COMMERCE AND FINANCE.
1801-1887.
EARLY STATE OF TRADE—CONTINUED STAGNATION AFTER
INDEPENDENCE—STEAM ON THE COASTS—ITS BENEFICIAL
EFFECTS—VARIETY OF STAPLES—PORTS OF ENTRY AND
TARIFFS—IMPORTS AND EXPORTS—FAIRS—ACCESSORY TRANSIT
COMPANY—INTERNAL NAVIGATION—HIGHWAYS—MONEY—BANKING—POSTAL
SERVICE—PANAMÁ RAILWAY TRAFFIC—LOCAL TRADE OF THE
ISTHMUS—PEARL FISHERY—COLONIAL REVENUE IN FINANCES OF THE
FEDERATION—SOURCES OF REVENUE OF EACH STATE—THEIR RECEIPTS
AND EXPENDITURES—FOREIGN AND INTERNAL DEBTS.
During the first years of the present century, toward the end of
the Spanish domination, after many restrictions to trade had been
removed, and Central America had obtained leave to traffic direct with
Mexico and other Spanish American colonies, there were only 30 or 35
mercantile houses throughout the country. Merchandise to the value of
one million dollars was yearly imported from Spain through the bay of
Honduras. The returns were chiefly in indigo, coin, and bullion. There
was some trade also with Peru and Cuba.[XXXIII-1] Smuggling was carried
on quite freely, even the officers of the revenue cutters taking a hand
in it. The large amount of goods thus imported caused a drainage of
specie.[XXXIII-2]
[Sidenote: FOREIGN TRADE DATA.]
[Sidenote: FAIRS AND IMMIGRATION.]
After the separation from Spain, there was little commerce for many
years,[XXXIII-3] until the construction of the railway across the
Isthmus, and the establishment of a line of steamers making periodical
visits at the several Central American ports on the Pacific coast,
afforded facilities for the development of both agriculture and foreign
trade,[XXXIII-4] which under liberal legislation has since assumed
large proportions, commerce being free with all friendly powers. In a
note[XXXIII-5] are given copious data on the foreign trade of each of
the five republics, showing an invariable balance in their favor, which
steadily increased their wealth. As to internal trade, there is very
little to say. The several republics have regularly established fairs,
which are attended by those wishing to purchase national or foreign
products or manufactures.[XXXIII-6]
The republics, having special facilities for internal navigation,
endeavored to make them available. Guatemala granted privileges with
the view of having a steam line established between the fluvial port
of Panzós and Livingston, and also on Lake Amatitlan. In Nicaragua,
under a contract entered into on the 22d of September, 1849, and
amended April 11, 1850, between the government and an American company,
transit was formally established between the two oceans, by way of Lake
Nicaragua.[XXXIII-7] The American Accessory Transit Company, as it was
called, went into active operation and carried thousands of passengers
to and from California.[XXXIII-8] The first interoceanic trip was made
in August 1852, and the service continued successfully until February
18, 1856, when it was suddenly closed, and the company's charter
was revoked by the government of Rivas, at the dictation of William
Walker.[XXXIII-9] The transit continued for a time under Walker's
control, mainly to furnish his army with recruits, until the steamers
fell into the hands of his enemies.[XXXIII-10] Navigation on San Juan
River and Granada Lake was regulated in June 1861. In 1868 a convention
was concluded between Nicaragua and Costa Rica for the navigation of
the rivers San Juan and Colorado. In 1870 a contract was made with
Hollenbeck and his associates for steam navigation on Lake Granada, and
it was inaugurated in 1872.[XXXIII-11]
[Sidenote: ROADS AND CURRENCY.]
The national highways of Costa Rica are not all in the best condition,
which is due to the destructive force of the winter rains. The
government, however, endeavors to render them serviceable. In
Nicaragua, the public roads, prior to the construction of railways,
were only fit for mule travel, except at short distances from towns,
which wagons could traverse. In the rainy season they were impassable,
owing either to mud or swollen streams. The same is to be said
respecting those of Honduras. Much has been successfully accomplished
in late years in the improvement of roads and construction of bridges.
