Bond Claims Ripen for Peru’s ‘Age of Manure’

MANHATTAN (CN) - With the "Age of Manure" long dried up, a case over bonds signed in 1875 for debt related to the trade of seabird dung that once sustained Peru's economy splattered in U.S. District Court.

Guano, a Spanish and Quechua name for bird droppings, had once been such an important commodity for Peru that an era of its history had been named after it.

"The Age of Guano," alternately described as the "Age of Manure," began in 1840 as Peru discovered that it could repay the British bankers who underwrote the country's revolution with mounds of bird excrement more than 150-feet high on its Chincha Islands, The New York Times reported.

Peru controlled the world's fertilizer industry for the next four decades with the extraction of 12 million tons of guano valued at $500 million in U.S. dollars, the Council on Hemispheric Affairs, a Washington-based think tank on Latin American policy, says.

But by the 1870s, "there was little left to extract," the council notes.

A federal complaint MMA Consultants 1 filed Thursday against Peru stems from the end of Peru's Guano Age.

"In 1875, Peru issued a series of bonds pursuant to a contract with certain consignees of guano, the Guano Consignment Company in the United States of America, in order to refinance its debt to those consignees," the lawsuit states.

MMA says a Peruvian with the title "Envoy Extraordinaire and Minister Plenipotentiary" went to New York to sign bonds labeled "$1,000 Certificate of Indebtedness bearing seven percent interest per annum, in gold."

"Know all men by these presents, that I the undersigned Envoy Extraordinaire and Minister Plenipotentiary of Peru in Washington have been instructed and specially authorized to pledge, and do hereby pledge, the National Faith of Peru towards the faithful performance and observance of the conditions under which this Certificate has been issued as set forth above," each bond said, as quoted in the complaint.

Claiming to hold 14 such bonds, MMA says that the Peruvian embassy in Washington has ignored repeated demands to pay up.

At 7 percent interest, a 140-year debt would make the present value of each bond nearly $13 million each, or almost $182 million for all 14 bonds.

Guano's boom in Peru is credited to the ecosystem created by the Humboldt Current splashing Antarctic waters off the country's coast, the importance of the droppings to the Inca's agriculture, and research at the time by a German organic chemist.

Illinois-based MMA wants a federal judge in Manhattan to award it damages for breach of contract.

Its Chicago-based attorney, Patrick Ahern, has not returned a request for comment.

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