XII.

FINANCE AND BANKING.

The revenue of the Government of Costa Rica is derived from custom-house duties, revenue stamps and stamped paper, liquor monopoly, tobacco revenue, coffee tax, sale of public lands, tax for registering property, tax on slaughtering live stock, etc.

The national revenue for 1896 was as follows:

Pesos. Revenues proper 6,685,178 87 Public service (post, etc.) 233,529 89 Various sources 89,079 14 Funds in administration (postal-money orders, etc.) 395,104 88 Public credit 32,718 00 ------------ Total 7,435,610 78

To this sum

Pesos. The main custom-house in San José contributed 1,930,746 58 The custom-house in Puntarenas ” 474,148 27 ” ” ” Limon ” 404,444 25 ” national liquor business ” 2,242,174 96 Tobacco revenue 778,211 75 Coffee tax £61,415 00 Lumber tax 15,044 26 Stamped paper 70,164 30 Revenue stamps 39,469 38

Expenditures during the fiscal year ending in 1896 amounted to 6,697,326.51 pesos, distributed in the following manner:

Ordinary Disbursements for Administration.

Pesos. Department of Gobernacion 666,429 55 ” Police 163,051 84 ” Fomento 628,350 98 ” Foreign Office 101,170 74 ” Justice 274,568 83 ” Public Instruction 630,627 41 ” Cultus 24,101 00 ” War 432,943 09 ” Military police 235,152 56 ” Navy 47,559 51 ” Finance 297,414 62 Various services 1,229,823 86 ------------ 4,731,193 99

Various Services.

Pesos. Department of Beneficence 101,213 44 Various other services 115,904 61 ---------- 217,118 05

Monopoly Services.

Pesos. Buying tobacco, sugar, etc., freights 277,126 34 Contract of Odilon Jimenez 18,372 52 Contract of Robato & Beguiristain 1,840 53 ---------- 297,339 39

Funds in Administration.

Pesos. Billets of Instruction 19,883 97 Postal orders 347,530 81 ---------- 367,414 78

Interior Debt.

Pesos. Bills payable 475,495 55 Interest and discounts 15,991 15 Private deposits 39,558 00 Amortization of national notes 340,888 52 Hospital of Alajuela 14,215 53 Bank of Costa Rica, contract of June 20, 1894 135,068 82 Deposits in favor of pupils of Barroeta 6,558 06 ------------ 1,027,775 63

Consolidates.

Pesos. Hospital of San Juan de Dios 13,640 00 Ecclesiastical funds 6,337 50 Legate of Barroeta 15,300 00 Hospital of Cartago 9,638 00 --------- 44,915 50

Various Accounts.

Pesos. Flint & Co. 4,684 67 Municipality of Cartago, notes and interest 6,884 50 --------- 11,569 17 ============ Total 6,697,326 51

The _foreign debt_ contracted in 1871 and 1872, in England, against the will of the nation, has been disastrous to it. It amounts to £2,000,000 in five per cent. debentures. Lately an arrangement was made under which the amortization of this debt will begin in 1917, instead of 1898, and with £10,000 per year, instead of £20,000. The government is also authorized to buy in its own bonds for their immediate liquidation.

The _floating debt_ chiefly consists of private deposits, of the school-loan, amortization of which is made annually, of paper money which is received in very limited amounts, and of bills payable, mostly given for sugar and syrups to the “National Liquor Distillery” and drawn on thirty days’ sight. The rest of the floating debt scarcely amounts to 50,000 pesos.

In figures the _interior debt_ of Costa Rica may be represented as follows: 79,155.75 pesos in notes of war emission; 1,037,628.43 pesos for various accounts, private deposits, cash orders, municipal fund, ecclesiastical fund, etc., making a total of 1,116,784.18 pesos.