Salvador appropriated in 1876 funds for macadamizing the public
highways. Guatemala is well provided with roads and bridges, and
derives a considerable revenue from tolls to keep them in repair, and
to construct new ones.[XXXIII-12] Railways and telegraphs are treated
of elsewhere.
The monetary unit of Costa Rica is the peso of one hundred centavos,
with 25 grammes of silver of the standard of 0.900. The government mint
coins gold, silver, and copper.[XXXIII-13]
Gold coin became very scarce in Nicaragua. There was no copper, and
the smallest of silver was the half-real. Gold coins of the United
States, Great Britain, and France, and the silver money of those
countries, Switzerland, Belgium, Mexico, Peru, and Spain, were current
for their full value.[XXXIII-14] In Salvador nearly all foreign coins
were received for their face value. In Honduras the currency was
much vitiated by the introduction of the moneda provisional—copper
slightly alloyed with silver—of the denominations of quarter and
half dollars, of which probably $1,500,000, nominal value, went into
circulation since 1839.[XXXIII-15] Besides this coin there has been in
circulation the cut money of the old kingdom, a portion of the Honduras
government's own coinage, and that of the federal republic; all of
which, together with English and American coins, make up the bulk of
money in circulation.[XXXIII-16] In a decree of September 21, 1870,
the government of Guatemala endeavored to introduce in its coinage the
decimal system, recognizing the peso as the unit.[XXXIII-17] Another
law of November 15, 1878, provided for the coinage of gold pieces of
1, 2, 5, 10, and 20 pesos, and silver pieces of 8, 4, and 2 reales,
and half and quarter reales.[XXXIII-18] Foreign coins circulated at the
rates fixed by the government.[XXXIII-19] There have been banks in most
of the states of Central America for a number of years, several being
now in successful operation.[XXXIII-20]
[Sidenote: BANKS AND MAILS]
The states of Central America, including the Isthmus of Panamá,
maintain communications by mail, not only with one another, but
likewise with other nations of Europe and America, and through them
with the rest of the world.[XXXIII-21] The several republics use their
best endeavors to perfect the internal mail service.[XXXIII-22] They
pay subsidies to steamship companies for bringing and carrying their
mails, and are members of the Universal Postal Union.
* * * * *
[Sidenote: ISTHMUS TRAFFIC.]
The discovery of gold in California, as is well known, restored
life to the Isthmus of Panamá. In December 1849, the first emigrants
went across, bound for the new El Dorado. In 1850 there was a large
travel,[XXXIII-23] notwithstanding innumerable difficulties and
discomforts. After the construction of the railway the traffic over it
still increased; most of it was in transitu, but the local trade was
not insignificant.[XXXIII-24] The note at foot contains data mainly
procured from official sources on the amount of transportation from the
earliest days of the opening of the road to a recent date.[XXXIII-25]
It will be noticed that in the latter part of the sixth decade of
this century the transit traffic through the Isthmus became greatly
diminished. This was mainly due to the construction of the overland
railway to the Pacific in the United States, and to the establishment
of a British line of large and fleet steamers running from Europe to
ports in the south Pacific through the straits of Magellan, affording
advantages over the Panamá railroad transportation.
The transportation of passengers and merchandise to and from the
Isthmus has been mainly effected by steamship lines—American and
British during the first fourteen or fifteen years, to which were
subsequently added those of a French company; and still later those of
a German one.[XXXIII-26]
[Sidenote: GOLD AND THE ISTHMUS CANAL.]
