The old and the new Peru

by Marie Robinson Wright

THE LIMA SAVINGS BANK.

THE BANCO POPULAR, LIMA.

As soon as the war with Chile was ended by the treaty of Ancón in 1884, Peru turned to the problem of restoring the national finances, and a few years later the contract elsewhere referred to was arranged, whereby the Peruvian Corporation assumed the foreign debt and agreed to complete the construction of projected railways, in return for certain concessions and privileges. The country began at once to recuperate, though slowly at first, as might be supposed, the question of politics absorbing much attention. Patriotic and capable leaders came forward, however, to meet the occasion with judgment and foresight. One of the most important reforms effected was the adoption of the gold standard, which has done a great deal to attract foreign capital and to inspire confidence abroad. The government notes that had been issued to meet the needs of war, became so depreciated in value that they were little used and finally they were practically withdrawn from circulation by the announcement that their acceptance was optional; immediately the old coins—the silver sols—began to reappear, imported from other Spanish-American republics, especially Central American, where they formed at that time the circulating medium; the government reopened the mint, and Peruvian silver was coined into sols; at this juncture the depreciation of silver arose, and the question of establishing a gold standard was debated. The idea of adopting a gold standard grew in favor when a second fall in silver occurred in 1886, adversely affecting the finances of all countries that used the silver standard exclusively. President Pierola gave a strong impulse to the proposed measure and Congress finally sanctioned its adoption in 1897. The legal equivalent of the Peruvian libra, or pound, was fixed at ten sols, which at once solved the problem of the value of sols in circulation, amounting to about twelve million. Then the free coinage of silver was suspended and reimportation of silver sols was prohibited, though it was a legal tender in Peru. Congress also passed a law by which custom house duties had to be paid in gold, at the rate of one pound sterling for every ten sols, which established the equivalent between the English sovereign and the silver sols at the rate of one to ten. In December, 1897, a law was passed to authorize the coinage of the libra, of the same weight and fineness as the English sovereign, and ordering it to be received by the state as the equivalent of ten sols. In 1901, it was declared by law that the monetary unit in Peru was the Peruvian libra and that silver sols were a legal tender up to the sum of only ten sols; and, two years later, all the banks came to an agreement to keep their accounts and to perform all their operations in the new legal money of Peru, the gold libra. The success and facility with which this important monetary reform was accomplished does credit to the genius of the financiers who projected and carried it through.

The fiscal reports of the last ten years show that Peru has made wonderful progress in the rehabilitation of the national finances and the establishment of a system of revenue and expenditure which ensures permanent and solid advancement. A very important share of the credit for this financial progress is due to the newly elected President of Peru, His Excellency Don Augusto Leguia, who, as Finance Minister in the cabinets of President Candamo and President Pardo, gave signal proofs of his superior financial and administrative gifts. Probably no other country can show such a rapid increase of revenues due to the administrative labors of one of its ministers as can Peru, whose fiscal receipts were raised from twelve million to thirty million sols annually during his term of office as Minister of Finance. The loan of six million sols, recently contracted for the purpose of acquiring naval elements, the creation of the bank of deposits and consignments and other financial undertakings of great importance to the country have been effected through his initiative and energy.

Every year shows an increase in the receipts and a decrease of expenditures under the present government. In all departments of the fiscal system, reforms have been inaugurated with a view to strengthening the national finances; the National Company of Collections, a joint stock company that was formed at the close of the war with Chile to organize a system of taxation and to take charge of the collections shows by its latest report that the receipts from taxes increased more than a hundred thousand sols from the last half-year of 1906 to the same semester of 1907, the collection from July to December, 1907, amounting to two million one hundred and fifty thousand sols. The interest on the internal debt of thirty-three million sols has been paid to date; and the claim of the Guano Consignee Company of the United States has been paid by an issue of fifteen million sols in bonds of the public debt. The prosperity that has become apparent in all branches of trade is indicated by the profits shown in the Peruvian Corporation’s report for 1907, amounting to more than two million sols. The banking institutions, which have been closely identified with the financial fortunes of the government, have been particularly successful in their negotiations during the past year. The bank of London and Peru has had its securities quoted on the Paris Bourse, and has established a bank of issue in Bolivia with a capital of two hundred thousand pounds; the Banco Italiano and the Banco Popular have increased their capital, besides adding large sums to their reserve funds; the German Bank has installed branches in Callao, Arequipa, and Trujillo within the past two years; and the savings banks and insurance companies have enlarged the scope of their activities.

A NATIVE INDUSTRY OF THE COAST REGION.

Commerce has felt the stimulus of progressive government, and commercial enterprise has flourished notably within the past five years. In 1902 the imports amounted in value to three and a half million pounds, the exports to three and three-quarter millions; in 1906, the value of the national imports reached five million pounds sterling and the exports amounted to six million pounds sterling in value. The first half of 1907 showed less trade returns than the corresponding semester of the preceding year, but the commercial reports for the first half of the year 1908 give an increase of one hundred and sixty-five thousand pounds sterling over the total returns for the same period of 1907.