Labeled "debt slavery" by those critical of it, debt peonage is a general term for several categories of coerced or controlled labor resulting from the advancement of money or goods to individuals or groups who find themselves unable or unwilling to repay their debt quickly. As a consequence they are obliged to continue working for the creditor or his assignees until the debt is repaid, and are often further coerced to borrow more or to agree to other obligations or entanglements. According to the traditional view, these individuals, once indebted, whether because of inadequate wages or employer fraud, were reduced to servitude and, in theory, to an inability to leave the workplace to which they have contracted.
Such peonages are usually found in societies with deep class or caste divisions in which elites, in spite of labor shortages, are able to restrict movement, sometimes by so-called vagrancy laws, and to control custom or law so that migration or flight, reneging on debts, and formal protest against conditions, are limited or prohibited. Some observers have associated debt peonage with paternalistic societies in which wage labor has not yet emerged as a dominant form.
In the aftermath of the Conquest and faced with the obvious and precipitous decline of indigenous populations, the European rulers of the new colonies abandoned the haphazard measures of the early years and sought more formal organization of the labor they required for commercial agriculture and mining. Where Indians survived, they usually retained at least initial access to the resources needed for their subsistence. Therefore, they resisted working for the intruders under the conditions offered, prompting the state and wouldbe employers to adopt coercive measures. These included Indian slavery (abolished by about 1550 in the core areas of the empires) and African slavery, coerced wage labor (repartimientos or mitas), and debt peonage or servitude. Prohibitions against adelantos (advances) to Indians appear in the third quarter of the sixteenth century. Favorite spots to catch Indians were at the entrances to market towns or at church doors on days of obligatory attendance. Peonage of various kinds grew in the late seventeenth century and after as encomienda and draft-labor systems declined, as the labor shortage caused by Indian population decline worsened, and as new haciendas and textile obrajes searched for a resident workforce. Slavery and forced labor continued on the empire's fringes, in the mining industry in Upper Peru that relied on mitas until independence, and on lowland plantations where black slavery predominated. As the population recovered and the economy and society stabilized, however, the general tendency favored labor mobilization and control to shift over time from more to less coercive forms, including debt peonage.
As it developed, colonial debt peonage embraced several systems of labor recruitment. In its seasonal form, recruiters advanced money or goods (enganche) to induce Indians and peasants, usually from the highlands, to go to the lowlands to work the harvest season on monocultural plantations. Advances of money or the goods to be worked on were also behind many of the "putting out" derramas or repartos de efectos of the eighteenth century.
In the highlands of Mesoamerica and the Andes, subsistence villages and nearby plantations often lived in symbiosis. It was to the large landowners' advantage to have a reliable workforce for which they were not responsible outside the planting, weeding, and harvesting seasons. The villagers found the large estate useful for providing cash for tribute and other obligations as well as for money purchases. Often the bond was many small debts from landowners to peasants. Debt peonage, mitas, derramas, etc., continued from the colonial period into the twentieth century, although scholars now believe that colonial peonage, in most areas, was far from being as pervasive and dominant as once thought.
In the nineteenth and twentieth centuries debt peonage took new forms. In isolated or peripheral areas of the new nations, especially in semideserts or jungles, local landowners and political bosses became very powerful, and their mines or haciendas were able to recruit and control labor through the tienda de raya, a system characterized by the "company store" and the "running tab." In some places private police forces prevented escape; in others the national army or police cooperated by pursuing and punishing those who fled. Rubber plantations were especially notorious, and those of the Putumayo region in Colombia and Peru, and in Chiapas, Tabasco, and Campeche in Mexico were the scenes of scandalous brutalities, backed up by the indifference or cooperation of the government. While debt may have been the official excuse for detention of workers in these cases, conditions were more like chattel slavery backed up by brute force.
The abolition of slavery in the nineteenth century created the problem of finding a substitute labor force, and debt was among the devices used. Sugar plantations in Cuba and the Dominican Republic used debt to finance Colonos through the dead season and to provide them with funds to buy seed, equipment, and daily necessities while they awaited the zafra (harvest) on their rented parcels, some of which were large and prosperous. Variations of debt peonage still surfaced from time to time in the late twentieth century, especially in poorer nations.
Academic debate has led to the abandonment of the old view that debt labor was monolithically exploitive and harsh. In the colonial period villagers sometimes preferred it to the difficulties of life in the village or encomienda. In the national period, loans from employers were one of the few opportunities for the poor to obtain money for improvements.
Where elites lost their cohesion and competed for scarce labor, and when rural police were few and ineffective, peons could shop around for bargains, flee from creditors with impunity, and thus had some bargaining power. One must conclude, then, that in its numerous forms and degrees of exploitation and servitude, debt peonage varied widely over time and space.
More recent research, for example, on north-central Mexico (the Bajío) and coastal Peru, has suggested a different picture, particularly for the nineteenth century. The need for wage income among the rural poor and their willingness to work in the cash sector increased dramatically as population growth and land loss in the late colonial and early national periods made subsistence more difficult and survival less certain. With pressures mounting and more and more families seeking employment, those able to obtain steady work and food at advantageous prices on the haciendas and who were allowed to run up debts at the hacienda store, far from seeing their condition as "slavery," felt themselves a labor aristocracy, and their peers envied them as such. If the worker was dissatisfied with his or her situation or the hacienda with the worker, there were always large numbers of land-short, desperate peasants and "free" laborers ready to take their place. A feared punishment was expulsion from the property, and the haciendas made little effort to seek to bring back those who fled, even if they owed money.
Also, before the last quarter of the nineteenth century, employers and the state had such limited political control over the countryside that enforcing peonage on individuals or a population that actively resisted was almost impossible. Where—for example, in southern Mexico and Chiapas—planters depended on a seasonal labor force drawn from intact indigenous villages rather than on workers resident on the property, the Indians' attachment to their home communities made mobilization and control easier, but peonage remained largely voluntary.
The limit case for the severity of debt servitude, and one in which extraeconomic coercion did predominate, was the involuntary peonage enforced in late-nineteenth-century Guatemala. Under laws intended to provide workers for export coffee production, Guatemala's Indians faced the choice of "voluntary" contracts requiring several months' labor a year for very low wages on the export plantations or repeated stints of forced wage labor (mandamientos) demanded by the planters and mobilized by the state. The threat of direct coercion pushed individuals into the debt contracts that provided the only, and that imperfect, protection from such drafts.
Debt peonage, however, whether voluntary or involuntary, tended to be an expensive and unwieldy form of labor mobilization, requiring that employers carry on their books large amounts of "dead" capital committed as advances and in some cases to employ a number of recruiters and policing agents, all of which added to labor costs. By the early twentieth century, population growth in most areas of Latin America, together with declining resources available to rural populations and new "needs" that could be satisfied only with cash, were at once pushing and drawing more and more individuals into free labor, without need of large advances or debt coercion.
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