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]
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]
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]