Preliminary report on the economy of the Colombia

 No. E-56 A RESTRICTED 66963 This report is restricted to use within the Bank INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PRELIMINltRY REPORT ON THE ECONOMY OF COLOMBIA August 11 ~ 1949 ElConorn.ic Department Prepared by Jacques Torfs  ESSENTIAL STATISTICS Area: 450,000 square miles Popula~ 10.5 million. Increase 2.1% per annum r. 1.1 millio' in ;; years. Currency: Unit: Peso Paritx 1.95 pesos =US$ (51Q3 cent w. 1 peso) 1/ Trade Statistics: 1947 1948- ':['otal Imports:- US~~ 339 million US~ 310&0 million Total Exports: US:::; 253 million US~~ 297.5 million Budr.et: 1947 19L~8 Total Expenditures: 374QO million ~esos 42'7million ~esos / Tax Rev8Uues:----- 312.4 million pesos 350 million ~esos~ Internal Debt of National Government, Sept. 19L~8: 369.1 Million :;!esos External Debt, Dec. 19h8: Princi}Jal, lonr:-Term US~:; Debt: usc hl.8 million Principal, Other External Debt:li US(:i 46.6 milli on De~artmental andlITlinicipal Long-Term; US$ 36.3 million 'rotal Us!:a24 • 7 million Export-Import Bank (end May, 1949): Total Loans Authorized (net)~-­ US':. 52.5 million Loans Disbursed: US~ 30.7 million Net Yet DISb1irSed: US~:;; 21.8 million ?rincipal Outs~anding: US;;) 20.3 million cost-of-Living Index, Bogota (Feb., 1937 = 100): • December, 1947: DeCember, 1948: irra:y, 1949: Total Gold and Exchan~e Reserves: --nece:m5er,1947: 253 299 306 US~) Ilh million December, 1948: US"~ 88 million Kr;rrr,-i949: US~~ 67 million ------.----------- FiE.llres for 19L~8 based on ILlF statistics in !;esos at 1.75 per US.:~; some irDDorts and eJ\,)orts occurred at othe:c rates. ?J Estimated. " 1/ L:(!)ort-Im:')ort Bank loans and short-term debt, exce,t for US;.; 9 millj.on sterling debt.  Parte _t._, Surrunary and Conclusions • • • • • • • • • • • • • • • i-v Part I. THE lAND AND THE PEOPLE • ... ... ... .. 1 1. Geocraphy - To,o~raphy - Climate. • • •• 1 2. Po!!ulation. • • • • • • • • • • • • • •• ;; 3. Political structure . • • • • • • • • • •• 6 Part II. ECOIJOI ~IC STRUCTURE • • 9 1. National Income • • • • 9 • 2• Capital Fornation ••• 11 3. 1ianp 01'1]'e r • . . . . . . • . ~. . . . . . . . 13 4. Acriculture and Animal Husbandry. • • • •• 16 ,-J ) . II.tining • • • • • • • • 19 6. Industries • • • • • • .......... 21 7. Transport • • • • •• .. . . ... . .. 24 Rail • • • • • • • 24 Roads • • • • • • 26 Rivers and Ports. ... 29 Merchant Fleet •• ... 31 Airlines • • 8. Construction .• ... 32 9. Electricity 10. Commerce ••• .... ...... ... 32 33 35 Part III EXTERNAL AND It DO~'TESTIC FINANCE • . . . . . . . . 37 • 1• Extern:.:.l Transactions Exports • • • • • • Imports • • . . • • • Balance of Payments .. . . . . • • • • • • • • • • • • Foreien Exchan~e and Gold ueserves • • Foreign Exchanc;e l1ates • • • • • • • • • External Debt • • • • • • • • • • • • • 2. Public Finance • • • . • • . • • . • • • • 48 The Federal Bude:et • • • • • • • • • • • 48 stace and i.'iunicipal Bud~ets • • . • • • 51 Internal Public Debt •. ••• • 52 · · · · · · . . · · · · · .. 52 3.Honey Supply and Prices • • . • Banking ChanGes • • • • • • ... • 53 • • 51+ Appendix I. Determination of National Income Appendix II. i.iaj or AEricul tural Crops Appendix III Minerals of Secondary Importance AlJnendix IV. Characteristics of Colonbian Industr':i.al Production Appendix V. Analysis of Government EXDenditures in 1945 Appendix VI. Banking Strncture L)pendix VIIQStatistical Tables.  1/ STLjMARY AND CONCLUSIONS- C~neral Structure of The Economy - Colombia is s country predominantly encaged in acriculture. National income is low, about US~~ 190 ~er capi.ta in 1947, but real invest- ment appears to be running at a relatively high level. 2. Although agriculture occupies 74% of the population, it accounts for onl:;r 36% of the national income. This is due to inefficient methods • of :Jroduction, and low agricultural yields. Domestic cro:ps ~rovide Col- ombians with an adequate cereal diet, but there 2re indications that food- stuffs such as meat and dairy ::>roducts are lacking. Better animal husbandry is ap~arently desirable. Cultivation of corn for cattle feed could ~robably increase sup~lies of fats and oils, and raise aericultural incomes. Care must be taken, how"ever, to avoid injury to coffee cultivation, which :::>rovides the bulk of foreign Gxchanc;e incor.le. 3. Industries and ha.ndicrafts account for 13.5% of the national in- • come in Colombia as aGainst 20% in Chile. equi~)~)ed plants (textiles, food cannin&:, bevera[es, cement and tobacco) Color.lbian manufacturine: is of ~~ relatively Exce:Jt for a Ie1-" larce and ;'rell sir.1~le nature. Due to the difficult nature of the to~oGral')hy, trans~Jortc..tion has always been difficult. Simultaneous eJ-..--:?ansi.on of roads, railroads, rivers and harbors seems to be imDracticable, and there may be ereater immediate need for improvement in existil1E trans90rt facilities, together [J A re::.>ort upon Colombian economic development lNill be !Jre:!!ared by a Hission to Colombia headed by Dr. Lauchlin Currie. This preliT!:inary study j s based upon information now available to the Economic De)art- nent, and is preparatory to the Currie :'1is8ion.  with construction of small roads liru{ing tovvus to their surrounding farm ] ands. 5. In 1949, Government developmental expenditures, of which about 75% are directed towards transport improvement, re9resented about 27% of budgeted Federal Government e)~enditures. As has been the case in other under ... devGlo~ed countries, tIns has contributed to infla tion (!Jara- eraphs 15 to 17 belO"ltiT). 6. othe:c develo~ment investment has been mainly by ::,:>rivate enter- • prise. There is no s~ecific evidence that local capital is lackinCJ but half of the present real ca~ital investment is based on im~orts of equip- ment, so th3.t foreign exchange shortaces result inrnediately in a decrease of :productive investment. In other words, Colombia is a fast £ro1'Jin[ country, but short-run expansion :!?ossibilities are at ')resent largely limited by the value of its coffee exports. Foreien Trade and Exch~nge - 7• • Coffee ~xports (U~; 228 milliOl: in 1948) represent 75';; to 80% of CololT.bian ex::>orts b~T valle. A fall of one cent per pound in coffee exp~rt ~')rices carries a loss of USC: 7 million in e}..'"Part uroceeds u::;on 3\TGJ:'age 191~.4-48 coffee eJq)ort volumes. Coffee export volunes ~1ave steadily incroc2sed c::r:d could inCrGClSC still further J and Colombian mild coffee enjoys a ,ermimn mar!{et. Coneensus of olJinion d.[rees on a f2vorable United Sc;.;.tes r.:.arket =- ii  for Colombian coffee over the foreseeable future. Shorter-run ~rice possibilities for mild coffee depend mainly upon levels of income and em- ployment in the United states, and no significant fall of prices is expected unless there is a sizable recession in the United states. Longer.-run price possibilities depend more upon changes in the ~!forld coffee supply:posi"Gion, W"hich at present. is statistically sound, without large accumulated stocks. lC. Petroleum e)~orts (US$ 48 million in 1948) represented 16% of exports by value in 1948. New petroleum investments are estimat.ed at US$ • 33 million in 1947" Maintenance of this level of exchange receipts depends largely upon Colombian oil policies affecting foreign exploitation, which a~pear to be presently regarded as unfavorable by some private interests. I~Ioreover, the world petroleum position is currently unfavorable to heavy ne'llr direct oil investments. 11. Present impor~ include commodities, notably agricultural pro- ducts, UhOS6 T->I'oduction may be expected to increase domestically as econ- onic development proceeds. This initial import replacement should :Dermit • a change of i:r.lport structure in favor of equipment for development purposes - even if some fall of export ?roceeds occur. 12. A very high pro?ortion of Colombian eX90rts go to the '-festern Hemisphere, and there is thus no substantial problem due to inconvertibility of currerieies. 13. Exchange rate revisions in Decelnber, 1948, including devaluation approxir:1ating 10%, were accepted by the International ~ilonetary Fund. These ch.:lnges, however, have not interrupted a continuous fall of foreigl exchange iii  holdings. 145 Foreign exchange holdings of the Central and commercial banks fell by US~p 67 million during 1947, and US(-~ 26 million during 19L.8, to a level of US$ 88 million, almost all US dollars~ Despite devaluation in December 1948 the situation again deteriorated during the early Dart of 1949, US$ 21 million being lost during January through April, reducing exchange holdings to a level barely sufficient to provide legal reserves for issued currency~ Although exchange holdings increased somewhat during • r.:ay, it is very possible that review of exchange and import policies may become necessary. Domestic Financa - ---------------- 15. Domestic inflation, by increasing money incomes and deEland, has contributed to the pressure upon exchange holdings. Honey supply (currency in circulation and sight deposits of the public) rose from ll.~l. 6 rnillion pesos in December, 1939 to 640.6 million pesos in December, 1947. During • 19~.8 alone money supply increased by 108.5 million pesos, or 17~~. The on1~r price index available (w'orking class cost-of-living in Bogota) increased from 100 in 1939 to 253 in December, 1947 and to 299 in December, 19h8, an increase of 12% during 1948. 16'1 In domestic finance, Government deficits have been intimately related to don8stic development expenditures. If these continue high, in- f1ationary pressures rifil1 also cOl"tinue unless tax revenues increase corres- pondingly or an internal Government bond market develops. - iv -  17. In recent years expansion of commercial bank credit has been a larger direct cause of nonetary inflation than deficit Goverl1r.lent finance. Deficit finance has, however, indirectly contributed materially to this result through sU9Port of the domestic cash reserves of cor:unercial banks. External Debt - 18.. A debt settlement has been agreed vrith external bondholders. External national direct and guaranteed debt totals usr"~ 12L~.? million, • of which US$ 9 million equivalent is in sterling debt. Export-In~ort Bank outstanding principal (included above) is USf:~ 20.3 million, with US~ 21.8 million undisbursed balances e 19. Domestic cost of external debt service is 6% of budgeted expendi- tures in 1949 (total internal and external debt service is 14.6;6 of budget). nhen all present ::;xport-1mport Bank loans are drawn, :g ea1-;: annual external debt service is estimated at US,:~ 13.2 million in 1953, or 5.2~~ of 1948 • current account balance of payments receipts. 1949 debt service is esti- mated at US$ 11.7 million, or 4.2~g of 19h8 current account balance of payments receipts, compared with similar rates for Brazil of 5.7%; Chile 8 • 4;0 (!f and Urugu['JY 5.Llb. 'r r,af 20. In assessing these figures, it should be noted that although Colombian exchange receipts depend overv'..rhelmingly upon the export of one commodity, mild coffee, that commodity is believed to enjoy unusucylly favorable prospects in the United states market. Adverse e~pectations would arise only upon the emergence of a severe recession in the United states. (paraeraph 9). -v-  COLOMBIA CARIBBEAN • • M-14  GeographL...~ TO:QograEhy, and Climate Situated in the northwestern part of South America, the Republic of Colombia has a coast line on both the Atlantic and Pacific Oceans. Its area, somewhat less than 450,000 square miles, is greater than that of France, Germany, Belgium and Switzerland combined. On the north it is bordered by the Pacific Ocean, P8.na.ma and the Caribbean Sea, on the east by Venezuela and Brazil, by Ecuador and Peru on the south, and by the Pacific Ocean on the west. The transportation problems of Colombia, the distribution of its • population, and its climates are in major part determined by its topography • Near the Ecuadorian border, the Andes break into three great ranges, the Wester~, Central and Eastern Cordilleras, 1,.]'hich traverse most of western Colombia from south to north. Most of the Colombian popUlation and economic activities are sheltered within or on the fringes of the two basins formed by these three Cordilleras. l.vest of the l,Jestern Cordillera are mangrove swamps and a torrid coast. East of the Eastern Cordillera extend uninhabited llanos, sloping gently down to the Amazonian jungle. • The Western Cordillera, averaging 7,000 feet, runs along the Pacific Coast in a northerly direction. the Pacific Coast. It separates the populated Cauca Valley from Merchandise coming from this Valley and points west must, in order to reach the coast, traverse the Cordillera between Calf and BuenaY.§rr:~1!:1:@:', the only important port on the Pacific. The Cauca Valley is of great economic importance to Colombia. Its upper half lies at an average altitude of 2400-3000 feet above sea level. This, coupled 1-1ith proximity to the Equator, promotes a mild tropical climate(. Popu- la tion centers, howe·ver, are not in the center of the valley, but on its outer rim or in subsidiary valleys where climate is milder. There are to be found  - 2 - ~elli~, capital of the Department of Antioquia, ~!~~es, capital of Caldas, Popayan, capital of the Department of Cauca. The lower half of the Cauca Valley is equa to:-ial in nature, ilft~erspers­ ed with swamps, and generally hostile to settlement.. The Department of &~ctr!2, south of the Cauca Valley, in the knot of three Cordilleras, is for all practical purposes a separate country, linked with the rest of Colombia, a.nd \vi th Ecuador only by the Pan American High'f..Jay. The Central Cordillera, averaging 12,000 feet and reaching 19,000 feet, separates the Cauc~ and ~~gg~len~ Valleys, up to a point· 100 miles from the • Atlantic Coast, where the Cauca empties into the Magdalena • Further north th~ Magdal~na major Colombian harbor in the Caribbean. reaches the Atlantic Ocean at Ca~gen~, ~?ngui~~, another harbor situated 100 miles west of Barranquilla, is linked with the Magdalena with a natural canal (Canal del Dig~). The whole of the Atlantic region of Colombia (with the exception of the harbor area) is practically unpopulated and of little present economic value. This is due partly to the hot, humid and tropical clima te, partly to the Si"lf3.mpy • and unhealthy terrain • The Cauca is not na.vigable in its upper half. Products of the popu- lated part of the Valley and points west, in order to reach the Atlantic Coast or the eastern part of Colombia, must cross the Central Cordillera, and can only do so in two points: through the heavy traffic road between ~!menia and Ibagu~, or through the railway betloTeen Medellin and Puerto Berrio (on the litIagda- lena) • The Magdalena River Valley is practically unp0pulated in its northern half, where it shows all characteristics of an equatorial jungle river such as the Congo or the Amazon. The southern part is more tiensely settled, though the population, as in the Cauca ValleY,concentrates rather on the mountainsides  - 3 - of its basin. Ibague, capital of Tolir~, and Neiva, capital of Huila, are the main centers of the upper valley. Both are situated above 3,000 feet. As in the case of the Ca~, the Magdalena is navigable only v!here clima te is equa torlal (and only part of the year in its central reaches); this, hQ\-Jever, provides navigability to points which are close enough to the popu1ated centers to make the Magdalena the most important artery of communication in Colombia. The Eastern Cordillera runs in a north'.Jesterly direction from Ecuador to the Maracaibo Lake in Venezuela. It separates the Magdalena Basin from the vast llanos of the East. In its large sabanas (high plateaus) at high altitude (8,000 feet) are found important towns, including BOgQ~, the national ·' capital. The sabana climate is mediterranean or colder. Historically, the transportation network of the whole of central eastern east of Colombia has been developed as a result of successive attempts to improve the communications between Bogota and the Atlantic and Pacific Coasts. These improvements have been necessary because the Magdalena, natural outlet of traffic for the East, is Lot navigable all year round in its upper reaches except for very small vessels. Initially, goods were transported on • the Magdalena River as far as possible, to the point nearest to Bogota (Gi!9~' Subsequently railroad heads were brought further and further down the Magdalena. At present, goods are carried 10 to 12 days over the Magdalena to Puerto Salgar, whence they reach Bogota by rail in one or tt-lO days, dr they cross the three Cordilleras, from the Pacific port of Buenaventura, through Cali, Armenia, Ibague, Girardot, to Bogota. Points up to 150 miles north of Bogota in the Eastern Cordilleras are linked with the rest of the country only through Bogota. Further north in the Eastern Cordillera commu:tl=_cations ~ave been established from the popUlation centers to the Magdalena River. Near the Venezuelan border the town of Cucuta and surrounding areas are linked Hith  -4- the rest of Colombia only by the Pan ~merican Highway. Their principal outlet is a railroad line which joins a tributary of the Maracaibo Lake in Venezuela. Throughout this study an attempt has been made to describe Colombian National Income and economic activities on a regional basis. About 10 distinct economic regions exist in Colombia. The most important of which are: Major Center of Zone Department Acti~ity I. Antioquia Antioquia Medellin TT -'-~. CHIdas - Valle del Gauca Valle del Cauca Cali ... - Cauca ... Caldas Vlanizales .' III. IVo Ctmdinamarca - Tolima - Huila - Boyaca - Santander (South) Santander (North) and Norte de Santander Cundinamarca Bogota v. Atlantico - Bolivar Atlantico Barranquilla Further statistical investigation revealed th8.t these regional units were for many purposes too large. So for many purposes are the major depart- ments. In most fields except the agricultural, the major centers of activities • and their irnmediate surroundings should be considered as active oases thriving in the midst of an economic desert. In certain instances (such as construction of buildings) most activity 1,.Jas limited to the tcwns. In other industries, activity extended to the area surrounding the town (Se.bana de Bogota or Medellin Valle). In the study ",hich follows, regional units (zone, department, or town) have been selected, 1,.Thich could, be most re~)resentative of an economic situation in each case.  - 5 - Population Colombia ranks fourth in population among the Latin funerican countries (after Brazil, Mexico and Argentina), with about 10.5 million people., or 23 per square mile, according to 1947 estimates. The last enumerated census, taken in 1938, recorded 8.7 million inhabitants. The average annual rate of population growth is 2.1% -- a high figure for Latin Americac The Colombian birth and death rates are 32 and 15, respectively, per 1,000 population. Death rates are progressively declining and the population is gradually developing into one with an older average age. The males of working age (15-64) were • 54.5% of all males in 1938. be of wo-rking age. By 1957 it is estimated that 58.3% of all males wIll This trend will decrease the producer, which is now 100 per 100. m.l!hber of dependents per Like most Latin American countries, Colombia has a young population. More than three-fourths of the people are under thirty-one years of age. The population is largely concentrated in the western part of the country, on the mountain plateaus and in the valleys betl.Jeen the great ranges, especially in the Upper Magdalena and Upper Cauca River Valleys. Density is • 101,] in the coastal regions and especia:ly low in the region east of the Eastern Cordillera, i"hich includes nearly two-thirds of the total land area but less then 4% of the population of the country. About three-quarters of t.he population live at elevati0ns of more than 4,000 feet. Thirty percent of the population is urban. The largest city is Bogota with about 400,000 people~ Only four other cities, Medellin, Cali, Barranquilla, and Manizales have more than 1007000 people. Altogether there are about 14 areas of concentrated settlement in Colombia, all of them located in the western part of the country and corres- ponding quite closely to the centers of population in the 15 political sub-divis- ions called Departments.. Considerable differences in physical setting, racial composition and economic life are apparent among these thickly populated areas.  -6- About 20% of the population is of European stock, 70% of mixed race, mainly mestizo, and the remainder Negro and Indian.'