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Bourbon Intervention in the Peruvian Tobacco Industry, 1752–1813*

Published online by Cambridge University Press:  26 July 2007

CATALINA VIZCARRA
CATALINA VIZCARRA
Affiliation:
Catalina Vizcarra is Assistant Professor in the Department of Economics, University of Vermont.
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Abstract

During the second half of the eighteenth century the Spanish Crown monopolised the tobacco industry in its American colonies, creating vertically integrated organisations which included factories for the production of cigars and cigarettes. A detailed analysis of the regulations, organisation and policies applied during the Peruvian viceroyalty suggests that Bourbon officials were effective managers. The monopoly was successful at curbing contraband and extracting rents. The evolution of monopoly policies, however, reflected political constraints on the Crown's efforts to raise revenues. The archival evidence suggests that Bourbon officials closed the tobacco factories in Peru in 1791 as a result of public opposition.

Resumen: Durante la segunda mitad del siglo XVIII la Corona española monopolizó la industria tabacalera en sus colonias americanas, creando organizaciones integradas verticalmente con fábricas para la producción de puros y cigarros. Este artículo es el primero que estudia el Estanco peruano a profundidad. Un análisis detallado de las regulaciones, la organización y las políticas aplicadas en este caso sugiere que los oficiales borbónicos fueron efectivamente sus gerentes. El monopolio tuvo éxito en frenar el contrabando y extraer rentas. La evolución de las políticas monopólicas, sin embargo, mostró los límites políticos sobre los esfuerzos de la Corona por elevar sus ingresos. Los archivos sugieren que los oficiales borbónicos cerraron las fábricas de tabaco en Perú en 1791 como resultado de la oposición pública hacia ellos y no por razones económicas.

Palabras clave: tabaco, reformas borbónica, Virreinato de Perú, ingresos fiscales, contrabando.

Resumo: Durante a segunda metade do século dezoito a Coroa espanhola monopolizou a indústria de fumo de suas colônias americanas, criando organizações verticalmente integradas que incluíam fábricas para a produção de charutos e cigarros. Este é o primeiro artigo a estudar o estanco peruano a fundo. Uma análise detalhada do regulamento, organização e diretrizes aplicados sugere que neste caso funcionários bourbons eram administradores eficazes. O monopólio obteve sucesso em frear o contrabando e na extração de rendas. Porém, a evolução das diretrizes do monopólio refletia restrições políticas sobre os esforços da Coroa para aumentar receitas. Evidências arquivais sugerem que funcionários bourbons fecharam fábricas de tabaco no Peru em 1791 mais propriamente como resultado da oposição pública do que por motivos econômicos.

Palavras-chave: tabaco, reformas Bourbons, vice-realeza do Peru, receitas fiscais, contrabando

Keywords

tobaccoBourbon reformsViceroyalty of Perufiscal revenuescontraband
Type
Research Article
Information
Journal of Latin American Studies , Volume 39 , Issue 3 , August 2007 , pp. 567 - 593
Copyright
Copyright © Cambridge University Press 2007

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References

1  The last decade has witnessed an upsurge in the publication of works that address the role of institutions in shaping the region's path of growth. The latter is the result of the major influence that the New Institutional Economics (NIE) has had in the field of economic history. Coatsworth, John H. has pioneered the application of this framework to Latin America. See, for example, his ‘Economic and Institutional Trajectories in Nineteenth-Century Latin America’, in Coatsworth, John and Taylor, Alan (eds.), Latin America and the World Economy Since 1800 (Cambridge MA, 1998), pp. 23–54Google Scholar. For a discussion of the latest research in Latin American economic history and the influence of the NIE see Coatsworth, , ‘Structures, Endowments, and Institutions in the Economic History of Latin America’, Latin American Research Review, vol. 40, no. 3 (2005), pp. 126–44CrossRefGoogle Scholar.

2  Fisher, John, El Perú borbónico 1750–1824 (Lima, 2000)Google Scholar.

3  Total tobacco exports were behind silver with 13.6 per cent of the total during the ‘free-trade’ period between 1782 and 1796. Tobacco was followed by cacao with 7.8 per cent and sugar with 5.5 per cent: see Fisher, John, The Economic Aspects of Spanish Imperialism in America, 1492–1810 (Liverpool, 1997), p. 168Google Scholar.

