Estanco del Salitre Peruvian nitrate monopoly

as new tax proposed senate committee, government prepared create state monopoly of nitrate sales; ley del estanco (monopoly law) issued on 18 january 1873, become effective after 2 months. peruvian state pay 24 soles per tonne producers, , if nitrate sold on 31 soles per tonne state , producers share profits. law set production quotas based on capacity , existing output. unexploited saltpeter fields transferred state, further private investments in nitrate industry forbidden. 4 peruvian banks, nacional, providencial, perú , lima, undertake administration of monopoly law. producers export product directly, had pay state excess of price on 31 soles per tonne.

as stated newspaper el comercio (peru) on 30 september 1872, new law regulate nitrate supply, increase price, eliminate competition between guano , salitre, , displace chilean investors tarapaca. on other hand, threatened independence of producers, had created own enclave in sparsely populated , infertile region physically isolated rest of peru. industry largely organized foreigners , net income went overseas. materials, capital , equipment brought valparaiso or europe. companies resented allocation of quotas, , refused co-operate. in february, in fear of gate closing , firms raised output increase quotas, saltpeter price fell 18.70 soles per tonne, less government had promised pay producers.

in march 1873 government postponed law, , in autumn shelved entire plan. greenhill & miller cite reasons project s failure political crisis in lima, high administrative costs, lack of trained officials, , valparaiso s strength sales center. 2 measures survived disaster: export duties of 1.50 soles per tonne, , compañía administradora del estanco del salitre collect export duties.

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