an impoverished people to
meet an increase in taxation. An instance of this occurred in the
promising export of live cattle to Cuba and Panama, which was
completely suppressed in 1906 because of a new export tax of $3 gold
per head. Of the expenditures about one-fourth is on account of the
war department.

The foreign debt, according to the 1896 arrangement with the
bondholders which was renewed in 1905, is L2,700,000, together with
unpaid interest since 1896 amounting to L351,000 more. Under the 1905
arrangement the government undertook to pay the first coupons at 2-1/2%
and succeeding ones at 3%, pledging 12 to 15% of the customs receipts
as security. The first payments were made according to agreement, and
it was believed in 1907 that the succeeding ones, together with
one-half of the unpaid interest since 1896, would also be met. It is
worthy of note that this debt, principal and accumulated interest,
exceeded six and a half millions sterling in 1873, and that the
bondholders surrendered about 60% of the claim in the hope of securing
the payment of the balance. It is also worthy of note that Panama
refused to assume any part of this debt without a formal recognition
of her independence by Colombia, and even then only a sum
proportionate to her population. The internal debt of Colombia in June
1906 was as follows:--

Consolidated 5,476,887 dollars silver,
Floating 2,345,658 " gold.

Whether or not this included the unpaid war claims was not stated.

_Money._---The monetary system, which has been greatly complicated by
the use of two depreciated currencies, silver and paper, has been
undergoing a radical reform since 1905, the government proposing to
redeem the depreciated paper and establish a new uniform currency on a
gold basis. The paper circulation in 1905 exceeded 700,000,000
_pesos_. The issue began in 1881 through the Banco Nacional de
Colombia, its value then being equal to that of the silver coinage.
Political troubles in 1884-1885 led to a suspension of cash payments
in 1885, and in 1886 Congress made the notes inconvertible and of
forced circulation. In 1894 the Banco Nacional ceased to exist as a
corporation, and thenceforward the currency was issued for account of
the national treasury. On October 16, 1899--the outstanding
circulation then amounting to 46,000,000 _pesos_,--the government
decreed an unlimite