4  The Bourbons sought to transform the colonial ‘consensus’ of the Habsburg period into a stronger state capable of extracting higher rents: see Lynch, John, ‘The Institutional Framework of Colonial Spanish America’, Journal of Latin American Studies, vol. 24, Quincentenary Supplement (1992), pp. 69–81CrossRefGoogle Scholar.

5  See MacLachlan, Colin, Spain's Empire in the New World: the Role of Ideas in Institutional and Social Change (Berkeley, 1988)Google Scholar.

6  The Cuban industry, with the tobacco of best quality, was monopolised early on with the explicit goal of assuring enough imports of Cuban tobacco leaf for the factories in Seville. In all other areas the main goal was to increase fiscal revenues.

7  The most important study of the tobacco monopoly is the work of Susan Deans-Smith, Bureaucrats, Planters and Workers: the Making of the Tobacco Monopoly in Bourbon Mexico (Austin, 1992). In addition, see Eduardo Arcila Farías, Historia de un monopolio: el estanco del tabaco en Venezuela (1779–1833) (Caracas, 1977). For a collection of essays on the tobacco industry in the eighteenth century see Agustín González Enciso and Rafael Torres Sánchez (eds.), Tabaco y economía en el siglo XVIII (Pamplona, 1991).

8  The earliest article on Peru is Castillo, Guillermo Céspedes del, ‘La renta del tabaco en el virreinato del Perú’, Revista Histórica vol. 21 (1954), pp. 138–63Google Scholar. Mauro Escobar Gamboa wrote his bachelor's thesis on aspects of tobacco production in Saña: ‘El tabaco en el Perú colonial 1752–1796’, unpubl. Bach thesis, Universidad Nacional Mayor de San Marcos, 1973. Christine Hünefeldt addresses some aspects of production and distribution in Chachapoyas in ‘Etapa final del monopolio en el virreinato del Perú: el tabaco en Chachapoyas’, in Nils Jacobsen and Hans-Jürgen Puhle (eds.), The Economies of Mexico and Peru During the Late Colonial Period (Berlin, 1986), pp. 388–417. John Fisher gives a general overview of the monopoly enterprise in ‘El estanco del tabaco en el Perú borbónico’, in González Enciso and Torres Sánchez (eds.), Tabaco y economía, pp. 35–53. Additional secondary sources include Pimentel, Carlos Deustua, ‘Aspectos de la economía peruana a fines del siglo XVIII (1790–1796)’, Boletín del Instituto Riva Agüero, vol. 8 (Lima, 1969–1971), pp. 135–308Google Scholar; Alonso, Serena Fernández, ‘Un caso de represión del fraude en la Real Renta de Tabacos de Lima durante el período reformista’, Boletín del Instituto Riva Agüero, vol. 17 (Lima, 1990), pp. 401–10Google Scholar; Catalina Vizcarra, ‘Markets and Hierarchies in Late Colonial Spanish America: The Royal Tobacco Monopoly in the Viceroyalty of Peru, 1752–1813’, unpubl. PhD diss., University of Illinois, 2001; and Vizcarra, Catalina and Sicotte, Richard, ‘El control del contrabando en el Perú colonial: el caso del monopolio del tabaco, 1752–1813’, in Contreras, Carlos and Glave, Manuel (eds.), Estado y mercado en la historia del Perú (Lima, 2002), pp. 184–211Google Scholar.

9  For an overview of its importance as a source of revenues see Vizcarra, Catalina, ‘El monopolio del tabaco en hispanoamérica colonial’, in Alvarez, Luis Alonso, Muñoz, Lina Gálvez and Luxan, Santiago (eds.), Tabaco e historia económica: estudios sobre fiscalidad consumo y empresa (siglos XVII–XX) (Madrid, 2006), pp. 231–44Google Scholar.

10  The data employed in these estimates were gathered from extensive records at the Archivo General de Indias (AGI) in Seville and the Archivo General de la Nación (AGN) in Lima. Most of the primary sources used for this work cover the monopoly period until 1813. Some data from 1814 onwards are available at Biblioteca Nacional and AGN, but they are quite disperse and incomplete.

11  The net revenue figures underestimate the importance of tobacco income. We should keep in mind that all other revenues listed in Table 1 are presented in gross terms. In neither case have bureaucratic costs been subtracted. See Jacobsen and Puhle (eds.), The Economies of Mexico and Peru, p. 23, for an alternative assessment of the Peruvian monopoly.

