When I landed in Peru in 2000, I had to learn the language. New languages are very difficult for a person who is hard of hearing. I began reading books with my trusty English/Spanish dictionary to improve my language skills. I read the textbooks of the biologist with whom I was working and my oceanographer friend Robert who is married to a biologist. Occasionally I would try a novel to see what their literature was like but I found them not to my taste. I complained to friends who complied by bringing me history books. They felt I couldn't understand them without knowing their historical roots. After reading more than 50 books in both Spanish and English, I saw a pattern of events in the footnotes that were basically ignored by historians until I came across a thesis by a history student published in 1989 on the role of Great Britain in the Great War of the Pacific in 1880. This led me to the story of Nicolas de Pierola, the last of the great swash-bucklers.

As the Generals danced in and out of the President's post through the first half of the 19th century following the victory of San Martin and the declaration of independence, the British were the first to set up shop and get into trade. Because they were owed a pile of money for financing the liberation armies, they negotiated monopolistic rights on the most valuable resources. Gold and silver were well known but they soon came to learn the secret of the Peruvian coast. Guano was worth more than gold! Most of the coast of Peru has never felt the touch of raindrops. Guano is bird dung. Before the fishmeal industry devastated the coastal ecosystem by taking too much of the anchoveta (anchovy) stock, depriving the other creatures of the system of their main source of food, Peru's coast was host and home to uncountable numbers of birds. One observer watched two black lines of cormorants heading home after a day's fishing that took more than 5 hours to pass! The favourite nesting places were the islands just off the coast where they were safe from predators, including man. For thousands of years their dung would dry in the tropical sunshine and grew into mountains hundreds of meters high.

Guano is not only one of the best fertilizers known, it is also an important ingredient in gunpowder. The merchants got concessions (often through bribery) on the guano but withheld the royalty payments owed to the Peruvian government until the government ran out of cash to pay the bills. These merchant bankers from London would LOAN the government the money they OWED the government at high interest rates!

They loaned the government money to build railroads to haul the ore from the mines that they owned to the coast for shipping back to Europe, keeping the Peruvian government in debt and constantly on the brink of bankruptcy and charging outrageous interest rates.

In 1869, a young man came down from Arequipa, Peru's second largest city, and began writing articles protesting the disgrace of those in power. At the age of 30, Nicolas de Pierola became the minister of finance in the government and immediately announced that Peru would no longer tolerate this shoddy treatment by the British merchant bankers. Nicolas was the son of a Spanish aristocrat who gave up his wealth to support liberation. Although poor, he had powerful friends, especially in the Catholic Church. Arequipa is the ultra conservative balance to the liberal ways of Lima. The friends of his father arranged a full education for Nicolas in a convent university in Arequipa.

In the 1840's a great discovery was made in the desert in the south of Peru. Saltpeter. Also excellent fertilizer and also excellent for high quality gunpowder. Charles Darwin describes seeing a basin more than 100 miles in diameter with pure "phosphates", as they were known then, in a massive layer from 3 to 100 meters thick. British merchants latched onto this and pulled the same dirty tricks to cheat the Peruvians of their wealth.

Pierola took a trip to France and met with their bankers. He negotiated a fair contract for the harvesting of guano and another for the mining of saltpeter, to come into effect when each of the existing concessions reached its end date.

The British were furious! They demanded a return to the status quo but Nicolas was adamant and had persuaded the President and the congress to support him and stand firm. Never again would Peru humble itself and pay usury for money it was owed!

The British quietly went to Chile and stirred up the people down there. Peru's wealth, they said, would make Chile a rural backwater. The business in the port of Valparaiso would all go to Callao. Peru must be stopped! Chile needed the mines in southern Peru and Bolivia to balance the scales!

Peru had warships being built in England. They were diverted to Chile. With the financial backing of the British merchants (and approval of the British government) Chile invaded Peru, occupied Lima for 3 years and left, taking the southern part of Peru where the saltpeter mines were and the coastal area of Bolivia where there were silver and copper mines.

In the leadup to all this, while the Peruvians were dithering over whether or not they could stand against the growing British Empire, Pierola decided he had had enough. With a handful of compatriots they stole the Huascar, a boat called a monitor that lies low in the water with only it's gun turret above the surface, invented by the Confederates in the American Civil War. Another coup in Lima had forced a change of president and Nicolas de Pierola was going to put things right! He cruised into Callao and demanded the great fortress surrender! People lined the cliffs to watch this brash young man challenge the navy. The Peruvians didn't have a warship capable of taking on the Huascar and an earlier president had sold the cannons of the fortress for scrap, so they demanded the British War ships take care of Pierola claiming he was a pirate and had stolen their ship. After a short diplomatic flurry (always necessary in the Spanish culture) the British agreed. They demanded that Pierola surrender or they would open fire.

The brassy little aristocrat from Arequipa attacked the 3 warships with his little monitor! They fired at him but couldn't hit him as he chugged in and fired cannon shells back, ripping a hole in the side of one of the ships! The British retreated!

Pierolo marched from Callao to the Palace in Lima through a massive cheering crowd that kept growing as he went. The President fled in panic! Pierola declared himself President and spelled out the rules of doing business in Peru.

That was when the British decided to send in the Chilean Army escorted by Peru's warships.

The wound to Peruvian pride still has not healed, more than 125 years later.

Nothing to do with our subject of money, but an intersting post-script:

Nicolas de Pierola remained dictator only long enough to end the war with Chile and set up elections for a new democratic government. He returned to politics in 1895, when he was elected by a landslide.

The power of money shapes our lives. The men who dictate policies to governments are never seen in public. The names of the rich that we read in the papers are part of the smoke and mirrors that hide the few people with enough money power to dictate to all of the governments of the world.

The information revolution gives us the power to understand the forces that control our destinies and allow us to change our destinies for the better.

Will we? Or will we just go get a hamburger while they last?