·Ti thin the chief racial groups are many strongly contrasted varieties. Of the Indian tribes inhabiting the country at the time of the Spanish conquest, the hardiest and most advanced groups in the 'Eastern Cordillera region \.rere utilized by the Spaniards as serfs, TJhile the more prim! ti ve tr:~ bes gradually became extinct through disease or withdrew into less accessible regions. Large numbers of Negro slaves were in- troduced, especially in the northern and western coastal areas. The population of the Antioquia region, centering in Medellin, provides a marked contrast to other settled areas because of its almost pure European stock. ~funy Basques and ~ converted Jews settled here, and, despite lack of immigration and of mixture with Indians or Negroes, managed, by virtue of a high birth rate, to build up a large por~lation and develop the most concentrated industrial area in Colombia. Somewhat more than 40% of the country's total population is literate; the proportion ranges from very high in the wealthy groups to extremely low in the under-privileged class. Appropriations for emlcation in the national budget are extremely small, representing in recent years about 6% of total government expenditures. ~ Political Structure Colombia is a constitutional unitary republic, t!i th a stron~ Pec1eral tradition. Its 14 Departments, until 1886 sovereign states within a federated republic, possess a considerable amount of local autonomy. The C'rovernment of the Republic is essentially ~lemocratic in structure and function, It has universal suffrage. The Presi(lent and bicameral congress are elected by popular vote. The President's term of office is four years and he may not succeed himself. The Supreme Court of 12 members is se~ected by Congress from lists of candidates presentad by the President,  - 7- Regional autonomy has been a major political issue throughout the Republic's history. Each department is governed by a popularity elected unicameral assembly and by a Governor appointed by the President of the 1epublic. The De~artmental (Su~erior) Courts depend from the Supreme Court of the Republic which appoints their members. Each department is divided for its internal Govermnent into municipalities, which are terri- torial units for administration rather than communities or public corp- orations • • Two najor political parties exist in Colombia, the Liberal and the Conservative. The doctrinal difference which originally divided the tyro traditional parties on such issues as separation of C!lurch and State, non-intervention of the clergy in politics, administrative decentrali- zation and more advanced social legislation, have vanished. The words of ex-President Lopez have already become famous in Colombia. "The iG.eo10;:::i- cal boundaries between the two parties have been erased". The evolution there is comnarable to that which has occurred among long-established • parties in other countries. During the first thirty years of the present century, the Con- servative party £overned the country. In 1930, the popular elections favored the Liberal T)art~.r, 1'1hich governed from that time until 1946. In the elections of that year, due to a split in the Liberal party, the Con- servative party again obtained the Presidency, although the combined Lib- erals Tctained a majority in the 1947 Congressional elections. 11.11 these changes Vlere effected in orderly and constitutional form without the occur,. rence of the slightest disturbance. Colombia fully deserves a reputation  - 8 - of political stability. The only major threat to that stability occurred on April 9, 1948. The Pan Al~erican Conference was meetinG in Bogota v:hen very serious riots took place in the Capitol as well as in other cities of the country. The riots did not have a marked political character, but assQmed the form of outright vandalism. Churches and buildings, both I1ublic and private, were burned, and stores were sacked by the crowd. • These disturbances were provoked by the assassination of Jorge Eliecer Gai tan. l~r • Gaitan was a left:tst political leader of very ereat prestige among the masses, from which he emerged. After three days of fury, the Army had the situation under control. It is, hovrever, significant that the democratic institutions of Colonbia 1'Jere fully preserved throughout the turmoil. A new Cabinet of national union was created in April, composed of the most distinzuished Liberal and Conservative leaders. The President refused to resign. The police of Bogota, ~;rho had sided l'Jith the insurgents, were dismissed and re- placed by military police. The Army throughout the troubles remained dis- ciplined and loyal to its duty. After April 1948, the President of the Republic attempted to es- tablish national unity through the co-operation of the two major parties, and the Liberal factions managed somehow to rally and unite. It is too early to discern the success of this policy. Elections in June, 1949, gave only a slight majority to the Liberals. This may pro- voke unbalance, if any diversion is allowed to subsist in their ran.1{$,.  -9- PAET II: ECONOMIC STRUCTURE National Income Preliminary estimates by the IBRD staff (see Appendix I) set the national income (net, at factor cost) at 2327 million pesos in 1945. This is equivalent to 3490 million pesos, or $2 billion at 1948 price levels. Per capita annual income in 1948 can thus be estimated at US$190. This figure is low: it is probable that US$lOO (1948 price level) is the minimum subsistence level for the naverage" Colombian citizen • • In Chile, a c(untry whose economic structure can in tl'!any points be compared with Colombia, national income was a little above US$2 billion in 1948, but per capita income was about US$363. An estimate made in 1940 by the National Bureau of Economic Research (USA), set the national income at 1097~6 million pesos in that year. Distribution was described as follows (in percent of total): NBER IBRD Estimate Estimate (i940) (1945) • Agriculture Industries Mining Government Public Utilities/Transport 31.0 16.8 8.0 9.1 5.2 36.2 13.5 3.5 4.6 2.9 Others 29.9_ 39.3 Total 100,0 100.0 There is little doubt that the relative importance of mining and industries were overvalued in the N.B.E.R. estimate, and total national income undervalued. In the absence of points of comparison, the estimate for 1945 can be projected beyond one year only on the assumptions (a) that per capita real income did not change from 1940 to 1945, and (b) that it then started increasing at the rate of 1% per year. Such assumptions already embody the results thorough  - 10 - national income study is designed to ascertain, and hence yield little beyond indications of possible orders of magnitude. As shown in Table 1, the following relations between national income Rnd capital formation lIensue: Gross Capital Forma.tion in Per Cent of Net National Product at Factor Cost 1940 1943 1944 1.24~ 1946 1947 Colombia n.a. 9.5 9.7 10.1 )..3.7 11.2 Chile 10.8 9.0 10 4 0 10.9 13.0 10.8 This comparison is suggestive: Colombia and Shile appear to capitalize • at about the same rate. y Both increased their rates of capital formation when foreign exchange reserves and foreign supplies ~ere simultaneously available. The rate decreased as reserves were depleted -- faster in Chile, as reserves at the beginning of the re-equipment period (1945) were lower than in Colombia. Both countries probably have the capacity to capitalize more than in 1947. Their efforts are hindered, it seems, more by shortage of exchange than by a lack of local capital. Regional national income ano capi t.s.l formation fig-I).res have been esti- • rna ted for 1945 as follm.]s: Antlo--Clll1;-r':"Z"~=--~U.ijs Va..l.J..e Atl81~-=---RGstor _____________aui§l____!!:~;:::·1. _________ Country Nation a) Regional National Income (pesos per capita) 190Q6 287.7 200.0 221.6 b) Regional National Income (000 pesos) 258.1 383.8 14403 1111.3 2327,0 c) Capital Formation (000 pesos) 58.7 91.6 9.4 28.2 16c4 30.7 235.0 d) C in % of b 23% 24% 4% 13% 11% 4% 10.1% 11 Capital formation i;-;tudj;d in the next chapter. It i[; def~~H~d as the sum total of investments in industries, agriculture, mining and transportation. Y This is a rather s~rprising result. It is unusual to find similar rates of capital formation when per capita national income differs markedly, since the present real burden is then much greater for the poorer country than the more developed one. The conclusion is therefore subject to on-the~spot verifi- cation by the economic mission e If substantiated, it indicates a relatively high rate of economic development, provided actual capital formation is proceed- ing in appropriate directions.  - 11 -- Cundinamarca and Antioquia are undoubtedly the most important economic centers of the country. Capital seems to be plentiful there while, with the exception of Valle del Cauca and Atlantico, the other departments could achieve very little investment. The very high capital formation figures for Antioquia and Cundinamarca were obtained on the assumption that little inter-departmental capital movement occurs. Although it is known that some Antioquia investments were made in Caldas and Valle, and that Bogota capital reaches remote corner8 of Colombia, • the size of these transfers is not significant and it is thus believed that the assumption is valid v The fact that low per capita regional incomes are reported for Antioquia and Cundinamarca seem to be in direct contradiction with the high rate of capital formation achieved in these departmentso Capital formation can be construed as a promise of higher consumption in the future. If maintained a t a high level for a period of years it should be concommi tant ~ri th high standards of living. It is likely, how Gyer, that most of the cepital formation • occurs in urban centers such as Bogota and Medellin. This does not necessarily influence the surrounding rural areas and there is thus no reason why average departmental incomes should be high. Until more thorough investigation has been made of local conditions it can he surmised from the above figu:i"l8s that in Colombia savings originate not from the bulk of the population but from a small group, earning entrepre- neurial incomes or ownership profits, and I iv1.ng in large towns ~ .Q.l;lllf taJ_ Form~:~.!2!l Colombian capital formation has never been fully studied, and the results obtained in this report should be regarded as preliminary. Investment of capital takes several forms, ~Je have distinguished in this study between Financial Invest~, or investment of ca.sh balances and  -12- undistributed r ofi ts into non-consumption expenditures and Real Investment, or t _" that part of the first category which results in the creation or maintenance of facilities for production. Real investment is actually the eql1iva1ent to Capital formation. Owing to the scarcity of data however, we have had to limit the latter concept to enumerated Capital formation, specifically to real investments in Industry, Agriculture, Transportation, Mining. This limited definition has been utilized successfully in similar computations made in Chile. As shown in Table 2 it has been estimated that total financial invest- ment in 1945 amounted to 519 million pesos, or 778 million pesos at 1948 price 4It levels. Of these, 36% represented investment in new corporations, "nd increases in capital of old, 40% investment in real property, 13% investment in new buildings, and 11% Government investment in public works and transportation systems. If 't."e eliminate those investments 10lhich resulted only in transfers, and those which resulted in the creation of new enterprises with little direct bearing on the 1"'.8.paci ty of the couhtry to produce goods (such as investments in commerce, services, financial institutions), it is doubtful that capital ~ formation in this restricted definition exceeded 235 million pesos in 1945, or 352 million pesos at 1948 price levels. Tnis seems to be confirmed by estimates of gross capital formation based on r~al use and installation of identifiable capital goods, which amounted to an estimated 198.4 million pesos for 1945. The relative importance of various categories of financial investment, in percent of total, is outlined as follows: 1943_ 1944 1945 19~6 1947 NevI Ca pi tal and C8 pi tal Increases 11 33 (19.8) 36(21.6) 36(21.6) 39(23.4) 1~2(25.2) Real Property 35 37 40 36 33 Suil'1ings 9 11 13 14 11 Pu.blic lA{orks and Autonomous Agencies 23 15 11 11 14 11 Share of industries in parenthesis.  - 13 - The end of the war brought about a relative reduction in investrr.ent in buildings and real property and an increase in industrial and agricultural investment. The trend may be significant. It is usually contended that local capital for industrial projects is short in Latin America because savings hedge against inflation and are directed toward buildings and real estate. The table above shows a trend toward (partially) unproductive investments until 1945, which was reversed precisely \.rhen imported -rnachinery became available. Capital formation figures, deflated by the cost of living index in Bogota, provide the following progression (million pesos): • Absolute figures Deflated figures (1945 = 100) 19~1 158 213 194~ 199 221 ~ 235 235 1946 366 333 1947 360 279 Capital formation in real terms may have increased more rapidly than this series suggests because, at least, one-half of Colombian real capital f01'ma tion is based on imports, l.,rhich increased in price at a lo\..rer rat.e than goods produced locally. The geographical distribution of investment for productive purposes • in 1945 was approximately as follows (in percent of total value): Bogota - and Zone II~ Medellin - and Zone I = = 39 25 Barranquilla - and Zone V 7 Zone II 14 of which Oali = 12 Maniza1es = 2 Other Areas Total = 100 It is estimated that 4,4$8,000 people ue-ra. gai'tlfu1J..y:.."occupied in Oolombia in 1938, and that this figure grew to 5,470,000 in 1945. Of the total in 1945, 74% Here engaged in agriculture, 9.8% in manufacturing, 3.6%  -14- in trade and finance, 3.1% in domestic services, and less than 2% in other categories of occupation. The six regions of Colombia are very similar In their occupational distribution of the labor force. Specialization falls mainly 1J1 thi!,! regional groups and the extent of specialization between regions is limited. During 1947 1tlhen the Colombian population was 10,545,000, the labor force (including unpaid family workers) was about 5,600,000, or approximately 51.6% of the total population. This is one of the highest rates of labor force • participation in Latin America. For a pop~lation of its age-sex distribution, little expansion can be expected in labor force participation, and growth of total labor force depends mainly up0n natural increase. This source adds about 150,000 annually to total labor force. The present labor force ~s concentrated in agriculture, forestry and fishing (74.• 0%). Persons in mat,ufacturing, const.ruction and other activities likely to expand during economic development are now rela ti vely fe\v. Apart from migration, there are only two sources of manpower available for both the • construction and manning of development projects and activities, the first being natural increase of populationr and the second, manpower now engaged in agri- culture. If development is to proceed at any real pace, however, the first will be insufficient; it has been a universal experience elsewhere that the propor~ tion of occupied population engaged in agriculture falls as economic development proceeds. NelJ entrants into the labor force could provide excellent workers for developmental programs if their lack of experience is compensated for by proper vocational training. Ne1a]' entrants are a mobile group both to occupation and location. Their correct training and guidance is of extreme importance to economic development. Colombian population falls into a distinctly cluster-like configuration. But mobility of population between clusters is greater than one  - 15 - would expect with the rough terrain and poor transportation. Nevertheless, vocational training schools $hould probably be located in the area where the graduates would be employed to cut down on need for labor movement .. Vocational training and guidance in Colombia is rather meager. There are around 210 vocational schools with 17,000 students. Vocational training fac~lities must be expanded and with careful consideration of the specific needs of particular development programs. Industrial workers, construction workers, and farmers with kno\OTledge of advanced agricultural methods probably head the • list of necessary workers. Relatively good basic general- education in Colombia will be an aid to future vocational training programs. Colombian agricultural labor is more fully utilized than in many other agricultural countries, because in many areas of Colombia harvests are taken two or more times per year and frequently there j,s more than one planting a year. This significantly reduces seasonal rural unemployment and also the possibilities of agricul turE~l workers engaging in secondary part-time occupations. Underemployment in agriculture is apparently at a minimum in Colombia. • Withdrawal of manpower from agriculture into full-time non-agricultural pursuits wi thout corresponding improvement of agr:tcul tural techniques would in most areas of the country have a detrimental effect upon the volmne of agricultural output In a few knoHn cases where factories have attracted 1!lorkers away from the land, agricultural production has already gone down. Agricultural productivity should therefore probably be increased before many workers can be released from agriculture for other developmental proj ects, ",hose full cost should othervTise include the consequential loss of agricultural output.  - 16- Agricul ture ..§Ed Animal HB£!:>andry In 1945~ 74% of the active population of Colombia was engaged in agricul ture and animal husbandry, vlhieh probably supported more than three-.: fourths of the total population" Yet the total value of agricultural product1.on was estimated at only 1,035.4 million pesos, and agricultural incomes were less than 43% of total personal incomes of Colombians as estimated in Appendix 110 Most agricultural activities are concentrated in the non~equatorial area bet1.Jeen the ti}"es.tern Cordillera and the eastern border of the Eastern • Cordillera. The lowlands between the Magdalena and the Sinu are devoted mainly to cattle and cotton and the llanos east of Bogota to cattle. altitude, practically all climates from sutequatorial to arctic prevail. Depending. on The variety of crops is thus remarkable. However this advantage cannot be utilized fully, for the population is not evenly distributed in agrieultural areas, and ~.1uch of the arable surface is si tua.ted on steep mountain slopes, 1.Jhich do not lend themselves well to intensive cultivation, mechanization or improvements. By value the major agricultural crops in Colombia t~re coffee and sugar • cane, follo1.Jed by tubercles such as potatoes, cassava and yams. animal slaughter, is greater than the value of any single agricultural crape; Appendix III contains a brief analysis of the major crops. Value of Fith the exception of wheat and flour, Colombia's agricultural food supply is largely domestically raised. Moreover, with the exception of bananas and coffee, Colombia contributes little to the world's exportable surplus of foods. As is the case with countries with low dietary levels (2160 daily calories per capita prewar and 2368. calories in 1945) the proportion-of grains and other starchy food entering into the diet is rather high (75% pre1,Jar and 1945)11 The mainstay of Colombia's economic life is coffee, not so much because of its importance in domestic agriculture, but because coffee exports provide  - 17 - about 75% of the country's current exchange receipts. Volume of coffee exports, as described later in the section on the balance of payments, is increasing steadily, and world market prospects for coffee of the quality produced in Colombia appear good. Any program for agricultural improvement in Colombia should take into account the maintenance of high levels of quality coffee production. Colombia's livestock industry is not able to supply the protective foods (meat and dairy products) needed for reasonable health standards in the tit Colombian population. An improvement in cattle may thus prove to be important for increase in human efficiency. Furthermore, an expansion of cattle production may finally permit meat exports, which should find an easy outlet in the immediate neighbors of Colombia. Colombian agr~culture as a whole has increased its output since the prewar year as shown in Table 3. This result was not however accomplished through improvement in yields, but through increase of cultivated areas 8 Indeed it seems that the new lands put in cultivation since 1935-38 are of lower • quality than the older. It therefore seems that the possibilities of territorial expansion of Colombia's agriculture are limited and that more intensive culti- vation is the key to future output increases. J1gvicult~ Develop!TIent. Governglens. AssJ_stance to _Agricultg~ and Private Organizatio~s for Agricul~ral peve10Rment Substantial indirect Government assistance to agriculture has been granted in the form of tariffs or licensing of imports. High protective rat.es have existed for some years on maize, sugar (lifted when imports are essential to domestic supply), cotton, tobacco and fique, Licensing exists for wheat imports.  - 18 - Development institutions sponsored by the Gover~ment comprise commissions on wheat, cotton, rice and cocoa, which ren~er technical assistance, distribute seed, extend credit, establish standards and prices and handle marketing. In additlon to these commissions, cartels such as the National Federation of Coffee Growers and various cotton cooperatives have been established under Govern.ment auspices, and in some cases are directly connected (as sections of the Caja de Credito Agrario) with Government credit functions. Some effort has been made by Government Departments to develop ~ seed-types suited to Colombian conditions or disease resistant varieties for maize, rice, sugar and bananas. In the livestock industry, Government assistance h~s been extended to the improvement of cattle and other pastoral productso A number of Goverrunent experiment farms have been established with imported purebred stock for breeding with native stock. Methods of combating diseases and pests are being studied, experiments with native grasses are made and technical advice is given. The Government also subsidizes the construction of cattle dips and requires inocula- • tion and dipping of cattle when transferred from one district to another. Tte Government is also interested in providing the raw rraterials for the woolen textile industry. A. model sheep farm has been e~·'tablished in the Department of Caldas to conduct experiments and give technical aid.  - 19 - The most important mineral activities in Colombia are oil exploitation and gold ~ning. Foreign capital has been very important in their development. Colombia is t~e largest South hmerican pro~ucer of gold, and ranks fourth in the entire :-!estern BemisphGre~, Production during 1938-1947 averaged over 542,000 fine ounces, attaining its peak in 1941, when over 656,000 ounC8S ~,.J'ere mineq. Since thnt time, however, output has declir:ed stea.dily to 383,000 ounces in 1945, 41: below the peak, and only 70% of the ten-year average~ Pre- limir\~!'y aat/t:'1. for 1948 indicate that a. further decrease of 12:' has occurred as • compared '.-1i th output in the preceding year Q fis is the case in most other gc1.d-- proclucing areas i the decline is principally attr:tbutable to rising costs of production "lith a fixed price for gold. N:~arly t1.Jo-thirds of the gold mined in Colombia. is alluvial. Antioquia, Caldas, Chaco, CPDca ~n~ Narino in 1945 supplied al~ost 95~ of the total gold production of tre country. The three largest gold mines (lode and alluvial), located in the ;epartITlent of Antioquia,are all foreign-owned and in 1945 accounted for about .~ 69.4% of total gold production in the country. The most important of these is the Pato Consolidated Gold Dredging, Ltd., a joint Cana1ian-U.S" owned company, while the other two are under British and Canadian ownership reLpectively. Purcnas~ and export of gold have been controlled by the Banco de Ia Republica since 1931, and all enterprises must obtain a license before beginning operations. The price of gold is fi~~d on the basis of the U.S. price of $35 per OtL~ce. Exports are almost entirely in the form of bars and are principally to the United States. Colombia ranks tenth among world oil producers and is th~ second largest petroleum-producing country in South America, although its output is less than one-tenth that of Venezuela. Foreign ownership (United States and British) pre- dominates in petroleum development. The chief producing field is the De Kares  - 20- Concession developed by Tropical Oil Company (a Standard of New Jersey subsidiary) and located on the Magdalena F~ver in Santander. The field was opened in 1921 and now yields about one-half of ColC'mbia's oilo The Barco Concessi.on in Norte de Santander, developed by the Colombian Oil Company (Texas and Socony-Vacllum) and opened in 1939, accounts for one-fourth, and the newly opened Yondo Concession oper~ ted by Shell, most of the remainder. Drillings, h01.Tever, are being made in various parts of the country, even in the eastern llanos. Known oil reserves are estimated at 500 million barrels, sufficient for about 20 years' production a t the peak rate of output. Tt.Jf') pipelines, one from the De Hares field and one • from the Barco, transport more than 85% of the crude petroleum to Atlantic Coast ports, mainly for export~ (They are owned by Andean Inte~national Corporation and S.A. Gulf Oil.) About 20% of tee country's crude is refined for local consumption in t"lO refineries adjacent to the t"lO major fields; both these refi,neries were provided for in the contracts betvleen the companies and the Government. The main refinery with a capacity of 50,OCO bbls. daily is situated at Barranca Beamejaa Despite local refinery output, rising domestic consumption of refined products has necessitated increasing imports during • recent years • The first petroleum law in Colombia was enacted in 1919 (Law 120) and remained in force until 1931, when Law 37, incorporating a petroleum code, was passedo Law 160 of 1936 contained modifications designed to encoura~e develop- mental ~.,rork. Ever since 1942, efforts have been made to enact ne", petroleum legisla tion 'tolhich would do away Tlli th a number of restrictive features of the laws in force. ':!.'he De f1ares Concession has been eJq;loited under a contract of 1919 between the Colombian Go~ernment and Tropical Oil Company, providing for a lease running to August 1951 under the terms of which 10% of the gross product, valued at prices at the port of embarkation less the portion consumed in exploiting  - 21 - operations and less transportation costs to the port, is to be paid to the Government in money or in kind. The contract with the Colombian and South American Gulf Companies in 1931 provided for a return to the Government of 10% of the gross product at the source or 6% at the port of embarkation. In 1947 Cu-lombia's production of crude petroleum reached a new high level of 26 million barrels, exceeded in South America by Venezuela alone. By far the greatest portion of this output is exported for refining, although the proportion of crude refined internally has gr~Nn from slightly more than 10f in 1937 to over 20% in 1945. Exports of crude petroleum have constituted • varying proportions of the total value of exports from as 10'.' as 8% in 1942 to a high of 49% in 1938. In 1945, the latest year for which comparable data are available, the export value of crude oil represented 16% of total Colombian exports. These exports are sent principally to the United States, with Canada the next most important destination. The petroleum industry in 1946 employed nearly 18,000 persons, approximately 93% of whom were Colombians. Metals and Minerals of secondary importance are described in A~pendix IV. ~ Industries Total value of industrial production (excluding handicrafts) was 645 million pesos in 1945. Processing of foodstuffs accounted for 41% of the total. Second in importance was production of textiles, valued at 13% of the total, followed by production of beverages and clothing. Industrial production increased considerably in Colombia during the 1930's, and continued to increase during the war years. Production of textiles trebled bet1.feen 1936 an'l 193? f.! •• , 10ubled between 1939 and 1945. SUgB.zo refining increased by 60% during the war years. Output of chocolate factories increased by 75% during the same period so that cacao imports more than doubled despite a 50% increase in domestic production of cacao. The output of the various  - 22- rubber industries doubled. Under the impetus of a great construction boom cement consumption increased nearly 10Q%between 1935 and 1939, and 70% between 1939 and 1945; dc~estic production increased correspondingly~ In 1942 a small steel mill in Medellin commenced production using scrap for its raw materials. In 1945 it produced 3,400 tons of ingots, sheets, bars and rods. Between. 1934 and 1942 the number of chemical plants increased from 17 to 125. During the war years, additional small plants producing a wide variety of pharmaceuticals were estab~ • lished. The tanning industry expanded greatly during the war and exports of hides and imports of finished leather have declined by about 50% as compared with prewar. Despite the substantial development of Colombia's industry in recent years, the country remains largely dependent upon imports of manufactured goods. More than three-fourths of the total value of merchandise imports consists of partially or completely manufactured goods. Machinery, textiles, chemicals, autos and trucks and metal manufactures account for more than half of the value • of imported manufactured articles • Colombia has very few modern and organized industrial plpnts, possessed with specialized machinery and buildings, trained personnel, expert supervisors and managers~ In 1945 no more than 50-odd plants could correspond to this description. Only 28 had a capital of over 2 million pesos; seven of them processed foodstuffs, seven produced cement and construction material, five manufactured textiles. With the exception of a petroleum refinery situated near the oil fields of Santander, the 28 plants were situated in 5 distinct areas centered in Barranqnilla, Nedellin, Bogota, Cali and the Province of Caldas. These areas contained additionally one half of the 7800-odd smaller industrial establishments of the country (most of them l·,i th amounts of less than 10,000 pesos) and 76% of its industrial ,,.rorkers (excluding handicraft Ylorkers).  - 23 - From 54% to 73% of the ll'fOrkerE in these areas were engaged in 5 prin- cipal activities: food~ textiles, bevera;r.s, construction material, :eCi:the~. There are evidences of some industrial specialisation: Medellin and ~arranquilla produce mai~y textiles, the Province of Calda~ r~d Cali process mainly foodstuffs. In industry proper a total of 135,000 workers were employed in 1945. The remainder of the population gainfully e .nployed in manufacturing _ or appro:;~imately 400 ,000 Colombians - is engaged in handicraft product.ion. About 100,000 manufac- ture fibre bags for the handling of ar.ricultural products. The balance is presum- ~ ably engaged in the manufacture of regs, pottery, and native trade gocds utilized in the most bacl<vvard areas of Colornr ia. As sh01'IJn in Table 4, the 5 lIindustrial" regions have a comparatively small amount of handicraft workers. In.til other regions of Colombia, the ratio bet'r.reen industrial workers and the populacion employed in industries and !1andicraft is less than 33%. The characterist:.cs of Colombian industrial production 6.re studied in some detail in Appendix V. From this tentative analysis, it seems thc.(.t Colombia is in need of more large plants, skilled vJorkers and nore capital, and tlia;~ all • these factors of production an, applied most successfully to the processing of foodstuffs and agricultural mc.terials in the regions of industrial specic:J.iscS.t..ion. Government ldd to Industry Industrial development in Colombia ha,;,:' been favored by heavy protect:'ve tariffs, by import quotas on competiti'T.re foreign products and by exchange controls, especially since 1931.. Tax exemptions have also been granted to new industrial es- tablishments. The most energetic steps toward developing Colombia's industry have been taken by the Instituto de Fomento Industrial, a government institution created in 1940. Its capital, equivalent to IT .S. ~)4 million, is held by the go"rermnent and the government-controlled Central iiortgage Bank. Fomento's policy is to participate only up to 50% in the capital of nevr companies and to divest itself of its holdings  • ~. of 76- 74- 72- 7(1' &e- 80- 78- -r IrL /). N s E A })1)) .., ~\\ -112- e e E ~ ~ c, 10'" VENEZUELA ::':\ -v~.;,\ :r~:j¥' s- 8· G· 6- p A c F c o C E A N 4· 4- /,':: i. ...:' N'IVO L .~ ".~{, \ ~ u .,., ........ \ . -·2' 2- r'~'''''''' _ ...)." ..,,' '\. \ ~, ~ ~ JC 8u."av~"'urQ Yum I~d Colo ,~ '. Ia'" :'j /~-- .\:<. . : 2' TU~OC ) t!J , ~ ~ Borda I) .-,"",,-, ...,.,. ....~.~~ ..~ /\ i: '..:. . . .;. . . . . :.; . .: ...,. ~~.... '" \;.; . ..\ . \. . ' , 2· ~ ;-c.:. )\ ~ --- ~ ...:.:{,.... OlVItO " ~;Ir,o.to J a;;..';";;.~.:''':'' · f:::; • 1. ... "'. // r:: ...... , ·....:..yuqu.rr;;9- .....:....:.;. ·.--~Pial" ..r...,... ~ . .:.: . ' '~ QUITO~.:.:.:••• TO P::·:;.:;:::·";' .;.:.;.:.;:::.... • E C U ADO R .:.:::::::~.~:~.~.' I ...... 1 "::::::\. i}{;· o o RA I LWAYS '~~:~\::. BRA Z , L "i':~:·· OF \:':;:,: COLOMBIA LEGEND COMMON CARRIERS IAU( '-'1". ,,,I-Illell, Hl10UL Ull-nSo (GolI"".,II,.c.",lI): 2' I 'i .9.... -C., ,.,r .......................... . 0.,. .. elrt C,"".I tI,l larh. S.c:c:loll r'I .. ' ............ .. 1.0 J 3 o l J C,lItr.I ",I lor". S,e:eloll St,,,,,,. , ~II' ...... . 1.0 3 l Cu"dl" .... rc ••• O.!I" I I . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. J o -.r r;1'.,dOI-lol' •• -lIul .......................... .. 0.91" '''0 .... , ....... I I 11 • • • • • • , • • • • • • • • • , • • • , I I • • 0.11" .or •• It. ..,., .•.•.. 11' • , •••• , •••••••• , 1.0 •••••••••• 3 o l cJ 'IC t flea •••• , ••••• t • • • • , • • II.' •••••••• , •••••••• 0.11' o ...b.' ••• -I •• '........ ...... ...... .......... ... O(rUlI'UUL ~&Il.ns (O".,I-'IIhll, 0.. ... ,): t. 'ft' 0.'11:- o o .0 II 10 •• ' •••••• C.leI ............................... ' 0 . . . . . . . . . '.IUll U Il_au: II •••••• II II ••••••••••••••••••••• 0.1111 D.'' . o ... ~- 12. Colo-.I .., r.lrol'lIIJ Co-'.II' ................. .. C"cut.· •••••••••••••••••••••••••••••••••••••••• 1.0 0.'" o 'II 13. L.Oor.' ••••••••••••••••••••••••••••••••••••••• 0.11' 3 o Ill. S."" "ute .. "".,. Co-"II,. LI.II" ......... ,.,"'~'·all ...., ' ...... '10" .,,~ .... ,..... 'IC"'" " '11[(1 UIlW''':' (II.IIlel"lI, 0.. .. ,,) D.' ", o .. IIOtol ......................................... . 1.0 3 ... '.111 ........................................ . 0."11 o '.'.1' •...... ,............................... . 0.'''' 'tlrt"" II ... , ... , .." .." , ........ _ o tunw"s: (60.. ' .... "1-0..".": 16. C.~I, a."o ,. G••• ".-Oe .................... .. 17 C•• I. a.,,, ,....'I .. III-..."Iul .............. . Ull."S 6- 6- IIIG ....n5 IIUI .. CO•• (tllOIlS willi UIl.U~ cuuu" OO.~~-717 eo- 78· 76· 74· ne 70- w  - 24 - as soon as practicable. Among its principal projects have been the electric steel and rolling mill at liledellin for processing scrap iron, tl:e bone fertilizer plant at Bogota, lime furnaces at Samaca, a defibratL~g plant in Santander, a glass fac- tory at Pereira, a shipyard at Barranquilla, and studies of possible iron and steel development at Paz de Rio in Boyaca. Transport Railroads • (1947). There are 14 railways in Colombia -v.ri th an aggregate trackage of 3,396 100 • The National Government owns 8 railways ~ri. th apprJxiInately 75~ of the ag- grega.te trackage. About 80% of the track is 3-foot gauge and the remainder meter gauge. In addition to the railways, there are two aerial cableways - the LJariquita- Manizales (72 km), privately ovmed, and the Gamarra-Ocana (47 km), owned by the Government. The railroad network is essentially a series of individual regional systems, each serving the needs of its OVln area. Most inter-regional traffic moves via the • Magdalena River or via highways which connect the railheads of separated railroads • li breakdown of railway traffic by groups of commodities shows that agri- cultural products, manufactured products (chiefly processed agricultural corr®odities) and mineral products account for 23%, 24% and 20%, respectively, of total tonnabe hauled by rail. Coal and salt comprise the preponderance of mine products hauled. "';ork output of Colombian railways increased more than 80% over the period 1937-47, from 304.9 million ton IGns in 1937 to 555.6 million ton lcms in 1945, and 557 million ton kms in 1947. A SUbstantial increase in those economic activities which use railviay facilities is indicated. Hevertheless, per capita output of only 53 ton kms is relatively low for a country of Colombia's size and population in comparison to 421 ton kms in Chile. Size of locomotive and rolling-stock fleet remained almost unchanged under  - 25- the increase in traffic vo:j..umej new acquisitions were almost exclusively re,lacements. Export Import Bank loans have financed purchases of locomotives, "'quipment and materials. Of ,~5 million negotiated in 1944 by the national railways, $.1 million remains undisbursed. it purchase of 10 locomotives costing :';>700,000 by the 1:"':'''1tioquia Railvvay (departmental) was financed to ',1'500, 000 by the Export Import Eank. An addi- tional Export Import Bank loan for ,;20 million including amounts for rail1N·a~T equip- ment is now pending. 1~ small number of 60-ton freight cars vrere built from partly imported, partly dOTJ.estic materials during and after the war. Despite the acquisition of some replacements, a U.S. technical mission in 1946 found motive pov:er and rolling-stock performance deficient because of poor main- tenances practices (e.g., almost exclusive reliance on hand labor, poorly planned maintenance schedules, etc.). Repair and upkeep of main lines were also found to be poor due to accrued arrears during the war years and low outptit of repair shops generally. Serious bottlenecks on key lines (e.g., the Buenaventura-Cali line and the Medellin-Puerto Berrio line) have resulted. Nevertheless, for slow, undependable service, Colombia is paying more than 5¢ per ton mile, roughly 5 times the prevail- • ing U.S. charge. There is thus an a priori case that Colombia, for the present at least, should concentrate on rehabilitation of existing railways, and the inprovement of operating procedures, before embarking on the construction of eX<..Gnsive new lines which do not necessarily promise better service at lower cost. However, the Consejo Administration de los Ferrocarriles plans to complete three ambitious projects: completion of the '"\estern Trunk Railroad (from the border of Ecuador to Cartagena, through the Valle del Cauca), the Eastern TrQ~k Railroad (from the border of Peru to Santa I·jarta, through Bogota and the Sabanas of the Eastern Cordillera) and links between the two. Investment is estimated at 315 mil- lion pesos for construction of 1989 kIDs of railroad lines, and funds provided annually  • • 1r 1&- 74- n- 70· 68- ~--~-~~,~~--------- f -- ~~~ -~-- I~--~ -~--~I 12- C ARI88EAN SEA I'AC"IC OCfAN 10 OCEAN .,. SOUTH AMERICA eo v E N E z u E P A CfFIC 6" GG o C E A N 4· 4- ........................... " .... ............... :!- .................. o· o· E C U R A z L HIGHWAYS 28 OF COLOMBIA NATIONAL TAUNK HIGHW AY NATIONAL SECONOARY ROAO ----- DEPARTMENTAL ROAD .............. F'ROJ ECTE 0 ROA 0 4" .." 14- ,. 10· 18-  - 26- by the railroad investment program (Law 26) are 10 million pesos. Practically all lines are to be pushed simultaneously with this annual out- lay - a rate which precludes the completion of any of the lines in the next 10 years and which might require up to 40-45 years to finish certain lines. In addition, the railway investment programs call for the reh&bilitation of existing railroads, at a possible c~st of about ;,~25 million in foreign €xchange over the next 10 years plus a substantial outlay of local exchange • • Roads The higLway system of Colombia comprises approximately 20,000 lan, of which roughly 11,600 are national higt~ays and the remainder departmental roads. Only 700-750 km of the national highways are paved. The network in general carries only Ii ght traffic, is Foarly maintained, and is characterised by gaps and a lack of feeder roads. The main function performed by highways at present is to link rail- heads, i.e, to close gaps in the rail networl::, and to link production centers and • r5:"ers or railway centers • The highways carry almost as much treight and passenger traffic as railways. They are playing an increasingly important role in Colombia's transport, as demon-' strated by the rapid growth of motor vehicle registrations from a total of 19,435 in 1937 to 37,817 in 1947. Highway transportation is expensive because of poor road conditions, high import taxes on motor vehicles and high taxes on gasoline. The combination of these factors largely explains Colombia!s prevailing high truck freight rates, i.e..