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State-led Industrialisation: The Evidence on Paraguay, 1852–1870*

Published online by Cambridge University Press:  05 February 2009

Mario Pastore
Mario Pastore
Affiliation:
Mario Pastore is at the Department of Economics and Latin American Studies Program, Tulane University, New Orleans.
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Extract

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 1852 on, free circulation on the river Paraná 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.

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Journal of Latin American Studies , Volume 26 , Issue 2 , May 1994 , pp. 295 - 324
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Copyright © Cambridge University Press 1994

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References

1 See Batou, Jean, Cent ans de résistance au sus-deéveloppement. L'industrialisation de l'Amérique latine et du Moyen-Orient face au défi européen, 1770–1870 (Geneva, 1990), p. 460Google Scholar. Quoted excerpts are from Batou's English summary, pp. 451–69. 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in secondary sources Vera Blinn Reber's ‘Modernization from Within: Trade and Development in Paraguay, 1810–1870’ (unpublished book manuscript, Shippensburg University, Carlisle, PA, 1990) is the latest and most thorough statement based on archival sources.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 Whigham, Thomas L., ‘The Iron Works of Ybycuí, Paraguayan Industrial Development in the Mid-Nineteenth Century’, The Americas, vol. 35 (1978), pp. 201–18CrossRefGoogle Scholar and Williams, John Hoyt, The Rise and Fall of the Paraguayan Republic (Austin, Texas, 1979)Google Scholar, both based on archival research. No historiographical study of the Paraguayan revisionist school is yet available, but its evolution may be traced in Alperovich's, M. S. ‘La dictadura del Dr. Francia en la historiografía del siglo XX’, Estudios Latinoamericanos (Wroclaw), vol. 5 (1979) PP. 87–99Google Scholar, Vilaboy, Sergio Guerra, Paraguay, de la independencia a la dominatión imperialista, 1811–1870 (Havana, 1984)Google Scholar and Reber's Introduction in ‘Modernization from Within’. Paraguay's revisionist school is related to Argentina's, analysed in Donghi's, Tulio HalperinEl revisionismo histórico argentino (Buenos Aires, 1970)Google Scholar. 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, Bushnell, David and Macaulay's, NeillThe Emergence of Latin America in the 19th Century (New York, 1988)Google Scholar.

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 in the Upper Plata, 1780–1870 (Albuquerque, New Mexico, 1991), pp. 71–2. Also, Reber, Vera Blinn persuasively argues, in ‘The Demographics of Paraguay: a Reinterpretation of the Great War, 1864–1870’, Hispanic American Historical Review, vol. 68, no. 2 (05 1988), pp. 289–319CrossRefGoogle Scholar, 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 18.5 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, 1864–1870”’, Hispanic American Historical Review, vol. 70, no. 4 (November 1990), 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 según Wisner’, Revista del Instituto Paraguayo (39–1903), 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.

4 Revisionist authors usually resort to dependency or Marxian theory when they rely on theory at all. Early applications of dependency theory include White's, Richard AlanParaguay's Autonomous Revolution, 1810–1840 (Albuquerque, New Mexico, 1978)Google Scholar and Whigham's ‘Iron Works of Ybycuí’. A relatively toned-down version of dependency theory is apparent in more recent works like Batou's Cent ans and Reber's ‘Modernization from within’. Among Marxist analyses, an early one is Creydt's, OscarFormación historica de la nation paraguaya (Moscow, 1963)Google Scholar; a more recent one is Guerra Vilaboy's Paraguay, de la independentia a la dominación imperialista, which specifically cites (p. 90) Lenin's, V. I. ‘Sobre el impuesto en especie’, in Obras escogidas (Moscow, 1961)Google Scholar, as relevant to understand the state capitalism that allegedly obtained in early national Paraguay. John Hoyt Williams's Rise and Fall is apparently unconcerned with theory and only seeks to provide an accurate description based on archival evidence. However, descriptions imply 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 Box, Pelham Horton, Origins of the Paraguayan War (New York, 1930), p. 12Google Scholar. The theoretical framework underlying the alternative hypotheses put forth here is the new institutional economics based on the work of Ronald Coase, Douglass North and Oliver Williamson. For a good summary of its main tenets see Nugent, Jeffrey and Nabli, M. K., The New Institutional Economics and Economic Development (Amsterdam, 1989)Google Scholar. For space constraints these alternative hypotheses can only be formulated here.