Another important factor in the commercial and economic life of Costa Rica is the money in circulation. Including every kind of emission, notes of the Costa Rica bank, national paper money, war-emission paper money, silver and gold coin, the money in circulation amounted in

Pesos. 1882-83 4,395,089 1883-84 4,129,518 1884-85 3,707,434 1885-86 3,619,261 1886-87 3,899,975 1887-88 4,210,733 1888-89 4,762,885 1889-90 5,603,512 1890-91 5,941,947 1891-92 5,806,752 1892-93 5,630,416 1893-94 5,507,343 1894-95 5,666,207 1895-96 5,721,837

There were in circulation, in 1895-96, currency valued in pesos as follows: 3,820,404 of Costa Rica bank notes, 2764 national paper money, 98,669 war-emission paper money, 1,500,000 coined silver money, 300,000 coined gold money, total 5,721,837; or 20.08 pesos per capita of the population of Costa Rica.

As above indicated, the Government of Costa Rica is beginning to displace the notes of the Banco de Costa Rica by others issued by the government, maintained at par and guaranteed by a gold reserve or by gold certificates.

This monetary question is of such interest and importance, that the following translation is given from such parts of the reports of the Minister of Finance as relate thereto.

“The emission of gold certificates is necessary, as it would be impossible to keep the gold coins in circulation so long as the quantity of paper money issued by the bank, is far greater. Again, in order to avoid the difficulties which would arise from the constant retirement of this paper money, the gold certificates must be issued to furnish an adequate supply of currency. In this way also the Government has the advantage of utilizing the quantities of gold in deposit, and of acquiring by means of those certificates resources for fresh coinage of gold pieces.”

“In order to avoid embarrassment in the commercial and economic life of the country it has been agreed with the Banco de Costa Rica to maintain parity between these certificates and its notes. By the monetary law of October 24, 1896, also parity with the actual silver peso was established. It was further agreed that the ‘colon de oro,’ the new gold coin, should correspond in intrinsic value with this standard of ratios.”

“For these purposes, there had to be taken into consideration: First, the actual state of the national wealth, estimated in the already established credit circulating medium; second, the average range of international exchange during a number of years, and third, the average ratio of silver to gold during the same period. There had further to be considered the outstanding obligations of the interior and of the exterior debt, as well as pending negotiations as to exportable products, and the relation of the intrinsic value between gold and silver.”

“In this way the following conclusion was reached: That the ‘colon de oro’ should contain 700 milligrams of fine gold, in order not to complicate the situation created by the circulating notes of the Bank of Costa Rica, and in order to include an average exchange of 110 per cent. with respect to the pound sterling, and of 115 per cent. with respect to the American gold, as well as to create a relation of 1 to 26 between silver and gold. In consequence of this and for the purpose of giving to the ‘colon de oro’ the same fineness as has been given to the American gold coin, and as has been adopted by the Union Latina, it was established that the ‘colon de oro’ should have 778 milligrams of gold of 900-1000 fineness. Its relation to the gold coins of either nations is as follows:

1 American gold dollar Colones 2.1495 4 shillings sterling, gold ” 2.0921 5 francs, gold ” 2.0737 4 marks, gold ” 2.0481

“In the contract with the Banco de Costa Rica, it was agreed that the Government should coin gold periodically. There are already 600,000 ‘colones de oro’ in pieces of 10 colones in Costa Rica, and the Government ordered furthermore a second emission of 400,000 colones in pieces of 20 colones each, which will soon be issued. It is further willing to coin half a million more in the near future. The Costa Rican Bank, on the other hand, is obliged to retire a corresponding amount of its notes from circulation, and later, as soon as sufficient gold can be put in circulation, the exchange of bills is to be made by this bank in gold instead of silver.”

There are sufficient reasons for believing that the Costa Rican Government will succeed in the realization of this highly important economic change without difficulty. As the Costa Rican Bank no longer has the exclusive privilege of issuing paper money, new banks must be established, with authority to issue circulating notes. As these banks will have to keep a reserve of national gold coins for the redemption of their paper money, there will be an abundance of currency of a fixed value. As the fineness of the ‘colon de oro’ constitutes the best type of international exchange, there will in the future be slight fluctuations, and this will prove a most valuable guaranty of the stability of public wealth.