- lleU¢ -. 22.8¢ per ton kIn in early 1948, compared with the U.S. average rate of approximately 2.5¢ per ton km (4¢ per ton mile). Because there is a ~,~ck of feeder and farm-to-market roads, much of Colombia t s farm prodl,lce is moved to villages and towns by pack animal and human  - 27 - porter.. Tho\lgh no precise estimate of the cost of transport by these means in Colombia is available, t.here are estimates for Central ll.merican countries, where the transport situation is similar to that of Colombia. In Central America the ~erage ton km costs in 1946 by various modes of transport were h.O¢ by DVT, 5.3¢ by rail, 12¢ by pack animal, 42.5¢ by ox cart, SS.O¢ by human porter. There is thus indication that Colombia's use of beasts of burden and men to move goods may be even more costly than truck transport.. Her transport bill in certain circum- • stances and areas could probably be substantially reduced by the construction of an adequate network of farm-to-m~ket roads. Long-run highway construction plans stress (a) completion of four national trunk roads to be supplemented by feeder and access roads; and (b) exten- sive road paving over major stretches of the present highway network. Three of the trunk highways as nOVI planned, i.e., the Western, Eastern, and Central, cross the country from north to south while the fourth, the Transversal, foll~ws a general east-west route. These trunks are in various stages of completion. • Up to the present, construction has proceeded at a very irregular and discontinuous rate. During the period.. 1941-1946, :)13.2 million of Export-Import Bank credits were obtained to help defray foreign exchange and local costs of highway construction; ~1~3 million was applied to the Buenaventura.,..Cali higlwray and the remainder on the four trunk highways'. To complete the networl}: of trunk highways might well require a total j.nvest- ment of $30 million. In 1948 the highway budget allowed approximately ~4.25 mil- lion for new construction. At this rate the program could be completed in about seveL years if all such funds were devoted to the Trunk Highways and if there were no interruptions or curtailment of e~e!ldj.tures dur~ng that period. The highway paving progrrun, started in 1947, is a four-year plan to  - 28 - resurface 1,400 kIn at a total cost of 35 million pesos (roughly ~n 7.5 million). To realise it, a 10 million peso loan, to be serviced by the proceeds of a gasoline tax, was obtained from the Bank of the Republic in the first part of 1948. 4.2 mil- lion pesos of this sum are to be spent, inside and outside of Colombia, for the pur- chase of paving machinery and equipment. In the year ending March 31, 1948, 27 km of road were paved under this program. Colombia recently has been spending about $4.5 million a year on the main- tenance of national highways, secondary as well as trunk. These are well justified ~ expenditures since Colombia's most serious highway problem is probably that of in- adequate repair and upkeep of existing roads, especially secondary roads. It can be estimated that adequate maintenance of the highway network will involve U.S. ¥~O million in the next ten years. Colombia's imports of highway construction equipment from the U.S. reached a total of $4.7 million in 1947, a figure three to four times the prewar rate. Looking ahead for ten years, the foreign exchange requirement, after absorption of the backlog of imports created by the war, would be $15 million to $20 million • • To sum up, Colombia's present plans for highway development envisage the expenditure over the next ten years of approximately ~30 million is for new construction, ~60 ;~105 - ;;aIO million, of which million for maintenance, and 018 million for paving. About J20 million out of the total investment w~ght be in foreign ex- change for the purchase of imported equipment. The program outlined above does not necessarily represent Colombia's total necessary outlay for highway purposes over the ten years. It ignores the very critical problem of improving and extending the n,.~t~7o~k of farm-to-·market roads, and the expenditures which viill be reqp.ired for impor : ~_:: ~ .:1.otor vehicles to operate on the highways.  - 29- Rivers and Ports The ffugdalena River is the great inter-regional traffic artery of Co~ombia. It floNs from the highlands of the interior in a northerly direction between the Eastern and Central Cordilleras d~lal to the Caribbean Sea. About 50% - 60% of Colombia f s import-export traffic moves on the river, as well as a substantial a.."":lount of domestic traffic. In 1945 it carried about 1.2 million tons, roughly equal to 25% of the volume moved by all the Colombia railways. • Despite its great L~portance as a carrier Qf essential cargoes to and fram l the population centers of the Central F~ghlands, certain natural characteristics 01 the tIagdalena make it an undependable means of tra.TJ.sport ;n its preser..t state. The upper stretches are navigable only by small ships, the water level in the ;criddle reaches bet"ween Puerto :;ilches and L~ Dorada is subject to serious fluctuation, and this section of the river is closed to navigation by all but ve~ small craft during 3 - 6 months of each year. The Boca de Cenizas (the 12 km access ch~~el fron the Caribbean to the port of Barr an quill a at the nouth of the "[agdalena) is subject to • continuous siltLTJ.g. This makes it necessarJ for ocea~ vessels frequently to dis- charge part of their cargo at alternate ports (Cartagena or Puerto Colonbi~) in order to reduce draught before entering Barranquilla. The Canal del tique, which is an important tributar.r of the ~:agdalena, is subject to fluctuating ~'later levels, c...::d the mouth of the canal where it enters the river is subject to silting. Besides the Uagdalena system, there are approximately 7 ~ ~C0 km of inlc...""1d watervlays classed as navigable. The most important are tne Cauca and Sinu Rivers. Judging by traffic volume (excluding crude petroleum), Coloobia lS 5 main ports in order of rank are: Barranquilla, Beuna.ve:~tura, Gartagena, Santa I.!a!'ta and Tumaco. .t-.. preponderance of port traffic consists ~f "t,rade with foreign cOlLlltries; a small amount of traffic arises lrorJ coastal trc:,.!.:!"  - 30- River and Port Investment Program Colombia's river and port investment program stresses (a) improving the navigability of key rivers and canals; (b) expansion of facilities at her main Caribbean ports; (c) expansion of facilities at important river ports. AS offi- cially defined in a report by the Ministry of Public ~orks in March 1948, the program would require an expenditure of 12 million pesos (.~ million) for imported equipment which vlould be distributed to various projects as follows: (000 Pesos) • A. River and Canal Improvements: 1. Deepening and widening of the middle reaches of the Lagdalena., the Boca del Cenizas, the Canal del Dique, the Sinu River, and other JJ.IT arteries •••••••••••••••••• 7,847 B. Expanding Facilities at Ocean Ports: J_ • Santa tl a.:rt a •••••••••••••••••••••••••••••••••••••••••••••• 37 2e Ba'rranquilla •••••..•••••••••••••••••••••••••••••••••••••• 1,005 3• Cartagena •••••••••••••••••••••••••••••••••••••••••••••••• 500 1,542 C. Hiver Ports: • D. 1. Additional wharves, warehouses., and mechanical eqUipment at :~gan~~a, Gamarra, La Dorada, El Banco, \Jilches, and Berrio •• • • • • • • • • • • • . • . . . • • . . • • . • • • • • • • • . • • • • • • • • • • . • • • • • Installation of Radio Communications at River Ports:........ 640 100 E. other ~.1aterials and Equipment.: •••••••••••••••••••••••••••••• GRA.tID TGr.h.L •••••••••••••••••••••••••••••••••••••• 0 ,. ••••••••• 12,000 In addition to the outlay for imported equipment, the completion of the river and port program would require a SUbstantial expenditure in Colombian currency for labor and materials procurable locally. The entire program might thus cost .;;i25 million in local and foreign exchange. Li. ttle information is available concern].;'lg the progress that has been made in implementing the program since it was published in March 1948. The report  - 31- of the 1:Iinistry of Public ".forks which outlined the plan was to be the basis for part of a ;:;20 million loan application which, at the time of 'VIl!'iting, is still pending at the Export-Import BmL~g It bas been ascertained that a ~1.5 million credit v~s obtained from the Export-Import Bank in December 19h7 to help finance the purchase of a .. ~2 million sea-going dredger (not yet delivered) for use in the Boca de Cenizas. The official river and port program does not include any pro~~sion for • modernisation and expansion of the inland watervlays tug and barge fleet. Judging from reports of U. S. technical missions, the existing fleet for the most part is very old and in poor condition. There is a strong indication that year-round navi- gabili ty 1~lould be substantially improved and the capa0ity of the entire inland water transport system materially increased by use of modern shall~N draft craft. If the fleet were thus re-equipped, the outlay for deepening r,;T channels v;ould be substantially reduced. At present no information is available upon which to base an estimate of the cost of re-eq,lipping the n~rT fleet. • Considering the vi tal role of the 11agdalena in Colombia r s economy, and judging by U. S. experience in carrying out river improvement programs, an outlay of ;~25 million appears to be a yery modest sum to accomplish all of the projects contem- plated by the river and port program. Viewing Colombia's contemplated transport investment as a whole, it seems very possible that a bigger and more prompt return might be obtained by spending more on river improvement and less on other expensive long-term programs, e. g., the official railroad and highway programs. l1erchant Fleet The Grand Colombian ~erchant Fleet is jointly ovmed by Colombia, Venezuela and Ecuador. Equity participation is in the proportion of: Colombia, h5%; Vene- zuela, 45%; Ecuador, 10%. The compa~y ~as organised shortly after the war and began operations in 1947.. Colombia's initial investment was approximately w9 million ..  - 32 - In view of the adequate service available to Colombia by foreign shipping lines and considering Colombia1s many other investment needs, it is questionable whether this initial outlay, plus an implied commitment to imrest further funds later for expansion or other contingencies, represents the best application of limited investment funds to realise the greatest return in terms of Colombia's econo~ic development. .Airlines ~ Colombia's five principal domestic airlines - Avianca, Lansa, Sasta, Taereo and Viarco - have an: und·~~plicated route mileage of approximately 20 - 25 thousand miles, of which more than half are operated by Avianca. In 1948 Avianca carried h50,000 passengers and 24,000 tons of freight (including international flights to hQami, Florida); no data are available for the other companies. At present, the development of airvlays and airports is left to local or private interests. In numerous cases service is poorly organised and undependable; airports are often under-equipped and inconveniently located, 1j1fl.th unreliable means • of surface transport to and from towns. Judging from the practice in many other countries, the legitimate and important role of commercial aviation as a long distance carrier of passengers and high value freight across Colombiats rugged terrc:in might be considerably improved and expanded, if a national policy 1lvere adopted to develop ainvays and airport facilities at Government expense. Construction Investment in building construction amolL.'1ted to 65 million pesos in 1945; 108 million pesos in 1946 and 79 million pesos in 1947. There is some evidence that the nature of building has changed between 1945 and 1948. Until 1946 large multi-storied apartment and office buildings have  - 33 - been constructed mainly in Bogota. In 1948, the emphasis seems to have been on the construction of small dwellings in minor tmvns and rural areas. There is a tendency on the part of kntioquian capitalists to invest in buildings in Caldas and Valle del Cauca rather than in Medellin. £ considerable reduction in building activity since 1946 was only partially compensated when Colombia was faced va th the task of rebuilding the considerable number of dwellings which had been destroyed in the riots of April 9, 1948. • Construction employed 104,000 workers in 1945, or less than 2% of the total labor force. available. It utilizes in the large tovms the most modern techniques Great progress has been made in the war years in the field of office buildings, adrainistration buildings, hospitals, and luxurious apartment buildings. However, little has been done to provide the low income groups with adequate and healthy shelter, and there seems to be little planning in this direction. Slum areas cover about one third of all cities. There is no doubt that efficiency of labor could considerably be improved by their rebuilding~ ~ Electricity The capacity of plants installed in Colombia has been reported as 235,000 kvv in 1947. Of these, 65% are water generated. On the basis of public utility power consuned, the follOwing pattern of power distribution seems to prevail: Bogota 26%, Medellin 43%, Barranquilla 12%, rest of country 19%. Consumption of power and potential installed in 19h5 and 1947 can be estimated as follows:  - 34- 1945 % of 1947 %of ~NH Total Total (millions) Ir.-r r. KWH KJH K-r .1 IG:H Public utilities sales to private consumers 292 n.a. 59 395 135,000 62 Public utilities sales to industries 134 40,000 27 161 40,000 25 Capacity installed and 41 38 used in industrial plants 68 20,300 14- 83 20~300 13 • 492 n.a • 100 639 235,300 100 The increase in pO;'fer consumption is spectacular. Publi-.; utilities sold 279 million f~7H in 19lt3 and 472 million !ViR in 1947. In percentage and by regions, consumption of power grew as fol10vls: 194h 1945 1946 1947 over 1943 over 1944 over 1945 over 1946 Bogota 16;& 6% 15:{~ 13;; Barr anquill a 9-:1 i" 16% 22% 16% Manazales - 1% 2% 7CJ. I' 5t11 P lIedellin 165; 18% 18)& 11;10 • New or projected plants are almost entirely hydro-electric. Of 27 central power plants planned Qy both private and public enterprise, work has begun on 7 with a combined capacity of 134,000 ~:. Total capacity of all proje~ts is to be 600, 000 I·~,:. The Colombian Government has subscribed approximately half the neces- sary funds for completion of those under way. Coordination of construction is in the hands of the Nationnl Institute of ~'later SuP!;ly and Electrical Development, a semi-autonon:ous agency of the I~c.tional Government. Under Law 4 of 1947, annual appropriation of not less than 700,000 pesos fron the I~illlicipal Development Fund is provided the Institute for study of electrification projects. Largest project conaidered to date is that of the Lunicipality of Lledel1in for 250,000 IL installation, of which 50,000 1-'{ere to be completed by June 19h9,  - 35- on the Rio Grande to serve the Medellin area. Remaining capacity is to be installed by 1951. O:mership of existing power installation shows a large proportion of foreign investment. The largest single firm operating in Colombia is the "Cia Colombiana de Electricidad ll ., a subsidiary of American and f:1reign PRwer, v'lith an estimated minimum of 25% of total investment. Commerce • There are few large commercial firms in Colombia. Major organized enter- prises handle imports of machinery, vehicles and office equipment, and sell them at both 'wholesale and retail. They have adopted modern techniques of marketing and are efficient. Modern organizations exist for the wholesale distribution of products of major industries (tobacco, cement, textiles, beer and petroleum) and for the sale at wholesale of coffee. Food distribution is primitive. Foodstuffs are brought to the market • on mules or horse-drawn carriages, and are sold retail by the farmer (or more fre- quently his wife) in the market place. Ivlarkets are ins ani tary, products are neither graded nor standardized, and food control is inadequate. Only industries canning or othervrise processing foodstuffs ovm and utilize storage facilities. The lack of silos, of refrigeration facilities and of warehouses, provokes violent fluctua- tions in foodstuffs prices and marked cycles in farm income. Most goods produced locally as well as imported foodstuffs are sold in small stores. Their personnel and inventories are very large relative to their sales volume. As a result, retail mark-up is high.  - 36- A better organization of commerce would be a ve~J useful contribution to the Colombian economy since it could greatly reduce the cost of living. Con- struction of storage space and refrigeration facilities together 1uth organiza- tion of chain and department stores are the most obvious methods for achieving this ai.1Jl • • •  - 37 PART III EXTERNAL .~{D DO~ffiSTIC PI1~~CE External Transactions Fluctuations of the COlombian balance of payments a.re largely determined by the value of: (a) coffee exports, (b) petroleum ex~orts, (c) ca'?i tal im:)orts on the lJart of the foreign-o\"ned ~etroleum cOITme.nies and (d) gold sales. These recei~ts also partly determine the effective ra.te of capi tal formation in Colombia, wr. icn is heavily de1)endent Ul)On • im"orts of ca:oi tal goods • Colombian foreign trad.6 has considerably increased in value since l?re-v!ar. A.""(1)orts in 1937 "-lere valued at TJS$ 86 million. They are estimated to have reached $273 million in 1948. Imnorts increasec.. from US$ 9509 million to US$ 354 million in the same period. Aggregate trade values, given in Table 5, indic'lte that large trade sur1Jluses from 1.942-1944 resulted from stort~ge of available foreign imports. ExlJorts 6 and 7, coffee and petroleum are tl-_8 eXDort • As Shol.,!n in Tables leaders. Gold is third in the value of eXT)orts, but is not usually inclu,led in trRde statistics as it leaves t~e country in monetary form. I~ 1929 coffee accounted for 635.. of all ex:')orts and petroleum for 217.). A~y)roxir.1ately t1:e sa:::e ratio \'laS mai tained until 1939 ':;hen the combined val"'J.e of both products represented 87>~ of all eXi)Orts o During the ':Jar shortage of taILk.:ers red"'J.ce~ the importance of Colombian oil exnorts which never entirely re;cined tl:eir "Oosi tion, as in 1947 coffee accoun~ed f~.n· 77~':, and petroleum for only 15,.: of total eX:lorts. Ott.er export l)roducts are minor. Hicies ane:. sldns h~ve never accoun- ted for ~ore than 3;~ of total e::1)orts. .:Je.les of bananas and ~latir..'l:l decrea- sed from the outbreak of /orld -oar II. n01,'!ever, as shov!n in ':::eble 6, Colombia dis~layed an ability to Qevelop new export lines and succeeded in  - 38 - increasing considerably its sales of cattle, cotton textiles and quinine during the ",ar. Coffee EXl)orts. The volume of sales of Colompian coffee has increased steadily since the beginning of the century. Period Annual Ex-por t s (millions of bags of 60 kgs.) 1909-13 1914....18 1919-23 · ....... • ·........................ . • ........................ . • • • • • •• • •••••••••• 0 0.8 1.1 1924-28 1929-33 ·........................ . ........................... 1.8 2.3 3.1 • ·... ., ............... ..... . 1934-38 • • • • • • • • • • • ••••••••• 0 ••••• 3.8 1939-43 ~ 401 1944-48 • ••••••••••• 0 • ~ ••••••••••• 5.3 Eaj or 'l:10rld events have introduced only minor variations in this trend. During the world crisis of the thirties sales decreased l~b to 3.0 million bags in 1931 and again in 1934, and during ~'!orld -:ar II export volume fell in only one year, 1941. This insensitivity of sales volume to the state of the 'I!;orld cycle is not matched by coffee nrices. vl1:ich, from a level of 28,,54 US¢ }Jer :;Jound • CIF 1'1e\'1 York in 1926, dro]Jped to 22.8l¢ in 1929 and to 10.26¢· in 1935, a decline to 35/~ of former values (see Table 9). The effects of this T)rice decreaGe on foreign traa.8 1:1::1.S most drastic. The value of coffee exports of Colonbia in 1929 ",ere the eO..111 valen t of US$ 87.29 million. In 1935 tr.e;y- vlere US$ 51.4 million. Statistics of total eXi)Orts reveal an increase from 12107 million Desos in 1929 to only 123.6 million in 1935. In dollar value they fell f1'o:1 US~ 118 million (1929 parity) to US$ 70 million (1935 p~rity). Tte devaluation of t:b.e ColoJ1bian peso from a rtuasi pari t:1 to the ';S:$ in 1929, to a ne\\[ rate of 1.75. ueso '1er US~ assisted in mnintaininf, t~:e :oeso value r:nd the volu."7le of exports'., Its :nagni tud.e vIas in greater ~Jart determined by the fall of coffee ~Jric8s, just as devaluft tion in other ai~riclll tu:!:'al ex~')orting coun tries l.vas rela.ted to the :oriC6 fall of their main export s.  - 39 - Thus Colombia, during the crisis of the thirties, lost a large part of its foreign purc:b..asing :?o"Jer tot-ring to fall of coffee prices. The possi bili ty of a repeti tion of s',.lch phenomenon still exist s. but coffee nrice drops of past magnitudes are improbable. Al though the volume of Colombian coffee exuorts almo.st attained an all-time high in 1948. and although prices reached unprecedented levels (J4¢ a lb.), coffee 11rices in spi te of i;'leakening in the II fu tures", have no t yet (July) suffered the severe reduction incurred by most commodity prices at the beginning of 1949. The reason seems to be partly that the Colombian. coffee market in • the United states is steadied by the Coffee Federation which has at its disposition large funds for the stabilization of short-term nrices, and partly that the world statistical coffee position is sound. However, it may ".,e1l be that this position ""ill be ",eakened in the future by either a si zable curtailment in demand pRrticulal'l~r for high-grade coffee, (due to recession in the U.S.) or (a longer-run possibility) increased world productiono Petroleum Exuorts~ Petroleum exports have fluct~ated in value • bet"'leen 32 and 42 million pesos (US$ 18 to 24 million) betv!een 1937 and 1941 and 1944-46 0 Shortag~ of tankers and drilling equiyment reduced it severely in 1942 and 1943, vrhile booming crude -oricee increaRed eXDort values considerably in 1947 and 1948. The current decrease in ra\,r material nrices and consumption volumes may well in the short-run reduce sales of Colombian petrole~m, and this is all the more possible since foreign oil com-)anies already show serious distrust of official Colombian intentions to.·rards foreign oil investorso The "ue i"iares" field concession to tl:e Standard Oil of fIe,,! Jersey expires in 1951, and the administrative fate of thi8 areA, accountable for one half of' Colombian nroduction, is currently the object of political negoti- ations of doubtful outcome. The recent curtailment of Venezuelan production  - 40 - by l07~ does not indicate a likelihood of increased Colombian :productiono However, the short-run imnortance of petroleum production for Colombia can110t be measured in terms of exuorts alone, In fact t petro1enm production in Colombia is still in its infancy. The foreign cOID!?anies have their to invest heavily in exploitation and eXDloration if/Colombian fields are to provide future ~rospects! and the size of these foreign Q::change inve~tm~nt5·may well be as im-ryortant for Colombia as the income from oil exports. It is unfortunately almost impossible to estimate these investments • with any accuracy. The only statistics available conceal under the item IlCapital imnorts of foreign petroleum companies" the net result of a complex made. from exports of oil, profits outflo\vs, 1Jurchases of foreign material, capital inflo1fls, etc. An inde~endent attempt was therefore made to disentangle these various elements (see table 8). The relative importance of petroleum exports and ne\'. ca}")i tal inflo",] resulting from petroleum ex:ploi tation are estim&. ted as fallows (million nesos): 1944 1945 1947 • 1946 Total Exports 37.l.J, 38,,9 42.0 63.3 181.6 CaDi tal Inf10\'IS }j e\v of PetrOleum Cos~ 2.7 230) 24.7 33.0 (a) 83,,9 In four years the capital contribution of the petroleum industry may thus have amonntect. to about US$ 47.9 million, making this the third source of exchange revenue for Colombia, after coffee ~nd petroleum exports. Distri bu tion of Exuorts by COl1ntries. As sho1~m in Tables 6 and 10, the United 3tates and other hard currency countries are the major clients of Colo~nbiao Before the \I:ar, EurolJean, and especially German, demand for nlatinum, coffee, bananas and leather was important" although it never compa.red. l:d th t1e 63% of total exnorts absorbed by the Uni ted States and Canada in 1938. The ,nicture after the 1:Jar is still more favorable to (a) Arbitrary figure  - 41- Colombia. In 1946 Canada and the United States absorbed 87% of its ex~orts; the balance went mainly to Mexico, the Canal Zone an (I. Venezuela. There is, therefore, no convertibility problem in CQlombia, and there is no expectation of such a problem since Colombian coffee seems to be well established in the Uni ted 3tB.tes as a high Quali ty }?roduct and most of the petroleum is taken by Canada and the United states. Capital Movements. Major capital receipts of Colombia have already been discussed under the heading IlPetroleum E..xportsl1. As shovJn in Table 13, they are accom~anied by sizeable investments in various • enter~Jrises, major of 1.1hich are gold mines. Very little official capital outflo\1s match the steady inflo1.'.7 of US$ 6 to 16 million a year on that account, and canital evasions which may occur are rather small. It is to be hoped that a relative political tranquility and a fair treatment of foreign capital will maintain a favorable balance on this capital account. Gold Movements. The fourth largest source of foreign eJcchange resources for Colombia is currently the local production of gold, 1:Jhich must in its entirety be sold to the Banco de 18. Republica, and is e:X::Jorted • in monetaI'Y form ",hen so needed • Gold production has decreased since the beginning of the '·,rar, :?artly because gold vIas not considered as essential Nar material ancl therefore little machinery '.,]as made available for its exploi tation, and partly because rising costs discouraged gold nroducers who had to sell their out~ut at the official rate. The recent devaluation of the peso by 101, ma;)' reduce the d01:Jnv.T8.rd trend in gold production. If it does not achieve this effect other measures may be necessary, as Colombia cann.ot ';:811 afford such steady deterioration of a ;!lain source of exchange revenues. Imnorts The distribution of Colombian imvorts by categories seems to be  - 42 - at least as rigid as the distribution of its exports. Before the war, as shovln in Table 7, manufactures accounted for 9l~ of all imports. Of these manufactures, most 1;lere finisr:.ed goods. .d..gricultural 1)rodu.cts then accounted for only 6.~ of im:9orts. In the period 19l }0-4.5 the share of manufactures in the total value of im~orts diminished slightly to a proportion l·ihich '-Tas maintained through 194 8. In the period 1940-1945 agric111 tural imports accountea. for about l~~ of the total value of imyorts. They decreased in relati~e im~ortance only slig1:tly by 19~ as t1:e res",-,_l t of a.n un,.,recedentecl demand for • industrial proQucts • About one 1:alf of industrial goods i~or'Gs in recent years c~~ be classified as ca0ital goods. As importing is practically the only effective method available to Colombia for im:)ortant tynes of (gross) ca:pital formation, ca-::>ital goods imports, although high (a-puroY..imately 270 million pesos in 194·8), do not seem unduly so ~:lhen compared to roughly estimated n9. tional i!lco~e in that year (3,750,000,000 nesos), narticule.rlJ' T:.f~e;l re!JlL.ce:nent ref'.1.A..irements are t~l:::en into account~ • .r.gricultural iITl:!lorts 7!ay seem ~Jnd'1.ly large, anc:. tJ::eir y~st relf'.ti7e grOl'rtr.. ilnj'lstified in a countI7! ';T::ich is mainly agricultural a:ld cO'7.1d i1roc..uce locally more 0: the sugar, tr.e cotton and. tl:e \<Jheat ·'!!"ich consti-;ute their blJ.lk. If, hO':ever, econo::1ic c.evelopment in0l'E'?SeS ~()·0\;.lar li-;/~ing .;;nd !l1J.tri tion stenG8rds, im-·)orts nay rema in 8. co..:.f:i.nuously iI!I'1ort~n"t S01;4!'ce of agricul tl?-ral "/rod,u.cts desnite increaced dOr.1E:;stic 'Pro~ur;tior: ::.,f 3i:::il~r cO:7J:lo::::'i ties. originated fro::! the ~Jni ted St~tes ~7 in 1 q i~ [~S (~[ainst hr/ "-''', " in and sri/.- in 1938. AlthougL: ne.ny European countY"iF~ see:: t:» be atte!":"'Jti!lg to rE:-er.. ter the Colombian mr::rket to rerylpce ~E:r:r£.tn;! (~·;l:icl: ..yrovided IT of GO::'onbian il'U1')orts in 193~), it l$ doubt:ul 1;Jr~ether the :~r.itecl sta~esl share 1::i11 return to the pre-t·:ar .505. of iID-port tr8de, as (a) although there is a.n  exc;~~·n[:e shortaGP in Colombia, al2.. e: c1:r tngf availabl~ is usu~lly TI.S. tr.e "'!e.r to est::-.blist tre~selves firz:ly in tl:e r:e.rket. ?cJ:;lE: lZ ard ::ab1e 13 prese!lt tr.~:) different esnects of tl*e b~.. l~. !lce !n '.c.:-c1e 12, officiel excb·:'!Ii-E' tr~nsactions on ...;:. ~re descr:'bed., a.s ser r.l. :ro;: t1:e Tloir:.t 0 vie":' of tl-.e Gffice 0: L..'Ccr.~nge Cant."'ol of tr.e ..;;:,nco '1:1:.e e:.::norts recor-ied a.re tl-:oGe to!~-:;_ch res;;.l ted in forei.::n • e:::ci :?!ige receipts for tl~e e=:cl.~ngE centrol au ~tori ties . ::rey d) not inc:;J~de e.:;.:-:,ort~ of "1etrcle:r.:: aT,,:: e::-:"')o;:-ts of s::'.a11 pack:;:~ec of wiscellaneous gooG.Sg 'ill:e ir:;ryortc recard.ed d~ r:ot i::cl"2r:e t!·.o~'J :l~de by t1:e :creign-o··!!1ec. netro~.e~ • receipt.:3 sL. . e. .... ~ _ .... ~r ,...c _..... .... ... "'" ;.I "'-•. ,  - 44 - Foreign Exchange and Gold Reserves Table 14 ShOvTS that the foreign exchange reserves of Colombia tncl."eased from US$ 25 million in December 1939 to US$ 180 million in December 1946. Gold, 1jI!hich 1ITas purchased from local producers and was not exported, accounts for the major part of the increase. U~S. dolle.rs cansti tuted pre.ctically the 'l1hole of the balance. In 1946 Colombia started catching up with the backlog of cap~tal f:'oods imports. Larger eX!Jorts 1JJere unable to nrevent a drop iii reserve~ by abo~t US$ 67 million in 1947. At the beginning o·f +948 9. further • defici t of US$ 35 millio~ 1,ras anticip~ted for the year • Colom0ia managed, fortun~tely, to maintain a high level of coffee exports, received a loan from the Eyport-Imnort bank after the politic91 events of the nintr- of April 1948, and benefited from relatively large capi tal imports by ~)etroleum cOIDl')anies. s:r..ese increased total balance of ua:,rments receipts, and uermitted up to about August 1948 an unprecedented level of import s \·ri tr.. out dangerous deterioration of the :r;eserves. Short~ge af exchange, ho':'ever, then led to the in troduct ion of a ne~·r ~1..ltiple exchange rate sYGtem. It is doubtful ':;hether the reform • by itself rp,sul ted in tl:e imnort red.uction '1:Jl:ich ensued; it is more likely t1:at ti:e contractio!! was A.ttained. tl:rough tr:e simUltaneous introduction of more strint;f'nt t::-~J_pnti tative ir.mort restrictions, ..loS a total reE.-11 t, tle ioss of foreign exctanE;e for tr.e year amounted to only ~26 r.!J. llio'.1, c:untries. It 1,'PG re--:ortet:: ttnt t?~ r,.rtole 0:':' tLe bnc~:log of licenoE's 0!l l.rl"ich reserves 1.1 at t1:e G: r:1il:ion 1/ Cf ntral .!:!e.!'l..: ani~ Co:;::ercial '::?!lKs  - 45 - and prospects \-!ere that, given strict administration of i~1jort licens:'nt: •. they t·-ould remain at ap":1roxi!ne.te:!.y that level for ti:e c21e.n.ce of t1:e year. The situation, ho··rever, d.eterior:::ted ra::):'dl~! ir.. tl- (- firs'; :-:on"tl:s of 1949. US$ 17 !.:lillion ~'lere lost througl: .A."'Jril .-. '.-!as that a backlog of imnort licenses vlhich :had been a;' lO"red to c.evelo~: ~;Jas exerting hearJ nressure on exctange reserves, while c~ffee s~le~ ~~U c~~:.te.l imnorts by petrolffilm comuanies h~d both decreased. It nay \'le11 be that tl:e exchange a".lthori ties and uublic o"'Ji:-~io:~ had indulged in over optimism. ~egulations had been relaxed to tte po~nt • l:::rere 90;..: of all iruports ""rere concirlered as esser. tial. For =-,11 pr(:~.ctica.l pUr)03eS exchange cor-trol had ceased to exist. Ftysical coffee ~xports actu3.11y decreased only sligr.tly, but 75.000 to 100, COO bat;s T:Jere rc: rorted to be stocked ir. Ire':1 Yor:: by t1:e Colombian Co:fee Federntion~ for tr e curre:l':;Y • • v:as be:'n~ deferred. on D"S3 10 r::ill :'on "Tort!'- cf im")ort lice!1ses. :1'.;.:0 :::.ct  - 46 - 1.95 pesos per US$. An exnort bonus of 10 points granted to exporters of coffee and certain other products was eliminated. On the selling side, transactions "rere, as before, submitted to 4f.; stamp tax, ,"hlch makes the effective import rate 2.03 pesos per US$o The tax of 10% levied on most esse~tial imports (Group 1), payment of royalties for motion pictures, etc., ''':Ias decreased to 6;). /. The l6~ surtax on imports of merchandise of Group 2 was reduced to 12%. while the 26% surcharge on sales of exchange for lUArury imports remained unchanged. The system of exchange certificates under ,"hich the foreign exchange • proceeds of minor ~orts can be sold on the free market (subject, hovr6ver, to the imposition of the taxes described above) 'V.faa maintained. the use of exchange certificates ,.ras limited to payment for machinery Ho\·rever, imports, travel funds alid re~ittances to residents abroad. A number of rater: re~ain thus effective, ~~ich range from 1.96 to 2.63 ~esos per ~S$ f':;r tt e selling ra tee External :Debt On ~ecember 31, 1948, tee struct~re of the forei~ debt outst~n~~ng • c,;~~!'d be estiItated as fol1o-:!s, in. tl:ousa!lds CG$ : JJ 1. Dollar bon~s issue~ by tee I~tior.?l Goverr-~ent (Latio~~l co~solid~ted l~ng-tprm debt) b' ~, Q":(:t -'" ,... G. . . , t ura 1 ". Agr:LCuJ. l,.or lIg[if:~e -aM L '1::( • (r t ' " kt) ';,;u~ran eed. ue u ~:2: )0 ~enart~ent and ~~iiciDal debt :'\6, :·~5 4. Exl:r.baru,: and C:?LC debt y ZCI).5~ 5. Sterlinc debt ~', 9'12 60 3(:!M S:,rndic::.te !.oan 1932 (3~ notes mat~.:!ring 10,200 1943-1952) 7. Ac,=-uisi tion ?roperties narbor Barr:'"~ntJ'-'.illfi .;rc 8. :mcks in :Euenaventura Z50 9. Re.,urc!:ase of Central ~e1epb~ne Co. 2,,300 IG. 1".cQuisi tion of :·;urine :reJiIes Z,CCO ll~ ::':ol:fi-.r b:)!u.:.s of cert~±in b~,dcs no t eu~,;,"·nteecl by the :=tepublic accur'~ te da tn on to 1:aze interent ::lncl <1")ortizF~icn ~a:;:1ent$. t·!!:icl~ 1/:iitf:,ures as of DE:ce:::cer 31, 1948. S.r:ltrce: Cfficial state::ent ~n tte Externcl =ett of COlombia nresented to IE~ in Ju~e 194, ~ Figures for J~nuary 31, 1949 detailed in ~cc1e 18.  - 47 - (in ~Ul1ion US$) Sterling Eximbank 11 National & Department Bank Debt &O.F.L.C. Guaranteed & ~IuniciEa1 Syndicate rxota1 1949 0~5 4 .. 3 2.7 1.5 2.7 11.7 1950 0 11 5 5.1 2.7 1.5 2.7 12.5 1951 0.5 5.7 2.7 1.5 2.7 13.1 1952 0.5 5.8 2.7 1.5 2.7 13~2 1953 0.5 5.2 2.7 1.5 9.. 9 1954 0.5 4.8 2.7 1.6 9.5 1955 0.5 4.1 2 .. 7 1.6 8.8 1960 0.3 1.4 2.7 1.6 6.0 126~ 2·2 1.6 h.2 Actual service charges may be hi~her than the tot81 above ~J 1 to • 2 million a year for the next four years as the service sched~les on the five last loans listed are not available. Peak service burden vrill pro08bly occur in 1952, when it will reach about $ 1302 million. This figllre is 502~; of the official current account balance of paymEnts receints of Colombia in 1948. Tl:e estimated 1949 service (US$ 11.7 million) re1>resf'nts 4.2,..; of 1948 current acco1;.nt balance of T)a:{::lE:~ntz receipts, compLred '.·:i tb . 01 ar s~m~ ra to ).05 f or "D ..Draz~ "I c:: ~. 7"""/.', f"'h"l 8! , ana. v ~ e.""", ~ ~T" vI11f;uay ~ "''' • ,.,;,.Gj'"' • ;.1 It is ~t.:;su~ed tl~'1 t ~ltilized.,  - 48 - Public Finance The Feder81 Budget Official presentation of Colombian nublic fi~~nce statistics is dela~,red. in3.ieq:l:" te 'lr:d. cc::f":1s'lng. J'":.1.:1::: :i!'~ce '1[1ta are apparentl~T re- leased by at least three different agencies w~ich have not agreed on ciefini tions, accounting practic~ or fi scal periods. 1/ Since 1942 def ici t finar.cing has befln standard practice, auparently ?veraging about 18;~ of total means of financing federal expenditures during the years 194 3-470 Table 15 shOt:1S Federal Government expenditures and revenue sources (including borrowings) from 1939 through June 1948. • From this table it e:'J1!ears tl::· t total federal ex·;endi tures increased from 104 million pesos in 1939 to 37 4 million in 194-7 t a. percentage increase of about 26o~i over the period~ Dxring the s~~e ~eriod revenues from taxes inc~eased from ar.:o1.lt lCZ ::illion pesos to about 312 million. an increase of about 20T J. (in millions of nesos) 1919 1947 ;~ incrense Ex"')enditures 104 37h 2tSQ Ta->;: receipts 102 312 207 Credit oper~tions • (c~lmu18ti ve 1939-47) ::l:e excess of exnendi tures over reCeil)t5 from sOt':.rces during tl:is ~eriod 338 custo:n~·r~· amounted to 338 million pesos Ftnd T:ras firo:lced rAvenue b:rl corroT·rings from tl:e Central B&nk (43~~) 1 tee com.rnercial baru:s (1.5;.'), and otters, incluning autonomous Government c~gehctes, state governments an~ priv~te industries, both foreign and domestic. 1/ Previous to fiscal 1945 there 'I!ere t1:10 federal buc.:gets, II ordinnr);11 a::.d extraordinaryll; since 19l15 there has nresumably existed only one Cuaget, but inasp."iUcr. as tl:is contains e, large segment of II earrec.rked" re;;enues. the cl:ar.ge has been largely fictitious. Colombian tudgetar;t yractice, furt1:er- more, ap~ears to per~it the shiftir.? of allocateu revenues from one ~urpose to another tt.rithin a {;i ven year, anci. from one year to the next, as TJJell [lS the add.ition of supl)lementary adfuinistrative and legislative eXl)enditures during ttf' course of the fiscal year.  - 49 - Total federal government expenditures for 1948 were 427 million pesos t. against revenues from tax: sources estimated at about 350 million. It is estimated that about 28 million of the deficit was financed by the Banco de la Republica, 15 million by private ba~~s and the ~ublic, 12 million by a reduction in the Trea~ury cash balances and 22 million by other methods not yet determined. In part the heavy exnenditures in 1948 resulted from destruction ca'lsed by the civil d~sturbances in Bogota in April and to this extent may be viewed as abnormal. 1949 is given • The latest available overall budgetary estimate for as about 384 million pesos. This estimate compares \vith an estimated 1949 national income, adjusted for nrice changes to 1948, of about L:, billion pesos, and is thus less. than lO~ of the 1948 level of national income. It is conceivable, hOHever, that eX"'Ienditures in 1949 may run above t1:e present budget figures • .A breakdown of federa.l exryendi tures by funct ions 1944-1t9 is g:i ven in ~·.'.ble 16. 1/ The table indicri tes only moderate cr.an&es fror.1 1931 to 1':)49 in the • reIn. tive distribution of ex',pndi tures excent in the case f)f mili tarT 1)olice anc:. pd:ninistr~tive services. ?.tolic Horks thr')ughout this 'P~rioc.: h~.s sented tte largect i tern cf outlay (22< in 194 9) betn~-; -r:rir.l~rily for road.s, renre- railroads, port tf'rm~nal facilities and militar~v constr'.lction. ~·alit~~r:j 1/ ~nfortunatel;v, no 1)resentation of tria breakdo,!.rn is maint~ined in tte statistics made currently available, l.'tprpfore, tte table !Jrer-ents n~t~al exnendi tures 1944-46; for follo';rinE YPers t in tl:e absence of actunl f'X'''en- ditures t i t l)r~sents 1-3. test availa'ble tudget~try estim0. tes so as to offer some idea of re1e.tive allocations to tl:p v;:~riouf functional units. Furt1:ercore, sincetr:e scurce of t!:is tatle is not tl:e same 8.S t; e SCllrce of tbe Table I}, the figures pven for t:!:e years 1'}~-46 c,,... n0t p:-:act'l? coincide.  - 50 - expendi tures (16%) and the cost of public adrninistration (125~) sho\'/ oome increase since 1939 but military exryenditures on a relative basis are noticeably smaller than in some other Latin American countries. A slight decline in the relative cost of the debt (14.6;; in 1949 of \·ir.ich about 6i for the foreign debt) reflects (1) resumution of full service on tee natio:n.a1 foreign debt, offset by (2) adjustments lllc'lde ,:'i th dollar and sterling bonill:olders in 1942-~4. Allocations for ryublic education and health amount to about 12.6~; in 1949, slightl;r more percentagewise than in the earlier period but still la',.' for D country desiring develo~)ment. Specific allocations for agricultural and i11'dJUs~rial planning and orientation are innovations • in 1949. If these innovations ,'1re taken in conjunction '.'Ii th ?rovision for uub1ic ,·..orks and mines, approxi::1ately 27:' of tudgeted federal ex "'endi tures in 1949 are directed to'.'!ards develo~':npnt (tre -10si tioD in 191.1-5 is analyzed in more detRils in ~ppendix VI). Defici t s a~lpear to reflect inadequate tc:Y.? tion, ra t1".~r tl~e.n OV'8r- re1)resent only about 10;. 0: the 19L!~ level of n~tional income~ • Table 17. A breakdo ·tfi 11 1 of f,overn:nent inco!Il8 sources, 1939-49 C):)l)e:lrs in It innicates, in addition to tce appeerance of deficit finupcing during tne ",':-tr ye:'.rs. an in~ree sing cle"Jendence on income tozes as a !r.