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 Pastore, Mario, ‘Crisis presupuestaria, regresión institucional, y contractión económica: consecuencias económicas de la independencia en el Paraguay, 1810–1840’, in Prados, Leandro and Amaral, Samuel (editores), La independencia americana: sus consecuencias económicas (Madrid, 1993), pp. 164–200Google Scholar; or the later version of this paper (see fn. 76, below). The Paraguayan government had repeatedly demanded free navigation of the Paraná river from the Argentine government before 1852. 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 Krauer, Juan Carlos Herken, ‘Proceso económico en el Paraguay de Carlos Antonio López: la visión del cónsul británico Henderson (1851–1860)’, Revista Paraguaya de Sociología, vol. 19, no. 54 (05–08 1982), p. 108 cuadro 8Google Scholar.

7 See Reber, ‘Modernization from Within’, Table 13, ‘Paraguayan Imports and Exports, 1792–1880’.

8 On export volumes and prices see Herken Krauer, ‘Proceso económico’, p. 110, Table 4 and p. 113, Table 8, respectively.

9 For Argentina's exports see Randall, Laura, A Comparative Economic History of Latin America, 1500–1914, vol. 2 (Ann Arbor, MI., 1977), pp. 204 and 219Google Scholar.

10 For yerba mate exports see Reber, Vera Blinn, ‘Commerce and Industry in Nineteenth Century Paraguay’, The Americas, vol. 42, no. 1 (07 1985), pp. 29–53CrossRefGoogle Scholar; for tobacco exports see Whigham, Thomas L., ‘Agriculture and the Upper Plata: The Tobacco Trade, 1780–1865’, Business History Review, vol. 59, no. 4 (Winter 1985), pp. 563–96CrossRefGoogle Scholar; for the trade on cattle and cattle by products see Whigham, Thomas L., ‘Cattle Raising in the Argentine North East, c. 1750–1870’, Journal of Latin American Studies, vol. 20 (11 1988), pp. 313–35CrossRefGoogle Scholar; on the trade in hardwoods see Reber, ‘Modernization from Within’, Chapter 3 and Table 5, ‘Lumber products: Prices and Exports’.

11 See Herken Krauer, ‘Proceso económico’, p. 90.

12 Yerba mate was consumed mainly in Argentina and Uruguay, though smaller quantities were consumed in Chile, Bolivia, and further north. Tobacco, the other addictive substance Paraguay exported, was also consumed regionally. Despite government efforts, neither of them developed a market in Europe.

13 The 1846 decree making yerba mate and woods for naval construction state monopolies appeared immediately after another reducing taxes on exports and imports down from the high levels at which they were set in 1841. See El Paraguayo lndependiente (Asunción, 1859), tomo 1, PP. 362–72 for the 1846 decrees, and Herken Krauer, ‘Proceso económico’, p. 94 for the 1841 and 1846 tax rates. Clearly, the state seized a source of funds it anticipated would have a higher yield if free navigation of the Paraná river obtained, which was seen as unavoidable after 1845, when the Argentine dictator Rosas was defeated by the British and the French at Vuelta de Obligado. See Herken Krauer, ‘Proceso económico’, p. 83. However, the state presented the seizure as compensation for reducing taxes on imports and exports.

14 ‘Proceso económico’, p. 88. The state did allow certain privileged individuals occasionally to export yerba mate or woods unsuitable for naval construction, although the volume of these exports was comparatively small.

15 Price data are from Herken Krauer, ‘Proceso económico’, 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 Chaves, Julio César, El Supremo Dictador. Biografía de José Gaspar de Francia (Madrid, 1964), p. 287Google Scholar.

17 ‘Modernization from Within’, chapter X, pp. 16, 30–1, and 32–3. Reber also reports that ‘the decree of 16 January 1855, 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 Asunción belonging to Colonel Venancio López, son of the president as it appeared directly aimed at closing down the concern of Edward Hopkins’ (chapter IV, p. 15). 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. 19).

