Señor Hurtado to Mr.
Blaine.
Legation of
Colombia,
Washington, May 11, 1892.
(Received May 14.)
Sir: I beg leave to offer some observations on the
report of Hon. William F. Wharton, Acting Secretary of State (vide Ex. Doc. No. 68, Fifty-second Congress, first
session), to whom was referred the resolution of the Senate of the 21st of
March last, wherein the President was
[Page 467]
requested, if not incompatible with public interests,
to communicate to the Senate the items of taxation under the laws of
Colombia upon which he had found and proclaimed that the tariff laws of
Colombia are reciprocally unequal to the United States.
I am aware that, although documents such as the report above alluded to are
often printed and freely circulated, they are, nevertheless, of a private
character and not subject to be commented upon outside of Congress, to whom
they are addressed. Nor do I intend to transgress this rule. The remarks
which I have the honor to submit to you have reference merely to matters of
fact, and I venture to present them, by way of information only, with the
hope that they may be conducive to a satisfactory issue in the important
question connected with the matter of the report.
For the sake of clearness in the course of these remarks I shall confine
myself in the body of this note to the mere statement of facts; the
demonstration of which will be found in the accompanying memoranda to which
I shall refer, as occasion may require.
The report states:
It will further be seen that of the total importation in 1891, of the
products * * * of the United States imported into Colombia, it may
be safely estimated, that at least 80 per cent were charged with
duties.
It is difficult to estimate the exact proportion of American goods that enter
free into Colombia; but those exported to the free ports of Panama and Colon
from New York and San Francisco alone, constituted in 1891, 28 per cent of
the total imports from the United States into Colombia. If to that
proportion of free imports were added the quota due to exportations to the
Isthmus from Boston, Philadelphia, Baltimore, and New Orleans, and if goods,
on the free list, shipped from the United States to the custom-house ports
were also taken into account, this proportion, viz, 28 per cent would be
considerably increased.
The estimate 20 per cent laid down in the report, is evidently much too low
(vide memoranda, Sec. I).
The report of Acting Secretary Wharton, further says:
In the province comprising the Isthmus of Panama, a more liberal
tariff with a much larger free list than that of the general tariff
is in force; but as the statistics are not separable, the exact
amount of our export trade with the Isthmus, can not be ascertained.
This condition has existed for many years past.
The ports of the Isthmus of Panama were made free ports in 1856 and so
continued to be until 1891, when a few articles were subjected to import
duties. Among these, the only American imports on which the tax falls, are
salt beef and pork which pay 1½ cents per pound; whisky and bitters paying 3
cents per pound. All other American imports are free (vide memoranda, Sec.
ii).
The report farther states:
The statistics hereto appended show that as a consequence, in a great
measure, of these tariffs, the balance of trade is now and for some
years past has been largely against the United States. For instance,
for the year ending June 30, 1891 * * * while imports from Colombia
aggregated $4,765,354 our exports thereto were $3,182,644.
It is submitted that if the high duties imposed by the Colombian tariff make
the balance of trade with the United States to be in favor of Colombia, as
stated in the report, then the same result should follow respecting the
trade of other nations with Colombia; for the tariff contains no
discriminations. Its provisions are one and the same for all nations. But
the balance of trade between Colombia and foreign countries is in every case
against Colombia, the trade with the
[Page 468]
United States included; and, contrary to the statement contained in the
report, has been so for several years past. (Y. Mem., Sec.—.) If any
conclusion can be drawn from the premises laid down in the report, it would
follow that the tariff of Colombia, far from being high, requires to be
increased for the protection and equalization of the commerce of that
country.
The sum stated in the report as the amount of imports from Colombia for the
year ending with June, 1891, viz, $4,765,354, is much in excess of the
correct value of the imports. This arises from the erroneous valuation put
upon the Colombian peso (in which the invoice accompanying each importation
is framed) at the time of converting the footing of the invoice into United
States currency.
