19th Century Economies and Taxation in Latin America
Most people were engaged in agriculture as in
the U.S. in 1820. They farmed to feed and clothe themselves; in other words, they engaged
in subsistence agriculture. Most people did not own land. The land was owned by a few,
such as hacendados or the Roman Catholic Church.
There were export sectors in economies.
Exports were of two basic kinds: agricultural and mineral. Argentina and Uruguay exported
cattle hides and salted beef. Bolivia exported silver and mercury; Peru: silver and,
later, guano; Colombia: precious metals and sugar; Brazil: sugar and, later, coffee; and
Mexico: silver, gold, and cotton. Most of these exports went to Europe. Little went to
each other. None of it in huge volumes even in Argentina until the late 19th century. The
countries lacked capital, communications networks, and technology to develop the export
business. Besides, the upper class was able to meet its needs without much
economic expansion. Societies were run for the benefit of the upper classes.
Ownership of what was valuable was
concentrated in a few hands.
Taxation. Government revenues were based on import and
export duties. National governments depended on taxation of international trade which
meant they were unable to control their revenues. They were unable to control
international trade. It also meant that they could not increase revenue when needed. What
it did mean was that they were not levying direct taxes on the wealthy and influential
(who controlled the government and were deferred to by the government). The tax system did
what the upper classes wanted.
A further consequence was dependency upon
foreign creditors to supply the capital needed for basic governmental operations.
Governments borrowed to meet their needs, desires, and deficits. Because of the
amount of risk and the desire for profits, lenders charged high rates and discounted the
loans. Governments had difficulty making the payments. When these difficulties occurred,
the rates and discounts got higher. Sometimes, a country would only get 40-50% of
what it borrowed.
Governments also used "forced loans"
on their citizens. One reason to get into political power was to force others to loan