The Isthmus traffic, from the earliest days of Spanish occupation
of South America, was carried on by pack-mules at excessive
rates.[XXXIII-27] In the early part of this century, the condition
of trade being unsatisfactory, reforms were loudly called for by
both Spaniards and Americans.[XXXIII-28] A brisk contraband trade
was constantly going on.[XXXIII-29] After the war of independence,
the traffic between Spain and South America ceased. In 1825-30 trade
was at a low ebb.[XXXIII-30] With the view of fostering it, the New
Granadan government, in 1847, decreed the suppression of custom-houses
at Panamá, Portobello, and Chagres.[XXXIII-31] I refer elsewhere to
the great improvement wrought by the influx of travellers consequent
upon the discovery of gold in California. The amount of business done
in providing conveyances, accommodations, and supplies of all kinds for
passengers was very large, and money became quite abundant. The opening
of the railway in 1855 paralyzed the local trade.[XXXIII-32]
The local trade of the Isthmus in 1865 is set down to have been
$350,000 to $400,000 of imports, and between $500,000 and $600,000 of
exports.[XXXIII-33] With a few exceptions, the chief trade in foreign
goods is carried on by foreigners, most of whom deal in almost every
kind of merchandise; the United States furnishing the greater part of
the provisions, and other commodities. With the works on the canal,
and the large increase of population, the local trade became greatly
augmented. Weights and measures and money were based on the French
decimal system.[XXXIII-34] All kinds of money were current. American
coin generally commanded a high premium. Bank notes or paper currency
of any kind could be easily passed.[XXXIII-35] Small silver coin was
generally scarce, and there was no copper currency. There were no
banks of issue, though some merchants did a banking business. Bills of
exchange on England usually commanded a premium. Those on France were
about par. The canal company sells exchange, receiving the existing
currency in payment.
The Pearl Islands, comprising sixteen islands and numerous rocks, had
a population of about 2,000 souls, about 700 of whom were engaged six
months of the year in pearl fishing, which yielded about 1,000 tons
of pearl shells valued at $70 per ton, and pearls enough to raise the
value of both to $300,000 yearly. This industry had almost ceased to
exist in 1873, owing to recklessness. Fishing for pearl oysters was
forbidden by law on the 7th of May, 1872, for the term of five years,
in order to allow the mollusk time to renew its vitality, which was
in danger of destruction; but so far the measure has had no visibly
good effects, and the fishery has not been revived. Pearl fishing was
carried on with success by the Indians of Costa Rica on the coast of
Nicoya, the shell being an established article of export.[XXXIII-36]
Pearl oysters are also found near the south of Caroon Island, but yield
so few pearls as to make it unprofitable to search for them.[XXXIII-37]
[Sidenote: REVENUE AND DEBT.]
As to finances prior to the separation from the mother country, and the
disruption of the Central American confederacy, it can scarcely be said
that the country had any.
A sketch of the revenue of the so-called reino de Guatemala, made
in 1818 for the five years 1817-1821,[XXXIII-38] shows the various
sources. The ordinary imposts yielded 462,944 pesos, and the special
256,975 pesos, making an aggregate of 719,919 pesos.[XXXIII-39] The
scale of expenditure to the day of independence had been kept down;
financial wants being few, the needed resources were easily collected,
and did not weigh heavily on the people. The ruin of the treasury began
in 1821, but was not felt till later, during the period Central America
was harnessed to the Mexican empire.[XXXIII-40]
On the 2d of July, 1822, the congress of the Provincias Unidas de
Centro América decreed the recognition of the public debt. In December
1824, the government, duly authorized by congress, contracted a loan
with Barclay, Herring, Richardson, and Company, of London,[XXXIII-41]
recognizing an indebtedness of $7,142,857, and the receipt of a
net sum of about $5,000,000.[XXXIII-42] The banking house agreed to
advance $200,000 at the end of two months, and $150,000 at the end
of seven and nine respectively. To make the story short, the federal
government received only $328,316, notwithstanding which its debt had
risen in the early part of 1830 to one million dollars.[XXXIII-43]
After the dissolution of the Central American union, the several
states assumed a share of the foreign debt, and adopted measures to
provide their governments with means to cover their expenses. Most of
them depended chiefly on receipts from customs, and the monopoly of
spirituous liquors and tobacco, stamped paper, excise, and a few other
sources.[XXXIII-44]
The gross receipts for the fiscal year 1883, including a balance of
$104,327 on hand from the preceding year, were $6,728,607.[XXXIII-45]
The expenditures amounted to $6,613,607, of which $3,027,511 was
the actual expenses of administration, and $3,586,096 went toward
extinguishing the internal debt.[XXXIII-46]
[Sidenote: GUATEMALA INDEBTEDNESS.]