12  Gálvez's enterprise led to the extension of state intervention in the industry in terms of geographical location (it is in these years that the Estanco became omnipresent in the region), and to a higher degree of control. For a discussion see Vizcarra, ‘El monopolio del tabaco.’

13  This finding is significant for the historiography because an important portion of our knowledge about the Spanish American economies is based, in one way or another, on the Treasury accounts. If contraband had been as pervasive as so many scholars suggest, it would be necessary to be quite suspicious of some of the general conclusions drawn from the official records. Nonetheless, this result should be treated with some caution. It refers exclusively to the Gálvez era. As noted later, archival evidence suggests that in the early eighteenth century tax evasion was rampant.

14  The costs of monitoring employees and protecting property are viewed by some scholars as being lower in a factory environment than under an alternative sub-contracting or system of ‘putting-out’ to artisans. The case of the Peruvian tobacco factories is consistent with this view. See Williamson, Oliver, ‘The Organisation of Work: A Comparative Institutional Assessment’, Journal of Economic Behavior and Organisation, vol. 1, no. 1 (1980), pp. 5–38CrossRefGoogle Scholar. For alternative points of view, see Marglin, Stephen, ‘What do Bosses Do? The Origins and Functions of Hierarchy in Capitalist Production’, in Gorz, André (ed.), The Division of Labour: The Labour Process and Class-Struggle in Modern Capitalism (London, 1976)Google Scholar, and Landes, David, ‘What Do Bosses Really Do?’, Journal of Economic History, vol. 46, no. 3 (1986), pp. 585–623CrossRefGoogle Scholar.

15  Report of Thomas Chavaque y Herreros, AGI, Lima 1229.

16  Mazos were small rolls of tobacco leaf, typically weighing between 15 and 24 ounces.

17  Limpiones were small bundles of chewing tobacco, about one inch long.

18  Estimated from ‘Extracto que demuestra’, AGI, Lima 1236-B.

19  Slaves in Peru consumed tobacco produced in Saña.

20  Tax rates did not exceed 0.05 reales per mazo and did not change throughout the period. As a way of comparison, from 1746 to 1750, the total revenues of the Royal Treasury in Lima were 8,283,468 pesos: see Paske, John Te, ‘General Tendencies and Secular Trends in the Economies of Mexico and Peru, 1750–1810: The View From the Cajas of Mexico and Lima’, in Jacobsen, and Puhle, (eds.), The Economies of Mexico and Peru, p. 337Google Scholar.

21  Chavaque's estimations were overly optimistic. During the monopoly period net revenues for the Crown were rarely greater than 500,000 pesos. There were three main flaws in his calculations. First, he assumed that tobacco smuggling would vanish with the creation of the Estanco. Second, the final prices he considered in his calculations were much greater than pre-monopoly prices, yet his estimates assumed the same level of consumption as before the establishment of the monopoly. Finally, he did not account for bureaucratic costs. Report of Tomás Chavaque y Herreros, p. 3.

22  See Fuentes, Manuel A. (ed.), Memoria de los virreyes que han gobernado el Perú, vol. 4 (Lima, 1859), p. 239Google Scholar.

23  Céspedes del Castillo, ‘La renta del tabaco’, p. 139.

24  The ordenanzas of 1759 are in AGI, Lima 1229.

25  Ibid.

26  As described in Table 2, costs in production areas were 0.2 reales per mazo for Saña leaf and 0.24 reales per mazo for Bracamoro tobacco in the pre-monopoly period.

27  See Escobar, ‘El tabaco en el Perú’, appendix, p. XII.

28  Factor of Chachapoyas to Dirección de la Renta, July 1787, AGN, C-14, legajo 18. Also see, ‘Reparos que resultan de las listas de sembradores de tabacos remitidas por el factor de Chachapoyas Dn. Baltasar Collantes’, 1771, AGN, C-14, legajo 617.

29  Otermín's report to Gil, July 1790, AGI, Lima 1228..

30  Ibid

31  See Céspedes del Castillo, ‘La renta del tabaco’, pp. 147–51.

32  See Table 1.

33  These figures are derived from Table 2, using average final prices for each product. These are the best estimates that can be obtained, although they are clearly contingent on the precision of Chavaque's assessments, and on the assumption that the industry did not grow substantially during the early years of the monopoly.

