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. Pesos.

1882-83 4,395,089 1889-90 5,603,512

1883-84 4,129,518 1890-91 5,941,947

1884-85 3,707,434 1891-92 5,806,752

1885-86 3,619,261 1892-93 5,630,416

1886-87 3,899,975 1893-94 5,507,343

1887-88 4,210,733 1894-95 5,666,207

1888-89 4,762,885 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.

Year. Fincas Amount of Year. Fincas Amount of

(properties). mortgage. (properties). mortgage.

1868 130 147,931 1883 8,177 9,188,730

1869 435 580,936 1884 8,523 9,283,415

1870 632 826,176 1885 8,523 9,331,985

1871 845 1,112,060 1886 8,513 9,119,853

1872 1,166 1,440,810 1887 8,475 9,309,261

1873 1,565 1,889,789 1888 8,386 9,027,632

1874 2,007 2,667,565 1889 8,396 9,088,676

1875 2,483 3,480,011 1890 8,417 9,403,484

1876 2,909 4,105,197 1891 8,444 9,772,885

1877 3,422 5,359,158 1892 8,630 10,862,961

1878 3,972 6,141,955 1893 8,968 12,132,204

1879 4,748 6,700,357 1894 9,528 14,110,510

1880 5,528 7,944,641 1895 9,928 15,231,308

1881 6,563 9,033,333 1896 10,511 16,831,402

1882 7,373 9,113,818 1897 11,055 17,686,872

Net value of the fincas was:

Pesos. Pesos.

1870 2,551,858 1890 35,679,253

1875 15,610,546 1895 43,347,019

1880 24,340,698 1896 45,126,821

1885 29,896,583 1897 48,642,827

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

(Part 1 of 2) Key to column headings:

Rur. = Rural Properties.

Val. = Value in Pesos.

Urb. = Urban Properties.

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, first, 3141, $4,751,176.43; second, 5193, $8,493,090.09; 8344 fincas, valued at 13,244,266.52 pesos.

Alajuela 723 1,313,350.17 468 346,090.09

Heredia 477 1,227,200.39 755 704,950.93

Cartago 497 972,605.11 501 454,726.09

Guanacaste 11 79,021.00 9 10,370.00

Puntarenas 23 75,678.66 9 15,945.00

Limon 36 94,898.33 10 22,585.65

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:

Distribution of Mortgages.

Rural Properties. Sum Secured. Urban Properties. Sum 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

Cancellations.

Rural Properties. Paid Off. Urban Properties. Paid Off.

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 Properties. Amortized Debt. Urban Properties. Amortized 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 Mortgages. Sum Secured. Total and Partial 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. Pesos.

1888 12,000 1893 336,800

1889 60,500 1894 482,000

1890 70,200 1895 666,000

1891 170,100 1896 1,002,000

1892 380,000 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. Pesos.

1882-83 35,000 1889-90 2,911,479

1883-84 56,400 1890-91 3,249,914

1884-85 168,890 1891-92 3,037,167

1885-86 210,170 1892-93 2,820,892

1886-87 1,004,010 1893-94 3,079,067

1887-88 1,518,290 1894-95 3,565,041

1888-89 2,191,930 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 Anglo-C. R. Bank 10,075.43 Reserve fund 745,000.00

1,278,757.76 Dividend account 50,000.00

Discounts 120,984.70

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 5,038,397.32

Branch Banks 373,595.05 Securities in commission for collection 394,420.74

Bonds of School-loan 40,607.50 Government on account ‘Colones de Oro’ 600,000.00

Various obligations to collect 254,101.99

Immovable property 167,052.54

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:

Assets. Liabilities.

Cash on hand 281,869.25 Capital 1,200,000.00

Reserve Fund 210,000.00

Securities for collection in San José 1,208,192.54 1,410,000.00

Mortgages 530,729.51

Securities for collection in San Mateo 739.83 Deposits account current 371,443.60

1,739,661.88 Deposits on sight 10,778.00

Deposits on credit 380,601.23

762,822.83

Credits current 185,698.55 Outside creditors 436,403.84

Credits in £ sterling 485,545.34 Various debts 22,202.38

Shares of the Mercado de San José (165) 8,250.00 458,606.22

Securities in commission 188,014.10

Bonds of the Guatemalan Central Railway 15,000.00 Government of Costa Rica, Treasury funds 1,500,649.79

2,434.155.77 Government of Costa Rica, exportation notes 93,275.00

Immovable property 20,000.00 1,781,938.89

Furniture 1,500.00

21,500.00 Dividends not collected from 1895-96 700.00

Debtors abroad 82,778.37 Dividends from 1896-97 (15 per cent) 180,000.00

Remittances due 25,969.48

108,747.85 180,700.00

Securities in commission for collection 188,014.10 Discounts on bills payable 39,779.55

Money for expenditure 1,500,649.79 Profits for 1897-98 17,450.96

Exportation notes 93,275.00 57,230.51

1,781,938.89

Interest on deposits not due 8,484.45

Various debtors 14,602.24

4,651,298.45 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.