It is only in times of crisis that it puts on the jackboots and goes into the street with truncheons. In times of peace it wears mufti and busies itself with other, less militant pursuits -- primarily that of maintaining itself in the style to which it has long been accustomed. It is as old as the Incas and every bit as ruthless with opposition. Its counterpart in the U.S. has been labelled The Power Elite. In Peru it is called the Forty Families, an all-powerful aristocracy that makes its North American cousin look weak and tame by comparison.

“That's what Kennedy doesn't understand,” explained one Lima-based American businessman. “You just can't have democracy down here. The people don't understand it. Loeb was the same way: he went out to the futbol game and sat down in the grandstand with the common people -- I saw him myself, with his feet propped up on the rail and the top of his hose showing -- why, they thought he was crazy. It was absolutely incomprehensible, even to the people he was trying to make friends with. If you want to get anywhere down here, you have to make people respect you.”

However sad a commentary that may be on a lot of things -- American businessmen included -- it is sadder still because there is a lot of truth in it. From the beginning of their history the Peruvian people have been conditioned to understand that these are only two kinds of human beings in this world -- the Ins and the Outs, and a vast gulf in between. In a book called The Ancient Civilizations of Peru you read that “The Inca state insured the people against hunger, exploitation, undue hardship and all kinds of want, but regimented them rigorously and left them no choice, independence or initiative. . . There was a large class of nobles and priests, supported by the masses. Heavy tribute in the form of labor was demanded of the peasants, who profited very little from it.”

That was in 1438, and little has changed since then except that the peasants are no longer insured against hunger, exploitation, undue hardship and all kinds of want. There is ample evidence of all those conditions even in Lima, which differs from the rest of Peru much like Manhattan differs from the mountains of eastern Kentucky.

The strange assumption in Lima's business community -- Americans and Peruvians alike -- is that President Kennedy would join them in their endorsement of The System in Peru “if he could only understand it, and stop paying so much attention to Loeb.”

U.S. Ambassador James Isaac Loeb is undoubtedly the most second-guessed man in recent Peruvian history. There is not a man at the Bankers' Club, among other places, who cannot tell you where he went wrong and exactly what he should have done instead. The most common criticism is that he tried to force-feed democracy to a people who had not the faintest idea what he was talking about.