34  Gálvez himself had played a significant role in the evolution of monopoly policies in New Spain. As visitador general of Mexico, in the 1760s, he had been responsible for several important policy measures, including the move toward centralisation of manufacture: see Deans-Smith, Bureaucrats, Planters and Workers, chapter 1.

35  De la Riva to Gardoqui, March 1796, AGI, Lima 1242. See also Otermín's report to Gil, July 1790, AGI, Lima 1228.

36  His companions were Miguel de Otermín (who became director of the Peruvian Estanco in 1783) and Marcos Alonso Gamero. Both worked for the Mexican monopoly prior to their appointment as De la Riva's assistants.

37  Deans-Smith argues that there were two reasons for centralisation in Mexico: ‘profitability’, and provision of employment for the urban poor. In the Peruvian documents there are a number of references to profitability, but social considerations do not figure prominently. Deans-Smith, Bureaucrats, Planters and Workers, p. 144.

38  Ortiz de Landazuri to Gálvez, Madrid, 23 April 1776, AGI, Chile 369.

39  Otermín's report to Gil, July 1790, AGI, Lima 1228.

40  Ibid.

41  These monitoring problems were in some respects analogous to those faced under the putting-out system in eighteenth-century England. Travelling from station to station to supervise workers implied high monitoring costs. According to Oliver Williamson, hierarchy (the centralised ownership of equipment and inventories, together with close supervision and discipline) displaced other forms of organisation because it economised on transaction costs. In Williamson's view, the putting-out system was gradually replaced by a more efficient system based on a greater degree of control: the reduction of embezzlement and shirking are crucial to improve performance, and under greater discipline illegal markets are less likely to expand. As mentioned above, it was precisely the reduction of monitoring costs that monopoly officials had in mind when they decided to integrate into the manufacture of cigars and cigarettes: see Williamson, ‘The Organisation of Work’.

42  Nonetheless, this factory was quite small. This area produced no more than 7 to 8 per cent of the monopoly's revenues at the time. In its first year it had only five employees. De la Riva to Superintendente General de la Real Hacienda, Nov. 1781, AGN, C-14, legajo 621.

43  By 1788, the Lima factory employed 622 workers, 472 of whom rolled cigarettes, while 121 manufactured cigars, and 29 limpiones. Otermín's reports to Gil, No. 16–21, AGI, Lima 1229.

44  Piece-workers have good incentives to comply with production quotas, but poor incentives to produce good quality products. As a legal monopoly, the Estanco considered necessary to produce good quality products which were perceived as essential for the state to be able to compete with contraband tobacco.

45  ‘Expediente sobre las instrucciones que deven guardar los elavorantes de la fabrica de tavacos’, 1787, AGN, C-14, Administrativo (Adm.) 11.

46  In ‘Instruccion que debe obserbar el administrador y demas empleados en la real fabrica de puros cigarros y limpiones de Lima’, 1790, AGN, C-14, Adm. 15.

47  Ibid.

48  Ibid.

49  Ibid.

50  Fernández Alonso, in ‘Un caso de represión del fraude’, p. 405, cites a number of cases and sources related to the enforcement of anti-contraband regulations. Documents on expulsion and other penalties imposed on factory workers can also be found in AGN C-14, Contencioso, 9–11.

51  ‘El visitador general Escobedo’, Jan. 1783, AGI, Lima 1231. Monopoly officials argued that high salaries were critically important to achieve their objectives. This finding challenges Linda Salvucci's view of Bourbon administration. According to Salvucci, the changes introduced by José de Gálvez in Mexico reflected very limited perspectives on the part of Bourbon officials on how to build an effective bureaucracy. In particular, she refers to the salaries of employees and managers as the foremost example of Gálvez's ineptitude. As she puts it: ‘In spite of the fact that his explicit objective was to improve the Crown's control of the local government, he did not envision bureaucratic salaries as an important incentive to increase productivity or the willingness to serve the Crown … ’ Indeed, Salvucci extends this view to the entire administration: ‘As a consequence of the Bourbon reformers’ conceptual mistake, the bureaucrats continued immersed in corruption … ' See Salvucci, Linda, ‘Costumbres viejas, hombre nuevos: José de Gálvez y la burocracia fiscal Novohispana (1754–1800)’, Historia Mexicana, vol. 33, no. 2 (1983), pp. 249 and 252Google Scholar.