~j or source of t:u-:: re"Jen~u.e. ·':n.ereas in 1939 im1)ort duties urovided 38. (:" of revenues and income taxes 18.5,', in 19l}9 the bu~get anticipetes obtaining only 15.6: from im~orts as against 38.~, from income (including pa.trimony and excess profits taxes~. This shift not only reflects the .::' '.' .~, - ~/ Tl.is tatle preser..ts data of rctual receipts through Octooer 194 8, though tl:e data for 1947 and 1948 do not permit breRking out the deficit finuncine co~nonent (crp.dit o~erntions). ~he figures :or 1949 are erltimnted.  - 51 - falling off of imports during the early war years, but increased domestic economic activity and improved administration since 194.5. Under present condi ti?ns of controlled imnorts, channelled l~.\rgely into develop- mental purposes, the import tax is not geared to act as the main revenue source. The Table also shows government income from petroleum to have increased some'!lhat on a. rela.tive basis, and such income may lJrobabl J be T eX1")ectec.L to increase further if the government reaches an agreement accentable to the petroleum industry. In other respects, the Table indicates little change in the relative productivity of the com~onents • of the t~x structure; this suggests that,most other tax revenue is collected on a percentage-of-value basis .. The inadeq~acy of revenues from taxes to meet current expenditures has been criticized in many quarters, and not least vigorously among the Monetary Authorities of the government itself. The reasons for this inadeCluacy ',)robably reflect both insti tutic'1al forces and adninistrati ve problems. The difficulty of finding substi tutes for declining im-oort duties during the war years, and the anparently obvious need of develonment, • may have seemed to justify a urogram of deficit financing in the depths of the \"lar years. The present continuance of such a lJrogr8.ID, hOlflever, seems less justifiable a As noted earlier, the current rate of governEent expenditures "'Tould ap2Jear to b~ well ",r1thin the :nossibilities of taxation in relation to national income. State and Munici~al Eudgets In addition to the national budget, there are departmental budgets which in 1946 totalled 121 million pesos, and municipal budgets totalling in the same year 75 million pesos, making a total for national, state and municipal buclgets of about 425 11 million nesos in 1946. A11o\'ring 1/ This total probably overstates the facts, since there appears to be some overlapping the extent of ""hich is not easy to determine.  - 52 - for a 50~ increase in state and municipal budgets since 1946, the total of national, state and municipal budgets in 1949 \'lOuld come to about 690 million pesos. On the basis of a present national iecome estimated at about 4 billion pesos. the total of these governmen~al eX-)enditures vmuld represent about 14~: of estimated national income. Internal Publ.ic Debt. As a Tesul t of deficit financi11e, Colo:.1bia t s national internal debt (funded and floating) gre'l:! from 90 millio:l pesos nt December 31, 1937 to 369.1 million at September 30, 1948. Ann~'=ll sen~ice requirements amount to more than 30 million Desos, or 8~ of the estimated exnendi tures for 1949. The combined burden of debt service on tl:e e· foreign and locpl debt ".Till reach about 15,:, of 1949 eXT)endi tures. :.~ost of this debt is held by the Banco de la Republica, i1.side from tl'e national debt, there are more than 80 ~illion pesos of state and nunicipal inter~al debt representing bond issues for road. construction and otr..er ceVel01Jf.ient activities, About half of tr.is debt is held by the b2nk s o Prospects. Lnrge scale Government s~fJonsored develo")!Y!er:. t ~'}roj ects (}r n no'.'! being rylanned. Even if tJ:~e foreign e::cr..ange resrY'.1rces 1.rere • available, it remins that thp local currenC~t costs of the ~teel :;~ill in Paz de Rio, of the nevl hydroelectric pl.3.nts, of tl:e large rond ,,)l1d r3.i7.roo,d, irri,gation and river control plans are heaVtJ, and their exec':ltion l.,'~u,ld. increase the burden on a budget \·]l:ich already knot:JS defici tS G If i~lflotion from grot·dng deficit finance is to be' f':voicled, ar..d it rc~ains i~ossible to sell Government bonds to non-bqnk investors, reform Jf the t[txation syste~ is needed to calfl.nce increased e:-: len~i tures \.ri th tax recei!its. All in{1.ic~tions nre that Colo::lbi£ cC1l1d by tLis me~ns avoid deficit financing. It is doubtful, hOvJever, r:.·h(.tr.er any he0V".f tax incre[~ses '::ould be "Doli tically acceut':tble: increased t!:1xation of cornorations and on hit:h income groups may, under present condi tions in Colombia, discour.~ge es- tablisl:ment of net'! industries, vlhile personal taxes U1)on lOt.-Ter income r.roups migh t occasion strife.  - 53- The solution seems on one side to reside in modest but progressive increase in revenues. This might be accomplished by a number of minor reforms of the tax and credi t structure rather than by svreeping measures. an the expendi ture side, the lJostponement of very costl;'{ ~roj ects ma~T ~rove the only \'!ay to avoid grave long-run inflationary pressures. 7he rate of develoument must necessarily be related to available resources. Money SUTJ"Ply and Prices In September 1948, money suuply reached 801.3 million ~esos. This represents an increase of almost five times over 1939 • • MONEY S-lJPPLY (in million December ~esos) 11 December December September 1939 1945 1947 1948 Notes and Currency 88.5 214.8 112.6 14S.7 of 1.'lhich Notes 60.4 204'r,9 297.9 310.4- Others 2/ 28.1 29.9 JL~. 7 35!3 Demand Deposits 64.2 261.3 344.. 9 419.2 ,. Government JJeposits Total Index 1939 ::: 100 15.2 167.9 100 342 79.4 575.5 41.0 718 •.5 427 16.4 80L,3 L~76 ~~ Revista del Banco de la Hepublica. Silver, cC'pper coins, National Bank Notes, Silver Certificates o Al though analys-is is obscured by a change in 19l.J'3 in the statisti- cal and accounting methods of Colombian banks, it seems that during the early \1ar years, heavy inflo\'Js of gold and foreign exchange, on account of balance of lJayments surpluses, combined vri th some expansion :in business credit, were the main causes of the increased ~oney eupply. This is illustrated in the table on the follo 1:ving page.  - 5h - In 1942 and 1943, the Government instituted a vigorous anti- inflationary campaign, by introducing com~ulsory savings. by freezing nrices, and by exchange controls. But, beginning in 1944, political pressure, coupled ,:.ri th the -problem of financing budgetary deficits and agricultural and industrial development 1')rogram, forced abandonment of much of the program. BANKIl'JG CilAHGES (million pesos) Jan. 1940 Jan. 1944 Jan. 1946 Jan. 1947 Jan. 1948 to to to to to Dec. 1943 ~@~o1945 Dec. 1946 Dec. 1947 Sept p 1948 • Central Bank Loans to Government Central Bank Loans tc ?ublic f 19.8 3.1 f 8.6 3.0 f 21.5 I- 0.1 f 39!9 I- 4,7 I- f 16.4 15!5 Loans by Other Credit Institutions to t 902 f 9.3 f 32.2 Government Loans by Other Credit 24.1 Institutions to Public f 120.4 I- 128.0 f 79.2 f 160.0 f 151.3 f 204.8 I- 56.0 Net Bank Foreign I- 155.4 I- 113.8 t 0.4 - 93.2 • Exchange Notes in Circulation Public ;vionetary Depo- f 234.6 f 65.4 n.a. f f I- 273.8 79.5 99.3 f 7 I- 151.7 55.2 72 6 0 7 111.6 f 37.8 f 41.0 I- l- 1.7 sits Government Deposits f 27.0 f 37.2 11.3 - 27.1 n.a. I- 216.0 7 116,,5 I- 94.2 Public Time Denosits n.a. I- 3000 t 13 .. 5 11.0 1.0 .J. 246.0 I- 130.0 I- 62.7 93.2 Increase in Banking Capital n.a. f 19.5 f 33.9 f 39.4 11.5 Absorbed by Banking System 30.0 7 273.8 I- 151.7 f 111.6 1.7  - 55- During 1944 and 1945 monetary inflation stemmed from two major factors, the first being the continued growth of foreign exchange holdings and the second and larger cause a considerably increased rate of commercial baru~ lending to the ~ublic. In this period, Government resort to bank finance was relatively minor. In 1946 the situation changed significantly. Foreign exchange holdings remain virtually unchanged, and exuansion of money supply was due l,.,holly to domestic factors. Of these, the most important Vias heavy commercial bank loans to the nublic, although at the same time official • borrowing increased considerably. Such borro\"ing from the Central Bank affected the position partly through its own directly resulting monetary exnansion. but much more by easing commercial bank credit eXDansion through improvement of the reserve position of commercial banks Q In 1947 the position again changed. The rate of monetary infla- tion was about half the annual level of 100 million nesos customary in recerJ.t years. Its reduction, hOVJever. \'1as due 'lftJholly to external factors; exchange holdings fell heavily in the year.. By itself, this fall would • have occasioned domestic monetary deflation of equivalent magnitude o Domestic banking action more than offset potential deflation to result in net monetary inflation which, if less than customary, was still sizeable c In this, commercial bank exuansion again made the largest statistical contri bution. Government borro'tJings from domestic banks ( the largest in recent years) added directly about one half as much as commercial bank credits to the nublic, and again indirectly contributed to commercial bank expansion. In 1948 (to September) loss of foreign exchange holclings continued, yet net domestic monetary inflation increased to customary levels. Increase of Central Bank loans to Government 'lftJere less than in previous years, while Central Bank loans to the nublic increased markedly. Taking  - 56- these two together, Central Bank lending fell only slightly. Cornne~~ial bank 1e nding as shown in the statistics fe:LI very markedly in rate, and change of nother items" in consolidated balance sheet suggests this ap"?arent decrease was more the result of account reclassification than change of policy. Public nonetary deposits rose to an extent confirming this im- pression. At October 1948 the inflation potential had not been seriously reduced. The Banco de la ~epublica carried a foreign exchange and gold reserve of 1~1.8;b aeuinst its note circulation, while only 25% is requested • by law - as described in A:)~endix VIr on the Banking structure. circulation could thus increase from 310 to 518 million pesos. banks in September 1948 carried reserves of 102 nillion pesos against sj.ght Hote Co~~ercial and time deposits of 480 nillion pesos, legal rese~le require~ents being only 70 million pesos (15% atlainst demand deposits - 5% against ti::-.B de::; 0 sit 5 ). During November 1948 through Aryril 1949 money sup~ly in the hands of the public did not increase very much. This stability, ho~ever, was due • priy.larily to loss of foreign exchange reserves, a loss v:hich has also tir;ht- ened the reser~e position of the banking str~cture. The future of inflation in Colonbia, hov!ever, rests 1'fith the banking and monetary authurities. Its ero~~h cannot be effectively checked until fiscal deficits are e~iminated and bank credit is controlled. Accordinc to the terns r;f a decree of January 191i9, the board of director& of the Banco de 1a ReDublica is nO;;'f empowered to chanee (within lini ts) the reoerve requirencnt::; of the cO:;J~ercial "fJanl-::s ";rith the aSsrjnt of seven of its members, inclw:1tnC the : :inister of 7inancE:. Th is ct)uld be a useful measure. However, the nast record of both helders of the nS":r :)I:r:!ers  - 57 - (the Banco and the Goverru::ent) doee not lead to optinistic e1qJectations of a stiffening of requireL'ents. The Danco de la Re/,ublica" beginning in January 1948, re-untered the field of loans to bu!>inecs an!: ir:ciu~trie~, 'while the Governnent is, ifanJ'ttdng likely to increace ucficit financing. Little infoTh.ation is available u~on the ,rice chanzes azcGciated ~/ith inflation in Colombia. The official cost of living index fer a "·"c,rl.ring class fCL':!i1'7' ~ in BC'i::ota increased to 247 in Ccto(;cr l/~!'~ (1937 ..,., =100),. ""r1-!,':1e l.40 .... ,..,....- the index of cons:r su:>::>ly re~ched h76. Fro!:: this and other cor~tr:Lut,cry • indications, it seeY::s )robable that nart of the increace in has 'teen '1artly absortted by ~o;,;th of both tot(';.l and creater :;roduction, and ir.crc:aca:i cor.r.-.erce, reducin,-; t!1e ~,:one:r e~::lo::ed inflati~,n sup,ly .v0pulation.1 of ::lcnetary prices and incor.:r:s. i!evertheless, the tot~l situation C?.lt::.:estc that net inflatio~ i$ lik~ly to con~inue • •  APP~lIDIX I ~. or. 6 ~ *"r' ...... ~ '-' :....,i. ..,.;oJ a) r:et !iati")nal Product 11:on:ethods have been utilized to esti#.ate tt,~e i;ational IncGrze of Colo13tia. The fi!'st ~ethod consists in ag::;re;;atin3 all va:ue a.dded by the vario:ls sectors of econooic activity. The second cor~sists in ad(2.- ir:>~ ti.? all vrages ~md incomes earned by Colombians. :he first meiihods provides a figure representing tte 4et national product at factor cost (produced in Co1o~ia). T~is figure is estiY~ated to have been 2,327 million pesos in 1945, broken uovm as stOiID beloTJ. • :~ztir.la1:',e of net r;ational P:r-oduct at Factor vest in 19h.5 ~illion Pesos Per cent of Total Per Cent Of Total Chile 1943 643.0 36.2 16~0 .t~~ric·:llture 309.5 13ct5 1)~8 Industries and Handicrafts :.:ining, incl1.idlng Petroleum 84 .. 3 3.5 ).8 '.:rar.sparts 44.4 1.9 5,,7 G~lverrli:.ent J!Jd.1 L.6 9.1 Pu~)lic Ctilities 22.0 1.0 1.4 Ccnstructicn 35.7 1 .. 5 2.0 305.6 16.5 1).6 Ccr.,r.:erce 2.7 4,0 • Finances 6).1 others (s~rvices, aents, V~r~ous) 431.) 16.6 ItL6 'fot:::,l Prcduct 2,327. 0 100.0 100.0 VaJ...;e ad.;;ed b~l ;l.::,r ,,:,c:,Alture: ~ias obtuin8d by ap)lyir.:"j to :'.~16 :.ota1 of Coluwbian a3ricultural production in 1945, or 1,035,w..3,00'] 7til ... e l;esos, the ratio of valtlE: a.dded to val..l.e prod":.lced prc·,railing in CLile in IlL). ~Jalue ad'':ed by L:ining: The v:ilue O!~ :r.unJ.ng prc1ucti:ln "'::as 97.':5 r-allion pesos in .L9L5o petroleum ar::ounted to 45;; ani ~ol'1 to .31;; of t!':is total, a5 shovm in Table 12. Inasmuch as the profits of f0r€:i-sn-o-..ned pGtru1eu!!l coop('3nieo -:;ere exported, only t!'!.~ir cost '.1£ proG.t1.cti0n, taxes an~l rujal:tJ.€JG cGr..tr:Lbuted to Cclor:. ~ia rs !!ational Inc/j~;~(;. Their total ar;:ounte(l tc 42. h mi11:;",f~~n reGOS • " :.n ... , "I·e' .i;lL+) as "" sn0~:n • ~n f'"'"".. ,i.ar. . J.e 13 •  - 2 - 69~4% of the gold valued at 21.3 million pesos was produced by foreibn corporations. Frou this share of mineral production, only taxes on gold (10; of the value of sales) and the wages of employees (estiLlated at 10,000 earning an average of 1,000 pesos each) contri~ tuted to National Income. The "Value Addedtl by the foreign-o\",ned gold ~nes was thus 12.1 million pesos in 1945. national production of minerals and metals valued at 37.45 million pesos iD likely to have contributed to national Income 80% of its total (as is the case in Chile). Total value aclded by minerals production can thus be est~.lated at Petroleum." ••••• ,., ••••••••••• 42.20 Gold (foreign o1vned) ••••••••• 12.10 • National Production of minera1so •••••••••••••••• ~. 29.96 Total •••••• G ••••••• 84.26 million pesos Value added by Indust~: The 1945 industrial census, covering the period July 1944 to June 1945, sets the value contributed by industry to the National Inco~e (factor cost) at 144,803,643 pesos. For the period the value of local raw materials used by industrY"'fas 390 million pesos, and the value of foreign raw materials 105 rnillion pesos. Textiles ac- counted for 19%, food for 16.5%, beverages for 12% of the "value by industrylt. In estimating Nationa.l IncoL1e figures for 1945, it is necessary to adjust this figure for value contributed to take into account depreci- ation of the Colombian monetary unit. Such weighting suggests that value contributed in 1945 was 150 million pesos • • A complete lack of data prevents accurate estimate of the value con- tributed by handicrafts. A minimum figure can be arrived at as follows: By and large each activity occupied person in Colombia supports another lIinactive PfJrsonlJ • The 400,000-odd handicraft Yforkers thus sustain 800,- 000 people. The total income of these people cannot, in the average, have been much lower than 120 pesos per year in 1945, inasmuch as this figure represented a llminimum level" of income for an "average Cololilbian\t~ It is therefore possible to assume that the value added by handicrafts cannot be lower than the minimum income necessary to sustain 800,000 people, or 96 million pesos. Total value added by all industrial activities in 1945 was therefore app.£'oximately 246 million pesos. This, however, excludes completely the share of profits and direct taxes. Profits, as indicated by average dividend rates in 1945, may have been 10% of the capital invested in industries, or 40 million pesose  -3- Direct taxes which may have had a bearing on industrial production a::1ounted to (million pesos): On Natural Persons On Societies Income Tax 8.3 2104 Capital and Reserves 7.3 On Excess Profits 1.4 2.5 Grand Total 40.9 As some of these taxes were levied on commercial and agricultural enter- prises, or on personal income not resulting from ownership of industrial plants, it will be assumed that only one half, or 20 8 4 million, was borne by industry. Total value added by industry, as revised, is~ • ac b. c. d. e. Value added according to Colombian definition •• 150.0 Profits •••••••••••••••••••••••••••••• ~ ••••••••• 40.0 Direct taxes' (National Gt)vernrnent) ••••••••••••• 20.4 lJunicipal and Department taxes on production... 3.1 Handicrafts,G •••••••••••••••••••••••••••••••••• 96.0 million million million million million pesos pesos pesos pesos pesos Total •• ,·· ••••••••••••••••••••••••••••••••••••• 309.5 million pesos Value added by Transport: In 1945, the wages and salaries in state railroads, departmental railroads, and private railroads were as follows: Railroads Wages (pesos) Salaries (pesos) state 6,954,081 5,805,305 Departments 2,921,693 953,676 Private 95,148 92,780 • Total 9,970 ,922 6,851,761 Total wage and salaries bill was thus 16\118 million pesos, which can be assumed to be the value added by the railroads to national income pro- duced. There are no similar data on other transportation enterprises. \Je will have to assume tentatively that each ton/krn. transported by other means than railroads had the same income formative effect as railroad ton/kms. Statistics on such traffic, however, will have to be derived, as follows: 1"iil1ion Tons/kms Paying Freight Railroads (19L.5) 525.6 Paying Freight Aerial Cable 2.8 Paying Frei:-;ht .Airlines 7.6 (Cont. next page)  -4- (Cont. ) Million Tons/kras Hiver traffic. In 19L.5, 1,210,219 tons were tr3usported mainly on the i.lagdalena. It can be assumed that the average run is 355 kms. (Distance between Calamar and Pto. ~I'ilches) 429.6 Truck traffic. In 1945, 10,062 trucks were in existence. Their total capacity 22,500 tons. Assuming that they carried their total loads So kms. per day, traffic was 337.5 Total transportation amounted thus to 1,303.1 million tons/Ion. and railroad transport amounted to 40% of this total. Value added by trans- portation excluding streetcars, and 44.4 million pesos, including them, • is thus assumed to be 41 million pesos • Value added by Public Utilities (a) Electricity. According to the 1945 industrial census, 68~5 million KnH produced in the plants were valued at l,SSC thousand pesos, or 2.1 centavos per Krn-I; 134.9 million K.:H supplied to plants by public utilities were valued at 3,517 thousand pesos, or 2.5 centavos per Kia-I. On these bases it can be assumed that the IDJH sold by public utilities to the public could be valued at least to 3.0 centavos, or 8.76 million pesos for 292 million IITffi. The total value of sales of electric power amounted thus to 13.8 million pesos. Value added to the national income is tentatively estimated at 70C;{' of this total, or 9.7 million pesos. • (b) Water Distribution. ~{ater is distributed in many Colombian cities. The total value of sales of water in these principal cities has been estimated at 3,993.9 thousand pesos in 1945, and 4,494.5 thousand pesos in 1941. Value added contributed by this service may have been 70% of this total or 2.8 million pesos in 1945. (c) other Public Utilities o Government revenues from mails and the telegr8. . ,hic . system amounted to 5.46 million pesO's in 1945 and 4.87 million pesos in 1947. Mails accounted for about 40~s of total revenues. Expenditures on personnel, however, were 5,,7 million pesos. Statistics of the foreign cable companies (if any) are not included in this total. Participation of utilities to total sales and national income in 1945 may have been (million pesos) Value of Sales Value Added Electricity 13.80 9.7 Hater 3.99 2 .. 