The Republic of Costa Rica

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:

To this sum

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

Ordinary Disbursements for Administration.

Various Services.

Monopoly Services.

Funds in Administration.

Interior Debt.

Consolidates.

Various Accounts.

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

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:

“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:

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.

Second Inscription.

The following list gives the number of fincas (properties) and the amount in pesos for which they were mortgaged.

Net value of the fincas was:

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