52  Cigarette rollers earned, on the average, five reales a day, and cigar manufacturers six.

53  Official reports discuss the income of some of these workshop managers. For example, former workshop manager Dn. Andrés Zavala earned an average annual income of 2,587 pesos as an independent cigarrero, and Dn. Manuel De la Rocha 1,935 pesos. As employees of the factory they earned only 300 and 700 pesos respectively. Escobedo to Gálvez, Feb. 1784, AGI, Lima 1231, and ‘El visitador general Escobedo’, Jan. 1783, AGI, Lima 1231.

54  Evidence for the Peruvian monopoly can be found in ‘Reyno del Peru’, 1811, which gives the history of all monopoly employees in great detail, AGN, C-14, Adm. 42. See also ‘Nomina de hoja de servicios reales rentas estancadas’, 1806, AGN, C-14, Adm. 37; and ‘Nomina de empleados mayores y menores que en esta fecha sirben en la renta del tabaco de los reynos de Peru y Chile con expresion de sus oficios, nombramientos y sueldos fijos … ’, 1780, AGN, C-14, Adm. 5. For Mexico, see Deans-Smith, Bureaucrats, Planters and Workers, p. 42. Secondary sources suggest that this was the case for the bureaucracy in general. For Buenos Aires, for example, see Susan Migden Socolow, The Bureaucrats of Buenos Aires, 1769–1810: Amor al Real Servicio (Durham and London, 1987).

55  It can be assumed that the Peruvian factories experienced similar mechanisms given that they followed closely the Mexican organisation in most respects. It must be emphasised, however, that no direct evidence of the use of such means of informal controls was found in Peruvian documents. On Mexico, see Deans-Smith, Bureaucrats, Planters and Workers, p. 204.

56  Ann Carlos and Stephen Nicholas, for example, in their work on the Hudson's Bay Company, argue that one of the most effective mechanisms in dealing with agency problems was the institution of an ‘informal system of control’ that adapted employees’ values to the company's goals. See their ‘Agency Problems in Early Chartered Companies: The Case of the Hudson's Bay Company’, Journal of Economic History vol. 50, no. 4 (1990), pp. 853–75.

57  De la Riva to Areche, no. 190, 1781, AGI, Lima 1230.

58  The tenientes reconocedores (newly appointed officials) were in charge of supervising all aspects of cultivation: the suitability of the land for tobacco production, its preparation, planting of the seedbeds, transplanting, etc. until the mazos were deposited in the factoría. All details about the production process are in ‘Circular anexa comunicada a los tenientes reconocedores de los cinco partidos de Chachapoyas’, signed by Gregorio Zuñiga, September 1787, AGN, C-14, legajo 620.

59  The opportunity cost of selling the leaf in the black market is the official purchase price. Thus this measure increased the opportunity cost of engaging in contraband. Also, the Estanco reserved to itself the right to decide ex-post the price for tobacco that did not comply with monopoly standards.

60  This rule implied that planters who engaged in illegal activities or who did not produce tobacco according to the instrucciones, risked losing their production quotas. See ‘Condiciones de la nueva contrata’, and ‘Instrucción que han de observar los cosecheros de tabacos de la provincia de Saña para el cumplimiento de la contrata con la Real Hacienda, 1779’, reproduced in Escobar Gamboa, ‘El tabaco en el Perú colonial, 1752–1796’, appendix, pp. VIII and XXIII.

61  Ibid.

62  600 pesos for the factor and 100 pesos for each guarda veedor.

63  De la Riva to Areche no. 190, 1781, AGI, Lima 1230.

64  Ibid.

65  Dn. Fernando Pantoja in Chiclayo, Dn. Miguel Paredes in Ferreñafe, and Dn. Benito Antonio Caldas in Saña. The sise of quotas rose substantially. The maximum quota in the pre-factory period was 20,571 mazos. See Escobar Gamboa, ‘El tabaco en el Perú colonial’, pp. 103–5.

66  Although all of them had been tobacco producers in the 1770s, many of the old ‘prominent’ planters were not registered in the 1780s.

67  The roster of tobacco planters and their respective quotas of production for the 1780s can be found in AGN C-14, legajo 619.

