Commerce and Credit on the Periphery: Tarija Merchants, 1830–1914

Economic historians of nineteenth-century Latin America have spilled much ink over the export economy. Clearly, the integration of Latin America as an exporter of raw materials to the industrial North Atlantic nations is one of the major themes in the region’s economic development during that period. The emphasis on the export complex, however, has meant the neglect of other aspects of economic history, such as the role of internal markets, or commercialization of imports, and the social consequences of the import network. While a growing literature has begun to deal with the internal markets, it has not yet addressed import distribution.¹

This study contends that examining the import nexus reveals significant information on the consumption patterns, and thereby the general economic development, of Latin America. Because vast portions of this region—especially those with difficult access to coastal areas—were only indirectly connected to export markets, concentrating exclusively on areas with vigorous export economies leaves out much of the picture. A valuable way to determine how the export-import complex intersected with internal markets is to analyze the records of regional merchants. Variations in such factors as the amount of credit and the ability to pay for imports over distance and time can show how the consumption of imports in different zones changed as links to export sectors, relative poverty, and levels of labor coercion shifted.

Peasant consumption patterns are particularly important in this regard. How did peasants acquire imported goods in regions where exports were unimportant? How did merchants cope and even, in some cases, grow wealthy importing goods to those regions? A large part of the answer lies in the respective strategies merchants and rural folk used for granting credit or assuming debt. Indeed, the commercial circuits were intimately related to the debt-credit systems of haciendas and merchants. Thus, to examine import commercialization not only leads to a better understanding of economic development in Latin America, but relates strongly to the issue of debt peonage and its related questions. The credit-debt nexus between merchants and peasants also provides a perspective on debt peonage.² Merchants influenced the accumulation of debt by hacienda peons and certainly by independent peasants. Thus, the issue of how different groups gained access both to imports and to credit provides important insights into the working of rural society in Latin America.

Another important issue is that of merchant behavior, both in Latin America and in the world economy. A number of studies have dealt with large, mainly foreign import-export firms in nineteenth-century Latin America.³ What have been much less widely discussed, however, are the strategies of the local merchant houses, which also played an important role in Latin American commerce. How these firms survived and even prospered has been virtually ignored—along with the results that emerged when the well-financed foreign houses penetrated the interior of the continent in the late nineteenth century. It is at this regional level that the interaction between commerce, credit, and rural conditions can best be discerned, because, as this study will demonstrate, local merchants tended to act as both retailers and wholesalers, selling at the retail level even in rural areas.

Tarija Commerce as a Case Study

An analysis of the consumption of imports is particularly appropriate to Tarija, the southernmost department of Bolivia. Situated far from either South American coast, this little-studied area exported virtually nothing. Unlike highland Bolivia, it possessed virtually no mineral resources (other than petroleum, not utilized until the twentieth century) and produced very few agricultural goods for outside consumption other than some corn, cattle, and hides. Yet this region developed a strong merchant elite in the nineteenth century.

This essay presents three case studies of Tarijan import-export merchants in the nineteenth and early twentieth centuries. The accounts are based on the merchants’ own records, corroborated by notarial and judicial records in Tarija and Salta, records of other merchants from Tarija and other Bolivian regions, and reports by government officials and the Tarija merchants’ association, the cámara de comercio.⁴

During the colonial period Tarija was a small Spanish frontier outpost facing the powerful Chiriguano Indians, who dominated the eastern foot-hills of the Andes from Santa Cruz to what is now the Argentine border. As a result of the mixture of Guaraní-speaking Chiriguanos, Spaniards, and the Andean peoples who inhabited the area west of the city of Tarija, the region developed rural and urban cultures quite different from those of the highland regions to the west. Other than on the eastern frontier, where Guaraní remained important, Tarijan peasants spoke Spanish, and ignored many aspects of the Andean culture and economic organization so prominent in the rest of highland Bolivia, Peru, and Ecuador.⁵ Apparently as a result, Tarijan peasants were less self-sufficient than Andean peasants and therefore tended to participate to a greater degree in the monetary economy. In particular, Tarija’s rural peoples did not produce their own clothing.⁶

The city of Tarija, while never a major population center, began after independence to serve as an important trading center for high-priced goods, especially textiles, moving between Argentina and southern Bolivia. It became an entrepôt between the southern Bolivian silver mines, the eastern Chaco frontier, the Pacific coast, and northwestern Argentina.

The city’s commercial orientation was already apparent in the 1830s. In an incisive 1834 report on conditions in the department, General Francisco Burdett O’Connor asserted that the inhabitants could be divided into three different classes: those who had previously been wealthy; the labradores, or farmers; and the peons and servants. Few artisans were to be found in the region. The wealthy labradores, in addition to their agricultural pursuits, worked as merchants. This means that trade remained unspecialized. Landowners also engaged in mercantile activities, and there was little distinction between export-import wholesalers and retail merchants. According to O’Connor, “every man who possesses three hundred pesos calls himself a merchant. These [men] make a yearly trip to Salta and return with textiles for making clothes.” Both the labradores and the landlords purchased these “luxury goods,” financially “ruining” themselves and thereby impoverishing the department.⁷

Despite the perceived detrimental effects of the textile trade, the region offered few other possibile means to make money. Agriculture did not bring high profits. Although Tarija boasted a mild climate and good soil conditions, extremely poor roads made potential markets for bulky foodstuffs, such as grains, difficult and expensive to reach. The department of Tarija as a whole contained no important urban center that might serve as a market for agricultural production. The city of Tarija, the largest settlement, contained slightly more than 5,000 inhabitants in 1846. The rest of the department’s 64,000 inhabitants were relatively self-sufficient in food production. According to tax records from 1844, the only significant agricultural export was com, of which 31,443 cargas were exported. Shipments went to Atacama, the highlands of Jujuy in neighboring Argentina, and the mining camps of southern Potosí.⁸ But with competition from other regions and the country’s overall economic stagnation until the 1860s, Tarija’s trade in agricultural goods was simply not very lucrative. For this reason, many members of the Tarija elites and middle sectors preferred to engage in textile imports, though some continued to work exclusively in agriculture.

Three phases can be discerned in Tarija commerce. In the first, roughly from the 1820s to the 1860s, Tarija merchants remained relatively minor players as importers. From the late 1860s to the turn of the century, Tarija commerce flourished, and the city’s import-export merchants became the primary purveyors of imports for most of southern Bolivia. After 1900, competition from other merchants and an unfavorable transportation network made Tarija increasingly peripheral, although a number of elite merchants continued to accumulate impressive fortunes.

