proposed custom-houses on the isthmus., October 1, 1885

proposed custom-houses on the isthmus.

To the civil anal military chief of the State of Panama:

I have been ordered by the national secretary of finances to transcribe for you the following decree, that it may be executed and profusely published on the Isthmus:

Decree No. 696, establishing custom-houses on the Isthmus of Panama.

The President of the United States of Colombia, in execution of the 8th article of the law No. 53 of the year 1884 on ways and means, decrees:

• Section 1. From the 1st of December next, the custom-houses allowed by the law 53 of the year 1884 shall be established and begin to have their effect in the ports of Panama and Colon.
• Sec. 2. By the aforesaid custom-houses the same duties shall be collected that are charged by the other custom-houses in the Republic as “importation duties,” with a reduction of 40 per cent.
• Sec 3. The other regulations common to the other custom-houses will rule at the aforesaid ports. In accordance with this, the requisites of certifying the statements of cargoes (sobordos) and invoices, as enacted by articles 41, 43, 47, and 48 of the Fiscal Code, must be duly enforced in foreign ports from which merchandise is embarked.

proposed custom-houses on the isthmus.

The public will read with surprise and regret the decree of his Excellency President Nuñez, which we publish in our English and Spanish columns to-day. If it could be carried into practical effect it would simply create a revolution in the fiscal policy of the Isthmus that would at once be disastrous to commerce and unproductive to the Government itself. The decree orders the establishment of customhouses in this city and Colon. Apart from the fact, that merchants and other traders on this Isthmus, and the consumers of imported articles also, have the right, sanctioned by time and a long-prevailing custom, to be exempt from imposts such as are now proposed, it would be indiscreet and display considerable unwisdom to insist upon so unconstitutional a change. In the first place, the revenues that would be collected would hardly pay the cost of initiating and keeping a large staff of officials; then the change would be most vexatious to merchants and embarrass commerce in every way to an extent that it is impossible to anticipate. In fact, it would inflict the death blow to all branches of trade, already fearfully depressed. Large direct taxes are levied in the shape of the monthly contribution, and to attempt to increase the charges to which merchants are already liable would be to consummate the ruin of the Isthmus.

We say it is impossible the decree can be carried into effect, for the reasons we have stated, and for others which will occupy our pen in a future article. All parties sympathize with the Government in its financial difficulties, but none are blind to the fact that the remedy proposed would simply amount to an aggravation of those difficulties, and lead to irritation and discontent. Every class of the inhabitants, as well as the importers, is interested in this important question, and it is to be hoped that united and respectful remonstrances will induce a reconsideration of the subject, and lead to a withdrawal of the decree, which is injudicious and unworkable. We did not exaggerate when in a former article we stated that the public opinion of the country was opposed to the reimposition of custom duties on the Isthmus, because the necessities and welfare of the inhabitants depend upon free transit, and opposition to the institution of custom duties has been known to exist for half a century.

Since 1835 the law of May 25 conceded to the districts of Panama and Porto Bello the privileges of free ports during the period of twenty years, when “there would be a canal or a railway existing,” and later, under the law of June 2, 1849, a decree was issued to take effect on the 1st of January following, abolishing the custom duties on the Isthmus without fixing any limitation as to time. At that time the contract for the construction of the present railway had already been agreed upon in Washington, on the 28th day of December, 1848, and the work was inaugurated in 1855, this measure having been decided upon on April 15, 1850.

Anyone who has considered this subject in the least will see the evidence of this in the manner in which the New Granada legislators were convinced that there was no way to reconcile the system of tariff duties through the customs with prompt and absolute free transit. The indispensable restrictions to avoid fraud as to the importations of merchandise must necessarily restrain, more or less, free transit, and would require a corps of employés, who would be so many more hindrances and absorb the revenue to be derived. Nor is it probable that without very high salaries responsible persons could be had to perform these duties in a country where the expenses of living are so very high.

The inevitable result of the restriction in the transit (in case the customs service should not prove to be merely an expensive formality) would be that our rivals would take advantage of these financial errors. The transcontinental railways would be the carriers of the merchandise which now goes through the Isthmus of Panama from New York to San Francisco, and by the Straits of Magellan that coining from Europe or the United States and proceeding to the South Pacific Republics, and vice versa.

