on
total
government spending,
state
imports
and
investments
in
particular.
(i)
Government
receipts
(a)
State
exports.
The available data
-
whose
reliability
will not be
questioned for the moment - suggest that sales of Paraguayan products
abroad
began
to
grow rapidly
once
the
Argentine government opened
the
Parana River
to free
navigation
in
I852.5
According
to
Herken Krauer's
estimates,
total nominal
exports
increased sixfold between
8
5
I
and 8
59.6
Reber's
figures
reveal
a
similar
behaviour.7
Both
export
volumes and
export prices
rose.8
However,
the
high
rate of
growth
of
export receipts
is due
to the fact that
exports
were
very
small before
8
5
2,
i.e. that the rate
of
growth
is
calculated on a small base.
Thus,
although export earnings
grew
very
rapidly, they
continued
to be
extremely
modest
when
compared
with those of
Argentina.9
Four commodities
generated
almost all of the
growing export receipts.
The
greater part
of the increase is attributable
to
yerba
mate
and
tobacco
5
In
the first
part
of the
early
national
period,
hindrances
to trade had resulted
in a
substantial
decline of
Paraguayan exports
relative to the
late colonial
period.
For
an
analysis
see Mario
Pastore,
'Crisis
presupuestaria,
regresion
institucional,
y
contraccion
econ6mica:
consecuencias econ6micas
de la
independencia
en el
Paraguay,
8Io0-1840',
in Leandro Prados and Samuel
Amaral
(editores),
La
independencia
mericana:
sus
consecuenciasconomicasMadrid, 1993), pp.
164-200;
or the later version of this paper
(see
fn.
76,
below).
The
Paraguayan government
had
repeatedly
demanded
free
navigation
of the Parana
river from the
Argentine government
before
185
2.
However,
after
1852
it
did
not
readily
want to
grant
similar
rights
on the
Paraguay
river
to the
Brazilian
government,
which
needed access
to
Matto
Grosso.
Frictions
with Brazil
developed
over
this issue
-
as well as over
whether
Britain would
enjoy
similar
rights
-
which contributed
to the later War
of the
Triple
Alliance or
Paraguayan
War.
See
Box,
Origins,
ch. 2.
6
See
Juan
Carlos Herken
Krauer,
'Proceso econ6mico
en el
Paraguay
de Carlos
Antonio
L6pez:
la visi6n del c6nsul britanico
Henderson
(1851-I860)',
Revista
Paraguaya
de
Sociologia,
vol.
19,
no.
54
(May-Aug.
I982),
p.
Io8,
cuadro
8.
7 See Reber, 'Modernization from Within', Table 13, 'Paraguayan Imports and Exports,
1792-1880'.
8
On
export
volumes and
prices
see Herken
Krauer,
'Proceso
econ6mico',
p.
I Io,
Table
4
and
p.
I
3,
Table
8,
respectively.
9
For
Argentina's exports
see
Laura
Randall,
A
Comparative
Economic
History
of
Latin
America,
1o00-I914,
vol.
2
(Ann
Arbor, MI.,
I977),
pp.
204
and
219.
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300
Mario Pastore
Table i
Yerba
mate
prices
(in f/arroba) I854 i86o-i
Paid
by
the state
to
o.
I5
.2I-0.2z5
licensed individuals
Paid for
yerba
mate
in
0.30
the internal
market
Paid for
export quality
0.70-0.80
0.5
I
yerba
mate in
Asunci6n
Paid
in
Buenos Aires
1.40-I.60
paid
for
yerba
mate in
1854
and i86o-i are shown
in
Table
i.15
Herken
Krauer also reports that the state paid for the yerba mate partly with
imported
merchandise,
which
suggests
that the
state had a
monopoly
on
at
least some
imports
as
well.16
The state's share of
production
and
exports
was,
of
course,
much lower
in
the case of
goods
it did not
monopolise.
Thus,
most
production
and
sale of tobacco and
cigars
in
the local market or abroad was
attributable
to
private agents.
Likewise,
although
state
ranches
and
tanneries
produced
leather
goods,
the state did allow
private production
and sale in local
and
foreign
markets.
Though
the
state
did not
itself
monopolise
these
commodities, it granted privileges for their manufacture to persons
closely
associated to the
regime,
in
particular
to
members
of
the
governing
family,
whom it
protected
from
foreign
competition.
Reber
notes
that 'to
increase state
profits
on
commercial transactions the
government
sometimes dealt with favored merchants and
agents
or hired
its own commercial
agents.
Friends
and
family
of
Carlos
Antonio
L6pez
benefited
in
many
of
these transactions'. She adds
that 'from
185 5,
when
twenty
nine
year
old Francisco Solano
L6pez,
eldest son
of the
president,
handled
correspondence dealing
with
state transactions
in
Buenos Aires
and London, it was often difficult to
distinguish
his
personal
speculations
from
state business'.17
15
Price data are from Herken
Krauer,
'Proceso
econ6mico',
p.
89.
16
This
hints at a
similarity
with the first half of the nineteenth
century, during
which
Chaves asserts
that 'the
monopoly
of
exports
was
completed
with a
monopoly
on
imports'.
See
Julio
Cesar
Chaves,
El
Supremo
Dictador.
Biografia
de
Jose
Gaspar
de Francia
(Madrid, 1964),
p.
287.
17
'Modernization
from
Within',
chapter
X,
pp.
I6,
30-I,
and
32-3.