8) I.iails- Teleeraph 5C146 5.7 Y Cables (assumed) 2.00 1.1+ Y Telephones 2.25 1.57 Y Total 27,,50 21.97 (Footnote~ on next page)  -5- ~ In June 1946, 56,700 telephones were installed in the country. 31 70% of revenues. Value added by Construction: Assuming that, as in Chile, value added is about 55% of total value, building construction contributed 35.7 million pesos to the national income in 1935. Value added by Banking Service: The determination of the IIvalue added" to the national income by banking services is difficult, as the ratios value produced/value added used in our analysis of economic ac- tivities exclude interest payments from value added but include dis- tributed profits and, under the item II Governmentll , include the inter- est paid on Government bonds. Value added by the banking service therefore cannot be mo~e than the sum total of wages, salaries, social security payments, plus those • profits not resulting from investments in Government bonds, or in se- curities;-8tc. Chilean statistics indicate that such value added in 1943 amounted to about 11% of the value of total loans outstanding at the end of the year. The ratio, applied to Colombia in 1945, suggests the fo1lmJlring estimate: Loans by 1\lillion pe s os Banks Banco de la Republica 9102 Commercial Banks 319.1 ~jlortgage Bank 52.6 Caja de Credito Agrario 47.5 Savings Bank 52.8 Other Banks 1102 Total Loans 574.4 • Value added (ll/~) 6301 Value added by Government: To the pa~yments to the personnel of various governmental bodies it will be necessary to add tLe income yielded by the government income from public property and serviceD, as follows (million pesos): Personnel National Government 77,5 AutOi.10r.lOUS Entities 0 (included in Cl!Jc've sum) Municipal, DepartP.lental Governnif::nt ~ Z2 ~O Income on National Property 404 Income on lJatiJnal Services 9.8 113.7 i.:inus Public Utilit.ie s - 5(06 Value ad:led in Commerce: The value addec. :-.:ill be deterI:~illCd t)n an er.lpiricdl basis: 8o~'~ of tot~!l mar'i{-up. Determinatior: of mark-up: ,holesale 5~~, H.ut:.::il 20;;.  - 6- Total Value added A. Local Production 1. Agriculture 1,053 million ~esos 2. Industry 710 million pesos 3. Handicrafts 96 million pesos 4. others IOU million pesos 5a Sub-Total 1,959 million pesos 6. il~inus Liaterials Used by IndustrJ 221 million pesos 1,738 million pesos tiark-up = (25%) = 434 .. 5 million pesos 80~ of lIark-up :: • 347.6 million pesos B~ fuports 1. Agriculture 30 09nillion pesos 2. Industrial 236.2 million pesos 3. Others 14.0 million pesos 4. Increase in Value Due to Freight (58) _14.0 million pesos 50 SUb-rotal 295.1 nillion pesos 6. l.:inus Foreign R.a1~r I.iaterials Used by Industry 105e.-0 trillion pesos 190.1 milliQn ~esos Kark-up = 30% = 47.5 million pesos 80% of l~:ark-up = • 38 0 0 million pesos Total Value added by Com.;:erce Trade of Local Products 3h7.6 million pesos [rade of Forei3n Products 30.0 million 1,esos 335.6 li~llion nesr;s b) Personal Incones .d.n attempt has been made belO'll to esti1ilate Colol.lbian :rat:L~mal Incr)I!:e through the addition of all personal incoo8s. statistics on the dist,ributi'Jn of population b.' income ~roups, and on 1-':ases and salaries (outside of the indust.ri[~l croups) are pl"actica.lly non-e::istent. Fron frc..~!:l(;rrtt:..r~" Hviderice it seeras thLi t there are 11 major sccic economic t~rouPG.1 "(lr.. ich. in 1945~ 8a.l'ned the folloYJing incomes:  - 7 Personal Incomes (million pesos) Agricultural Laborers ••••••••••••••••••••••••• 677 Handicraft Horkers and Qvvners ••••• o. • • • • •• • • • • 91 Industry, Mining Horkers •••••••••••••••••••••• 121 Domestic (Urban) Laborers and Undefined Laborers •• .; ••••••••••••• ~ ••••••••••••••••••• 87 Service Laborers ••••••••••••••••••••••.•••••••• 204 Employees ••••••••••••••••••••••••••••••••••••• 248 Tenants and Colonists in Agriculture •• o • • • • • ~. l16 Proprietors in Agriculture ••••••••••••••• , ••• ~ 375 Q\mers (in Industry, Mining, Others) •••••••••• 268 • Professional norkers .......................... . 38 Payments to Social Security ••• ~ 8 Total Personal Incomes ••••••••••••••••• Q •••••••••••• •• g •••••• --- 2,233 Agricultural laborers and handicraft workers and 01l'mers earn incomes which Cal1not be much above the subsistence level for two people (them- selves, and the people they support) -- or 240 pesos. As male workers traditionally earn higher incomes than female workers, income distrib- ution is therefore likely to be: No .. (Ooots) Per Capita Total Income Bale Female Yearly Income (m. pesos) Male Fema Ie 1\1 ale Female (a) Agricultural laborers 1077 1837) • (291 386 (b) Handicraft liforkers 128 272) 210 210 (34 57 Some statistics are ava.ilable on the earning of industrial and milling "':;orkers: No. (000 1 s) Per Capita Tote.l Income Male Female Yearly Income (m. pesos) }.:rale Female l~Iale Female (c) Industry and mining laborers 125 64 750 430 94 27 Donestic scrvonts (urban), undefined ";10rkcrs, and sE~I'vice lc:..i;orers -- a class of relatively unskilled lr~l>or - are nur.lurous. lfheir i~lco;:le, al- thOUi~h not as satisfactory as that of the industrial i;Jorkers, is s'.!ffi- ciently high to attract a consideraLJ..e number of unskilled labor front the farms to the cities.  - 8 - No" (000 t s) Per Capita Total IncoIr.t;? :Male Female Yearly Income (m. pesos) ,. Iviale Female hlale F eDale (d) Domestics - Urban - Undefined 61 146 600 350 36 51 (e) Service Laborers 240 80 720 390 113 31 Non-workers in agriculture (tenants, colonists, proprietors) are ve~y nmnerous. The fragmentation of agricultural property results in a lo'.'{ average income. This does not, however, mean that large land-o-rmers ov:ing feudal latifundia do not exist, but the aggregato of their incoMe does little to tip the scale of average group incone. • No. (000 I s) Per Capita Total Income Male Female Yearly Income (m. pesos) Male Female f!Iale Fenale (f) Tenants and Colonists 334 30 t- 318 ~ f- n6 ~ (g) Proprietors in Agriculture 131 38 ~- 488 ~ ~- 315 --7 IIiddle class groups are the employees (white collar workers) and professional workers. Their average income is low, perhaps lower than the ave~age per capita incone in the USA. Noo (000 t s) Per Capita Total Income I'.~ale Female Yearly Income (m. pesos) tlale Female l'.lale Female (h) Employees 116 35 ~ 1640 -~ ~ • 248-} (i) Professional ~.iorkers 17 5 ~- 1150 --; \- 38 --j The non-aericultural owners class count in its ranks the small cu""'i- talist group Tfhich is the repositor~r of power and savings in Colo;.lLia. Inadequate statistics unfortunately make it impossible to distinguich Le- t1~Jeen small OTmers of shops, bars, garages, and. captains of indust~r. This ex;>lains the 101'[ average per capita income of the ~roup. No. (OOO's) Per Capita Total 1~lcnm8 II: ale Fenale Yearly Income (m('l TJesos) 1~ale Female l.:ale Fel.lale (j) Ovmers in Industry, r.:ining Commerce, Finance 116 18 ~ 2000 ~ 268 Tho total y{a~~e s , salarie s, ::::rofits [lnd. <:.:ntreprE;nf;urial inc'); ,e s of the 2,945,000 males and 2,525,000 females actively en3aged in econor.. ic  - 9 - pursuits is estimated thus to have reached 2,233 million pesos s The two lowest income groups (agricultural workers and handicrafts), accounting for 60.5% of the active population, earned only 34.5% of the total of personal incomes. The highe st income group (olNners in other than agri- c1J:c,ure), accounting for 2.5ib of the active population, earned l2~~ of itu total income. A matching of these figures with national product studies suggests that, if anything, agricultural and other low incomes have been over- stated. Total of agricultural wages and incomes here add up to 1,168 l"Jillion pesos - or more than the total (estimated) value of the agri- cultural production. The cause for this discrepancy must be analyzed in Colombia • • •  APPENDIX II -----,--- ... ... N~JOR AGRICULTURAL CROPS. Food Crops. The value of agricultural food crops (excluding coffee), amounts to about 50% of the total gross value of agricultural and ~ii!Seo:c1f [)roc1ucts: Production and Value of Food Crops~ =-- ~ Production (000 tons) Value (000 pesos) Commodity Prewar Average 1945 Prewar Average 1945 Cereals 575.0 801.0 67,222 127,330 starches 2,080~0 2,180.0 82,17 2 17 8,305 Sugar Products 499.5 776.0 46,343 213,710 • Vegetable Oils Cacao Pulses Total 10.2 11.0 5u.0 Total Agricultural & Livestock Products 17e O 10 0 2 62.0 1,100 5,068 8,831 210,736 430,905 4,687 8,3.51 24,800 557,183 1,035,443 Per Cent of Total 48.9 53.8 !i Excluding coffee, fruits (other than bananas) and vegetables (other than pulse and potatoes)o Cereals. Kaize • I\iaize is the chief cereal, "rrith annual tonnage more than "wheat, rice and barley combined. Practically all maize is used for human consumption. Production has increased greatly during recent years; location of prin- cipal production areas appears to have shifted of late, a significal1t increase having taken place in Zone III for which no IJx~lanation is available. Yield has improved sU0stantiall:r , the 1934-38 averaGe havi:l i; been 9 quintals per hectare against 12.4 in 1947. Some eXiJorts of .iJaize take place to Venezuela. Because of difficult internal tr&ns.:.)ortation, however, SOlne imports occur for the Atlantic coast departments. Corn- starch is heavily imported for the S3.n:e areas. .!',.n extremely hiGh pro- tective tariff (Yl.39 a bushel in 1944) api)lies to corn, but other Govermnent assistance has not been appreciaole o 1"Vheat ~;heat, in 1Jhich Colombia is not entirely self-sufficient, has in- creased partly through increase in acreage, and partly throuGh itlproved yields. Prey;ar (1931-33) average ~Tield VIas 6.8 quintals per hectare against 9.1 for 1948; acreage for the sa:-;le period vras 109,500 against 122,000 hectares. The 1934-38 period was marked by a sharp increase  - 2 - in acreage and decrease in yield following establishment of a high pro- tective tariff. 1~neat imports have varied vvidely in the last 10 years, reaching a peak in 1945 at 67,77L~ metric tons (wheat equivalent at 75% level of extraction of 'wheat and flour). Production of wheat in 1945 amounted to 109,000 million tons, and in 1948 to 111,000 million tons. Cololl1bian 'wheat is not of good bread-making quality, although many varieties are grovm; imported wheats and flours are mixed with the local product 1Nhenever possible. Wheat growing is almost restricted to Zone III (Departments of Cundinamarca and Boyaca) followed by Zone VI, 1I:The1"e some significant increase has occurred. As in the case of maize, tariff protection to growers has been provided for some years; producers of wheat are also assisted by a trade association instrumental in putting wheat imports under licensing. II.o1echanization of cultivation of wheat appears to have met importa.nt obstacles in the rugged nature of land. • Rice 1 large expansion in recent years of rice production has resulted in virtual elirnina tion of imports, although production methods rel:1ain rudimentary in the extreme. Rice land is not irrigated and the crop is cut by hands Disease is a problem in the main producing area, the DepartlJent of Valle del Cauca; special attention has been given by various governments to the p~omotion of rice culture, through instal- lation of rice mills, loans to producers, etc. Rice production is concentrated in Valle de~ Cauca and Bolivar, Zones II and V respec- tively, althoutjh it grows in all zones. Prospects of expansion are best at the higher altitudes, involving transportation difficulties o Barley Barle~~ is used exclusively for beer, and is almost entirely pro- • duced in Zone III. li:larketing is controlled by the chief purchasers, the LreV{ery group knovm as II Consorcio de Cervecerias Bavaria". Tech- nical assistance to growers from this group has effectively reduced inports of barley and malt during the war. Cultivation and imports of other cereals are negligible. starches Of iIlportance to the national diet is the group of starchy foods cor;lprising potatoes, 'Bananas, cassavas and Y3l1ls. These products consti- tu.teu l)i,S prevJar and 17.2;; in 19Ls of total value of a;~~ricultural p:co- dliction. Cassavas and yams are of local importance only; little pro- duction data are available s Potatoes, leading the crop in value, are native to Colombia and are a staple in the diet, but yields are 1011 and costs are reported to be three tines those in the neighboring country 0; Ecuauoro Bananas have been an important export crop, as well as a popular local food item. Production controlled by a subsidiary of the United :fruit Company (Compania Frutera de Sevilla) is eminently modern althouzh plantations have deteriorated and exports ceased since 1942  "1'" 3 - due to Sigatoka disease. Cultivation is largely confineg. to the Santa Idarta region of the Department of Magdalena (Zone II). Sugar and Sugar Products ~,jhi te Sugar Plantation white sugar is produced principally in the Departments of Valle and Bolivar, which in 194.5 produc~d respectively 72% and 127; of totals Some centrifugal sugar is produced in the former, but the cost of transportation to the cities where markets are located is eJ~­ tremely high. A total of 22 centrals (mills) have a capacity of 10 3,- 500 metric tons. Increases in production up to 1947 have not satisfied domestic • demand; during the 1944-47 period, an average of 80,700 metric tons was produced, and 16,200 metric tons were imported. In previous periods irll- ports have supplied as much as 56% of requirements, although Colombian sugar was exported during the latter part of the 19th century. Imports are duty-free when domestic production is insufficient to meet demand; they are otherwise subject to a duty at present more than .5 cents a pound. Distribution centers are operated by the Distribuidora de Azucares, a cartel l:yhich makes loans to member sugar oentrales, prevents overpro- duction, fixes prices, etc., and apparently opera.tes to keep pri.ces very remunerative to large producers. Panela and Miel • Both in quantity and value the bulk of Colombia's sugar industries is represented by its output of panela, a form of broM1 sugar. Zones I-IV inclusive produce the greater part of this commodity. Hand pro- duced in primitive mills, panela utilizes only 6.5% of the sugar in cane and is therefore extremely wasteful of sugar cane. Expansion of pro- duction of this s~ap1e in the diet of the lower classes, however, ac- counts for an increase in calorie diet in recent years. In addition to panela and plantation (white) sugar, a form of molasses knovm as miel has been commonly consumed, largely in the form of chicha, a fermented bt:verage. Consumption of miel, which had decreased steadily since the prewar years, may have dropped to nil after April 19h8, vvhen chieha production was bam1ed. In the main producing area, Valle del Gauca, processing of sugar cane can be continuous as cane will grow all year round. Foreign varieties have been introduced successfully in this area, although cane in other regions is native stock, unimproved since colonial days. I.lOsaic disease is present and some effort to substitute irlmune varieties has been made.  -4- Oils and Fats Supply of oils and fats in Colombia is 10v/. Do!Ce:stic ~roducti:Jn consists chiofly of beef tallow, lard, copra, SeSaJ;ie, and cottonseed, gro~n chiefly in Zones III and V, and of a fe~ tropical oil seeds. Gil manufacturing is centered on the coast and is concentrated in a Dutch firm. The industry appears to be expanding, although there is as yet only one hydrogenation plant. Hydregenerated oils are imported 1/here needed to combine '"lith native oils, such as copra. other Food Crops Cacao il.lthough cacao has been produced for some years, llif,Orts have been • continuous for~ears. Disease is prevalent e;:cept in the Cauca ·,.i&11E:Y. Frociuction methods are poor. Large pla.nta tions conta.ining mor"e tha.!1 1, uOO trees, produce 82% of the crop. it cotmlission has be on appoin~efl to v:0~'k on improvement of all phases of production and harvesting. Coffee Coffee is the mainspring of ColOlllbia' s a7'ict~ltural econ'JtiY, ac- counting for roughly 18% to 20~; of thE': gross va.lue of a:.3rici.;.l:,urul und livestock production. Colomuia is second onl:r to BrD.zil as vlorlti c0fi\:e producer and exporter, and in additian produces the major pr')[)crtion of the world I s supply of mild coffee. l~oct of the coffee is prodl,;.cet! for export; domestic ~onsunption requires only about 27,000 tons at the present time of v:hich about t ...-ro-thirde reprE:f.mnts blc?"c!"~, broken and ot}ler beans below export quality. Exports are centrc/lled throuGh the: Gf.:'ice of Export and Exchange Control and the I!utional Focic:ra.tion of Coffee • Grov:ers j a semi-official agency composed of planter's, brok~.;r3 c::.nd bc.r.k€::::'s, 8.nd the only :~roup in Colombia that attoIapts to coo~"'d:;'nate the various parts of the irldustr:l. The Federc:.tion carries on an ac+,ive p!"Opr-:.f;D!1da cal.i~aign in f.:l7our of Colombian coffee, £.ncour[~~;eG impr(.Jver;:ent it.. f."lGt}l::'d.S of production, supports coffl;:e prices and nairltains sta.lJtctical dr:te on production, prices, trade, etc\) It receives coffee ,.:or 1;a:t'C;--tol.: s::'r.-z ';'~1U. can sell, ship, h~l.ll, classify and in goneral asc;ist the ;~o~:]'er ir: ob- tainin~ the bent I)()s8ible prices. Tile i!ati";,nal GOVE:rn!n0nt assistc. "i'/L.e coffee inclustr~r largely through the lJational Fede:..'u:i.J:Lonc '.:'he most ex- tensive zone of cultivation lies on ;.;oth slopes of the Central Cox'dille-ra, la::'gely in Zone II. Sr~.all, far.ri.l~!-opE:rated flncas are the pri.ncip.'11 ~:iJr;:l of cnterl)rise. Relatively feu diseD.ses and pests arc; pres&nt. Si::..,i",le machines are used even on fincas. t;any of the s:.lall .ilr'oceczors take coffee unhusked to polishin: and t;radin~; centers. '.:arebousin'T for tLis crop has i..rnproved since 1929 Und(h" thE; a,us:tJices of tl-:e Eationnl Feucr- ation of Coffee Gl"ov:ers. rrhe chapter denlin;~ ':'ith tte ::,[tlD.nce of p~J­ mellts of Colombia descriLes the role playec by cofi'e~ i1~ tho E..xtcrHal economy of the nation"  - 5- Industrial Crops Colo!:1bian industrial crops consist 0.1.' cotton, tobacco and fi(ll~e, tJ- e0ther representing from 2;: to 2-1/2~~~ of total a~;ric!lltural pr0G.uction l:.i~ value. Cotton One half of the Colombian cotton is grO'\~m in the Departr.:ent of n.tlarltico, 'where c111t.£.vation methods are primitive. Extensive but in- elficient use of rr.n!;:::i:lery is applied to cotton in ToliI:Ja. Both areas produce lou grade fibers. it better quality of cotton is obtained, but througn inefficient ax.. .Tasteful me&ns of production, in the other p:... .i;!ci- pal area, ~antander. .r~lthough experiment stations have Leen estaulisl"ed, little has been achieved in combattin6 the pests ~,vhich are e:~trE:.:1e:!..y :JrE'- • valent and destructive. Eost marketing is undertaken by a joint stoc:{ company, ;~IJadonera Colombialla, supervised by the Cotton Control Board, a Government agency. Governmerlt policy has been directed toward estab- lishnent of self-sufficiency. Tobacco Tobacco is produced largely in Zones IV and V and is used chiGfly for cigarett.es for local ccnsur,lption. Tobacco farr.Jing is protected by a hiGh tariff vihile uniform bale IN'eights and grades have been estar lished to eLcourat:e E;xports, ";;hich represent a declininG proportion of toi:.al prc- d1"!ction. Current exports arc of poor qualit;T and in ~urope the COlolJtiar! product is used only for nicotine extraction. • 1"1. sisal-like plant knovTrl aG fique is nativE: to C0101:1bia and ie Cl~lt:'­ vated chiefly in L;ones I and II Ii alt,nouzh it gro~:{s 1,'Jild in r:lany places • The plant ','}ill fJrovr on poor, dry soil and is the ref ore to be found on r..argir:al farms. DecortJication is performed by hand on the fCLr:.~ tty S~lve trrlnsport;:;;.tion ~osts, a process Y/ast8ful in r.ian~)o".'!E:r, v:hich could be COkl- 3iderably jr.irJ!"'ovc:d r/;,r the inijroducti:>n of li;;ht flactiner.r ~ Decort:i.c'.. ted f:,'~ue is used in the ;:.anufacture of coffee ta3s on a household industI7r bc..sis u A l'~i,1h tariff on jute and jute fabrics hag a:.;sisted this industry as vJell as a Uovernl.lent-sponsorect cooperative movcnent. Due to high cocts, Gul:xlcian fique c£1.nnot compete aLroad uith jute and jute products. The Live stock Industr;{ The raisin~i of I iv8s:'ock haG been a major inlustr,7 since c0lonial t.i..u:es o  6- Production and Value of Livestock Products Production Value (000 ~ecoe)77 Pret'rar Pre)':ar Average 1945 Average 1945 Slfltl~hter: (00:.; h~ad) cattle 1,008.8 1,322.5 77,130 161,713 BOJs 622.1 677.0 22,317 47,541 Sheep 129.2 11(,.1 1,938 4,064 Goats 2305 23.6 235 h72 Total 101,620 21),790 :r:ilk Froduction 585.0 916 o Q 21,782 50,105 • Grand Total "l()te.l .M.ijricultural a.nd LivG3tock Products 123~h02 263,i595 418,790 1,035,4L3 ----------------------------------------- 29ri5 25.5 l:ote: The above valuation is based on the value of the axdmal on the hoof before slaughter ~nd thus includes the v~~lue of by-p:i,:'oducts such as hides and skins. The va.lue of milk production repre sents the rayr milk value on the faL r:l and thus does net include the value added in :'~ilk proc~ss:::'Ilg~ 7he livestock industr~T repr€Gents fror.1 25;,; to 30,; of the ~;rosf: value of a.;r:'cult,uro.l productioll, not includinb the v:'llue creatE:d by ~':or}: c:nimals. • Cattle The livestocl: inductry i~ of particular ioportance te, Colorf!bin • .'1.tout 65 nillion acres, or almost one-quarter of the tot;-11 urea of '~:le count,r:,,', are devoted to the grazing of cattle. l',:ore tr.an half of cattle land iSi in the Derart..