During the first period, Tarija merchants took advantage of their close relationships with the elites of northern Argentina—many elite families had members on both sides of the border—to import goods into Bolivia. The Jujuy sugar plantation owners were involved with this trade. For example, José López de Villar, the proprietor of both an import house in Jujuy and the San Lorenzo estate throughout the 1830s and 1840s, sent the Tarija merchant General Bernardo Trigo imported goods as well as sugar and soap, the latter items undoubtedly produced on his plantation.⁹

Perhaps because of its close ties with northern Argentina, Tarija was unharmed by the shakeout in overseas commerce at the end of the 1820s, when large import-export houses elsewhere in the country displaced small traders. Capital from powerful Salta merchants and the buffer they provided against international competition were sufficient to keep Tarija’s small cloth merchants protected. During the 1830s and 1840s, these merchants continued to prosper, building up capital with their textile imports. Of course, not all traders were successful. For example, Cornelio de Aguirre, a moderately prosperous landowner in Concepción and Bernardo Trigo’s son-in-law, in 1852 still owed a Salta merchant more than two hundred pesos for imported goods he had received on consignment between 1833 and 1836.¹⁰

The Trigo family played an important role in commerce throughout most of Tarija’s history. Bernardo Trigo, son of a Spanish nobleman, figured prominently in the independence wars, rising to the rank of general. His son, Juan de Dios Trigo, is a good example of a successful, relatively large-scale trader during the earliest period of merchant activity. In the 1840s and early 1850s, Juan de Dios was among the most important merchants in Tarija. At his death in 1854, he was worth about 18,000 pesos, a large sum for the mid-nineteenth century.¹¹ Little of it was invested in noncommercial activities. His house in the city of Tarija and his personal effects were worth only 3,300 pesos. Juan de Dios owned no rural properties, though his wife, Manuela Hevia y Vaca, had recently inherited portions of her parents’ estates in southern Tarija.¹²

The rest of Juan de Dios’ estate, 14,910 pesos 3 reales, was invested in his business. The sum can be broken down into five basic categories: merchandise, cash, customer debts, pack animals, and cattle (see table 1). The merchandise, representing a fifth of the total investment, consisted virtually entirely of fabrics, clothing, and other dry goods, such as buttons and pins to make clothing. Other merchandise, including imported teas, guns, and chocolate, represented less than 200 pesos of his total stock. The predominance of cloth, of course, is consistent with O’Connor’s description from the 1830s, confirming that textiles remained the most significant import. Cash on hand represented a relatively large sum, 1,514 pesos, or about 10 percent of Trigo’s total assets. The largest portion of this account, 1,377 pesos, consisted of two large sacks of tostones. A tostón was worth four reales, or half a peso.¹³ The pack animals Trigo owned included, in addition to one valuable riding mule, four more mules and eight donkeys, constituting the typical number for a peara, or mule team, in nineteenth-century Bolivia.

The largest single category in Trigo’s inventory was the amount owed to him by his customers. Half of his mercantile capital was tied up in credit. His accounts list 433 customers who owed him an average of about 17 pesos. This is somewhat surprising, given that merchants themselves received their goods on credit from import-export firms. The going rate for the Pacific coast merchant houses was 12 percent annual interest, charged after a six-month grace period. Unfortunately, it is unknown how long it usually took Trigo’s customers to repay their debts, whether the merchant charged interest, and if so, how much. It appears likely, however, that most customers bought most of their goods on credit; cash was always scarce in the Tarija economy, as elsewhere in Bolivia.¹⁴

Juan de Dios Trigo typified Tarija merchants of this period in the ways he utilized trade networks. One striking characteristic of Trigo’s list of customers is the extensiveness of the commercial network it reveals. Trigo gave credit to customers from the city of Tarija; the eastern frontier settlements, such as Villa Rodrigo and Caraparí in the Gran Chaco; the wine-growing valley of Concepción in southern Tarija; and Cinti province, to the north in the department of Chuquisaca. A breakdown of these creditors (see table 2) shows that Trigo’s customer network was concentrated, as might be expected, in the city of Tarija, where he maintained his store.¹⁵

In the areas outside the city, what is most notable is the relatively even distribution of Trigo’s customers. Generally, the farther away the customers, the greater amount of credit they owed. This suggests a distinction between peasants and artisans, who bought on the retail level, and petty merchants, who came from farther away to stock up their own stores, with Trigo acting as wholesaler. Thus Cercado province, surrounding the city of Tarija, had the lowest average indebtedness. This pattern would have held for the “City of Tarija” category as well, except that members of the elites, such as Manuel Othon Jofré and Domingo Arce, who borrowed 173 pesos 6 reales and 300 pesos in merchandise, respectively, significantly increased the average indebtedness.¹⁶ Even keeping these customers in the pool, customers from Cinti, Cochabamba, and Concepción provinces on average had greater amounts charged to their accounts (see map 1).

The frontier province, Salinas, merits special analysis. As far as we know, the settlers along the frontier were a poverty-stricken lot. Cattle ranching, the region’s predominant economic activity, was not yet lucrative, as it would be in the following decades when the renascent silver-mining industry fostered increasing demand for livestock. If the diaries of Francisco Burdett O’Connor, the largest landowner in Salinas province and a man obsessed with the efficient administration of his properties, are any indication, cattle ranching did not bring in great earnings in the 1850s.¹⁷ In turn, the other potentially lucrative market for a merchant like Trigo along the frontier, the military, was in even worse shape. Soldiers at the forts were paid infrequently and often wore rags because they could not afford to purchase new clothes.¹⁸

Salinas was also the province with the fewest non-Indians. Unfortunately, no census of Salinas exists before 1871, when the economic boom of the eastern frontier had already begun and presumably a significant number of migrants had entered the region. Even then, the province had the smallest number of inhabitants in the department of Tarija, except when counting the savage population that is encountered between the Pilco-mayo and Bermejo rivers,” which the census taker calculated at more than 50,000.¹⁹ While their number may have been exaggerated, the “savage” Indians were also important consumers of imported cloth. The relatively high average debt among Trigo’s customers in Salinas indicates that the Tarija merchant probably acted as wholesaler for petty merchants in the province. Significantly, Trigo’s business was primarily with the far eastern frontier and not the area (today O’Connor Province) already firmly under the control of Tarija authorities.