Reber also
reports
that 'the decree of
G6
anuary
855,
which made
cigars
duty
free,
required patents
for
the establishment of
factories,
and
large
enterprises
had
difficulty obtaining permission
to operate. This decree may have favoured the cigar manufacturing establishment in
Asunci6n
belonging
to Colonel Venancio
L6pez,
son of the
president
as
it
appeared
directly
aimed
at
closing
down the concern
of Edward
Hopkins'
(chapter
IV,
p.
I5).
In
addition,
'(o)ne
of the
president's
relatives
had a
large
business and obtained hides
to
process
from the
military'.
Two other
individuals
closely
tied to
the
regime
obtained
similar
privileges
(ch.
IV,
p. I9).
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State-led Industrialisation
n
Paraguay
301
Table
2. Nominal state
exports
(in
pesos fuertes)
Total state
%
of total
Year exports exports
1854 300,000
38.5
8
I
855
230,000
23.00
856
530,000 46.36
i857
658,400
39.27
858 609,041
49.00
1863
1,097,380
52.00
Source: Vera
Blinn
Reber,
'Modernization
from
Within',
Table
22,
'Values of state
exports
for
various
years'.
Table
2
gives
available
figures
on
state
exports,
which seem
to
have
been
very
small
even after
they
are
adjusted
to correct for a
possible
under-estimation
of their
true
value.18
Thus,
it
does
not
seem
possible
that
state
exports
alone could have financed
an
industrialisation effort.
However,
it is conceivable
that other
sources
of state income
might
have
been
large
enough
to
finance a
programme
of
state investments
sufficiently
ambitious
to
merit
being designated
as a
'spectacular
industrialisation
attempt'.
Private
exports
and
imports
also increased
and
together
with
the
growing state trade may have led to a rising trade surplus, both of which
could have resulted
in
rising
tax revenues.
Likewise,
the state
could
have
borrowed
in
foreign capital
markets
and,
finally,
the terms of
trade
may
have
improved.
To
verify
whether
this
was or
was
not the
case,
we
move
on to examine state
revenues
obtained
through
taxation
and
borrowing
abroad.
(b)
Government
revenues. This subsection will first examine data
on
government
accounts available in
published secondary
sources;
it will
then turn to data offered more recently by Reber.
Data on
government
revenue
available
in
published secondary
sources
are even more scarce than data on
exports.
These sources offer
only
one
estimate
by
an observer
on
total revenues raised
by
the
government.
The
estimate
for 8
54
comes from the British Consul
Henderson,
according
to
whom total fiscal income that
year
reached
i
5o,ooo.19
Also available is
a
I982
estimate
by
Herken
Krauer for total
government
income between
I85
and
I86o,
which
distinguishes
between income from direct
state
18
According to Herken Krauer, some state exports to the Buenos Aires market do not
appear
in
the relevant
registries
published
by
the
government,
a
problem
which would
become
worse towards the end of
the decade
of
the fifties and the
beginning
of the
sixties,
'when the
greater availability
of national
ships
and
the
greater regional
demand
for
Paraguayan products
makes
this
type
of
commercial
operation
more
profitable'.
See
'Proceso
econ6mico',
p.
96.
19
Ibid.,
p.
92.
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Mario Pastore
Table
3.
Nominal
government
income
(in
pesos
fuertes)
1857
i858
Tax
revenues
Import
tax revenues
Export
tax revenues
Tithe
Stamp paper
Anchorage
and
navigation
fees
Total tax revenues
Rents of state
properties
Sales of state
products
to
public
Various state sales
to
public
(i.e.,
gold imports)
Foundry
products
Receipts
of
paquets
and
steamships
Passports
to
foreigners
Sales of
yerba
mate
Tolls on
Tebicuary
river
Sub-Total
Total income
Tax
collected from
previous
years
Total
1,413,293
424,270
i,837,563
Source:
Vera
Blinn
Reber,
'Modernization from
Within',
Paraguayan
Government
for
Various
Years,
186-i
864'.
202,789
81,488
105,694
350,000
72,288
413,293 812,259
2,055,807
462,748
2,5
i8,555
Table
17,
'Revenues
of the
exports
and from taxation
of
exports
and
imports.20 According
to
these
data,
total
government
income
reached almost
?200,000 (approximately
$i
million)
in
I857,
and
slightly
exceeded
?300,000
(approximately
$
.
5
million)
in
1860.
Clearly,
the available information indicates that
even
in
the best
years
total
government
income was
too
small
to
justify
any
talk
of a
'spectacular
industrialisation
effort'.
Any
such conclusion
would
thus
be unwarranted.
Furthermore,
it is not
clear
just
how
reliable
this
information
is;
it is
not known
how
Henderson reached
the
figures
he
proposed;
similarly,
Herken
Krauer
did
not
specify
with sufficient
clarity
the
sources
from which he extracted even
one of the
figures
he cited
in
his
Table 3.21 Unless we know how Henderson arrived at his estimates and
20
The data
in
question appear
n
ibid.,
Table
3, p.
109.
21
The
numbers
Herken
Krauer
provided
for
government
revenues
from taxation of
imports
and
exports
for
i85
5-59
are
'data
re-elaborated
by
the author on the basis of
information
provided
in
Henderson's
reports
and the
bibliographical
sources
cited'.
411,000
1,000,000 34,000
250,000
22,5
12
66,958
1,626
454,722
2,730
1,243,548
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can
verify
Herken Krauer's
calculations,
these
figures
would have
to be
considered
tentative.
We
can
compare
Herken Krauer's
figures
with more recent ones
furnished
by
Reber for several
years
of the
period
under
study.22
Those
corresponding
to two
particularly
good years,
I857
and
I858,
are
reproduced
in
Table
3.