The value of the _National Government property_ is estimated at 8,522,714.94 pesos. The principal items are:

Pesos. National distillery 900,000 Central custom-house 500,000 National theatre 905,815 Metal-building 286,432 National park 250,000 Insane Asylum 405,000 Pacific Railway 847,500 National Palace 200,000 Girls’ High School 350,000 Islands of San Lucas and Chira 400,865 Island of Uvita 200,000 Presidential Palace 150,000 Artillery armory 175,000 National printing establishment 140,000 National College in Alajuela 150,000 National Museum 40,000 Park of Morazán 159,185 Liceo of Costa Rica 145,000 Main armory 100,000 Old temple of La Merced 100,000 Ex-University 80,000 House in San José 100,000 Place in front of the National distillery 94,172 Custom-house in Puntarenas 100,000 Pier in Puntarenas 75,000 National telegraph 389,936 Palace of Justice 80,000 Hospital for lepers 65,000 Penitentiary 60,000 Police Stations 50,000 Mint 42,000

The private property owners are numerous and the orderly habits of the Costa Ricans are marked. Costa Rica being an essentially agricultural country, the necessity of a mortgage law was apparent to maintain and secure the equities of all. Hence an official registry of titles and mortgages was opened in 1867.

The landed property of the people of Costa Rica is registered in the “Registro Publico” in the following way:

_First Inscription._

Pesos. 1870, 5,243 fincas valued at 3,378,035 1875, 26,947 ” ” 19,090,557 1880, 43,281 ” ” 32,285,339 1885, 54,540 ” ” 39,228,567 1890, 65,858 ” ” 45,152,936 1895, 79,651 ” ” 59,244,326 1896, 82,614 ” ” 62,960,222 1897, 85,755 ” ” 67,711,398

_Second Inscription._

Pesos. 1870, 549 fincas valued at 502,503 1875, 9,580 ” ” 9,731,805 1880, 24,941 ” ” 25,339,594 1885, 41,286 ” ” 37,251,567 1890, 63,331 ” ” 52,702,051 1895, 89,276 ” ” 84,105,189 1896, 94,116 ” ” 90,654,569 1897, 99,309 ” ” 99,147,659

The following list gives the _number of fincas_ (properties) and the amount in pesos for which they were _mortgaged_.

--------+---------------+------------ | Fincas | Amount of Year. | (properties). | mortgage. --------+---------------+------------ 1868 | 130 | 147,931 1869 | 435 | 580,936 1870 | 632 | 826,176 1871 | 845 | 1,112,060 1872 | 1,166 | 1,440,810 1873 | 1,565 | 1,889,789 1874 | 2,007 | 2,667,565 1875 | 2,483 | 3,480,011 1876 | 2,909 | 4,105,197 1877 | 3,422 | 5,359,158 1878 | 3,972 | 6,141,955 1879 | 4,748 | 6,700,357 1880 | 5,528 | 7,944,641 1881 | 6,563 | 9,033,333 1882 | 7,373 | 9,113,818 1883 | 8,177 | 9,188,730 1884 | 8,523 | 9,283,415 1885 | 8,523 | 9,331,985 1886 | 8,513 | 9,119,853 1887 | 8,475 | 9,309,261 1888 | 8,386 | 9,027,632 1889 | 8,396 | 9,088,676 1890 | 8,417 | 9,403,484 1891 | 8,444 | 9,772,885 1892 | 8,630 | 10,862,961 1893 | 8,968 | 12,132,204 1894 | 9,528 | 14,110,510 1895 | 9,928 | 15,231,308 1896 | 10,511 | 16,831,402 1897 | 11,055 | 17,686,872 --------+---------------+-----------

_Net value_ of the fincas was:

Pesos. 1870 2,551,858 1875 15,610,546 1880 24,340,698 1885 29,896,583 1890 35,679,253 1895 43,347,019 1896 45,126,821 1897 48,642,827

In the last fiscal year from April 1, 1896, to March 31, 1897, the Public Register shows the following movement:

Key to column headings: Rur. = Rural Properties. Val. = Value in Pesos. Urb. = Urban Properties. (Part 1 of 2) ----------+---------------------------------------+ | FIRST INSCRIPTIONS. | |-----+-------------+-----+-------------+ | Rur.| Val. | Urb.| Val. | ----------+-----+-------------+-----+-------------+ San José | 343| 630,315.26| 728| 736,907.34| Alajuela | 559| 793,054.34| 440| 947,144.77| Heredia | 96| 503,588.00| 322| 160,832.85| Cartago | 272| 529,045.36| 253| 139,220.98| Guanacaste| 15| 13,753.50| 7| 4,200.00| Puntarenas| 25| 41,592.65| 23| 11,658.50| Limon | 44| 206,483.93| 14| 23,378.95| ----------+-----+-------------+-----+-------------+ Total | 1354| 2,727,833.14| 1787| 2,023,343.39| ----------+-----+-------------+-----+-------------+

(Part 2 of 2) ----------+---------------------------------------+ | SECOND INSCRIPTIONS. | +-----+-------------+-----+-------------| | Rur.| Val. | Urb.| Val. | ----------+-----+-------------+-----+-------------+--------------------- San José | 565| 1,236,822.10| 1129| 1,938,845.87| Total inscriptions, Alajuela | 723| 1,313,350.17| 468| 346,090.09| first, 3141, Heredia | 477| 1,227,200.39| 755| 704,950.93| $4,751,176.43; Cartago | 497| 972,605.11| 501| 454,726.09| second, 5193, Guanacaste| 11| 79,021.00| 9| 10,370.00| $8,493,090.09; Puntarenas| 23| 75,678.66| 9| 15,945.00| 8344 fincas, Limon | 36| 94,898.33| 10| 22,585.65| valued at | | | | | 13,244,266.52 pesos. ----------+-----+-------------+-----+-------------+--------------------- Total | 2332| 4,999,576.46| 2861| 3,493,513.63| ----------+-----+-------------+-----+-------------+---------------------

For the same period the “Public Register” furnishes the following statistics of mortgages on real estate estimated in pesos:

(Part 1 of 2) ----------+-------------------------------------------------+ | Distribution of | | Mortgages. | +-----------+------------+-----------+------------+ | Rural | Sum | Urban | Sum | |Properties.| Secured. |Properties.| Secured. | ----------+-----------+------------+-----------+------------+ San José | 211 | 990,051.28| 294 | 796,975.98| Alajuela | 152 | 348,825.25| 60 | 104,565.73| Heredia | 63 | 190,864.31| 77 | 187,202.05| Cartago | 166 | 409,518.63| 139 | 263,261.16| Guanacaste| 14 | 86,281.03| 3 | 20,000.00| Puntarenas| 12 | 41,843.00| 4 | 43,000.00| Limon | 51 | 199,893.84| 16 | 19,300.00| ----------+-----------+------------+-----------+------------+ | 669 |2,267,277.34| 593 |1,434,304.92| ----------+-----------+------------+-----------+------------+

(Part 2 of 2) ----------+----------------------------------------------- | | Cancellations. +-----------+------------+-----------+---------- | Rural | Paid Off. | Urban | Paid Off. |Properties.| |Properties.| ----------+-----------+------------+-----------+---------- San José | 116 | 283,513.97| 211 |539,572.67 Alajuela | 70 | 304,672.37| 33 |188,675.39 Heredia | 31 | 111,107.42| 28 | 41,781.50 Cartago | 111 | 346,415.03| 71 | 78,297.61 Guanacaste| .. | .. | .. | .. Puntarenas| 4 | 32,952.00| 2 | 27,498.00 Limon | 28 | 139,917.61| 13 | 95,505.35 ----------+-----------+------------+-----------+---------- | 360 |1,218,578.40| 358 |971,330.52 ----------+-----------+------------+-----------+----------+