68  Areche to Gálvez, July 1780, AGI, Lima 1230.

69  These figures for the pre-factory years were derived by calculating the amount of tobacco necessary to produce a pack of cigarettes or cigars and dividing the amount of tobacco leaf sales by that figure. For example, cigarettes were made exclusively with bracamoro tobacco and approximately 41.12 packs of cigarettes were made from one mazo. In the pre-factory years, the number of mazos of bracamoro sold was multiplied by 41.12 in order to estimate ‘legal’ cigarette sales. There is only a scattered series of legal sales of bracamoro tobacco in this early period, which explains the breaks in the graph. During the factory years, there are actual figures on cigarette and cigar sales, plus sales of tobacco leaf. Assuming that all of this leaf was converted ‘legally’ into cigarettes and cigars (for home consumption only), an estimate of product consumption can be derived.

70  As mentioned earlier, the sale of the leaf was prohibited in many areas. For the few cases in which it was allowed, retailers were not permitted to sell it by weight but only by mazos. As a consequence, lower income groups abstained from buying the tobacco leaf. Bear in mind that a mazo cost almost three times as much as the typical daily salary earned by common labourers.

71  Expediente sobre la reforma de la renta de tabaco, no. 230, AGI, Lima 1230.

72  The exact dimension of this change depends on the elasticity of the demand. But the impact of a price increase is unequivocally to reduce the quantity demanded, unless there were any meaningful exogenous shifts in the demand or supply of tobacco products. Vizcarra and Sicotte showed that such exogenous shocks were marginal, see their ‘El control del contrabando’, pp. 193–6.

73  Escobedo to Marqués de Sonora, Sept. 1787, AGI, Lima 1112. See also Document no. 982, AGI, Lima 1112.

74  Economic theory has shown that the monopolist of an input used in fixed proportions with other inputs could obtain full monopoly rents without vertically integrating. This was precisely the case of the tobacco monopoly where tobacco and paper were used in fixed proportions to produce manufactured products. So the argument that vertical integration in, and of itself, implied larger rents is questionable. Nevertheless, Quirmbach showed that integration might be profitable in such a scenario if there are ‘scale distortions’. Scale distortions can occur if downstream firms face U-shaped average costs, because the monopoly price of the intermediate good will induce downstream firms to adopt a scale that is not equal to the lowest possible unit cost. The central idea here is that monopoly pricing upstream distorts the incentives of firms downstream when they decide about the appropriate scale of manufacture. In this case the upstream monopolist can increase total profits through integration by lowering industry costs. See Vernon, Johnand Graham, Daniel, ‘Profitability of Monopolisation by Vertical Integration’, Journal of Political Economy vol. 79, no. 4 (1971), pp. 924–5;CrossRefGoogle Scholar and Quirmbach, Herman, ‘Vertical Integration: Scale Distortions, Partial Integration, and the Direction of Price Change’, Quarterly Journal of Economics vol. 100, no. 1 (1986), pp. 131–47CrossRefGoogle Scholar.

75  This is on the basis of figures for costs of production for 1788 and 1789. Even when quantities vary by tens of thousands of units, average total cost remains nearly constant for cigars and cigarettes. One fixed cost, that of the factory buildings themselves, is not included. Checking total costs of production divided by production of each item, a very rough estimate of returns of scale indeed, is consistent with the supposition of constant returns as well.

76  Economies of scale were also quite limited in the Mexican case. See Deans-Smith, Bureaucrats, Planters and Workers, pp. 143–73.

77  Data available for the years after 1813 confirm this trend. See for example, Fisher, ‘El estanco del tabaco en el Perú borbónico’, pp. 45 and 51–3.

78  Data on sales can be found in the Estados del Estanco (doc. cit., table 1).

79  Among other documents see letter Marqués de San Felipe to Gardoqui, Aug. 1793; AGI, Lima 1242.

80  Cooney, Jerry, ‘La Dirección General de la Renta de Tabacos and the Decline of the Royal Tobacco Monopoly in Paraguay, 1779–1800’, Colonial Latin American Historical Review, vol. 1, no. 1 (1992), p. 108Google Scholar.

81  The tobacco monopoly in New Granada also experienced serious opposition. It occurred much earlier, however, in 1780, as part of the Comunero rebellion. Secondary sources indicate that monopoly revenues in New Granada increased in the 1790s and beyond, but there is no detailed study of the political economy of monopoly policies in the period. See Anthony McFarlane, Colombia before Independence: Economy, Society and Politics under Bourbon Rule (Cambridge, 1993), p. 223. Also, see John P. Harrison, ‘The Colombian Tobacco Industry from Government Monopoly to Free Trade, 1778–1870’, unpubl. PhD diss., University of California, Berkeley, 1951. For Venezuela, see Arcila Farías, Historia de un monopolio, chap. 12.