I858
figures
are
more
disaggregated,
and will
be
examined
first. These
suggest
that the
government
obtained
income from
four main
sources: state
exports,
sales
of
state
enterprises
in local
markets,
taxation
of
foreign
trade and taxation of domestic economic
activity.
Among
government
revenues
from
direct state
participation
in
foreign
trade
or its taxation
were
those derived
from
the
government's
monopoly
on yerba mate and naval construction woods, from taxes applied on
exports
(those
of
gold
and silver
included)
and
imports,
from licences
issued
to individuals
to
trade within and outside the
country,
and from
fees
charged
for
navigation,
for the use of
port
facilities,
and
for
issuing
passports.
The
government
also derived revenue from
selling
the
output
of the
'ranches of
the fatherland'
as well
as
from the
sale
and
rental of
fiscal
lands.
To
these
must be added
revenues
contributed
by
direct
taxes
like the
dieZmo
and
the media
anata,
and
by
indirect taxes such as the
sales
tax
(alcdbala),
stamp
paper
and
the
inflationary
tax.23
Property
taxes
such
as those imposed in Argentina do not seem to have been applied.
The
customs
legislation
of
I84i
raised
taxes
on
exports
and
imports,
the
latter,
in
particular, being
assessed
at
40%
ad valorem.24 New customs
regulations
introduced
in
1846
reduced taxes on
exports
and
imports,
and
the new rates continued
to
apply
during
the fifties and the first half of the
sixties save for
small
modifications.
From
then
on
exports paid
00o%
ad
valorem
in
general.
Tobacco,
cotton and other
exports
paid
only
6%.
Imports
generally
paid
20%,
although
luxury
articles
paid
25
% and
agricultural
machinery
and
instruments
paid
no
import
tax.
Re-exports
paid
a i % tax. In
i855
the tax rate on tobacco and raw leather
exports
increased
from
o0%
to
I5
%,
but that on
cigars
and tanned
leather
decreased.
In
addition towards
the end
of the
fifties,
exports
of certain
types
of
wood
began
to
pay
a 20
%
tax
and the
export
tax on
cigars
was
See 'Proceso
econ6mico',
p.
107.
Unfortunately,
Herken Krauer
does
not
provide
the
original
numbers,
the
specific
sources from which
they
were
extracted
or
the
method
by
which
he
re-elaborated them.
22 The years of the period at issue for which Reber furnished data were
I85o,
1853,
I856-8,
and
I860. See
Reber,
'Modernization from
Within',
Table
17,
'Revenues of
the
Paraguayan
Government
for various
years,
1
86-1864'.
23
See Herken
Krauer,
'Proceso
econ6mico',
p.
92.
24
According
to
Juan
Andres
Gelly's
Paraguay:
lo
quefue,
lo
que
es,y
lo
que
sera
(Paris,
1926),
cited
in
Herken
Krauer,
'Proceso
econ6mico',
p.
93.
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eliminated. Herken
Krauer
argues
that these measures 'reflect an
attempt
by
the
state to stimulate
exports
of...
products
of
greater
value added... in
which
the
private
sector
played
a
determining
role'.25
However,
'until
i860
the data...
does
not
show
that
those measures had
fundamentally
affected the
composition
of
foreign
trade,
except
for
cigar
exports,
which
gradually
increased and which in
1862-64
probably
reached a
higher
level
than that
registered
in the
decade of the fifties.
Exports
of
leather,
both
raw and
tanned,
actually
decreased
in
amount and unit
value,
due
to
supply problems
that became evident in
85
8 and to the
competition
from
platine production.'26
It
needs
to
be
pointed
out,
however,
that
higher
taxes on
exports
of
leaf tobacco and raw leather could
also
have
been due
to an
attempt
to
reduce
foreign
demand for them
and reduce the
prices
that
cigar
makers and tanneries had to
pay
for
these
inputs.
Tobacco was
produced by
the small
peasantry,
while the
cigar
factories and tanneries
were
owned
by
members of the
L6pez
family
or of
its
circle.
Defining
revenues
directly
attributable
to
foreign
trade so as to include
state sales of
yerba
mate,
revenues
derived from taxation
of
private
exports
and
imports, anchorage
and
navigation
fees,
and
passports,
those
corresponding
to
85
8
may
be calculated
with
information from Reber's
Table 20.
They
add
up
to
879,871
pesos
fuertes
($F)
which were
equivalent to ? 75,974, at the rate of exchange of $F5/? apparently in
force in the
decade
of
the
i85os.27
This
figure
is
significantly higher
than
that for
I854
cited earlier.
This
is
not,
however,
surprising;
in
I858
exports
of
yerba
mate were
almost
twice,
and
those
of
tobacco
were
almost three
times,
as
large
as those
of
1854.
Exports
of
woods, leather,
and
cigars
were also
generally greater
in
I858
than
in
1854.
In
addition,
increased
private exports
led to
increased
private imports
and,
con-
sequently,
to
higher government
revenues derived
from
their taxation.
Proportionately,
however,
government
income
attributable
to the
foreign
sector for 858 amounted to
slightly
less than 40
per
cent of total
government receipts.
This
proportion
is
significantly
lower than that
estimated
by
Herken Krauer for
I854
(60 %)
and
contradicts his
notion
that
government
income from the
foreign
sector as
a
proportion
of total
government
income had
probably
increased towards
1857-9.28
Clearly,
if
government
income attributable to the
foreign
sector increased
absolutely,
but diminished as a
percentage
of the also
rising
total
government
income,
the
percentage
attributable
to
domestic sources
must have increased.29
25
'Proceso econ6mico', p. 94.
