Markets and hierarchies in late colonial Spanish America: The royal tobacco monopoly in the viceroyalty of Peru, 1752--1813

This study fills a historiographical lacuna with the reconstruction of the history of the Peruvian tobacco monopoly from 1752 to the second decade of the nineteenth century. I argue, contrary to the prevailing view, that the colonial state was effective in the extraction of rents. This result casts doubt on the alleged relative weakness of the colonial state in the Andean region. Major remittances were sent to Madrid between 1787--1797, but a great proportion of tobacco monopoly revenues remained in colonial territories. This finding challenges the view that the repatriation of resources to the metropolis was a major limitation to economic growth in the late colonial period. Nonetheless, the colonial state's adoption of coercive practices in its desire to boost monopoly revenues compounded the dismal market conditions of the viceroyalty. Jose de Galvez' tenure was the most dynamic, and under his guidance a substantial expansion of monopoly revenues took place. This was due in no small part to the vigorous enforcement of intrusive monopoly regulations. The model I present suggests that the better economic results of the 1780s were mostly related to relatively more effective regulations in the control of contraband in combination with high prices. The dissertation also addresses the institution and early closure of the State's tobacco factories (1780--1791). One interesting finding is the great degree of path dependence of monopoly regulations. Centralization of manufacture was a key component of the Bourbon plan for the Spanish American industry well before the State had any significant knowledge of the colonial industry. The centralization of manufacture did not imply any "modernization" or any major changes in transformation costs with respect to the artisanal production. Nonetheless, through the imposition of factory discipline, the colonial state deeply affected the social and economic conditions of those involved in the manufacture of tobacco products. The closure of the factories, after only ten years of operation, should be understood in light of the major changes in policy that emanated from Madrid following the death of Charles III. In these years, the Crown sought to transform the tobacco monopoly into a more lenient tax.