Numerous pieces of evidence suggest that imports reached the indigenous peoples on the other side of the frontier. Most important in this regard were the relations between the tarijeños and the Chiriguanos, a populous, agricultural people who inhabited the eastern reaches of the Andean foothills. During much of the nineteenth century the Chiriguanos held the upper hand on the frontier, forcing departmental governments and local landlords to pay protection money. Thierry Saignes has compiled a partial list of the expenditures the Tarija prefecture made in payments to the Indians, ranging from just a few pesos to more than two hundred pesos yearly. We must also include the “rental fees” the large Tarija ranchers paid to let their cattle graze in the Cordillera, as the Chiriguano tribal lands were called. This also represented an outlay of probably more than two hundred pesos a year, most of which, as we know, was paid primarily in clothing.²⁰

Merchants traveled the frontier themselves, selling European goods. One of the five clauses in the 1843 peace treaty between the Chiriguanos and the Bolivian military specified that “all Christians [that is, whites or mestizos] who want to enter the Cordillera with any type of trade may do so with complete security,” suggesting that this commerce was an important activity for the Bolivians.²¹ In particular, the Chiriguanos valued European clothing. This was clear from the Chiriguano chiefs’ acceptance of European-style clothes in payment from the Bolivians. Chiriguano males throughout the frontier during the nineteenth century began to adopt European dress; by the early twentieth century virtually no warriors wore homespun clothes—unlike their women.²² We know that merchants from Tarija—many of whom were probably Trigo’s customers—were especially active in the commercial penetration of the Cordillera.²³

As in the Southern Cone, where the nineteenth-century Indians of the pampas created vast political units based on the sale of cattle to either Chile or Argentina, on the Cordillera frontier the Chiriguanos gained the resources to pay for imported clothing through the sale of cattle.²⁴ While this trade was much smaller on the outskirts of the Chaco than among the Araucanians, cattle theft by Indians was endemic. The Indians bartered some of those cattle, thereby obtaining the resources to buy textiles and other needed goods.²⁵

Indeed, cattle also represented a significant investment for Juan de Dios Trigo, as his probate records demonstrate (see table 1). Altogether, the merchant had almost two thousand pesos, or 13 percent of his capital, tied up in agreements related to the sale of cattle. Although the probate record is not clear, it appears that Trigo had sold varying numbers of cattle to 21 different individuals on credit. These debts, owed to him over the ten years before his death (the oldest document dates from 1844), indicate that he was involved in the cattle trade between the frontier and the highlands.²⁶ Did Trigo receive cattle from his frontier customers in return for merchandise? Unfortunately the document does not tell us, though his very involvement in the cattle trade confirms Trigo’s strong commercial links with the frontier.

From Small Trade to Alto Comercio: Consolidation of Tarija’s Merchant Elite

Juan de Dios Trigo’s probate documents are particularly valuable because they reveal the structure of Tarija commerce at a turning point in the region’s economic history. Although relatively wealthy compared to most Tarija merchants and operating on perhaps a larger scale, Trigo, like the others, received his textiles from Salta suppliers and used the Salta merchants as intermediaries. These patterns changed in the 1850s, when the most highly capitalized Tarija merchants—members of the local elites—managed to squeeze out their smaller competitors and establish the hegemony of alto comercio (high commerce) throughout southern Bolivia. Indeed, by 1866 the pursuit of commerce was so pervasive that virtually none of the Tarija elites had bothered to earn a law degree, and even those who had were busy overseeing their estates or, more commonly, traveling abroad to import European merchandise.²⁷

Bernardo Trigo, son of Juan de Dios, was instrumental in this phase. The frontier still loomed large in Bernardo’s fortunes, as it had for his father. After leaving a military career in 1848, Bernardo Trigo accumulated six thousand pesos of capital by working as a merchant on the Chaco frontier for three years. Initially he used the Salta—Tarija route as other merchants did. But soon after his father’s death, Trigo made a bold move that made possible Tarija’s dominance in southern Bolivian commerce. In 1856 he formed a merchant company with two other members of the Tarija elite, Mateo Araoz and Manuel Pantoja. With their combined capital Trigo went first to Buenos Aires and then, with his partner Pantoja, to Valparaiso. In both cities Trigo made contacts with the merchant houses, established lines of credit, and purchased imports to take back to Tarija. Eliminating the Salta middlemen, the new firm undoubtedly provided Tarija’s consumers with lower prices than its competitors did. Soon other well-capitalized merchant firms from among the Tarija elites also made the trek to the Pacific and Atlantic coasts.²⁸

The new trade route to the Pacific also attracted foreign merchants. One was John Lord, who married a Bolivian woman and established a merchant house in Tupiza and Tarija in the 1850s. Lord died in 1857, only a year after purchasing 35,233 pesos’ worth of imported goods in Tacna, Peru. This was a very large sum for southern Bolivian merchants, making Lord one of the largest importers of goods into the region. The inventory of his Tarija holdings in a subsequent court case reveals a great deal about the trade to Tarija in the mid-nineteenth century.²⁹ Lord’s commercial connections were impressive, as evidenced by the letters he received. Most came from import firms in the Pacific coast ports of Tacna, Arica, and Iquique in Peru and Cobija and Calama in Antofagasta province, Bolivia. Lord also maintained contacts with northern Argentina, however; he received 39 letters from Yavi, a trade entrepôt and site of an important fair just south of the Bolivian border.³⁰

Apparently, Lord sold his wares in Tupiza and Tarija as both wholesaler and retailer. The Tarija merchant firm Jofré and Trigo (it is unclear to which Trigo this refers) had an outstanding balance of 800 pesos on Lord’s books. The inventory shows that other individuals, presumably merchants, had signed IOUs worth between 8 and 5,028 pesos. Lord, moreover, kept up a copious correspondence with a Potosí trader, Adrian Harriague, although no commercial transactions between the two appear in the Tarija inventory.³¹ The inventory of IOUs thus suggests that Lord acted as wholesaler to Bolivian merchants. As it had been for Juan de Dios and Bernardo Trigo, the eastern frontier was very important to Lord’s Tarija operations. Lord’s largest merchant debtor was Carlos Blanc (presumably of French extraction), who operated out of Santa Cruz in the eastern tropical low-lands. He owed more than five thousand pesos, over half the total credit Lord gave.³²

Lord’s accounts also show that he sold his wares on the retail level to nonmerchants. A ledger indicated goods sold on credit without promissory notes. A number of family names indicate members of the Tarija elite. Two who can be identified were the major landowners of the region, and perhaps others were also landowners rather than merchants. The two identifiable customers were the marquis Fernando Campero, possibly the largest landowner in South America with an estate that spanned part of southern Bolivia and much of Jujuy province in northern Argentina, who owed 429 pesos: and Francisco Burdett O’Connor, who with Campero was probably the largest single landowner in Tarija department but who owed only 10 pesos 4 reales. On average, each of the 17 customers on this list owed 298 pesos, an amount not insignificant in the mid-nineteenth century. Like the other Tarija merchants, Lord kept most of his wealth circulating as debt: 17,245 of the total 28,321 pesos in the Tarija inventory—over 60 percent—was in letters of credit or simply noted in his account books without a formal contract. Only 8,714 pesos remained in merchandise and 2,100 pesos in land.³³