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 economico’, p. 96.

19 Ibid., p. 92.

20 The data in question appear in ibid., Table 3, p. 109.

21 The numbers Herken Krauer provided for government revenues from taxation of imports and exports for 1855–59 are ‘data re-elaborated by the author on the basis of information provided in Henderson's reports and the bibliographical sources cited’. See ‘Proceso económico’, 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 1850, 1853, 1856–8, and 1860. See Reber, ‘Modernization from Within’, Table 17, ‘Revenues of the Paraguayan Government for various years, 1816–1864’.

23 See Herken Krauer, ‘Proceso económico’, p. 92.

24 According to Gelly's, Juan AndrésParaguay: lo que fue, lo que es, y lo que será (Paris, 1926)Google Scholar, cited in Herken Krauer, ‘Proceso económico’, p. 93.

25 ‘Proceso económico’, 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 1858 than in the immediately preceding and in the two immediately succeeding years. Consequently, it is possible that, in 1858, revenues from foreign trade may have been lowered as compared to those from other sources. In that case, forty per cent would not be a representative proportion 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.

30 See Herken Krauer, ‘Proceso económico’, p. 97.

31 On the line of credit Blyth extended to López, see John Hoyt Williams's Rise and Fall…, p. 189. Total exports for 1862 – according to Reber, ‘Modernization From Within’, Table 13, ‘Paraguayan Imports and Exports’ – reached $F1,867,000 which was equivalent to £311,166 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 económico’, p. 113, Table 8. Yerba mate and tobacco exports increased between 1852 and 1860. 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.

33 Reber, ‘Modernization from Within’, Table 18, ‘Paraguayan Government Expenditures for various years, 1816–1866’. The column labelled ‘1858b’ contains Reber's figures based on those in the Libros de Caja of the Paraguayan government's General Treasury. The column labelled ‘1858e’ contains figures from the British Consular report on the finances of Paraguay.

34 That there also was some private investment is clear, but it is not known what it might have amounted to.

35 Carlos Antonio López had sent a similar mission to Brazil at the end of the previous decade. See below, note 37.

36 The warship in question was the ‘Tacuarí’. Among the capital inputs purchased were between eight and ten steam engines. See Scheina, Robert, Latin America: A Naval History, 1810–1987 (Annapolis, Md, 1987), p. 19, note 10Google Scholar.

37 López had tried to establish an iron foundry twice before Whytehead's arrival, both times without success. In the late forties he sent Juan Andrés 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 Plá, Josefina, Los británicos en el Paraguay (Asunción, 1984), pp. 29–38Google Scholar. Subsequent quotations from Plá's text are from this Spanish original, and do not always appear in Plá's, JosefinaThe British in Paraguay (Oxford, 1975Google Scholar, 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.

38 Sumptuous private residences were built for the rulers. Most important among them was Francisco Solano López's – now Paraguay's presidential palace. See Gutiérrez, Ramón, Evolución urbanística y arquitectónica del Paraguay (Resistencia, Argentina: 1978)Google Scholar, Segunda edición.

39 After the war, coal deposits were found to exist in present day San Estanislao, Cerro León and Paraguarí. See Acosta, Juan Francisco Pérez, Carlos Antonio López, obrero máximo, Labor administrativa y constructiva (Asunción, 1948), pp. 59–60Google Scholar.

40 Whigham's figures on foundry production are from ‘The Iron Works of Ybycui’, pp. 208 and 210, respectively. His source for the figure he quotes on p. 210 is Trías, Vivian, El Paraguay de Francia el Supremo a la Guerra de la Triple Alianza (Buenos Aires, 1975), p. 32Google Scholar. 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 Plá, Los británicos…, p. 131.

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 Trías, Vivian, Obras de Vivian Trías (Montevideo, 1988), pp. 148 and 206Google Scholar.

43 See ‘The Iron Works of Ybycui’, p. 214. On the next page, however, Whigham reports ‘Total recorded poundage for Smithy and Foundry: 105–202 lbs’, which suggests a yearly poundage of between 105 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 1858. See Plá, Los británicos en el Paraguay, p. 65.

