No. 84.
Mr. Blair to Mr. Fish.

No. 153.]

Sir: Inasmuch as the sands of my official existence are fast running out, and this legation will soon cease to exist by operation of law, I deem it appropriate to review, briefly, the political and financial history of Costa Rica during the four years and eight months, the period I have had the honor to represent the United States as minister resident to this republic.

I arrived here on the 2d day of October, 1868, and presented my credentials on the 6th of the same month. I found the executive chair of the republic occupied by Señor Doctor Don José Maria Castro, a gentleman of fine personal appearance, agreeable manners, intelligent, and whose administration gave the most conclusive proof that the President regarded the freedom of speech and press as not only the essence, but necessary to the existence of a republican governments

Notwithstanding the people were in the full enjoyment of these [Page 211] inestimable privileges, and the country prospering to perhaps a greater extent than under any former administration, within one month after my arrival a revolution occurred, resulting in the removal of President Castro from office, and placing Jesus Jimenez in the executive chair as provisional president. The constitution being abrogated by reason of the revolution, President Jimenez continued to act as provisional president, untrammeled by any constitutional restrictions, until a new constitution was formed, and a President elected under its provisions, which occurred in the month of March following, when President Jimenez was duly elected President of the republic for the term of three years from the 8th day of May, 1869, at which time he was duly installed into office. In less than thirty days from his inauguration, the President of the republic found arrayed against his administration, both in and out of Congress, a most formidable party, and realizing that “power is a heavy burden” he tendered his resignation, which Congress refused to accept. He then asked Congress to clothe him with “full powers,” to which Congress acceded. The granting of full powers simply means the folding up of the constitution for a given period, until the President can rid himself of all opposition to his administration by banishing his enemies from the country.

President Jimenez remained in office until 27th of April, 1871, when he was relieved from the burden of official life by a second revolution, which made Señor Dr. Don Bruno Carranzo provisional President of the republic.

President Carranzo served his country faithfully for a period of a little over ninety days, when, not taking a hopeful view of the situation, he laid down his robes of office at the feet of Congress, and retired into private life. Congress at once elected as provisional President General Thomas Guardia, the hero of the last revolution. A convention was soon called to form a new constitution, and under its provisions an election was held, and General Thomas Guardia elected President of the republic. He was inaugurated on the 8th of May, 1872. His term of office will constitutionally expire May the 8th, 1876.

Almost the first official act President Guardia performed was to enter into a contract on behalf of the government with Mr. Henry Meiggs, a citizen of the United States, but who now, and for several years has been, a resident of Peru, to construct a railroad from Port Lemon, on the Atlantic, to the city of Alagula, a point about fifty miles distant from the Pacific Ocean, passing through the cities of Cartago, San José, and Heredia, the estimated distance being one hundred and twenty-nine miles.

By the terms of the contract the government agrees to pay Mr. Meiggs the sum of eight millions six hundred thousand dollars to construct said road, furnish it with all necessary rolling stock, and erect buildings for depots, &c. The road to be finished December, 1874.

The work has been prosecuted with commendable energy; still there is little hope of its being completed in contract time. At Port Lemon end about fifteen miles are nearly completed. In the interior fifteen miles may be said to be finished and twenty miles more graded. By far the most difficult and expensive part of the line remains untouched.

The question whether Mr. Meiggs will fully comply with his part of the contract does not seem to be the problem the most thoughtful are trying to solve. It is this: Will the government be able to negotiate a loan sufficient to enable it to comply with its part of the contract? For it is reasonable to suppose that if the government should fail to pay, Mr. Meiggs will cease to work. I think it will. The government has [Page 212] already obtained loans to the amount of seventeen millions of dollars, realizing therefrom about $9,000,000. This sum would be sufficient to enable the government to meet its engagement with Mr. Meiggs but for the fact that the government is compelled to draw from this fund an amount necessary to cover the amount of the interest borrowed, and two percent., which is set apart as a sinking fund.

I feel confident a further loan of at least five millions of dollars will be required to meet the demands upon the government during the construction of the railway. The debt of the country will then stand as follows:

Amount of loans for railway purposes $22,000,000
Domestic Loan 300,000
Debt to Peru 100,000
Total 22,400,000
The estimated income of the country, as per official statement for the fiscal year 1873–’74, is $2,850,000
Expenses, including interest on foreign loans 2,350,000
Leaving a surplus of 500,000

But it is proper that I should state that the estimate of the income of the present fiscal year is greater than last year by $648,000, and greater than the previous year by $1,034,000.

It is difficult to see how a country embracing an area of only 5,700 square miles, with a population not exceeding 170,000 inhabitants, the exports of which are confined almost exclusively to one single article, coffee, can liquidate such an enormous debt as Costa Rica is contracting. The thing at my stand-point is utterly impossible, and in a few years more Costa Rica, like Venezuela, Honduras, and other Central and South American States, will be literally bankrupt.

It is now-generally conceded that Mr. Meiggs will not be able to construct the railway for the sum stipulated in his contract with the government by over a million of dollars, and it is also clearly understood that he has by some private arrangement with the government, been released from all responsibility or loss in the event the sum stated in the contract proves insufficient to construct the railway. Rumor has it that he performed this diplomatic feat by assigning, with consent of this government, the contract to Mr. Henry Meiggs Keith, a relative of Mr. Meiggs, but a man of no responsibility whatever.

Should this impression prove true, and I fear it will, Costa Rica will indeed be in an unenviable condition. The country at present is tranquil, and the indications are that peace, with its innumerable blessings, will be enjoyed by the people of Costa Rica for years to come. But it is well to remember, as it is peculiarly applicable to these Central American States, the truthful saying, that no one can tell what a day may bring forth.

I have, &c.

JACOB B. BLAIR.