In contrast to the commerce of Peru and other Latin American countries during this period, the foreign element in Tarijan commerce was very small. Lord’s attempt to penetrate the southern Bolivian market remained an exception.³⁴ Why? Given low population densities and limited markets, perhaps foreign merchants were not interested in the region. A better reason, however, is that Tarija merchants preempted the foreigners’ inherent advantage by establishing direct ties with Europe. It was, once again, Bernardo Trigo who moved the competition up a notch. After almost a decade with Araoz and Pantoja, in 1865 Trigo and his partners dissolved their company. Araoz and Pantoja went on to start their own separate companies. Trigo immediately formed a new company with his two brothers called Trigo Hermanos, with a capital of 52,000 pesos.³⁵ Trigo took 45,000 pesos in gold and silver bars and embarked from Buenos Aires for Europe. While making the grand tour, he also purchased goods for his company directly from European manufacturers. On his return, his commercial success was so great that Trigo Hermanos opened stores in Cotagaita and Tupiza (both in Sud Chichas, department of Potosí), Lagunillas (in Santa Cruz), Camacho (in southern Tarija), and other towns. Bernardo Trigo made his move at precisely the right time. The Bolivian silver mines, many located in the south, began a three-decade boom in the 1860s, providing ample demand for imports.³⁶ Trigo Hermanos was to remain the preeminent commercial firm in southern Bolivia from this time until at least World War I.

Tarija merchants had another advantage over foreign competitors. Foreign merchants like Lord were usually financed by merchant houses on one coast or the other, while Tarija merchants had connections and lines of credit on both the Pacific and Atlantic coasts. Thus, depending on commercial conditions, Tarija merchants could purchase merchandise at whichever coast was more advantageous. From the 1850s through the 1860s, the Pacific coast was generally the more favorable. The route there, though it traversed some of the driest, most rugged terrain in South America, was substantially shorter than the route to the Atlantic coast and the ports of Buenos Aires and Rosario.

In the 1870s, however, the railroad penetrated to Tucumán, bringing lower transportation costs and higher security to the Argentine routes. In 1872 the owners of Trigo Hermanos made an inquiry to the Argentine ministerio de hacienda about transporting European imports through Argentina, which was already a favorite route for high-volume silver contraband. When an 1873 Argentine customs law permitted the free transit of imports destined for Bolivia, Tarija merchants quickly switched almost exclusively to the Argentine routes. Their main European import during this period continued to be textiles and clothing.³⁷

The War of the Pacific (1879–1884) presented the Tarija merchants with great opportunities. As territorial conflict erupted between Bolivia and Chile, Argentina became the only secure route for both imports and exports. In 1879 alone, commerce between Argentina and Bolivia tripled.³⁸ The Tarija merchants undoubtedly realized great profits. They had the necessary commercial links with trading houses in Buenos Aires and Rosario as well as the experience in bringing merchandise through Argentina. Indeed, the Bolivian government recognized the value of those connections: twice during the war it sent Bernardo Trigo to Buenos Aires to arrange the purchase of much-needed armaments.³⁹

The decade of the 1880s marked the apogee of the Tarija merchants’ fortunes. The southern route through Argentina, dominated by the Tarija merchant houses, became an important trade route for Bolivian exports as well as imports. The Argentine railroads continued to creep northward, bringing transportation costs down. The northern Argentine provinces, centers of mule and donkey breeding, provided abundant and inexpensive pack animals for the rest of the trip. The eastern frontier created new commercial opportunities as the Bolivian settlers emerged victorious over the Chiriguanos and the Chaco tribes. Small traders, often beholden to the large merchant houses of Tarija, dominated the life of small towns established in the former frontier as the cattle ranches proliferated along the edge of the Chaco.⁴⁰ In turn, the booming silver mines of Sud Chichas provided plenty of business in towns such as Tupiza and Cotagaita, where the Tarija merchants maintained a strong presence.

The merchant families built impressive houses during this period within a few blocks of Tarija’s central plaza. As in Sucre, where the silver-mining boom encouraged the reconstruction of colonial-era houses during the same period, the neoclassical style, based on Parisian models, prevailed. Inside those houses, imported French furniture, satin drapes, and exquisitely hand-painted walls and ceilings displayed the merchants’ wealth. Even today, many of these two-story adobe houses impress the visitor, particularly the restored home of Moisés Navajas, which is now a museum.

Tarijan Alto Comercio at the Turn of the Century

At the close of the nineteenth century and the opening of the twentieth, Tarija’s preeminent position in the continent’s commercial network began to face serious challenges. New transportation systems into the interior, such as the railroads; the development of the frontier; and the economic decline of silver mining increasingly marginalized the city’s merchant elite. Yet despite these changes, Tarija merchants continued to prosper through the extensive use of credit.

During the first decades of the twentieth century, commerce was still Tarija’s main economic activity. As one observer put it, “commerce constitutes the sole element of life, in which three-quarters of the population are active.”⁴¹ As would befit an administrative and commercial center, the capital of the department remained very small: in 1900 the city of Tarija comprised fewer than 7,000 inhabitants. Of this total, 466 declared commerce to be their primary profession, almost 10 percent of those declaring a profession.⁴² Industrial activity was virtually nonexistent in the city; the only industries were small and virtually all related to food processing. The only extant enumeration of industries (from 1917) shows that the city harbored a brewery, one small chocolate maker, two soft-drink bottlers, a pasta maker, and a workshop that made wire out of steel imported from the United States.⁴³

Unlike other parts of Latin America or even the rest of Bolivia, Tarija had seen virtually no foreigners yet appear among its merchants, who occupied “the highest social position” in the town.⁴⁴ The merchants belonged to the exclusive Club 6 de Agosto, founded by Bernardo Trigo in 1886. In 1893 Trigo founded the Cámara de Comercio de Tarija, which looked after the interests of the city’s members of the alto comercio. In the early 1900s the principal firms were Trigo Hermanos, Juan Navajas (Navajas also owned a bank), Jofré and Sons, Mateo Araoz and Sons, Moisés Navajas, Víctor Navajas, Carlos Paz, Navajas Hermanos, Zenon Colodro, Pio Arellano, Trigo y Cía, and Guillermo Schnorr (the only foreigner, a German).⁴⁵

The merchants of Tarija also dominated local government, combining economic clout with political power in Tarija department. Important merchant family names, such Jofré, Trigo, Paz, Navajas, and Arce, figured prominently among congressional deputies, senators, and department prefects throughout the nineteenth and early twentieth centuries. These political figures often were related by marriage. The merchants themselves held office: Bernardo Trigo was twice prefect of Tarija (1878–79 and 1898–99) and once senator for Tarija (1881–84); Juan Navajas and his brother Moisés were prefects in 1921 and 1924–25, respectively.