45 Ibid., p. 62.

46 Ibid., pp. 63–4.

47 Ibid., pp. 127–8.

48 Ibid., p. 65.

49 Ibid., pp. 127–8.

50 In addition to supplying the shipyard, the arsenal later supplied the railroad, the military hospital, and even the private sector. These demanded not only parts and spare parts but repairs and maintenance as well. Plá suggests that ‘toward 1864, the number of private commissions were choking the arsenal’. Some presumably typical examples of work the arsenal carried 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 iron works of the new buildings belonging to the President's relatives. See Los británicos en el Paraguay, pp. 133–4.

51 ‘The first brass cannon, a 12-pounder was cast on 26 July 1862; 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 18 December’. See Plá, Los británicos en el Paraguay, p. 132.

52 Plá 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 británicos en el Paraguay, p. 132. 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.

56 Ibid., p. 69. Apparently, there were lathes, machines to punch holes and to drill through iron planks, ‘and a powerful machine to cut iron without having to heat it’. It is known that among the machines produced in the arsenal there was one to drill cannons, which General López incessantly asked about; a railroad with a dump wagon to help in the construction of the arsenal, and machinery to extract oil.

57 This steam engine ‘which could be useful inside or outside the arsenal’, operated, among other machines, the two circular saws that were used to cut the wood used in ship construction in the shipyard. Steam driven presses were also installed in sugar cane plantations privately owned by General López in 1864. Ibid., pp. 68–9.

58 Ibid., p. 132.

59 Trinidad was the López's home town.

60 According to Pérez Acosta's Carlos Antonio López, p. 248, travelling time from Asuncion to Itauguá was an hour and a quarter and to Ypacaraí (Guazuvirá) an hour and a half.

61 Luis Vittone, Las Fuerzas Armadas Paraguayas en sus distintas épocas mentions that the cavalry regiment was detailed to help speed up the pace of railroad construction.

62 See Pérez Acosta, Carlos Antonio López.

63 We could have established how many months it took to construct the following seventeen and a half kilometres if we knew when the railroad reached Paraguari, but this information does not appear in secondary sources. We can, however, assert that railroad construction proceeded more slowly in 1862 but picked up speed in the last half of 1863.

64 Pérez Acosta was nevertheless able to calculate a lower limit for unregistered state imports between 1860 and 1864 which, according to him, added up to a minimum of £110,557 and 6,000 gold ounces. See Herken Krauer, ‘Proceso económico’, p. 96, footnote 52.

65 According to Plá, Los británicos…, p. 27. This has not, however, been established as a fact.

66 See Hume, David, Writings on Economics, edited by Rotwein, E. (Madison, Wisconsin, 1970), p. 64Google Scholar.

67 Financial institutions were even more poorly developed than Cooney suggests they had been towards the end of the colonial period; Cooney, Jerry W., ‘Serving the Hinterland: The Commercial Rise of Asunción, 1776–1810’, SECOLAS Annals, vol. 18 (03 1987), pp. 78–91Google Scholar. The fiscal structure was partly to blame for this problem: government expropriation of lands and their exploitation with coerced labour is certainly a very poor substitute for obtaining resources in ways that do not affect their ownership or mobility, i.e. by means of taxation or borrowing to which the population has consented through its representatives. Thus, extra economic coercion used by the state in land and labour markets had to have negatively influenced the development of financial institutions.

68 Local mercantile houses functioned as sources of private credit. In early 1855, a contemporary observer reported that they had lent £36,000 to individuals. See Herken Krauer, ‘Proceso económico’, p. 101. These were commercial loans, secured by the year's harvest. Similarly, there is evidence that the state granted credit to individuals at 6% per year through its ‘Colecturía’. However, this sort of state loans do not seem to have exceeded $F30,000 between 1849 and 1854, and had only reached $F50,000 by 1857, tnat is £10,000. It is possible that the state had offered loans at low rates of interest to induce individuals to hold copper coins that the state had minted but individuals did not want to accept, preferring those of gold or silver.