The error alluded to consists in the assumption at the U. S. customhouses
that the said invoices are made out in standard silver pesos of Colombia, a coin no longer in existence or used in
account; whereas the invoices are made out in irredeemable paper pesos (the currency of the country since 1886), the
value of which is, and has been for some time past, $0.50 United States gold
(Y. Mem., Sec. iii). Making the proper corrections
the amount $4,765,354, given by the custom-houses of the United States as
the value of the imports from Colombia in 1891, will be reduced to
$3,035,532, which is less by $147,112 than the value of the exports from the
United States (Y. Mem., S. iii).
Appended to the report (p. 5 of the printed document) is a table purporting
to show the duties levied in Colombia on the chief articles of export from
the United States.
These duties expressed in United States currency are much in excess of those
actually imposed by the Colombian tariff, and there is not a single case in
which the excess is less than from 40 to 50 per cent above the actual duty.
In many instances it is considerably greater, for instance:
On plows and machinery for agriculture the duty is made to appear in excess
of the tariff duty by 200 per cent.
On chemicals, the duty laid down in the table on saltpeter, stearic and
sulphuric acids, is in excess of the tariff duty 800 per cent, while on soda
salts, caustic soda, and potassa subcarbonates, etc., the excess amounts to
1,650 per cent.
On iron building materials, galvanized iron for roofs, ditto doors and
windows, railings, nails, tacks, saws, and tools generally, the excess given
by the table over the tariff duty is 500 per cent.
These are not the only cases of similar exaggerations occurring in the table,
which makes no allusion whatsoever to articles on the free list.
Among the last items found in the table under examination appears the
following: “Vessels sold to foreigners, per pound, $0,003.”
There is no duty on vessels excepting such as are intended for fluvial
navigation on the waters of the Republic; and, as a rule, these are
invariably exempted from the tax under special concessions by way of
encouragement to such undertakings. At all events, no discrimination is made
respecting the duty on this or any other article in Colombia bearing on the
nationality of the owner or importer.
At the foot of the table is found the following note:
The duties above stated do not include port and other charges, being
only the import duties levied by the National Government.
Port dues and other charges are no doubt a proper subject for consideration
when the commercial relations between two countries are being examined under
an economic point of view. In this connection
[Page 469]
it would have been advantageous to Colombia, the
object of the examination being had in view, had the report stated that
practically the port dues and other charges on vessels entering and leaving
Colombian ports are nominal—a condition so liberal that I believe finds no
parallel in any other country. The total movement of incoming tonnage in the
ports of Colombia during the year 1889 amounted to over 1,600,000 registered
tons. The sums collected thereon for port, light, and other charges
aggregated 14,219 pesos, equivalent to $7,110 United States currency, or say
about $4.45 per vessel of 1,000 tons register. The larger part of this small
charge was for light dues.
I have, etc.,
Memoranda accompanying Mr. Hurtado’s note of May 11,
1892, to the honorable the Secretary of State.
I.
The shipments of merchandise from the United States to the free ports of
the Isthmus of Panama during the year ending June 30, 1891, as far as
can be ascertained, were as follows:
| (a) From New York to Colon |
$1,059,181 |
| (b) Coal |
103,745 |
| (b) Lumber |
21,344 |
| (c) From San Francisco to
Panama |
98,542 |
| (b) To Bocas del Toro direct |
37,904 |
| (d) From Boston, Philadelphia,
Baltimore, and New Orleans |
|
| Total |
1,320,716 |
The above sum of $1,320,716 constitutes 28 per cent of the total exports
of the United States to Colombia for the year 1891. This proportion
would be increased if the value of shipments from Boston, Philadelphia,
etc., to the free ports were taken into account. It is therefore shown
that the importations free of duty into the isthmus alone, without
taking into consideration the goods admitted free through the
custom-house ports of Colombia, are of themselves sufficient to
considerably reduce the percentage of United States products stated in
the report to be charged with duty upon entering into Colombia.
II.
See Consul Sims’ report (Consular Report No. 126, for March 1891, pp.
453, 454) as to articles made dutiable on being landed at the port of
Colon. The duties are wrongly estimated. For instance, the duty on salt
beef and pork is 5 cents (Colombian currency) per kilogram (21/5
pounds.) Consul Sims gives the duty at 5 cents (United States currency?)
per pound. The exact duty in United States currency is 1⅔ cents per
pound.
