The most significant changes in the Puerto Rico economy during the 19th century began during the final third of the previous century when, influenced by the reformist ideas of the Enlightenment, the Spanish empire liberalized trade laws for its colonies in the Americas. In particular, the British invasion of Havana, reversed by treaty nine months later, alerted the Spanish crown to the need for reforms on the Caribbean islands. It authorized the opening of commercial ports, both in the colonies and in Spain. The measure was such a success that by 1826 the ports of Mayagüez and Ponce had displaced San Juan as the main exporting ports of Puerto Rico. This measure also served to avoid the loss of income to the widespread practice of smuggling.

Another important reform was the Royal Decree of Graces in 1815, which officially ended the policy of Spanish exclusivity in Puerto Rico. This decree, in effect until 1836, eliminated even more restrictions on trade with Spain, the other Spanish colonies in the Americas and even other countries, except for the imposition of certain tariffs. It also stimulated immigration by foreigners and other Europeans with capital and knowledge for developing commercial agriculture. This production led to the development of ranches dedicated to growing crops and to the formation of a new class that came to control the production on the island. These measures brought Puerto Rico into the international economy as a producer of crops, especially sugar and coffee, for international markets dominated by the European powers. On the other hand, this monoculture production made Puerto Rico an importer of food because it did not produce enough to be self-sufficient.

An important part of this process was the appointment of Alejandro Ramírez as the first quartermaster general of the island of Puerto Rico, whose measures were fundamental in the island’s economic growth. His administrative and fiscal reforms established a system of tariffs that benefited the colonial government from the production of agricultural wealth. This made Puerto Rico, for the first time since its beginnings in the 16th century, a self-supporting and profitable colony.

The sugar plantations

This period of economic reforms coincided with external factors that powerfully supported the sugar industry. These factors were the slave uprising in the French colony of Haiti, which until then had been the world’s largest sugar producer, and the huge population and economic growth of the United States, the young republic to the north. Both led to greater demand for the product and a subsequent increase in prices.

The sugar plantations were production complexes where the cane was grown and, with rudimentary technology, granulated sugar was extracted that was packed, transported and sold on the international market. Other products were also produced in this industrial process, such as melaza, a kind of syrup (used as a fertilizer and herbicide, in food, and an ingredient in medications), rum and fertilizer. As Puerto Rican sugar production increased in the 19th century, island producers entered a very competitive international market that kept sugar prices low. The greatest production on the island during this century was in 1846 with sales of 31,256 pounds of sugar.

At the beginning of the century, crops were concentrated in the periphery of the capital, in Carolina, Bayamón and El Roble (Río Piedras). To increase production, three important sugar centers were established: in Mayagüez, on the western part of the island, in Ponce to the south, and in Guayama in the southeast. By the middle of the century, 789 sugar plantations had been established and produced 5% of the sugar on the international market. Puerto Rico became the second largest provider of sugar to the United States, which from then on was its main buyer and an important provider of merchandise.

The sugar industry faced huge problems, however. Labor consisted of imported slaves, mostly from Africa. The institution of slavery was increasingly opposed by the British Empire (which participated in, supported and hugely profited from the slave trade during the 17th and 18th centuries), which increased the price of slaves and thus of sugar production. By the middle of the 19th century, the industry used a mixture of labor and by the final third of the century, all laborers were free, though still exploited.

Due to the lack of a commercial banking system, the plantation owners obtained credit from the trade houses that sold their products on the international markets. They used a system in which the trader bought the entire harvest in advance and charged an elevated interest rate, as high as 36%, and also charged a generous commission. Most of these trader-lenders were Spanish and were perceived by the landowners as hostile to their interests.

The fall in prices worsened the crisis in the 1870s, which led to many small and medium-size producers losing their land or becoming providers of raw materials. For those who could afford it, it meant a change in technology to improve productivity and the local sugar press was converted into a large mill. These costly technological improvements led to a vertical integration in the industry, huge land holdings, and the proletarianization of rural laborers.

Coffee: The mountains also produce wealth

Chroniclers of Puerto Rico in the 18th century, such as íñigo Abbad and Alejandro O´Reilly, pointed out that tobacco and coffee production were limited and for less lucrative domestic use. In the early 19th century, the main economic activities in the interior were raising livestock and some produce farming for sale in the local market. The intense activity in the sugar presses on the coast led to changes in the mountainous interior, however. The need for wood as fuel led to cutting trees, which opened land for cultivation. Also, with the coastal land used for growing cane, many rural people were displaced toward the mountainous interior. They occupied this empty land, cleared it with machetes and grew their modest gardens.

During the second half of the 19th century, coffee growing expanded in the mountainous part of the island, particularly in the west. This meant more disruption in the region for the rural workers who lived and subsisted there. The process of displacement was repeated, whether ownership of the land or access to use it, by a new elite, many of them recently arrived from Spain – from Catalonia or Majorca – or Corsicans, who were blamed for the exploitation. It is necessary to remember, however, that many of the successful landowners were island natives.

Meanwhile, the rural masses went through an intense proletarianization in which, through the Police and Good Government Unit implemented in 1838 and the registration of laborers in 1849, they were forced to work or face jail or forced work on government projects. All men age 16 and older who did not own enough property to support themselves were designated as laborers. Thus, the rural workers remained in a state of dependence and misery for the benefit of the landowning class.

The process of increasing production in the coastal areas during the increase in sugar production and later in the mountains during the rise in coffee caused both industries to endure an initial displacement of those families that owned land by foreign immigrants or those from other parts of the island who had more capital, experience and business connections that allowed them to take greater advantage of the land. This displacement process repeated periodically. This was in addition to the credit obtained from the trade houses controlled by Spaniards, as described above.

The Spanish colonial government supported this production, especially during the last third of the 19thcentury, when a belated modernization process took place with the development of certain public works and infrastructure projects. The construction of the Central Highway between San Juan and Ponce, the extension of the telegraph and the laying of an underwater cable were some of these. Additionally, hundreds of miles of railroad were laid, particularly in the coastal region near the sugar mills. The majority of the roads, however, particularly in the mountains, were difficult, and when it rained, as it frequently did, they were impassable.

One of the Puerto Rican economy’s main problems was that the wealth extracted from it, obtained through these industries by European businesses, was withdrawn and invested in their home countries, which did not benefit Puerto Rico. The agricultural sector’s debt with the traders also allowed the latter to control and increase their wealth from sugar and coffee production.


Autor: Pablo Samuel Torres
Published: February 21, 2016.

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