69 See Paoli, Juan Bautista Rivarola, Historia monetaria del Paraguay (Asunción, 1982), p. 94Google Scholar.

70 See Herken Krauer, ‘Proceso económico’, p. 100.

71 See ‘Proceso económico’, p. 144, Table 9.

72 Even so, Herken Krauer calculates figures for what he calls the trade balance between 1850 and 1861 by subtracting private imports from exports, which include direct state exports as well as private exports.

73 See ‘Proceso económico’, p. 111, Table 5. Note, however, that Herken Krauer compensated for a suspected import under-invoicing by arbitrarily increasing export values in customs registries by twenty five per cent. He does not clarify how he decided that percentage was the appropriate one.

74 See ‘Proceso económico’, p. 108, Table no. 2.

75 On the backward linkages made possible by state investments in railroad construction in Germany see Niveau, Marcel, Historia de los hechos económicos (Barcelona, 1971)Google Scholar.

76 For the movement towards institutional forms more conducive to economic growth in seventeenth century Holland and England see North, Douglass C. and Thomas, Robert P., The Rise of the Western World (Cambridge 1993), pp. 132–56Google Scholar. For the short lived effort at institutional reform in a similar direction in early national Paraguay see my ‘Trade Contraction and Economic Regression: The Agrarian Economy of Paraguay, 1810–1840’ (to appear in Journal of Latin American Studies, vol. 26, part 3, 1994).

77 For the role of seventeenth century institutional innovations in helping bring about the eighteenth century Industrial Revolution in Britain see North, Douglass C., Structure and Change in Economic History (New York, 1981), p. 51Google Scholar.

78 On the Army see Vittone, Las fuerzas armadas paraguayas, pp. 156–9 and on military fortifications see Thompson, George, La guerra del Paraguay (Buenos Aires, 1869)Google Scholar.

79 That investments in economic projects were lower than they could have been is suggested by the apparent discrepancy between the fiscal resources and the probable amount of state investments. The growing militarisation of society that one observes in the decades of the fifties and sixties as compared to the decade of the forties and, even more, earlier ones, suggests that military investments were greater than those justified by national defence, a contention consistent with the fact that the state sent troops and materials outside of the nation's territory in the middle of the decade of the sixties.

80 On the relation between balance of trade surpluses and the price of land see Mun, Thomas, ‘England's Treasure by Foreign Trade’, in McCulloch, J. R. (ed.), Early English Tracts on Commerce (Cambridge, 1954)Google Scholar.

81 It would also seem that the designers of this policy in Paraguay were unfamiliar with the critiques of mercantilism already implicit in Mun's mid-seventeenth century works or those explicitly formulated by David Hume around the middle of the eighteenth century. Familiarity with Hume would have allowed these policy-makers to predict the deleterious effects of the policies that they implemented in the monetary and exchange rate fields.

82 The staples theory of economy growth is a variant of the so-called ‘vent-for-surplus’ models of economic growth examined by Caves, Richard in ‘Vent for Surplus Models of International Trade’, in Baldwin, R. E. et al. (eds.), Trade, Growth, and the Balance of Payments (Chicago, 1965)Google Scholar and ‘Export-Led Growth and the New Economic History’, in Bhagwati, J. N. et al. (eds.), Trade, Balance of Payments, and Growth (Boston, 1971), pp. 403–42Google Scholar. On rent seeking theory see Buchanan, J. M. et al. (eds.), Towards a Theory of the Rent-Seeking Society (College Station, TX, 1981)Google Scholar. An attempt to formulate a theory of the state that takes into account rent-seeking behavior is North, Douglass, Structure and Change in Economic History (New York, 1981), ch. 3Google Scholar, ‘A Neoclassical Theory of the State’. An interesting early attempt to bring the staples and rent seeking theories to bear on Argentina is Di Telia, Guido, ‘Rents, Quasi-Rents, Normal Profits, and Growth: Argentina and the Areas of Recent Settlement’, in Platt, D. C. M. and Di Telia, Guido, Argentina, Australia, and Canada. Studies in Comparative Development (New York, 1985), pp. 37–52CrossRefGoogle Scholar.

83 See Mario Pastore, ‘Trade Contraction and Economic Regression’.

84 It is rather doubtful that there would have been war, or that the result of the war would have been the same, had the Paraguayan Army adopted a defensive strategy.