Many military officers joined the merchant elite after retirement. This was true of both Bernardo Trigos (grandfather and grandson). Former Indian fighters, such as Manuel Othon Jofré and Víctor Navajas, also later became important merchants. They received land grants from the government on which they established ranches and entered the cattle trade. Perhaps that favorable situation, combined with their extensive knowledge of the frontier and its Indian peoples, led them to pursue a lucrative second career. Jofré founded Jofré e Hijos, and Navajas, father of Víctor, Moisés, and Juan, founded Navajas and Sons.⁴⁶ With their virtual monopoly of power, both political and economic, these closely related merchants in many ways resembled the “great families” John Kicza has described for eighteenth-century Mexico City, but on a much more provincial level.⁴⁷

Although they continued to dominate politics well into the twentieth century, the elite merchants of Tarija began to lose their prosperity in the 1890s. Predictably, the silver-mining crisis of 1892 gravely affected the interests of the tarijeños in Chichas. Imports dropped precipitously in 1892 with the fall of silver prices.⁴⁸ And when silver prices did not improve, the vibrant markets of Chichas began to disappear.

An even more debilitating factor was, ironically, the railroads. In the 1880s the extension of Argentina’s railroad network had benefited the Tarija merchants by significantly lowering transportation costs. But in the following decade Chile built a railroad from Antofagasta on the Pacific coast into the Bolivian highlands, as compensation for Bolivia’s loss of its Pacific territory in the war. By 1889 the railroad had reached the Bolivian mining center of Uyuni; by 1892 it had connected to Oruro. Thus Bolivia’s densely populated altiplano was linked to the southwest, making it cheaper to carry merchandise from the Pacific coast and the north and presenting formidable competition for the tarijeños. As Tarija’s prefect complained in 1895, “the ease of transport cheapened the imports from the north, [making possible] the appearance of competition in those places where Tarija commerce was previously the exclusive owner. The increase in merchants brought imports into disproportion with consumption, bringing about a great plethora of merchandise.”⁴⁹ Moreover, when the Argentine railroads finally connected with those of Bolivia in the early 1900s, they bypassed Tarija completely, laying track directly to Potosí on the west and the Chaco on the east. Both Tarija’s merchants and its political authorities (who, of course, were often the same people) complained that the roads from the railheads to the city of Tarija were very poor, making it difficult for traders to conduct their business.⁵⁰

In the eastern frontier region, the railroad from Buenos Aires to Yacuiba gave Argentine and other foreign merchants a great advantage. In particular, German merchants, already well established in Santa Cruz, took over the Chaco with their Argentine allies. An example is the prominent Berlin firm of Staudt and Company, which in 1905 received from the Bolivian government the recently secularized Franciscan missions of San Francisco and San Antonio along the river Pilcomayo, renamed Villamontes. In return, the Germans promised to dam the Pilcomayo and irrigate the Chaco, a grandiose project that never came to fruition.⁵¹

The Tarija merchants, who had acted as the intermediaries in the trade between the western highlands and the eastern frontier, suddenly found themselves frozen out of a region where they had made much of their wealth and where many a young trader had begun to make his fortune. For example, the firm of Mateo Araoz and Sons, one of the Big Three of nineteenth-century Tarija (along with Trigo Hermanos and Jofré e Hijos), conducting perhaps the most extensive commerce in the frontier region, was suffering increasing financial problems by the turn of the century. As a result, in 1901 Araoz was forced to close his store in Lagunillas in the department of Santa Cruz.

The conquest of the Chiriguanos, and later the Chaco tribes, diminished commercial possibilities. The creole settlers turned the Indians into highly exploited and impoverished debt peons unable to purchase many goods. The poor labor conditions on the frontier fostered the depopulation of the region. The Indians, the vast majority of that population, fled Bolivia en masse for the sugarcane fields of northern Argentina, where they received higher wages and moved about much more freely.⁵²

A description of the state of commerce in 1913 by Carlos Paz, president of Tarija’s cámara de comercio, reveals the region’s contemporary trade network. By this time, Yacuiba, a frontier town on the Chaco-Argentine border, was supplying imports directly to the eastern portions of the department and Santa Cruz. But even excluding Yacuiba, the Tarija merchants imported approximately 1.4 million Bolivianos’ worth of goods, mostly textiles, from Europe and the United States through the ports of Buenos Aires and Rosario. German imports were the most valuable; U. S. and English goods were in second and third place. The department of Tarija, in turn, exported very little. Because it had no mines, its exports were limited to cattle and hides to Argentina and Europe, respectively, as well as some wine and sugarcane brandy to Santa Cruz.⁵³

Moisés Navajas, whose firm’s archives have been partially preserved, provides much useful information on Tarija commerce in this third mercantile period. Little is known about the origins of the Navajas family. Moisés’ father, Víctor, first appears in documents dating from 1863 as a grantee of land on the eastern frontier, in return for military services rendered as a lieutenant colonel in the Bolivian army. Like many other members of the Tarija elites, he appears to have made his fortune in the Chaco. In any case, by the late nineteenth century Víctor had become a merchant, founding Navajas and Sons. In 1897, after his death, his three sons split up the business, and each later formed his own merchant house. Moisés Navajas established his store in 1900. Over the next two decades his firm grew to third-largest in the region, behind Trigo Hermanos and Jofré and Sons. In regional importance, Moisés Navajas’ merchant house ranked in the second tier of Tarijan alto comercio, following the Trigos and the Jofrés.⁵⁴

Although Moisés Navajas was not the most important merchant in Tarija, his correspondence reveals that he, like the Trigos, maintained direct connections with manufacturers abroad. For example, he bought farm machinery directly from the United States and textiles, hats, and the like from factories in Germany and France.⁵⁵ His direct connections to the factories surely enabled Navajas to purchase goods at substantially lower prices than did merchants who relied on middlemen, and earned him sizable profits even when he charged competitive prices.

The advantages of direct connections were, however, somewhat attenuated by the difficulties of transport. Shipment across the Atlantic to Rosario or Buenos Aires was usually not difficult, but overland transport from there to southern Bolivia was more problematical. Navajas had the customs dispatcher in the Argentine port transship his goods onto the railroad. The merchant’s goods traveled by rail as far as Humahuaca (or, after 1925, La Quiaca), where he had another agent transfer his merchandise onto mules for the remainder of the journey. The cargo was always at the mercy of the rugged terrain, as well as the weather—mule drivers were difficult to find during the peak agricultural seasons, and trails were impassable during the rainy months. These conditions placed Navajas at a disadvantage compared to merchants who sold from cities connected to railroads.