26
Ibid.,
p. 95.
27
Ibid., p.
109.
28
Herken
Krauer
does
not indicate the bases of his
estimate,
which must therefore be
considered
speculative.
29
One must take into
consideration,
however,
that
total
exports
were lower
in
85
8 than
in the
immediately
preceding
and in the two
immediately
succeeding
years.
Consequently,
it is
possible
that,
in
I858,
revenues from
foreign
trade
may
have been
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The increase
in fiscal
income not
directly
derived
from taxation of the
foreign
sector
could
conceivably
be attributed
to an increase in domestic
economic
activity
induced
by
the
export
boom. We
note,
in
particular,
that
tax collections
derived from
the tithe
($FIo5,694),
from
the rental
of
public
lands
($F4II,ooo),
from
the
sale
of the
produce
of state
lands
($F25o,ooo)
and
of the
state
foundry
($F22,5 i2)
add
up
to
$F789,206.
If
to this
figure
we add
stamp paper
sales,
some
of
which must
have been
made
in
connection
with domestic
transactions,
we obtain
$F9I4,206,
a
figure
not
very
different from
government
revenues derived
from
foreign
trade.
Let us
now consider the behaviour
of fiscal income
in
I857.
Reber's
figures for that year are less disaggregated; they only distinguish
between customs
revenues
($F413,293)
and sales
of
products
of
state
ranches
to the
public
($Fi,ooo,ooo).
It would seem that revenues derived
from the
foreign
sector
are
proportionately
much
lower,
and those
derived
from internal economic
activity
much
higher,
than
in
1858.
This
would be
consistent
with the contention that domestic resources
were
much
more
important
than
previously
thought.
However,
Reber's
figure
for
I857
sales
of
produce
of state ranches
probably
includes
state
yerba
mate sales
abroad.
Evidently,
these
last
figures
do not seem reliable
and,
consequently, we cannot base ourselves on them to draw conclusions on
the
percentage
of total fiscal income attributable to the
foreign
and the
domestic
sectors,
respectively.
At
any
rate,
it
is
quite
clear that fiscal resources
capable
of
being
invested
in
the construction
of industrial
plant
were not limited to those
provided
by
the
foreign
sector,
and that the domestic
economy's
contribution
to
fiscal
income was
substantially greater
than has been
thought
thus
far.
Consequently,
the state could have financed its
investment
projects
not
just
from the
proceeds
of state
exports
and
foreign
trade taxation, but from the
proceeds
of a
higher
domestic economic
activity.
It could also have resorted to
foreign
credit,
which we will now
go
on to examine.
(c) Foreign
credit.
The
evidence available
in
secondary
sources
suggests
that the state borrowed abroad more
frequently
than has
previously
been
thought.
Based
on the
evidence,
one cannot
assert that the state did not
lowered as
compared
to those from other sources.
In
that
case,
forty
per
cent would
not
be
a
representativeproportion
of total
government
revenue
generated
by
the
foreign
sector. It is more
likely, however,
that
the
fall in
government
revenues from
foreign
trade was
accompanied
by
a
fall,
however
small,
of revenues
derived
from
domestic sources.
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Mario Pastore
incur
any
foreign
debts. The state made
its
first
attempt
to obtain
loans
in
the
London
capital
market
in
855,
when the
export
boom
was
just
beginning
and it had
not
yet
established credit
among
London
money
lenders.
Perhaps
for
those
reasons
the
attempt
was not
successful,
and
the
state had to
content itself
with
?4,000
obtained from
merchants.30
However,
in
I862,
John
and Alfred
Blyth
lent
Francisco Solano
L6pez
50o,6
12,
that
is,
close to a
sixth
of total
export earnings
or a
third of total
state
exports
for
that
year
-
not
a
negligible
amount
in
any
event.31 In
i865,
after the
War
of the
Triple
Alliance was
unleashed,
the
state
seems
to have
attempted
to obtain a
loan
of
?5,ooo,ooo
for the
alleged
purpose
of
building
a railroad to Bolivia. It
is
possible
that the
response
was
negative because it was already clear that it was not very likely that
Paraguay
could
pay
back a loan of that
magnitude.
It
is
also
possible
that
other
attempts
were made. It
is
clear,
therefore
that,
if
the
state
did not
incur
greater
foreign
indebtedness,
it was not
because
it
did not want or
try
to.
(d)
Terms
of
trade.
The
resources
available
to the state
were also
greater
than has been
supposed
until
now because there
appears
to have
been an
improvement
in
the terms of trade.
Although
export
and
import price
indices are unavailable, other available evidence suggests that, in general,
export prices
rose and
import
prices
fell.32
Consequently,
the
country's
import
capacity
increased,
an
important
factor in
any
modernisation
attempt.
(2)
State
expenditures
This
subsection
explores
the
available
evidence
regarding
the manner in
which the state
spent
the
funds
at its
disposal, independently
of
how
or
where it
may
have obtained them.
We
will
distinguish
local state
expenditures
from state
expenditures
abroad. As in the cases
previously
30
See Herken
Krauer,
'Proceso
econ6mico',
p.
97.
31
On the
line
of
credit
Blyth
extended to
L6pez,
see
John
Hoyt
Williams's Rise
and
Fall...,
p.
i89.
Total
exports
for
i862
-according
to
Reber,
'Modernization From
Within',
Table
I3,
'Paraguayan Imports
and
Exports'
-
reached
$FI,867,000
which was
equivalent
to
3
I
,166
at a rate of
exchange
of
$F6/?.