III.
The invoices accompanying shipments of merchandise from foreign countries
to the United States required to be presented at, the custom-house of
the port of landing are necessarily made out in the money of the country
whence the exportation takes place. Such is the case with all shipments
from Colombia, and the said invoices are made out in Colombian money,
which, since 1886, consists of an irredeemable paper currency of
considerable less value than the standard silver peso. The peso; which
was established in 1848, as the legal-tender unit of value, contained 25
[Page 470]
grams weight of silver
alloy 960–1,000 fine, has long ago ceased to exist in circulation or to
he used in account. In Colombia all transactions have been carried on,
since 1886, in paper currency, which is legal tender for any amount and
invoices like all other statements, respecting money matters, refer to
that currency.
The invoices alluded to can not therefore be correctly dealt with after
the manner from time to time proclaimed by the Treasury Department, for
estimating the value of the respective imports in United States money of
account, viz, the gold dollar. This system assumes, that the foreign
money of account is represented by a gold or silver unit, the
intrinsical value of which has been previously ascertained by the U. S.
mint and its relation to United States money determined. When, as in the
case of Colombia, the foreign money has only a fiduciary value, it
becomes necessary to find out, by other means, what that value may be
and there is no other or better method to reach this result than by
taking the equivalent exchange as the expression of that value.
(a) Reported by Consul-General Calderon.
(b) Report of the inspector of the port of Colon.
These shipments refer to the calendar year 1891.
(c) U. S. Bureau of Statistics.
(d) Not known.
The rate of exchange between Colombia and the United States has
fluctuated within very narrow limits and 100 per cent premium represents
a fair average, that is to say, Colombian pesos 200 equal to 100 United
States gold, or pesos 1=50 cents, United States currency. This has been
the ratio adopted by the Minister of Finance at Bogota to compare the
aggregate of imports into, and exports from, Colombia. (V. report to
Congress of 1890. Also Minister Abbott in consular report No. 109).
At page 6 of the printed report is found a table of exports from the
United States to Colombia and imports from Colombia to the United States
between the years 1876 and 1891, inclusive.
Taking the last six years, during which paper currency has been the legal
tender in Colombia, viz, from 1886 to 1891, it will be found that
exports from the United States aggregate $26,208,767 and imports
$23,957,258.
But this last sum embodies an error arising from the rates at which the
peso in the custom-house invoices has been
converted into United States gold.
The values of the Colombian silver peso proclaimed by the Treasury
Department on the 1st of January, 1886 to 1891, have been, respectively,
as follows: $0,771, $0,727, $0,699, $0,680, $0,698, $0.771, which gives
an average of $0,721.
Now, between this average, $0,721, and the exchange rate, $0,500, there
is a difference of $0,221, which represents the excess of the value
given to imports over their real value, or say 30 6 per cent.
Deducting therefore from $23,957,258, 30 per cent ($7,187,177), the real
value of imports ($16,770,081) would be obtained.
But this last amount also contains an error, owing to the fact that in
the departments of Santander and Panama the Government paper money is
not current. There is in these parts of the Republic a money of account,
consisting of a peso 835/1000 which only exists in its subdivisions,
viz, halves, fifths, and tenths of the dollar. These are the remains of
the former silver currency, the fractional parts of which were coined of
the above stated fineness, following the measure adopted by the Latin
Union in 1866, in order to impart toughness and give durability to
fractional coins, by introducing a larger proportion of copper in the
alloy.
The coin, 0 835 fine, or fractional peso, is intrinsically worth 7 2 per
cent less than the standard hard silver peso, 0 900 fine; and where the
latter has been estimated as in the average above established at $0.721,
the U. S. mint process would have valued the fractional peso at $0.6691,
United States currency.
The exchange between both Cucuta and Colon with the United States, is, as
quoted in these remarks, 50 per cent premium, say 150 pesos=$100 United
States currency, equivalent to peso 1=$0.6666. Practically the same
value given above.