The disadvantage, however, did not appear to curtail the business of Moisés Navajas. Navajas undoubtedly assumed many of the clients from his father’s firm. Therefore his trade network, as revealed in the account books analyzed for the period 1901–1902, closely reflects the Tarija merchants’ range of influence.⁵⁶ That network encompassed all of Tarija and parts of Chuquisaca department. The bulk of Navajas’ business occurred in six western areas: the city of Tarija; the surrounding Cercado province; Cinti province in Chuquisaca department to the north; and Méndez, Avilez, and Arce provinces. In addition, Navajas had a small number of wholesale customers in Yavi, Argentina (see map 2).

Even amid the fading prosperity of the Tarijan merchant elite, Navajas built a profitable business. How was this possible, given the increasing marginalization of both the merchants and their customers? Such marginalization was certainly evident in Navajas’ case. His books graphically show the weakening commercial potential of the eastern frontier region. Navajas did sell to customers in the eastern provinces of Gran Chaco, O’Connor, Azero (in Chuquisaca), and Cordillera (in Santa Cruz), but the volume of goods was so small that the significance of this trade was negligible. For example, the number of sales in each province ranged from two (Cordillera) to six (Gran Chaco). The total of purchases from the east amounted to only a little more than 3 percent of Navajas’ business. Navajas’ exclusion from the east provides a remarkable contrast to Trigo’s or Lord’s commercial network, to which the eastern regions contributed about half the business.

Navajas’ commercial network encompassed mainly the portion of Tarija that had suffered most from the decline in silver mining in the neighboring department of Potosí and that was cut off from the railroad. Nevertheless, this western region had a varied economy. Méndez was the wealthiest province; there, 56,000 sheep and 9,172 cattle grazed the land. In addition, the province’s haciendas produced almost 30,000 fanegas of corn and almost 9,000 fanegas of wheat. In second place was Cercado province, where sheep and corn again constituted the major agricultural products. Arce province’s major crop was grapes, grown in its lush valleys, from which wine as well as aguardiente and singani (different types of brandy) were made. Also important was stock raising; the 1906 agricultural census showed more than 19,000 head of cattle in the province. Avilez, by contrast, was clearly the poorest region. Consisting of extremely rugged terrain, this province produced little wheat and no corn. Only sheep, though fewer than in either Méndez or Cercado, destroyed the vegetation even further on the steep hillsides.⁵⁷

Within this relatively restricted area, Navajas’ commercial network can be visualized as a series of concentric circles. These circles spread out from the central point of the city of Tarija. Outside Cercado province, the eastern halves of the circles virtually disappear, while the western halves grow stronger over the western half of Tarija department. The value and incidence of sales largely correlate with the customer’s distance from the city. The vast majority of Navajas’ customers bought very little—less than 10 Bolivianos’ worth—and did not pay cash. Presumably these were people acquainted with the merchant in the city or the surrounding area who, through their relationship with him, were able to obtain credit. In the city of Tarija, most of the purchases were relatively small and the number of transactions very high, indicating that most purchasers were retail customers. The city of Tarija had the second-largest number of purchases (130, versus 168 for Cercado), with an average of 21.6 Bolivianos per purchase. This changed outside the city. As shown in figure 1, the value of individual sales increased proportionately with distance from the departmental capital, indicating the presence of more wholesale customers, or petty merchants. In general, the farther customers lived from Tarija, the larger the quantities of goods they were likely to buy.

Navajas’ business can be more clearly understood by dividing his customers into three categories: retail, hacienda peons, and wholesale.⁵⁸ Retail customers were both urban dwellers and rural folk who came to the city to buy from Navajas’ store. Especially concentrated in the city of Tarija and the province of Cercado, these customers tended to purchase goods throughout the year. They bought small amounts of goods at a time, typically less than 50 Bolivianos’ worth; most of them often bought less than 20 Bolivianos’ worth (see table 3).

Hacienda peons (or servants, in the city) were also important retail customers. We can identify them because they established joint accounts in small groups under the name of their patrón, who vouched for their creditworthiness.⁵⁹ They made their small, low-value purchases presumably to obtain credit. Most of these accounts came from the surrounding countryside, especially Cercado and Méndez provinces. For example, more than 68 percent of the sales in Cercado were made to hacienda peons; in Méndez about 32.5 percent of the sales went to this group. Thirty-three percent of the accounts from distant Arce belonged to peons. Joint accounts for city customers, which constituted only 10 percent of the city total, probably involved servants rather than peons. In either case, Navajas and the patrón must have known each other well enough for Navajas to accept the peons as creditworthy customers. This type of agreement most likely benefited the merchant, for through his connections with members of the landowning class he could tap into the pool of peons as customers for his store.

It is further possible that this arrangement, in which the hacienda peons had an account with the merchant rather than with the hacienda store, might have been more characteristic of the Latin American country-side than previously understood. The excellent and detailed surviving records of hacienda stores (tiendas de raya) have led scholars to focus almost exclusively on the exceptionally large estates that could afford to maintain such outlets. Merchant records, on the other hand, have rarely been studied to glean economic connections with the countryside.⁶⁰

If peons more commonly held credit with a local merchant than at the tienda de raya, how did this practice affect the financial management of the hacienda? First, it appears that if this type of arrangement were the norm, the hacendado could save some of the capital that otherwise might have been invested in providing credit for his peons. Thus, the landowner transferred to the merchant some of the cost of maintaining the labor force.

Providing credit through merchants, however, significantly constrained the landlord’s control of his labor force, if indeed this was his intention. Presumably, the merchant cared only whether he was paid back, not whether the debt-credit arrangement helped keep workers on the estate. The prevalence of this type of arrangement suggests that it used credit as a positive measure rather than a coercive one. This confirms Arnold J. Bauer’s hypothesis on the positive rather than negative implications of debt among the rural labor force.⁶¹

The more distant rural dwellers came to town to take care of many affairs in one trip; for example, to partake in seasonal religious celebrations as well as to purchase whatever goods they needed. They did so most typically in the month of August. In 1901, for example, over 40 percent of Navajas’ business was transacted in that month. This conveys the commercial importance of the annual San Roque fair, held in August. The hacienda peons are notable in this regard. Groups of peons attending the fair came to Navajas’ store and bought hats, as well as textiles, needles, buttons, and other items to make clothes. Forty-five percent of Navajas’ 1902 sales to hacienda peons occurred in August.

Petty merchants who bought for resale represented the wholesale branch of Navajas’ business. They tended to live farther away from the city than Navajas’ other customers, primarily in Cinti, Avilez, and Arce provinces. Cinti province, located in the department of Chuquisaca, quite far from the city of Tarija, averaged 121 Bolivianos per purchase, reflecting the prevalence of wholesale trade. These customers, like the hacienda peons, conducted most of their business during the month of August, most likely also during the San Roque fair. Of the ten wholesale purchases from Cinti during 1901 and 1902, three occurred in August 1901 and four in August 1902.