The indebtedness of Guatemala at the end of 1883 was as follows:
Internal, including interest, $4,257,631. It is understood that on the
30th of September, 1885, it was estimated at $6,138,000.[XXXIII-47]
The foreign debt resulted from the loan made in March 1869, in London,
for the nominal sum of £500,000 at 6 per cent annually, and 3 per cent
for a sinking fund.[XXXIII-48] The government remitted to London from
1870 to 1876, on account of that debt, for interest and sinking fund,
$1,377,000, which was somewhat more than it had received. No further
payments were made after October 1876. Consequently, at the end of 1885
the nation was owing, on account of that loan, £468,600 of principal,
and £276,474 for interest, aggregating £745,074, which with exchange
at 20 per cent make $4,470,444. Moreover, there is due by Guatemala,
on account of her share of the federal indebtedness—she having assumed
£100,000 of it—a very large sum. The debt had been reduced in 1873 to
£70,600 to which must be added the dividends accrued to the present
time.[XXXIII-49]
The national assembly voted on the 5th of July, 1886, for the
fiscal year from July 1, 1886, to June 30, 1887, appropriations for
expenditures of administration, aggregating $2,252,471, and afterward
granted the extra sum of $326,800 for contingent expenses.[XXXIII-50]
No provision was made as regards the foreign debt.
The revenue of Honduras in 1886 has been estimated at about two
and a half million dollars, being considerably in excess of the
expenditures.[XXXIII-51]
Honduras has a foreign and a home debt. The latter is partly
consolidated and the rest floating. The consolidated, which was
one million dollars, had been in 1883 reduced to $885,000. All
treasury notes had been cancelled. The floating debt, amounting in
1880 to $578,609, had been reduced in 1883 to $244,694.[XXXIII-52]
The indebtedness to British subjects, including the portion of the
old federal debt which Honduras assumed, was finally extinguished
by the payment of $50,000 in 1882, and the country was freed from
the burden long weighing on the custom-house at Trujillo. The rest
of the foreign debt, amounting in 1876 to $29,950,540, is held in
London and Paris, having been issued at high rates of interest and at
a low valuation. Since that time the accumulated interest has never
been paid.[XXXIII-53] It is unknown what portion of the bonds issued
has been negotiated. The actual indebtedness may fall short of the
above amount after a thorough investigation of the financial affairs
connected with the railroad.
[Sidenote: RECEIPTS AND EXPENDITURES.]
The revenue receipts of Salvador from all sources, according to
President Zaldívar's messages of 1883 and 1884, were, for 1882,
$4,549,209, and for 1883, $4,061,020. The expenditures as stated
by the same authority were $4,416,454 in 1882, and $4,001,654 in
1883.[XXXIII-54] In 1866 the budget presented by the executive to
congress estimated the receipts at $2,211,613, and the expenditures at
$2,716,505, leaving a deficit of $501,869.
Salvador had in 1853 a foreign debt not far from $325,000.[XXXIII-55]
Between 1861 and 1863 the government made an arrangement for the
foreign debt, giving bonds to the amount of $405,260 to cover principal
and interest. They were paid in due time, and since then the republic
has kept itself free from foreign indebtedness. Her internal debt,
consolidated at the end of 1882, was $1,589,861, and became slightly
increased in 1883.[XXXIII-56] In June 1885 it was $7,147,359.
The financial condition of Nicaragua at the present time is quite
easy. Her revenue has been steadily on the increase for several years
past, except when interrupted by political disturbances, such as that
of 1875, which caused a considerable diminution. The receipts from
all sources in the biennial term of 1883-4 were $3,238,363, an excess
of $359,426 over the two preceding years.[XXXIII-57] The expenditures
in the biennial term of 1881-2 were $3,240,940, as itemized
below.[XXXIII-58]
[Sidenote: NICARAGUA AND COSTA RICA.]