----------+----------------------------------------------- | Partial Cancellations in Pesos. +-----------+-----------+-----------+----------- | Rural | Amortized | Urban | Amortized |Properties.| Debt. |Properties.| Debt. ----------+-----------+-----------+-----------+----------- San José | 33 | 169,835.81| 37 | 87,560.81 Alajuela | 13 | 42,414.00| 2 | 4,400.00 Heredia | 2 | 3,810.00| 4 | 7,700.00 Cartago | 22 | 238,746.76| 15 | 18,368.42 Guanacaste| .. | .. | .. | .. Puntarenas| .. | .. | .. | .. Limon | 35 | 66,000.00| 1 | 17,367.00 ----------+-----------+-----------+-----------+----------- | 105 | 520,806.57| 59 | 135,396.23 ----------+-----------+-----------+-----------+-----------

RÉSUMÉ. RÉSUMÉ.

Number of Total and Partial Mortgages. Sum Secured. Cancellations. Pesos. Pesos. Rural 669 2,267,277.34 Rural 465 1,739,384.97 Urban 593 1,434,304.92 Urban 417 1,106,726.75 ---- ------------ --- ------------ 1262 3,701,582.26 882 2,846,111.72

Since 1865 the mortgage law permits this mode of converting real estate; upon due official registration its value may be divided into shares, each represented by a cedula or bond, on which as collateral security money can be raised at any time with perfect safety.

This law is included in the Codizo Civil of 1887 and since that time cedulas to following amounts have been issued:

Pesos.

1888 12,000 1889 60,500 1890 70,200 1891 170,100 1892 380,000 1893 336,800 1894 482,000 1895 666,000 1896 1,002,000 1897 1,381,700

The municipal taxes are not high. The owners of real estate are required to pay only the taxes devoted to the maintenance of municipal police, street lighting and the domestic supply of water.

Other municipal taxes comprise license fees for commercial business, for slaughtering cattle and hogs; for wine houses; taxes for registering of dogs; taxes on tanneries, breweries, coffee-cleaning establishments, cemeteries, etc.

Other important factors of the economic life of Costa Rica are the existing _banking establishments_. The first bank of Central America was established in 1857, in Costa Rica, by Crisanto Medina. This institution ceased and, in 1863, was replaced by the Banco Anglo-Costaricense with an authorized capital of 2,000,000 pesos and a paid-up capital of 1,200,000. This bank still exists, together with the Banco de Costa Rica established in 1867 with a paid-up capital of 2,000,000 pesos. It incorporated with itself the former Banco de la Union established in 1877.

The Bank of Costa Rica has had from the Government the privilege of issuing paper money to the extent of four times its cash on hand. The average circulation of these bank notes since 1882 has been as follows:

Pesos.

1882-83 35,000 1883-84 56,400 1884-85 168,890 1885-86 210,170 1886-87 1,004,010 1887-88 1,518,290 1888-89 2,191,930 1889-90 2,911,479 1890-91 3,249,914 1891-92 3,037,167 1892-93 2,820,892 1893-94 3,079,067 1894-95 3,565,041 1895-96 3,820,404

This issue privilege was withdrawn in 1897 on the introduction of the ‘colon de oro,’ and a special arrangement was made with the bank to uphold the contemplated change from a silver to a gold standard.

The Banco de Costa Rica, on July 15, 1897, had a reserve fund of 745,000 pesos and a dividend account of 50,000. It has branches in Heredia, Cartago and Alajuela. The situation of this bank at the same date was in pesos as follows:

