The international commercial movement shows a balance of trade in favor of Bolivia. For a ten-year period, ending in 1905, the total foreign commerce ranged from 34,000,000 to 54,000,000 bolivianos annually. In a recent year the value of the exports was 25,170,000 bolivianos, and of the imports 16,253,000 bolivianos, or, on the computation of 1 boliviano as equal to 42.6 cents, $10,571,000 and $6,826,000, respectively. Germany and Great Britain have even shares in the foreign commerce, but Germany’s advantage is in the merchandise she exports to Bolivia. Sometimes the United States does not appear in statistical abstracts as an exporter, but this is because consular invoices are made out for the Peruvian and Chilean ports through which the merchandise is entered. According to the Bolivian figures, goods to the amount of $400,000 to $500,000 are imported annually from the United States, but it is doubtful if this is anything like the full sum. Railway enterprises carried on by American capitalists would mean largely increased importations of equipment, mining machinery, and merchandise.

The treaty between Bolivia and Chile which was ratified in 1905 and put into effect, has a highly important commercial and industrial significance. By its terms Bolivia formally yielded all claim to the littoral, or coast strip of territory, which was taken from her by Chile as a war indemnity in 1881. The principal feature of the treaty is the agreement of Chile to construct at her own cost a railway from the port of Arica to La Paz, the Bolivian section to be transferred to Bolivia at the expiration of fifteen years from the date of completion, Chile also giving Bolivia, in perpetuity, free transit through Chile and the towns on the Pacific. Bolivia is authorized to constitute customs agencies in the ports which may be designated for her commerce. Under this treaty Chile further agreed to pay to Bolivia a cash consideration of £300,000, and to discharge various liabilities recognized by Bolivia for certain claims both Chilean and American.

Another provision of the treaty is that Chile will pay the interest, not exceeding 5 per cent, which Bolivia may guarantee on the capital invested in the construction of railways from Uyuni to Potosi, Oruro to La Paz, and via Cochabamba to Santa Cruz, La Paz to the region of the Beni and Potosi via Sucre, and Lagunillas to Santa Cruz. It is stipulated, however, that Chile shall not be required to disburse more than £100,000 a year, that the aggregate disbursements shall not exceed £1,600,000, and that the undertaking shall be void at the end of thirty years. The terms of this guaranty are somewhat indefinite, and their vagueness may give rise to controversy in the future. The present, immediate, and prospective value of this treaty to Bolivia is in securing a railway outlet from the interior to the Pacific at Arica, and thus being assured of a commercial artery which is bound to become a great highway of commerce. Its relation to the Panama Canal through the port of Arica I have explained in previous chapters.

In order that the country’s fiscal growth may keep pace with its industrial and political development, the government has sought to insure financial stability by recognizing the gold standard, somewhat after the manner of Peru. An important step in this direction was taken when, notwithstanding the silver production and the coinage of the white metal by the national mint, a monetary commission was created. This body matured a plan for the adoption of the gold standard. The report was accepted and recommended by the government to Congress at the Autumn session in 1904, and was enacted into law.

The financial system of Bolivia, as fixed by this legislation, may be said to be an approach to the gold standard. The basis of the currency is the silver boliviano of 25 grammes, 900 fine, and supposed to equal 100 centavos, or cents. In United States terms the boliviano is equal to 42.6 cents. In a recent year 19,187,610 kilograms of silver were coined into 866,592 bolivianos. The law of November, 1904, fixed the value of Bolivian silver currency in terms of the English pound sterling. It declared that the pound sterling, or English sovereign, should thenceforth have a cancelling value of 12 bolivianos, 58 centimes; also that from January 1, 1905, 50 per cent of the customs duties should be paid in gold coin at this rate, or, if a whole or part should be paid in silver, this quota should be subject to a surcharge of 5 per cent. Amounts less than one pound sterling may be paid in silver without being subject to the surcharge. By this law the Executive was empowered to suspend, should it become necessary, the mintage of silver coin; the exportation of silver coin was declared free, and its importation into the Republic was prohibited under the penalty of confiscation.

This gold approach law apparently caused no inconvenience to domestic trade, while it was a great help to Bolivia’s international commerce and to her credit abroad.

In 1905 the outstanding issues of the four banks which had the authority to emit notes was 9,144,000 bolivianos. The paid-up capital of these banks was 7,350,000 bolivianos. German and Chilean banks established branches in Bolivia in 1905. By a law passed in November, 1904, an issue of bonds was made to the amount of 2,000,000 bolivianos, to cover government obligations to the banks. They bear 10 per cent interest, and the amortization, or refunding, is to be at the rate of 6 per cent each year, 320,000 bolivianos being included in the national budget for interest and amortization.

The chapter is becoming long. The conclusion shall be short. The treatment of the topics has been paragraphic. If it were not so, further chapters would be necessary for the exposition of the guiding motives of the Bolivian national policy. Much of it is as yet only national aspiration. But the basis is industrial and, therefore, sound. Bolivia shares with her West Coast neighbors the stimulating influence of the Panama Canal. Its economic effect is her industrial and commercial opportunity.

CHAPTER XXII

NEW BASIS OF THE MONROE DOCTRINE