To what extent merchandise and articles of consumption increase in Panama and Colon can easily be computed. These results are not understood in Bogota, and particularly by those who do not take the trouble to study this question. Nor is the fact that the railway freight charges are very high for those goods which, are destined to be consumed in the country, for the simple reason that there is no competition. Another reason is that the products of the country have diminished to a large extent; everything is imported, even articles of primary necessity. The farmers abandon the fields to escape conscription, or are attracted by the high wages paid by the canal company; and the cattle, at one time so plentiful on the Isthmus, are decreasing at an alarming rate, so much so that it is now necessary to bring them from Bolivar and the Cauca to supply the demands of the market.

From this we see also the impossibility of substituting another tax for the commercial contribution levied by the State since 1850. There is no production upon which to impose new taxes, and therefore the goods imported will have to meet both the State and national taxes. If any one should ask, How do we manage to pay for the goods imported? we would point out to him that the large and increasing amount of metallic currency which the canal company furnishes in payments to their employés enables us to do so. From this also results the high prices, which, if it does not injure those who receive remunerative wages, does affect those who live upon their limited incomes or fixed salaries.

We will conclude by appealing to the judgment of the authorities. The decree which establishes the customs tariff from the 1st of December (a limit somewhat short) has surprised the inhabitants of the Isthmus, because, although the law existed, it was considered too unreasonable to imagine that it would be carried into effect. The evils of which we complain consist not only in what we have stated, but also in something worse. The maritime communications are the only ones which the constitution reserved to the National Government, and if these had not been reserved, if the State of Panama did not have the high honor to be one of the nine States of the Republic of Colombia, the annual income which the nation receives from the railway would belong to her treasury, and also that which will be derived from the canal company. From this originated the fact that upon the suppression of the customs tariff the State of Panama obtained the right of taxing the mercantile interest to replace this revenue.

Having demonstrated that both cannot conjointly exist, nor can the State of Panama impose an additional tax, it follows that there is no reason why custom-houses should be established. There is not, in fact, a rational or prudent reason except with those who seek for an imperious measure which will tend to weaken rather than to strengthen the ties which unite the State of Panama to the other States of the Colombian Union. Let it be understood that the projected political reforms, especially if they interfere with the autonomy of this State, will not be calculated to better the political situation.

A very important meeting of the mercantile community took place at the rooms of the International Club on Wednesday afternoon to consider the decree of President Nuñez ordering the establishment from the 1st December ensuing of custom-houses on the’ Isthmus. The greatest unanimity prevailed, showing the deep interest taken in the subject by all parties. J. B. Poylo, esq., was unanimously called to the chair, and explained very lucidly the important object of the meeting.

Dr. Pablo Arosemena, being requested, reviewed the legal bearing of the case, and eloquently defended the rights of the State of Panama to a voice in so momentous a question as the present one. Quoting from the act of incorporation of the federation of Panama with the Union, he said that custom-houses could not be established without the acquiescence of the State of Panama. Further, he argued that article 7, of the contract celebrated with the canal company, distinctly provides that customhouse restrictions shall only be placed on goods destined for other portions of the Republic, and that from the commencement to the termination of the work, and during its continuance, the ports at both extremities of the canal shall be free and open to the commerce of all nations. [Loud cheers.]

Dr. Amador next addressed the meeting and expressed his entire disapproval of the establishment of custom-houses on the Isthmus. He spoke very emphatically and proved conclusively the great inconvenience such arrangement would create to commerce, and he further dilated on the utter impracticability of the proposed scheme. He said it would not be remunerative to the Government under any circumstance, and when he recalled the recollection of the recent disasters on the Isthmus, he was certain the change would extinguish entirely the lingering sparks of vitality still visible in the country. [Applause.]

After remarks from several other gentlemen, all of whom evidenced their cordial sympathy with the object of the meeting, and signified their alarm at even the possibility of the proposed change being carried into effect, Dr. Francisco Ardila said he was sufficiently authorized by the directors of the Canal Company to say that they would protect and defend the rights secured to them by the canal contract to the extent to which human power could do. [Cheers.]

A committee was then appointed to prepare a memorial to the President, pointing out the disadvantages spoken of, and the danger of the enforcement of the decree, and praying that it be revoked. The committee consists of J. B. Poylo, Paylo Arosemena, D. H. Brandon, E. L. Salmon, and Dr. Amador.

It was further resolved to telegraph to his Excellency the President, asking him to suspend the operation of the decree until the memorial adopted at the meeting shall be received by him and considered.

A vote of thanks to the chairman brought the meeting to a close.