ASSETS. LIABILITIES. -------------------------------------+----------------------------------- Cash on hand: | Coin 1,268,682.33 | Capital paid up 2,000,000.00 Checks against the | Reserve fund 745,000.00 Anglo-C. R. Bank 10,075.43 | Dividend account 50,000.00 ------------ | Discounts 120,984.70 1,278,757.76 | ------------ Foreign correspondents 191,073.64 | 2,915,984.70 Accounts current 335,324.39 | Notes in ------------- | circulation 3,929,972.50 1,805,155.79 | Deposits, on time | or demand 1,108,424.82 Bills receivable 5,273,304.39 | ------------ Branch Banks 373,595.05 | 5,038,397.32 Bonds of School- | loan 40,607.50 | Securities in commission Various obligations | for collection 394,420.74 to collect 254,101.99 | Government on account Immovable property 167,052.54 | ‘Colones de Oro’ 600,000.00 Furniture 10,000.00 | Stamps 1,433.00 | Sundry accounts 29,131.76 | ---------- | 6,149,226.23 | ------------ | 7,954,382.02 | Securities in commission | for collection 394,420.74 | Deposit of ‘Colones | de Oro’ 600,000.00 | ------------- | ------------ 8,948,802.76 | 8,948,802.76 -------------------------------------+-----------------------------------

The bank is ready to retire 540,000 pesos of its own notes in correspondence with the first gold deposit of 600,000 pesos. In view of the satisfactory transactions of the Bank 20 per cent. was distributed in dividends for the fiscal year ending in 1897. Its manager is Mr. José Andrés Coronado. Its Board of Directors include Messrs. Francisco Peralta, Aniceto Esquivel, Fabian Esquivel, Daniel Nuñez and Manuel Sandoval.

The manager of the Banco Anglo-Costaricense is Mr. Percy G. Harrison, and its Board of Directors is composed of Messrs. Adrian Collado, Simeon Guzmán, Telésforo Alfaro, Gerardo Jager and Mariano Montealegre.

The situation of the Banco Anglo-Costaricense on June 30, 1897, was in pesos as follows:

(Part 1 of 2) ASSETS. ------------------------------------------------------------------------+ Cash on hand 281,869.25 | Securities for collection in San | José 1,208,192.54 | Mortgages 530,729.51 | Securities for collection in San | Mateo 739.83 | ------------ 1,739,661.88 | Credits current 185,698.55 | Credits in £ sterling 485,545.34 | Shares of the Mercado de San | José (165) 8,250.00 | Bonds of the Guatemalan Central | Railway 15,000.00 | ------------ 2,434.155.77 | Immovable property 20,000.00 | Furniture 1,500.00 | ------------ 21,500.00 | Debtors abroad 82,778.37 | Remittances due 25,969.48 | ------------ 108,747.85 | Securities in commission for collection 188,014.10 | Money for expenditure 1,500,649.79 | Exportation notes 93,275.00 | ------------ 1,781,938.89 | Interest on deposits not due 8,484.45 | Various debtors 14,602.24 | ------------ | 4,651,298.45 |

(Part 2 of 2) LIABILITIES. +--------------------------------------------------- | Capital 1,200,000.00 | Reserve Fund 210,000.00 | ------------ 1,410,000.00 | Deposits account current 371,443.60 | Deposits on sight 10,778.00 | Deposits on credit 380,601.23 | ----------- 762,822.83 | Outside creditors 436,403.84 | Various debts 22,202.38 | ------------ 458,606.22 | Securities in commission 188,014.10 | Government of Costa Rica, | Treasury funds 1,500,649.79 | Government of Costa Rica, | exportation notes 93,275.00 | ------------ 1,781,938.89 | Dividends not collected | from 1895-96 700.00 | Dividends from 1896-97 | (15 per cent) 180,000.00 | ---------- 180,700.00 | Discounts on bills payable 39,779.55 | Profits for 1897-98 17,450.96 | ---------- 57,230.51 | ------------ | 4,651,298.45

Foreign commercial obligations were settled through these banks on the following terms: Drafts at three days’ sight on Paris cost one per cent. less than on London on same time; those at ninety days’ sight on Paris or London cost one per cent. less than at three days’ sight; those at sixty days’ sight, on New York, cost two per cent. less than on three days’ sight. Submarine cable transfers of money cost two per cent. more than by three days’ sight drafts with the cost of telegraphing added.

Until the 24th of March, 1897, the Bank of Costa Rica sold drafts on New York for five points more than for those on London. Since the 25th of March, 1897, the difference of exchange between those cities has been eight per cent.

The rates on London, in October and November, 1897, were 127, and those on New York were 135.