To
reach
the
line of credit
proportion
of total
export earnings
I
assumed,
with
Reber,
that state
exports
were a
maximum of
52
%
of
total
exports.
We have seen that this
proportion
was much
lower
in
some
years,
in which case
Blyth's
line of credit
would
have been a still
greater
proportion
of
state
exports.
32
For export prices see Herken Krauer, 'Proceso econ6mico', p. 113, Table 8. Yerba
mate
and tobacco
exports
increased
between
852
and
I860.
Import prices
should
have
fallen,
but the
price
of
imported
flour rose
according
to Herken
Krauer,
ibid.,
p.
114,
Table
9.
Retail
prices
of
imported
goods
could have increased
for
local and
circumstantial
reasons,
for
example,
state
monopolies
and the more
rapid growth
of
demand for
imported
consumer
goods
caused
by
the boom.
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discussed,
disaggregated quantitative
data
on
state
expenditures
are scarce
-
basically,
the
figures
for
1858
contained in British consular
reports
-
until
Reber furnished additional data on the
subject fairly recently.
However,
the British
consular
report
data
differ
substantially
from
those
Reber
herself
calculated
for
the same
year
on the
basis
of
archival
documentation,
in
a
4:
relation.
Consequently,
both
groups
of
figures
will have to
be taken as
tentative
until their relative
reliability
can
be
established.
For that reason
we
will
only
try
to
see what
these
figures
can
tell
us
about
the share of certain items
in
state
expenditures.
The
percentages
calculated
on
the
bases
of
the British
consular
report
figures
are followed
in
parentheses
by
the
percentage
calculated
on the basis of
Reber's figures. Almost 80 (40) per cent of state expenditures for that year
went
to
pay
for
military
salaries. Other
employees
of the executive
branch,
the
legislature,
and the
municipal
government
absorbed
4.76
(3.92)
per
cent,
and the Church
7
(o)
per
cent.
Public
works,
the
most
important
category
of state
expenditures
after
military
salaries,
absorbed
only
2
(o)
per
cent of state
expenditures.
In
turn,
only
20
per
cent of
state
expenditures
on
public
works
that
is,
2.4
per
cent
of
the
budget,
was
devoted to
public
works
properly speaking, specifically,
to the
foundry
and
the railroad.
An
activity
that had little
in
common
with
public
works,
yerba mate production, absorbed a much greater proportion, around 7
(35)
per
cent.33
(a)
State investments.
An
examination
of
secondary
sources
reveals
that
even
less data
are
available for this
category
than
for
those
previously
discussed.
Still to
be done is
the
basic
quantitative
research
on
state
accounts
and state
imports necessary
for a
detailed
description
of
state
investments.
In
particular,
no
estimates
exist of the real value of
state
investments
or of the
product
of
state
enterprises.
In
both
cases,
the
available
evidence allows for
only
a
qualitative description
to
be
made.
Consequently,
revisionist
hypotheses
on
industrialisation rest on
rather
weak foundations.34
In
what follows
I
will
give
a
summary
of
the
state's
investment
projects,
taking
special
care to establish
their
chronological
sequence
and
to
review
the
quantitative
data available
in
each case. It
will
become
clear
as
a
result that
the
evidence does not
justify
the
contention
that
anything
even
remotely
akin
to
industrialisation
took
place.
33
Reber,
'Modernization from
Within',
Table
I8,
'Paraguayan
Government
Expend-
itures for various years, I8I6-i866'. The column labelled 'i858b' contains Reber's
figures
based
on
those
in the
Libros
de
Caja
of the
Paraguayan overnment's
General
Treasury.
The column labelled
'85
8e'
contains
figures
from the British
Consular
report
on
the
finances
of
Paraguay.
34
That there also was some
private
nvestment s
clear,
but
it
is
not
known what it
might
have amounted
to.
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308
Mario
Pastore
State
investment
projects
began
in earnest in
I853,
when
President
Carlos
Antonio
Lopez
sent
his son
Francisco
Solano,
then
a
general
and
Minister
of
War,
to
Europe.35
Francisco Solano
Lopez
visited
England,
France,
Spain,
Italy
and the theatre of
operation
of the Crimean War. In
London,
he established relations with
John
and Alfred
Blyth,
shipbuilders
of
Limehouse,
a concern that
would
henceforth act as
agents
of the
Paraguayan government. Through
Blyth,
L6pez
hired
John
William
K.
Whytehead,
who
would
eventually
become
chief
state
engineer,
as
well
as other
engineers
and machinists
of lower rank. He also
purchased
a
steam-driven
warship
in which he
returned
to
Asunci6n towards
the end
of
1854
with the technicians
he
had hired
and
the
capital goods,
raw
materials
and
military
materiel he had
bought.36
Working
directly
under
the
Minister
of
War,
Whytehead
designed
and
constructed
the
different
projects
that had been
taking shape
in
the mind
of
President
L6pez during
the
preceding
decade. These
projects
appear
to
have
become
more
ambitious
as
his son
became more
important
in the
government. Among
them
were,
first,
an
iron
foundry,
in which the
state
intended to
process
the
iron ore
extracted
from
local mines
;37
second,
an
arsenal,
where the
state
anticipated
that the
iron
produced
at the
foundry
would be
shaped
and
the
parts
obtained would be finished
and
assembled.