Minister Abbott has made the reduction into United States currency of the
exports of Colombia for 1888, in a manner similar to that followed in
the present case (Vide-Consular Reports, No. 109, p. 356), but has
neglected to take into account the differences of value between the hard
and fractional peso.
Minister Abbott finds from official data that, of the exports through the
customhouse of Cucuta, two-thirds valued for 1888 at pesos 976,678 was
reported in pesos, and the remaining one-third in paper. Assuming that
this valuation followed the goods to destination, and furthermore that
all goods so priced were exported to the United States, it will be found
that the correction to introduce in the aggregate exports to this
country, above computed at $16,770,081, is to add one-sixth of the value
of the merchandise exported through Cucuta. The same course should be
followed respecting imports from the isthmus.
Estimating the two-thirds of Cucuta exports at 1,000,000 pesos yearly,
and the exports from the department of Panama at 750,000 pesos (See Report of the inspector of the port of
Colon), of which say two-thirds come to this country; the amount on
which the correction would fall would be pesos 1,500,000 yearly, or
pesos 9,000,000 for six years, the sixth part of which amounts to
1,500,000 which is to be added to the aggregate imports as above
estimated from 1886 to 1891, making a total of 18,270,031 as the correct
value of imports from Colombia to the United States.
[Page 471]
recapitulating.
| Imports estimated by the U. S. custom-house on the
basis of hard silver peso from 1886 to 1891 |
$23,957,258 |
| Less 30 per cent for reduction to paper currency
basis |
7,187,177 |
| Corrected imports |
16,770,081 |
|
| Two-thirds exports, Cucuta |
$1,000,000 |
|
| Two-thirds exports, Panama |
500,000 |
|
| Yearly |
1,500,000 |
|
| For six years |
9,000,000 |
|
| One sixth to be added |
1,500,000 |
|
18,270,081 |
| Balance of trade |
7,938,686 |
| Exports from the United States |
26,208,767 |
| Average yearly balance of trade in favor of the
United States |
1,323,114 |
IV
When the duty on an article in the Colombian tariff is 1 cent of peso,
the duty on same per pound avoirdupois in United States currency will
be:
| Pounds avoirdupois, 2.205 |
= 1 kilogram. |
| Kilograms, 1 |
= 1 cent peso. |
| Cents peso, 2 |
= 1 cent United States currency. |
Hence, 1,000 × 1 × 1/2,205 × 1 × 2 =0.227 cents United States currency,
or $0.00227 duty per pound avoirdupois.
The table appended to report, p. 5, states:
| Agricultural implements: |
|
| Duty in United States currency per pound, according to
report |
$0.0170 |
| According to tariff: |
|
| Plows and agricultural machinery 2½ cents (duty per pound,
2½ by $0.00227) |
0.0057 |
| Excess |
$0.0113 |
| Equivalent to 200 per cent over and above the tariff
duty. |
|
| The table states: |
|
| Chemicals, drugs, etc.: |
|
| Duty in United States currency per pound |
$0.100 |
| According to tariff: |
|
| Duty on saltpeter, stearic, and sulphuric acids, 5 cents
Colombian peso per kilogram; per pound, 5 by $0.00227 |
0.011 |
| Excess |
0.089 |
| Equivalent to 800 per cent over and above the tariff
duty. |
|
| Chemicals, drugs, etc.: |
|
| Duty in United States currency per pound |
$0.100 |
| According to tariff: |
|
| Duty on soda salts, caustic soda, and potassa,
subcarbonates, etc., 2½ cents per pound, 2½ by
$0.00227 |
0.0057 |
| Excess |
0.0943 |
| Equivalent to 1.655 per cent over and above the actual
duty. |
|
| Iron and steel (manufactures of)— |
|
| Under this head the table omits to mention the numerous
articles of this class on the free list, and puts the lowest
duty at, per pound |
$0.067 |
| According to tariff— |
|
| Galvanized iron for roofs, iron buildings, nails and tack,
hinges, saws, and tools generally, duty 05 Colombian peso
per pound, 5 by 0.00227 |
0.011 |
| Excess |
0.056 |
| Equivalent to 500 per cent over and above the tariff
duty. |
|