As their letters to the merchant testify, wholesale customers attempted to establish personal relationships with Navajas himself. Some of these customers formed part of Navajas personal network of informants, who corresponded with him regarding other customers’ ability to repay their debts. The informants might thereby have obtained more credit for themselves. In one letter, for example, a petty merchant from O’Connor province informed Navajas of the financial situation of another wholesale customer and then asked for a large amount of credit for himself in return.⁶² The personal networks established in this way were also essential for extending credit terms beyond the usual one or two months.

Virtually all of Navajas’ commercial transactions were made on a credit basis. In historical terms, credit traditionally has been analyzed primarily in reference to peasants and hacendados, and mostly in the negative terms of debt peonage and exploitation. In light of the economic situation in Tarija in the early twentieth century, however, credit can be seen as a catalyst for the consumption of imports. This was an advantage for both merchants and peasants. Of 457 transactions recorded over a two-year period in five provinces, only 5 were cash transactions—4 of these in the city of Tarija (see table 4). Navajas’ terms of credit ranged from 3 to 455 days, with 60 days as the norm. Most people, however, took almost a year to pay off their debts, and for some areas the average was closer to two years.

Remarkable regional differences can be discerned that help elucidate the differing economic situations in the city and the countryside (see table 4). In the city itself, even though most purchases were small, customers still took a very long time to repay their debts. As indicated in table 4, Navajas gave his city customers short credit periods, mostly less than 30 days; but the credit terms do not correspond to the actual repayment time. The average repayment time for all customers in Tarija City was 323 days, or almost a year. The same contrast occurs for the provinces. Most purchases in Cercado were small—the average value was even smaller than in Tarija city—yet people in the surrounding province took longer to repay: the average time for regular customers was 397 days, more than a year. (While many customers made three or four partial payments, unfortunately the data on these payments are inconsistent.)

Striking differences between the provinces also appear, especially between the wealthy and poor provinces of western Tarija. In poverty-stricken Avilez, for example, the average repayment time for regular customers was more than 2.2 years. In wealthy Méndez, the average repayment time was almost exactly a year. While no direct relationship could be found between credit terms and payment time, two factors appear to have determined Navajas’ choice of terms. First, the more affluent the region, the shorter the granted repayment period. In Cercado, 103 out of 131 agreements were for 60 days. By contrast, almost a third of the agreements in impoverished Avilez were for more than 120 days (see table 4). The second factor was distance. The farther away the customer, the longer the credit term. These patterns suggest that Navajas did take into account factors such as ability to repay and time for the payment to arrive, but he grossly underestimated the actual payback time.

The first hypothesis, that length of repayment time was related to relative poverty, is also borne out in comparing peons and servants with the rest of Navajas’ customers. Wholesale and retail customers without joint accounts on average paid off their debts twice as fast as hacienda peons or servants. For example, in the city of Tarija, most of these “regular” customers paid for their merchandise in full within 249 days, or about eight months. In contrast, servants took more than twice as long: 563 days, or more than one-and-a-half years (see table 4). Even in poor regions such as Avilez, this difference can be discerned. Whereas regular customers there took an average of 806 days to pay for their purchases (even longer than servants in the city), hacienda peons took twice that time, 1,610 days. In relatively prosperous Méndez province, peons in joint accounts took only two months longer than independent peasants or wholesalers. In Cinti, where there were few joint accounts, the small difference between these and regular customers might be explained by the peon who went to purchase goods for his hacendado and probably paid off his own debt at the same time.

The evidence from Navajas’ accounts suggests not only that debt was related to the prosperity of a particular province but that debt repayment varied among social groups. The poorer members of society, such as servants and hacienda peons, took much longer to pay for their purchases. What’s more, the regional impact of contemporaneous economic changes can be discerned here. Certain regions, such as Avilez, former supplier of the silver-mining towns, were markedly affected by the shift in export dominance from silver to tin. Even hacienda peons in relatively prosperous Méndez province could pay off their debts sooner than petty merchants or retail customers in Avilez.

It is difficult to ascertain why credit was such a pervasive device among Tarija merchants, especially when evidence indicates that their interest rates were no higher than those of their suppliers. One reason might be the persistent lack of specie noted throughout Latin America at the time, even in countries, such as Bolivia, that minted their own coins. The universality of credit networks, however, suggests that more was involved than just a lack of small change. For one thing, the extension of credit assumes that the merchant trusts the customer enough to release the merchandise in exchange for a promise of money. The merchant must have confidence in the expectation of eventually recovering the investment plus a profit. Thus a potential problem for the tarijeños in extending so much credit was that customers might be unable to pay back their debts.

In the early 1900s, the first years of his own enterprise, Moisés Navajas simply tried to retrieve his money when his customers did not pay up. He developed ties with certain individuals in the countryside who were willing to collect these debts for a fee (usually 12 percent of the total), either through the courts as Navajas’ representative or extralegally. As Navajas became more sophisticated in his business practices, however, he took a more preventive approach. By the 1920s he had developed his network of informants, mostly his own petty merchant clients, to tell him whether his other customers were creditworthy. The network even included an entrepreneurial priest in the southern Cinti region. In turn, the merchant gave the informants special privileges, such as extended credit in his store.⁶³

Whatever they took to run efficiently, such elaborate credit networks benefited both merchant and customer. Hacienda peons usually purchased in small amounts and took a long time to repay. This indicates that they had access to very little cash. Being able to secure credit from an importer such as Navajas could mean the difference between obtaining such goods and going without them. From the merchant’s perspective, credit was a creative strategy for making a profit in a region where little money was circulating; but it was also probably the only way to sell imports in an economy that exported very little in return.

It is interesting that Navajas made no profit on the credit operation itself. When it is possible to discern the actual amount customers paid, the annual interest rate can be calculated to have ranged from 5 to 12 percent, charged after the grace period had elapsed. This was about the same rate wholesalers charged throughout the region at the time. In other words, Navajas’ interest rates only reflected his own cost of providing credit. Because Navajas was one of the most prosperous merchants in Tarija, he must have made most of his profits from marking up the price of his goods rather than from interest returns. Presumably his direct connections with suppliers in the industrialized countries helped him remain competitive and accumulate wealth.

If the relationship between merchant and customer involved any exploitation in the traditional sense, the use of credit was not the means. This was another, indirect benefit to both merchants and customers (especially hacienda peons and independent peasants). Unfortunately, the account books tell us little about the merchant-customer relationship and even less about the particular relationship between the merchant, the hacienda peon, and the hacendado through the joint accounts. It is probable that peons’ access to the stores of Tarija through their hacendado was predicated on the paternalistic links between them as well as the personal relationship between the hacendado and the merchant. What can be discerned, in any case, are the connections between the Tarija merchants and the larger world in which they conducted their business.