The arsenal would also produce, besides arms and munitions, inputs
needed
for other
projects being contemplated. Among
these was the
shipyard,
which would build the riverine
and
seagoing ships
for
the state
merchant
marine
and war
fleet
that
would facilitate
transportation
and
defence,
respectively;
the forts that would
control
strategic
stretches
of
the
Paraguay
River;
the
expansion
of the
port
of Asunci6n
that the
growing
trade would
make
necessary;
the railroad
that would
join
the
country's biggest port
and
population
centre,
Asunci6n,
with Villa
Rica,
the main
gathering point
for
the
most
important export product,
transporting exports outward and imports inland, and expanding the
35
Carlos Antonio
L6pez
had sent
a
similar mission
to Brazil at the end
of
the
previous
decade. See
below,
note
57.
36
The
warship
in
question
was the 'Tacuari'.
Among
the
capital inputs purchased
were
between
eight
and
ten
steam
engines.
See Robert
Scheina,
Latin America:
A Naval
History,
I810-1987
(Annapolis,
Md,
1987),
p.
i9,
note
o0.
37
L6pez
had tried
to
establish
an iron
foundry
twice before
Whytehead's
arrival,
both
times without success.
In the late forties he sent
Juan
Andres
Gelly
to
Rio de
Janeiro,
who hired
technical
personnel
and
purchased
needed
inputs.
This first
foundry
project
was directed
by
Henry
Godwin.
The
second
attempt
was
made
in the
early
fifties,
under
Augusto
Liliedat's direction.
See
Josefina Pli,
Los britdnicosen el
Paraguay (Asuncion,
1984),
pp.
29-38.
Subsequent
quotations
from Pla's
text
are
from this
Spanish original,
and do not
always
appear
in
Josefina
Pli's The British in
Paraguay
(Oxford,
I975,
translated
and with an 'Historical Introduction'
by
Brian
Charles
MacDermot).
The
Spanish
edition,
published
nearly
ten
years
after the
English
translation,
does
not
include
MacDermot's
very interesting
introduction.
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309
internal
market for
locally
produced
goods
and
services;
the
telegraph,
which would
accelerate still
more communications with
the interior
and
with
the fortifications
downriver;
and
the
buildings
that would be
required
for the
already
mentioned
projects
and
to
lodge
the
governing
family,
its circle
of close
associates,
and the state
bureaucracy,
whose
growing
number
and
importance
was
easy
to
predict.38
The
foundry
and
the
arsenal,
therefore,
would constitute
a
small-scale version
of a
capital
goods
industry.
Both
the
foundry
and the
arsenal
as well as
the
ships,
the
port,
the
railroad,
the
telegraph
and the
majority
of
the
public buildings
could
serve
not
only
an economic but a
military
purpose
as
well. In
fact,
during
the
War
of the
Triple
Alliance
they
were all
subordinated
to
the
latter purpose. Below I describe each of these projects in greater detail.
(i)
With
Whytehead
at the
helm
the
foundry
and
associated
projects
were
carried
out
between
early
I855
and
I857.
The
foundry
required
-
besides
the installation of the furnaces - the extraction of iron ore
and,
to
facilitate its
transport
and
that
of the
coal
needed
to
melt
it,
the
detouring
of
a natural
waterway,
its
dredging
in certain
stretches and its
channelling
in
others,
and
the
construction
of
the
dam that would move the wheel that
would
power
the furnaces' blowers.
Producing
charcoal
in
turn
implied
building
ovens.
Also,
wood needed
to be cut and
transported
to where the
ovens were located, a task that was carried out with carts produced at the
arsenal
moving
on
wheels
protected
by
iron
rims made
at the
foundry.
A
search
for
coal was
conducted,
but
it
was unsuccessful
-
despite
the fact
that
deposits
did
exist,
as was later verified.39
Apparently
both
L6pez
and
Whytehead
initially
held
serious
hopes
that
Paraguayan
iron could
eventually
compete
in the
region
with
that
from
Britain.
However,
the
foundry
never
resolved several
problems
of a
technical and
organisational
nature that
kept
this
goal
from
being
reached,
nor
could it overcome other
difficulties
presented by
nature. The
fundamental obstacle to the
expansion
of iron
production,
however,
turned out to be the
selection
of
inappropriate techniques
and
the failure
to
locate coal
deposits,
which
implied
the
use
of
charcoal as fuel.
The
foundry's
average output
level under normal
operating
conditions
cannot be calculated from available information.
According
to
Whigham,
total recorded
iron
poundage produced
at the
foundry
between
August
I854
and
January
I856
was
5,543
pounds,
which
he warns is a
partial
38
Sumptuous private
residences were built
for
the rulers.
Most
important among
them
was Francisco Solano L6pez's - now Paraguay's presidential palace. See Ram6n
Gutierrez,
Evolucidn
rbanzsticay
rquitectonica
el
Paraguay
Resistencia,
Argentina:
1978),
Segunda
edici6n.
39
After
the
war,
coal
deposits
were found
to
exist
in
present day
San
Estanislao,
Cerro
Le6n and
Paraguari.
See
Juan
Francisco Perez
Acosta,
Carlos Antonio
Lope:,
obrero
mdximo. Labor administrativa constructiva
Asunci6n,
1948),
pp.
59-60.
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3
o Mario
Pastore
figure,
for
'many
articles
produced
in the
foundry,
as
well
as
all
of
those
from
the
smithy
were
without
poundage
figures'.
This
suggests
that,
initially, foundry production
was
at
least
300
pounds per
month or
almost
3,700
pounds
per
year.
He then
goes
on to assert
-
following
Trias
-
that
'by
I857,
more
than
I,ooo
pounds
of iron were
being
smelted
in
the
foundry every
twelve
hours',
a claim that Reber
reiterates.40
This
suggests
a
daily output
of
2,000
pounds
under continuous
operation,
or
730,000
pounds per
year,
a
sizeable increase.
