AGEIOULTUKAL KESOTJBCES, ETC., OF PORTO EICO. 

 FINANCIAL CONDITION OF THE COFFEE PLANTERS. 



17 



All careful investigations show that when Porto Rico came under 

 American control the financial condition of the coffee planters, in the 

 aggregate, was about as bad as it could be. Of course there were 

 some exceptions. A few wealthy merchants owned plantations, and 

 some planters were very thrifty; but about 70 to 75 per cent of the 

 coffee plantations were heavily mortgaged, 30 per cent or more being 

 mortgaged to the full vahie of the plantations. To make clear how 

 this occurred, the financial system under which coffee plantations 

 were managed should be explained. It is well known in Louisiana as 

 the sj'stem of " advances." At the commencement of the fiscal year 

 the Porto Rican -planter arranged with some city merchant (provided 

 the planter was not a merchant or a capitalist) to advance him from 

 time to time money and supplies sufficient to make his crop. He 

 pledged his plantation and crop by mortgage, agreed to pay 12 to 18 

 per cent interest, as the merchant might demand, and to turn over his 

 crop, when harvested, to be sold at the option of the merchant. The 

 planter received very little money and was charged a profit of 50 to 

 75 per cent on all supplies. The merchant, if he found it necessary, 

 could buy his goods in foreign ports on a year's time. The coffee 

 planter opened a small store on his plantation and paid his laborers 

 in orders on this store or gave duebills on- some branch store of his 

 merchant. Under this system it cost the planter 30 to 40 per cent for 

 funds to make his crop, and at the end of the season he had no option 

 as to price or time in disposing of his crop; the mei chant was the sole 

 judge. Frequently the crop did not pay expenses; then a mortgage 

 was retained, which increased from year to year till it absorbed the 

 property. 



The testimony of Mr. Sasteria Francisca, before United States Com- 

 missioner Carroll, November 1, 1898, is in point: 



Importations formerly were made on a half scale in Porto Rico — that is to say, 

 were imported over and above the needs of the island, because the importers could 

 get a year's credit from Paris, London, or Hamburg commission houses. These 

 merchants or Importers, when they sold to smaller houses, charged them from the 

 date of invoice one-half per cent interest (monthly] outside of their commission on 

 the merchandise shipped, while they only paid their bankers at the rate of 4 per 

 cent per year. Moreover, these importers sold that very merchandise on long 

 terms to merchants in the interior, these terms extending as long as one year and 

 a half in some cases, and generally sold at wholesale at higher prices than wei'e 

 paid by retail at the rates prevailing in the capital. These merchants of the 

 interior would do exactly the same things in turn with the smaller merchants of 

 the country, selling to them on long terms, and charging them at least 1 per cent 

 a month on the invoiced values, and often from 1^ to 2J per cent. 



This class of smaller merchants in the interior consists for the most part of cul- 

 tivators, and it is a very important matter to be considered that these small culti- 

 vators are charged at least 35 per cent per annum over and above any profit realized 

 in any country in the world. The results of that system have been that at least 

 one-quarter of the small proprietors in the island, buying in that way, in the period 

 of five years have all lost their estates, the estates going into the hands of Spanish 

 merchants who commenced selling goods on credit without any capital to speak 

 of, and who after five or ten years have become worth $20,000 and even $50,000. 

 The estates on which they held mortgages were unable to produce sufficient to pay 

 back at the half rates that were collected. 



The evidence is to the effect that planters with plenty of capital 

 could make money in the coffee industry, but those who were obliged 

 to borrow lost money. The Porto Rican coffee crop of the years 1892 

 to 1896, inclusive, sold in foreign markets in cargo lots at over 14 cents 

 per pound (gold). This high price stimulated speculation in coffee 

 plantations till they were rated at fabulous prices. In some cases 

 H. Doc. 171 2 