At the end of 1880 Nicaragua's share of the old federal indebtedness to
British creditors—£31,510,[XXXIII-59] as per adjustment made in London
on the 27th of March, 1874—had been reduced to £4,170 15_s._ 6_d._,
which remained unpaid because the holders had failed to produce their
claims. Since then the balance was further reduced to £4,011 15_s._
6_d._, and the funds were on hand to pay it off on demand. This was
the sum total of the republic's foreign liability. At the end of 1882
the internal debt was $920,258, of which $644,218 were subsequently
paid, leaving a balance due of $328,667; adding thereto balances of
special accounts, the whole debt of the republic at the end of 1884 was
$908,707; but as the amount of consolidated bonds was being met, the
whole indebtedness would really be $802,310.[XXXIII-60]
Costa Rica's financial condition is anything but an easy one. The
receipts of the treasury for the fiscal year 1883-4 amounted to
$1,586,561.[XXXIII-61] The receipts for the fiscal years 1884-5,
and 1885-6, were estimated at about $2,559,866 and $2,936,756,
respectively.[XXXIII-62] The expenditures for the fiscal years 1882-3,
and 1883-4 were respectively $2,796,468 and $1,985,426; the former
leaving a deficit of $1,246,448, and the latter of $398,865. Congress
voted for expenses of the fiscal year 1885-6, $2,936,756, and for
1886-7, $2,607,613.[XXXIII-63]
[Sidenote: FOREIGN INDEBTEDNESS.]
The following statement exhibits the financial condition of the
republic at the end of 1882, as represented by the secretary of
the treasury. It will be well to state here that until 1871 Costa
Rica was free from foreign debt, her proportion of the old federal
indebtedness in London having been paid off at an early day of her
independent life.[XXXIII-64] The government owed, on the 30th of
April, 1871, $92,878; adding thereto the disbursements of eleven
years—1871-82—$30,251,284, and $2,110,905 paid the railway, in bills
of exchange on the national agent in London, and not included in the
aforesaid outlay, we have an aggregate of $32,455,067; and deducting
therefrom the revenue of the same eleven years, a deficit results
of $6,524,516, which is made up of $1,454,086, excess of expenditure
over receipts at the end of 1882, and $5,070,430, the equivalent in
Costa Rican money of £895,221 3_s._ 11_d._, net proceeds of loans
negotiated in London at 6 and 7 per cent.[XXXIII-65] However, the
council of bondholders formed in 1883 the following statement of Costa
Rica's foreign debt, namely: outstanding of six per cent loan of 1871,
£941,200; overdue interest, £564,720, making £1,505,920. Outstanding of
seven per cent loan of 1872, £1,460,200; overdue interest, £1,073,175
10_s._, making £2,553,273 10_s._ Grand total, £4,039,193 10_s._ The
home debt was set down in 1885 at $519,000.[XXXIII-66]
In Panamá the receipts of the treasury from all sources in 1812, a few
years previous to the separation from Spain, this nation being then at
war with her American colonies, were $746,241.[XXXIII-67] In 1827, six
years after the independence, the receipts were $241,683,[XXXIII-68]
and the expenditures $238,929. Under the law suppressing custom-houses
in the ports of the Isthmus, the revenue of the province in 1847
became reduced $77,880. The amount appropriated by the provincial
legislature in October 1849, for expenses of the fiscal year 1840-59,
was $51,220.[XXXIII-69]
After the organization of the Isthmus as a state of the Colombian
confederation, there being no receipts from customs, the chief portion
of the expenses has been met with a tax assessed on merchants and
shop-keepers, estimated on the amount of business done by each, the
legislative assembly fixing annually the sum required for the next
year's expenditures, and the proportion of it to be covered by the
commercial tax. The state received $50,000 out of the annual subvention
of $250,000 paid by the railway company to the Colombian government.
Other sources of revenue have been the taxes levied on steamship
agencies, consumption, slaughter of cattle, ice, distilleries, and
several others which in the aggregate are not insignificant.
[Sidenote: DEBT OF PANAMÁ]
The republic of Colombia being on the point of changing her
organization, Panamá, consequent upon recent political events, was
at the end of 1885 under a military government, the chief of which,
exercising his extraordinary powers, ordered the continuance after
January 1, 1886, of the appropriations that had been decreed for
1885, with a few modifications.[XXXIII-70] The financial condition
of the state on the 30th of June, 1878, was an indebtedness of
$214,317.[XXXIII-71]