This
figure
is
suspect
for two reasons.
First,
we
know
from Pla that
'even in the best
of
times,
the
yield
of the
Ybycui
furnaces did not reach
5,ooo
quintales
per
year'.41
A
quintal
equals
ioo
pounds
or four
arrobas
so
that output could not have exceeded 1,3 70 pounds per day even in the best
of
times. Thus
the
figure Whigham quoted
from Trias seems too
high;
also,
Trias
does
not
give
its source.42
Finally,
Whigham reports
that for
the twelve
months
during
which
the
foundry operated
between
April
i865
and
May
1866,
total
recorded
poundage
for the
foundry
and the
smithy
was
105,202
pounds,
which
suggests
that even the
figure
given by
Pla for
output
during
the best of times
may
be
an overestimate.43 Since six
of the
months included
in the
period
cited
by Whigham
followed the
beginning
of the
War
of the
Triple
Alliance,
one
would
suspect
that even
Whigham's figure is an overestimate of the foundry's average output
under
normal conditions.
From this discussion
it would
appear
that this
matter is far
from
clarified
or
settled.
An
indication
that the
foundry's
output
may
never
have reached
expected
levels is that the
state could never
accumulate
a
reserve
stock of
iron and
that iron
production
did
not reach
a scale sufficient
to
permit
local
production
of
the
iron-hulled
vessels that had
earlier been
thought
possible,
or of the railroad ties.44 These continued
to
be
imported,
together
with
pig
iron and coal. Once
the
original,
very
ambitious
40
Whigham's
figures
on
foundry
production
are
from
'The
Iron
Works
of
Ybycuf',
pp.
208
and
210,
respectively.
His source for
the
figure
he
quotes
on
p.
21o
is
Vivian
Trias,
El
Paraguay
de Francia el
Supremo
a la Guerra
de la
Triple Alianza
(Buenos
Aires,
1975),
p.
32.
The
Trias-Whigham
claim
reappears
in
Reber,
'Modernization
from
Within',
ch.
4,
'Education,
Industry
and
Mining', p.
22. She
gives
Whigham's
'Iron
Works...'
as
her source.
41
See
Josefina
Pli,
Los
britdnicos...,
p.
13I.
42
The sentence
where Trias makes the claim
in
question
is footnoted but the
footnote
where
the source is
supposed
to
appear
is
not
among
the rest of the footnotes
following
the text.
The
problem reappears
in Vivian
Trfas,
Obras de Vivian
Trias
(Montevideo,
I988),
pp.
148
and
206.
43 See 'The Iron Works of Ybycuf', p.
2
14. On the next page, however, Whigham reports
'Total recorded
poundage
for
Smithy
and
Foundry:
IO5-202
lbs',
which
suggests
a
yearly
poundage
of
between
I05
and 200
pounds.
This is
likely
to
be
a
typographical
mistake
and,
as
such,
we
disregard
it.
44
The conclusion
that the
original plans
would
have to
be
changed
for
more
modest
ones
was
apparently
reached
in March
I858.
See
Pla,
Los
britdnicos
en
el
Paraguay, p.
65.
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State-led Industrialisation
n
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3
I
expectations
for
the
foundry
were scaled
down,
no
attempt
was
again
made
to
increase
its
productive
capacity
until after
regional political
conflicts
became
more
acute and
the
probability
of war
increased
substantially.
In
1863,
Francisco Solano
L6pez
-
by
then President-
ordered
Whytehead
to
design plans
for a
new,
compressed-air
boiler.
However,
the
steam
engine
that
was
ordered
never arrived
in
Paraguay.
Similarly,
until a
very
late date
iron on its
way
from
the
foundry
to
the
arsenal
had
to be
transported
by
oxcart a
good part
of
the
way; only
in
May
1864
could this
distance be
reduced
by
half,
when
the railroad
finally
reached
Pirayu,
some
60
kilometres
away
from
Ybycui.
It is also
worth
pointing
out that
plans
to
build
a railroad link between
Pirayti
and
Ybycui
were
scrapped
as the
War
of the
Triple
Alliance
loomed; instead,
the
railroad
was extended
to
the
Army's
main
training camp
at Cerro
Le6n.
(ii)
The
shipyard
that
Whytehead
designed
and constructed
in
Asunci6n
was
expected
to
build
ships
for
the state merchant
and war
fleets.
Ships bought
abroad
would serve as
a model for those
the
shipyard
would
then
construct.
The fleet's main
ships
would
be steamers
capable
of
riverine
and,
in
some
cases,
of
ocean
navigation
as well. Consistent
with
this
plan
the first
three
steamships
were
bought
abroad.
The
already
referred
to
'Tacuari',
bought
in
London,
was
new,
while
the other
two,
bought in the River Plate, were second-hand. The shipyard buildings
were
all erected between
I
8
5
and
i85
6.4
Shipyard
personnel,
in
addition
to
constructing
and
repairing ships,
remodelled the
port
to
allow more
ships
to
dock
during
periods
of both
high
and
low
water,
and built
a
crane
to facilitate
the
handling
of
heavy
loads.
The first
of the
ships
constructed
in
the
shipyards
was launched
a
year
and
a
half
after Francisco Solano
L6pez's
return
from
Europe.
In the next
two
years,
four
more followed and two other
ships bought
abroad
were
rebuilt as
well.46 Between
1862 and
I864,
two more
ships
built
at the
shipyards were launched, one of which replaced another that had sunk.47
Only
partial
data exist
on
ship tonnage, purchase price,
or cost
of
construction.