Tarija Merchants and Latin American Economic Development

Our research, through the case studies of Tarijan commerce, highlights three dimensions of regional development: the geographic determinants, the commercial players, and the effects of the frontier. The geographic analysis of merchants’ records and the geographic breakdown of their customer bases reveal in a new way the comparative prosperity of certain regions. While some methodological problems persist—for example, the customer bases of various merchants might have different characteristics—this is a promising way to explore internal trade, for which data on Latin America are fragmentary. Increased credit here appears to signal prosperity, not decline. At the same time, the shorter the repayment period—an indication of customers’ ability to pay for their goods—the more prosperous these customers presumably were.

The merchant records also make it possible to distinguish between different types of customers, from wholesalers to retail purchasers to hacienda peons and servants. As we have seen, the differences between these groups were often significant, and they point to the differential impact of changes in the Latin American economy on various population groups. Data from merchant records quantify some small measure of this impact, which otherwise is visible virtually only in qualitative descriptions. The distinction between customer groups also clarifies the various levels on which Tarija merchants traded, including import-exports, long-distance intraregional commerce in commodities such as cattle, and local retail transactions.

The closely related processes of commercial and frontier development were the principal factors in the history of nineteenth- and early twentieth-century Tarija. Commerce, particularly textile importing, was the principal activity of the Tarija elites from the beginning of the republican period. Merchants made their money on the eastern frontier, trading not only with settlers and frontier soldiers but also with the vastly more numerous indigenous peoples, who were not controlled by the Bolivian state. The loss of the frontier region to Tarija merchants corresponds closely to the decline of the region’s economic dynamism.

The story of Tarija’s merchants illustrates the importance of the region in Bolivian history as a whole. The fortunes of Tarija merchants faded with the decline of the silver-mining industry. This in turn brought about a general economic downturn throughout southern Bolivia in the early twentieth century, from which the region has never truly recovered.⁶⁴ Yet the role of Tarija merchants in Bolivian commerce was extremely important throughout the first century after independence, particularly in supplying imports to the southern silver-mining centers. Their switch in the 1860s from reliance on Salta merchant intermediaries to direct relations with European firms on the Atlantic and Pacific coasts set the stage for the predominance of Tarija commerce from the years of the War of the Pacific to the early twentieth century. The heavy participation of traders from Bolivia’s southernmost department helps explain, for example, the dynamism of silver mining even when the Pacific trade was cut off by Chilean troops. Perhaps it also helps explain the success of silver miners such as Gregorio Pacheco and José Avelino Aramayo, both of whom controlled mines in the far south; or Aniceto Arce, scion of an important Tarija family.

The Tarija case studies also have wider implications for Latin American economic and social history. They suggest that the penetration of large latifundia and subjugation of indigenous peoples—a process very common on Latin American frontiers—diminished commercial opportunities rather than stimulated them. This assumes that Latin American frontiers were more open to commercial penetration than previously thought.⁶⁵ If this premise is accepted, it is easy to see how the numerical decline and the accompanying impoverishment of Indian populations under forced-labor systems eliminated much of the merchants’ customer base. In a sense, the surplus achieved by Indian societies was transferred from merchants to landlords. The estate owners greatly intensified the extraction of surplus through labor relations, diminishing the Indians’ purchasing capacity. This was certainly the case in the foothills of the Andes, probably on the Argentine pampas, and perhaps on the northern Mexican frontier.

The impact of the commercial penetration of Latin America by foreign merchant houses also bears examination. In the case of Tarija, foreign merchants eventually helped wrest the lucrative Chaco frontier region from the tarijeños, though a number of other factors also played into the decline of Tarijan trade networks there. This, however, occurred only in the early twentieth century. Even then, Tarija merchants continued astutely to manipulate the competition among a variety of merchant houses on the Pacific and in Argentina to select the most favorable prices. Indeed, Trigo Hermanos and other Tarija houses eventually bypassed the European houses by dealing directly with European manufacturers. Native merchant elites benefited from the expansion of transportation networks and worldwide trade competition in the second half of the nineteenth century.

The nearly universal use of credit made possible the consumption of imports in Latin American regions that had little or nothing to export in return. Credit from town merchants was probably much more important to the majority of rural folk than credit from the tiendas de raya. This was certainly the case in Tarija, where, as far as we know, no hacienda-run stores existed. The absence of tiendas de raya and the availability of merchant credit possibly characterized other territories in Latin America as well.

The relatively modest interest rates charged by Tarija merchants and the relatively long grace periods during which no interest was charged mitigated the burden of interest charges. Peasants and townsfolk had a choice of where they bought their goods, though hacienda peons could only use the stores in which their hacendado gave them access to credit. The web of credit (or debt) undoubtedly created special personal relationships between merchants and peasants, intertwining economic and personal interests. Such relationships, still prevalent today throughout much of Latin America and certainly important then in the Bolivian countryside, made the marketplace less flexible in response to price competition than might otherwise be supposed. Unfortunately, the records do not reveal the merchants’ profit margins (which might have been considerable). Nevertheless, the merchants’ direct relationships with suppliers and the large number of stores offering imported goods must have provided some price relief to consumers.

The meaning of credit varied significantly between social classes. For the elites and freeholding peasants, it meant selection of goods from stores at least partly on the basis of price. Dependent peons and servants, on the other hand, could acquire credit only through the special favor of their landlord. Hacienda owners (and the employers of servants in town) did not engage in debt peonage per se; instead they shifted the burden of debt maintenance to the merchant. This arrangement required considerable trust on the part of both the merchant and the landlord; indeed, the use of credit may have served as the glue that bound rural Tarijan society together, as well as similar communities elsewhere in Latin America.⁶⁶

If credit was a privilege, interest rates were reasonable, and the length of time to pay for the merchandise more than adequate, then conditions were quite favorable for the consumer. As we have seen, the large amounts of credit given by merchants made possible consumption patterns beyond what the economy might otherwise have supported. General Francisco O’Connor, who, true to his principles, became a landowner and not a merchant, might have been partly correct when he declared that the consumption of foreign textiles was the ruin of the Tarija economy because it hindered industrial development.

Nevertheless, given Tarija’s small markets, its relative inaccessibility, and its lack of an industrial base or an artisanal class, O’Connor’s dreams of industrial or even agricultural development probably never would have been feasible. Instead, the development of an extensive credit network provided the rural and urban populations of Tarija with goods that otherwise would have been impossible to afford.

Our thanks to Matt Jaroneski and Eduardo Trigo O’Connor D’Arlach for their indispensable help with the maps, and to the former also for his software expertise. Peter N. Stearns and David W. Miller, along with the members of the CMU History Department Seminar, provided useful comments, as did two anonymous reviewers.