82  Deans-Smith, Bureaucrats, Planters and Workers, pp. 52 and 65.

83  In 1787 the Ministry of the Indies was divided into two offices, one in charge of war, finance and commerce, under Antonio Valdés, and the other in charge of grace and justice under Antonio Porlier. In 1790, a Junta de Estado was formed to oversee policies in Spain and America. The colonial portfolios were abolished and the newly nominated peninsular ministers gained authority over the Indies in their own sphere. The Junta de Estado was composed of five office-holders: Florida Blanca was in charge of the Ministry of State, Campo Alegre of War, Valdés of the Navy, Lerena of Finance and Porlier of Justice. This evolution, according to Barbier, was ‘the logical culmination of nearly nine decades of administrative development’, whose principal problem was the coordination of policies. The Junta de Estado was meant to guarantee ‘union and equality’ between Spain and America. See Barbier, Jacques, ‘The Culmination of the Bourbon Reforms, 1787–1792’, Hispanic American Historical Review, vol. 57, no. 1 (1977), pp. 51–68CrossRefGoogle Scholar.

84  See Kuethe, Allan, ‘More on the Culmination of the Bourbon Reforms: A Perspective from New Granada’, Hispanic American Historical Review, vol. 58, no. 3 (1978), pp. 477–80CrossRefGoogle Scholar.

85  Ibid., p. 480.

86  In 1787, as part of the administrative changes that followed the death of Gálvez, the viceroys regained power over economic matters, which had been taken away from them in the early 1780s.

87  Opposition to the state manufactories thrived in spite of the fact that the state did not change the nominal prices of manufactured products: Areche to Gálvez, no. 230, Sept. 1780; AGI, Lima 1230. See also ‘Indice de los extractos que por la intervención de visita del Real Estanco de Tabacos de Lima, se han deducido de las actuaciones originales de ella por lo respectivo a cuenta y razon se pasan al excelentisimo Sr. Virrey de estos reynos. Anexo 3: Resumen de las sumarias informaciones recibidas por los señores intendentes de Tarma, Cuzco, Huamanga, Huancavelica y Trujillo, acerca del estado calidad peso y precio de los tabacos que se expenden en las capitales de sus distritos y en sus subdelegaciones, con arreglo a la comisión conferida por este superior gobierno en 27 de diciembre, 1790’, AGI, Lima 704.

88  See Unanue, Hipólito, ‘Disertación sobre la naturaleza y efecto del tabaco, orígen y progresos del Real Estanco de Lima’, Mercurio Peruano vol. 4, no. 109 (1792), pp. 43–51Google Scholar.

89  Barbier, ‘The culmination of the Bourbon Reforms’, p. 59.

90  Gil to the Crown, June 1790, AGI, Lima 1243.

91  Gil to the Crown, April 1790, AGI, Lima 1243.

92  Tobacco leaf was accumulating at a much higher pace than expected. This was an unintended effect of the state's success in controlling contraband in the production areas. The excessive accumulation of tobacco leaf in the factory's warehouse is consistent with S. R. H. Jones' view on the relatively poor responsiveness to changes in market conditions of the factory as opposed to the putting-out system. Jones' work focuses on British entrepreneurs in the eighteenth and nineteenth centuries. We should not expect any better from a state controlled monopoly. See Jones, S. R. H., ‘The Organisation of Work: A Historical Dimension’, Journal of Economic Behavior and Organisation, vol. 3, no. 2–3 (1982), pp. 117–37CrossRefGoogle Scholar.

93  ‘Indice de los extractos que por la intervención de visita del Real Estanco de Tabacos de Lima, se han deducido de las actuaciones originales de ella por lo respectivo a cuenta y razon y se pasan al excelentisimo sr. virrey de estos reynos’, 1791, AGI, Lima 704.

94  Otermín to Escobedo, Aug. 1785, AGI, Lima 1231.

95  Crown to Viceroy Gil, May 1791, AGI, Lima 1243.

96  For an account of this transition see John Lynch, ‘The Institutional Framework’, pp. 69–81.

97  See Marichal, Carlos, ‘Money, Taxes and Finance’, in Coatsworth, John, Conde, Roberto Cortés and Bulmer-Thomas, Victor (eds.), The Cambridge Economic History of Latin America (Cambridge, 2006), vol. 1, pp. 423–60Google Scholar.