Although
all the
ships
were
steamers,
side wheelers
or
propeller
driven,
they
were
all wooden hulled.
On
9
October
1857
Whytehead
presented
to
L6pez
a
project
to
construct
ironclads.
In March
I858,
however,
after
L6pez
had
insistently
inquired
about
the
project
and both
he
and
Whytehead
had discussed
it
further,
the
plan
was
apparently
abandoned,
for
the hulls of all the
ships
that followed
were made out of wood.48
In
August
1862-
when the
war
was
already
on the horizon
-
Whytehead
again
started
making
plans
to build iron
hulls
and
to
remodel the
45
Ibid.,
p.
62.
46
Ibid.,
pp.
63-4.
47
Ibid.,
pp.
I27-8.
48
Ibid.,
p. 65.
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3
12
Mario
Pastore
shipyards,
but
the
international situation
did
not allow
him
to
carry
out
his
plans.49
After the
Paraguayan government
ordered the
capture
of
the
Brazilian steamer
Marques
de
Olinda
and
open
war
began
between the
two
countries,
the
shipyard
limited itself to
repairing
and
overhauling
ships
captured subsequently
(4),
purchased during
the
first months
of
I865
(3),
and
damaged
in naval
battles
during
the course of
the war
(many).
(iii)
The main function
of
the arsenal
was
to
provide
arms and
munitions
to
the
Army
and
Navy,
and
to
produce
the
machinery
its own
production
required.
However,
it also had
to
produce inputs
of a
different
type,
intended to
satisfy
the needs of
government
agencies
and
of
the
private
sector. These
demands,
although
secondary,
were
not
negligible.50
The total number
of
artillery pieces produced
in
the arsenal, together
with those
produced
in
Ybycui,
'perhaps
exceeded
25o'.
Until
i862,
the
cannons
produced
in
Ybycui
or in
the
arsenal,
and
finished
in
the
latter,
were made
of iron
and,
following
the installation of the
necessary
ovens,
of
bronze
as well.51
It
seems
that,
until
i865,
all
the
cannons
produced
were
smooth
bore.
It
also
seems that
no
attempts
were made to
produced
rifled cannons until after
the war had
begun,
but it is not
clear
whether these
attempts
were successful.52 The arsenal also
produced
an
'enormous'
quantity
of
munitions,
both 'solid
and
hollow',
as
well as
'grenades, land and naval gun carriages, and iron oxcarts'.53 The arsenal
also
produced
many
spare parts
with which
to
repair
the steam
engines
and the
ships.54
Also constructed
initially
were
two
floating
docks to be
used
in
repairing ships,
and
in
November
858
a
machine
to launch
ships
was also under construction.55
To make
it
possible
to
produce
this
varied
output,
modern
machinery
was installed
-
some
imported,
some
produced
locally
-
though
it is not
49
Ibid.,
pp.
127-8.
50
In addition to
supplying
the
shipyard,
the arsenal later
supplied
the
railroad,
the
militaryhospital,andeven the privatesector. These demandednot only partsandspare
parts
but
repairs
and maintenanceas well.
Pla
suggests
that
'toward
1864,
the number
of
private
commissions were
choking
the arsenal'. Some
presumably ypical examples
of work the arsenalcarried
out for the
'private
sector' included
repairs
on
the bedstead
belonging
to Ana Paula
Carrillo,
mother
of the
President,
as
well
as structural
and
ornamental ron
works
of the new
buildings belonging
to the President'srelatives. See
Los britdnicosen
el
Paraguay,
pp.
33-4.
51
'The first
brass
cannon,
a
I2-pounder
was cast on
26
July
I862;
but not
enough
metal
was
apparently put
into the
furnace
and the cannon came out
headless.
The second
cannon was cast on
8
October,
and the
third,
on i8 December'. See
Pla,
Los
britdnicos
en
el
Paraguay,
p.
13
.
52
Pla reports that a sample rifled cannon had been bought in England and brought to the
arsenal,
where
it was
put
away
for several months
until
Whytehead
himself noticed it.
See
Los
britdnicos
n
el
Paraguay,
p.
3
.
Considering
the
vital
importance
of
that
sample,
it is
surprising
that the chief
engineer
should have allowed
it to suffer
such
a fate.
This event
suggests
a certain
inefficiency
in
arsenal
operations.
53
Ibid.,
p.
132.
54
Ibid.,
p.
69.
55
Ibid.,
p.
71.
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State-led
Industrialisation in
Paraguay
3
3
clear what
machinery
was
imported
and
what was
produced
locally.56
The
energy
available
to
operate
these
machines
was
apparently
minimal,
however,
for it was
provided by
a
single
steam
engine
mounted
on
wheels.57
The
arsenal's
plant
was
among
the
largest
that
had
been
built
in
Paraguay
until that time.
However,
its
output
was not sufficient to
satisfy
the
requirements
of national defence
plans, according
to
Pla.58
(iv)
The railroad
originally
envisioned
would
join
Asunci6n with Villa
Rica,
some
I50
kilometres
away.
The
inputs
to
build it
began
to
be
accumulated after
the
first
ships
were
bought,
construction of the
foundry
was
underway,
the
shipyard
and
the
arsenal
began
to
be built
and
the first
ships
were
launched. Iron rails and
planks,
locomotives
and
wagons
began arriving in Asunci6n in 1856 on board private and state merchant
ships.
Construction
itself,
however,
did
not
begin
until
I858,
though
prerequisite
tasks such
as
opening
the trail and
building
the