~ent of Bolivar (~one V). The second cr. ief cCit-t:e ~rE:"" is located on the llanos ea[;t of the Eastern Cordillt;..:;' and Ct_I.tE:rcd on Villavicencio, in the Interlderlcia of r:uta., Y;hich is the i'at~~erjx!~ c..:.!'ua • .rtpart from th8~t:: t-:10 nain surplus cattle reGions, smaller ones e.:,:ist in the hi,,~hla!ldc sU.l."Flying t.he chief consutiing areas. Cattle in ",he C f; ,,:,1 8abana is of the dual-pur.t?0se type. It is estimated that probably 100 millich 1lE;ad of cattle coulu bE: pastured on the coastal ~\lains, interior valleys and Dastern plainti, at prec8nt not fully utilized, if labor and facilities c'Juld be 111t,r:,duceu. into these relati vel;r cli:naticc.lJ..Y unfavouraule rb:;.ir)ns. Totc..l co.'title I;OPlI; tion is no',,' 14.(, ;::illl.()n, and ;las incrfj~Ged l'ror.t (1n aVI"J'a-;e of' ,13. i) f.lilliQn in 1/, JG-ho • ... rea8 of curplus cattle production a.re the coast:i!. pl':-lilW :tr:(l tot saLnnas of B01ivc.:.r· and I.u~dalt}na in t.,vl1e ":J, uncI the easter!;. 11':nos ll(:~:n" tht: j oothills of the EaEtern Cordillt:ra; dE:.!i'icit area::; arE.: .... uno 1  - 7- (~ntioquia), Zone II, Zone III (particularly around Bogota) and ~one IV • .H. considerable increase during recent years in cattle num~>:l"'s rela- tive to other animals, particularly hogs, is of si~1ificance. It is 'Vlhat is to be expected, however, because a hog industry is lart:SE:l:- based on feed concentrates 1Jhich are rela~ively scarce in Colombia, e;:pecially in comparison 1'.1.th the available sUPIJly of pasture land. Peets and disease represent serious problems although cattle in the hi~ihlands of Cundinamarca, Boyaca, l'Jarino and Huila are relatively free from them. The inability of 'llemperate zone breeds to resist tropical diseases and to retain the vlOrking ability of native liv8E'tock necess[:.ry f'.Jr l.1Clrl{eting on the hoof over a long distance at prE.sent limits the use- fulness of imported cattle for imprOving the quality of Colombian cattle, except in the cooler temperate Sabanas of the Eastern COl"dillera. The • Cecu-Criollo (Zebu and native) cross represents the most successful bre8ding attempt o The parauounL specialised breeding and exporting area is locnted ill tht::: DepL1.rtr.lcnts of Bolivar and ll:iagdalena Y/hich move an average of 140,OOt] - 160,000 head per annum to other zones and slau,~~hter a S01:1e- vlhat lr.iraer 'luc::ntity Vii thin the zone. Th~re is a considerable degree of cooperation betv16en breedinf; and f&.ttenirlg. The fat tening process is performed by the larf~er operat0rSj bre{!dint~ is usually carried on by SI:1all operators on poor pastures. Such operators are not able to bring the cattle to slaui~hter weiGhts. Cattle is rrarketed almost entirely on the hoof. It is usually started to market in a half-fat COildition and must be put in pasture at the d8~tination six to ten r:ionths before slaughter. The value of the loss in wei~;ht through t,ransportation has been esti~.:ated at £ro41 • 1~6 to ~.5 million pesos • ItefrigE::ratiol1 has played a very winor role in marketin?1, altilou§;h it has been considered, In 1920 an attempt to found a packing plant f:;,i18d because of the 'world depression and loss of export markets. There is no meat canning industry, but a consider~Lle quantity of meat is dried or salt cured for the use of the poorer classes o .. Shipment by air from Bolivar to Eedellin has recently been started, and it is reported that this project has resulted in substantial reduction of prices in L:edellin. Foreign trade in live cattle is relatively uniliLpo:ctC1nt both in ter::ls of total trade and total production. Imports are largely from Venezuela to rJortf" de Santander. Imports from the United States are larc~ely cattle for breeding purposes. The export trade becal,1e important for a short time during the war due to the concentration of United States troops in the Canal Zone. Prospects for cattle exports are poor in view of the restricted nearby markets and Argentine competition. oth!:.r Livestock In comparison uith beef, other livestock .:lnd livectocl< prodl.l.cts are of relatively minor importance. ThE: nUtiuer of hogs haD increased to 1,G78 a 9  - 8 - thousand in 1947, or by 8. ;;i~ in a decade, ;lnd shee~} have ap:Jarently L.Yl- creased 237~ over the same period. ii.oughly, two-thirds of the hog P01)U- lation are located in Zones III and V, while the bulk of sheep are raised in dry r:egions in Zones III and IV. The hog and poult~J industries are decentralized. Both hogs and poultry obtain the greater part of their feed from pastures and waste; only in the Sinu Valley of Bolivdr are 110 6 s fed an appreciable amount of grain. The numbe;:> Qf these types of live- stock in Colombia is thus limited. l:a~ive s~leep are descendants of the r:erino but are little developed in ter:ls of "mol production. Governrilent assistance has been made ava~.l­ able to the ~:;ool industry in an attempt to increase dorJ8stic sup;-ly. Dairying has never been developed to any extent in Colomtia, and no ir~ormation is available on production of milk, eggs, butter and • cheese. £lovailable data on dairy cattle leads to the conclusion that the qU3ntity of net fluid milk produced would approXL~ate 580,000 tons pre1'iar, and 916,000 in 1945. There are practica11:r no data on poultry, turke:,:s J ducks, etC e Hides and skins represent the most important livestock export pro- duction and to 1;)19 ranked third among total exports. Cattle hides represent well over 90;; of the total. A large proportion of exports are seconds. Domestic consumption is, hOYJever, exerting pressure to liwit exports. In addition to cattle hides, some quantities of ~oat, sheep, vd1d animal and reptile skins are exported • •  APPL1'JD LX. III t:nllirutlS OF SECONDARY nrr'OR'l'lJ.~CE t:etals and l.linerals of secondary importance are silver, platinum, salt, limestone,iron and coal. Silver Silver (as platinum) is mined together ,ath gold, and deposits are fcund in the sarre areas. Silver is apparently not exported in crude form, but probably in manufactured articles. The peak production of 27 1 ,- 000 ounces VTas achieved in 1941, when the highest gold production :ilso occurred, and similarly has declined steadily since that time. Platinum Colombia is one of the fevl platinum-producing countries in the v;orld, • and the industry y~s a prosperous one until the middle twenties when it encountered heGVY competition from newly-discovered mines in South Africa and CD.!lada. Price declines in the north American market, which receives practically the entire Colombian output, constituted a further depressing factor. During the war, Colombian production increased sharply, due to llilportant military uses for platinum, a record high of 55,000 ounces being reached in 1942. However, the cessation of war demands has caused con- siderable slump in output. The principal platinum mines are placer opera- tions, located in the Department of Choco, around the headwaters of the Hivers San Juan and .I1.trato. Salt Salt is produced in the interior (in Zipaquira, near Bogota) through d~J mining of salt deposits and at the coast (in Galerazamba near Cartagena) by the evaporation of sea water. Production is valued at about US~.) h.4 • million annually. The maritime salt deposits are administered directly by the National Government, and the Zipaquira mines are operated by the Banco de la Republica, under a Government contract. Domestic consumption of salt is considerable; accordinclly, small aI!10unts have been imported c:nnually. Limestone Limestone in abundance is found in many parts of the country. Value of output is equivalent to about US0 1.5 million. Despite increased pro- duction in recent years the greatly increased domestic use of cement has necessitated size~ble imports. Iron Deposits of iron ore are appreciable, both in quantity and quality, and are located principally in Antioquia, Cundinamarca, and Boyaca. Ex- ploration has been insufficient to permit an accurate evaluation of the extent and quality of deposits. However, it is knol¥n, for instance, that in the region of Paz del Rio in Boyaca there are rich iron ore beds ex- tending over a wide area and containing reserves of as much as 50 million tons. Nearby are located sizeable coal and limestone deposits. Small  - 2 - and r~ther prii:litive efforts L.ave been made to viork the lQ1u7:~1 deposits in other areas, such as Antioquia near Medellin, where there is a snail steel mill utilizing scrap iron. Coal The production of coal in Colombia has been relatively unimportant, averaging about 500,000 tons annually during 1940-1945. Nearly all of the coal is consumed internally, prilTIarily as fuel for industrial use~ Other South ~merican countries have been the principal destination for coal exports. Host of the coal mined is bituminous, and is found near Eo~ota, Sogarr.oso and throughout the Cauca River Valley between lI,'"dellin and Cali. Reserves have been estimated at 25 million tons of coal, of sub-anthracite and anthracite grades, low in ash content and therefore higher in calorific value~ • other minerals knovr.n to exist in Colombia include lead, zinc, chromium, molybdenum, mercury, manganese) asbestos, mica, sulfur, quartz and natural phosphate, but these have not been eA~loited to any appreciable extent. The total gross value of Coloobiats production is surr~arized below. Valuation of l:ining Production - 194# Value Units million pesos Gold Production oz 506,695 31.03 Silver Production oz 167,614 0.14 Platinum Production oz 34,757 1.69 • Petrole~ll Salt - Exports - Local th bbls th buls tons 19,487 3,108 105,072 3d.9 6.2 5039 Coal Y tons :)34,466 9<:3 Limestone Y tons 303.. 000 2.0 Others 11 3~0 Total Value of Colombian Mineral Production 97~65 Y Source: lvlonthly Bulletin Banco de l:~. Rei:)ublica 3 unless otherllrise specifiedQ y V~lued at $10 or 17.5 pesos per ton. l! Value estimated by Colombian authorities.  APFENDIX IV The major source of information on Colombian ind.ustries is the Industrial Census of 1945. The census provides data on valu.e of nrOullC~ti.on, value added and installed HP. These sr.ould ·oe interpreted ':Tith caution. The IIValue of Froduction", as defined, is a limited description of the cost of production. It is not qu.i te certain that it includes PF.'l. tE'!'J.ts, t,ood ,,.Jill, arl.d maintenance. It definitely excludes taxes on nrod1.lction. It amounts to 641.1 million pesos for the T)eriod July 1, 1944 to June ]0, 1945. The table below is an attempt to estimate the actual cost of uroduction of all industrial goods in Colombia in the same peridd. Thellvalue addedn as defined. in the cenS1.1,S, is the difference bet'tJeen the Il va lue of 'Production" alnd the value of ~avT materials and fuels. It includes some of the componl3nts of the concept of "vcll::te addec. in tl"~e 1l • cOIDuutation of national income at factor cost. They are bracketed in tLe follo',Jing table. C o L o M B I Elements of Cost of F~.ction as Provided in 'J1he Industrial Cen~us (Period - July 1944-June 1945) (in million ~esos) Ra\q Nat erial s * 484.3 11.9 fuel * 6t). L~ ) '!.-rages * ) 30.8 Sa1r:ries* 8.2 ) • Social Security* ) 1 .. 7 ColombIan Defini- Insurance* ) tion of ih.lue Rents* 3;9 \ J '\ = . . ._dG.ed l4L~. 8 Depreciatio~ * Ji I 28.7 ) I 2' ) ..) Patents and Good. ';iil1 .5::J ) ) yl:anageria1 Income * ) ) ) 5.1 ) Service on Loans ) ) Maintenance Y Taxes on Production JJ '3.1 Cost of Production 64Ll-.2 ------ -----------------------------_.-- -"._ .. * Items marked with asterisks constitute Cost of Production as defined in the census. They total 641.1 million ~esos. 1/ Assumed IDE]) to oe 101~. b Jr ~I Residual figure: Value add.ed according to Colombian concept, minus salaries, wages, social security, insurance, rents and depreciation. This'figure mayor may not include service of loans, uatents and good vlill, and maintenance. The text of the census does not define it clearly- ~I ~mnicip'al and department taxes wnich clearly bear on uroduction.  - 2 - Horsepovler availability as stated is misleading. Plants lJroduci:lB tr~f;,ir own 1=>o"ler are credi ted l.ri th both their ceneratinG ca})Cl.ci ty and. tre calJaci ty of machines consuming po'tler.. Plants using nublic utility power are only creCi.i ted \-Ii th the capacity of the consuming machines. These inadequacies of tt. e census will be temuorarily ignored in our nrese~t8tion. ~hey shoulQ be snbmitted to careful scrutiny by missions to Colombia, as they o·oviously obscnre the most relevant features of its industrial life. Characteristics of Colombian Industrial Production Industry in Colombia is nrimarily one of elaboration of domestic ra~ materials, urincipally agricultural. In 1945, 785~ of the raVT materials utilized in industry v[ere .. oT local origin, and 22 agricultural -oroducts account! d for 55% of all ra'1fl material consumed. There are, as sho\'!n in the table belo".] , four distindt groups 0: industrie s • in Colombia. The first two groups (A-l and A-2) utilize a very large propor- tion of local materials. The Group A-I is principally one of processing of non-edible local raw materials. It is characterized by the highest availpbili- ty of horse,01; r er per l,'.forker (averaging 2 .. 0 horsepower), high average value added per worker (averaging 1,551 pesos), and high fixed assets per 'l1orker (averaging 3,860 pesos). The second group is cha.racterized. by::,. 10\,[ availa- bili ty of horsepovJer 1)er 't,rorker (1.1. horsepo\,rer), a 10'11 average valu!?' added per ':rorker (854 pesos), and a lovl average fixed. assets ner \'Jorker (1,425 -oenos). The third group (Group B) is one of mixed utilization. of local and foreign raw materials. Availability of horsey>o\'rer, value ad.ded ;Jer ':JOrker, and fixed assets per ,..,orker are lov r , but not as 10\" as in Group A-2. F:'nB,ll:w Group C is characterized by a high level of utilization of forei{;n rav, material, a lo';! aVRilabili ty of horsepo1:!er and of fixed assets, but ~rJ. average value added better than any I}roup but A-I. • There seems to be no specific reason '""hy tr.e pattern of industries sh01J.ld fall into these four groups. It is suggested that the nrocessing of raw materials of Group A..... I (gold, p18.tinum, petrole\uu, rubber, cement, clay) requires heavier equipment, more managerial skill and larger producing units than those of Group A-2 (food stuffs, ~'Joodt leather, tobacco, garments). A relatively high avail?bility of installed horsepower and fixed assets in Group A-I suggests that the high value added ner Worker results much more from division of labor, efficiency of management, size of the enternriae and degree of mechanization than from the skill of labor~ This seems to be confirmed by the nature of industries in Group A-2 where the combined effect of lower fixed assets per worker and lower horseno~er availability lovrers sizeably the average value added, although there is clear indication that the skill in labor should be greater than in Group A-l~  • • C010~4BIA Characteristics of Industrie[ ~~~,. t'.; Total Value Percent 'Local Total Horsepo1tJer Added \Yorkers Value Added Fixed Fixed Assets Ra\nJ Materials Horsepovrer Per \'iorker 1~000 Pesos Employed Per \V'orker Assets Per 'tlorker 47 t 6'3.2 2.0 :1Z;J 216 24 i 096 li~~l 92!6:2 2 1.860 ~lS 97.9 599 0.4 1~923 1~385 1.. 389 2~076 1~495 1in. 97.3 -6 2~393 1,140 2~100 2~215 1~941 76.1 1;5 7 1.6 1,673 978 1,711 2~117 2~160 75.4 17,970 1.9 18~026 9:389 1~920 '56~487 6,000 57.9 27,499 2.4 13,221 11,204 1,180 29,737 2,650 70.887 1.1 52)993 62~026 854' 88~396 1~425 92.6 46~484 1.7 24~869 27~493 905 65~167 2t-3 6O w 89.8 17~910 2.1 7.393 8,3 23 888 8,049 965 83.3 3,7 27 0.4 7~988 8,919 896 6.318 708 78.6 1,511 0.2 5,264 7,643 689 3~829 500 74.8 1,255 0.1 7,lq9 9,648 .775 5.°33 .520 44,095 . 1.3 35,557 34,169 1,040 77,769 2,280 43.3 4,182 0.8 6~553 5~443 1.204 11,807 2.~170 40.0 39,9 13 1.4 29,003 28~ 726 1,010 65 1 962 2,300 15,413 1.0 18,397 14,264 1,289 27.627 1,931 8.2 12t165 1.4 9,973 8,481 1~ 176 16~898 1~990 6.4 364 0.6 594 594 l~OOl ·1~03.5 1~740 ,2.9 2,884 0.5 18,396 .5 t 189 1,509 9,694 1,870  • 4 GROUP A-l .. " ._,_ ....... _ ... - - - ............ .;.. '* ._ ... Processing Precious Metals :. .. Refineries Combustible Min. Rubber Processing Beverages Y·,:.. , Non-Metallic Minerals .. , GROUP A-2 Foodstuffs '. ,- V/ood Leather Tobacco Garments GROUP 13 J. "_ .... - _... _-- Chemicals Textiles t - , . ~ . _ ••• ",., _ _ -t· "" ".~',,--"'''''''.''' r' )'-'k~.""'~. GROUP C • '_.I- .._ ..... O' • j - , - - Metals/Machines Paper/Cardboard ~ Graphic Arts  -4- The peculiar characteristics of G-ro..:p C (lo~·'est aVer[1.ge availf'bili t:l of horsepo",er t 101" average fixed assets, and fair v::l1u.e f:'.dded) may indicate that craftsmanship ancl efficiency are directed mostly tOl·.'ard. tr.e Y)rocessing of im1)orted ra"] rna terials, a condition t·!nich enhances tr.eir relr-tti vely hit;~h uni t value. statistics for Group E (textiles and ~heIr.icals) seem to indica.:'e tr·~t even \·!here fixed asse ts uer "Torker are eight e lov, horse!)o'~J8r :)vailfloili t? will be a deterrent to a high value added o In its aggregate, the uicture of Colo~bian inaustry su[gests ttat more hOrSeT)01.'Jer could be applied \.,i th urofi t to the nrocessing of ra.':: agric~.ll t-..1ral uroducts except ruober, and that there is a need for more skille~ ;Tor~ers~ This tentative con~lusion seems, ho'~ever, to be i!lvalidated by the study of inJustries located in regions vihere specialization is noticeable. • As snov!n in the table on the characteristics of ind.ustries in specialized areas, textile industries of lilltioquia and Atlantica, ,,/here large f::..c t 9 r ien are concentrated, have a larger amount of fixed assets ner "l,tTorker then tr~e nationa1 average. The value added per worker is considerably improved... :'!":e beverage industry of CundiltlalIlarca has higher fixed assets I)er h10rker then the na tiona.l average and ShO\,1S considerablY greater value added. The CfdTIe phenomenon occurs for construction material in Cundinamarca. In both instances plants are large and vJell equi:pped. It should be noted. the.t tl:e horsepol;:er availability and the percent':lge of local ra".! material utilized in areas of specialization does not deviate considerably from the norm in any of the above cases. This may indicate that the division of l&bo1', possible in large plants (vrith high assets per ':Torker) may -be as important ~s the horsepower availability. Food processing in the Depart:nents of Caldas and. Yalle del C['uca, Doth specialized centers \'Jith no large industrial units, presents a puzzling • picture. Al though fixed assets :ner Forl.::er in Caldas are ~Delo\,T the n2.ticmal average, vplue added and horse:po,;rer ava:ila-oili t:y are !1.igher. In tl:e v2l1e del Cauca fixed assets ner \,rorker are higher t~1an the national average, horsenoFer availabili t:y normal t but v~.lue added 10','ler. In these tvro cases it seems that tl:e nature of the raw m.:~ tE=;rial processed is the IDRj or cause for difference in yield in ~alue adaed: the hiGh proportion of coffee processing turns the ratio in favor of Caldas. In general, the scale of opera ti on per indus triai uni t i s 10':1, as the average !)roduction per man year cO".ld be valued at lJ.,768 pesos in 19 L5. Capitalization is equally insu.ffiGient. Avera.ge fixed assets in ino.1:lstries (exclusive of handicrafts) ,,'!as 2,100 Colombian pesos in 19[~5, and 71~': of all establishments VIere reporting gross assets of less than 10,000 pesos~ Employment per industrial unit is 10\." amounting to 17 emnlo:,/ees. Finally, the utilization of mechinical power per worker is very small: 1.3 horsep01tIer per ~·'orker in 1945. Only 37~ of all recorded industrial esta- blishments ~ere utilizing mechanical power ~t all. The largest utilization of mecha.nical power is to be found in cement (2.4 horse-po\·rer per man) and. in wood production .(2.2 horsepo':rer per man). The 1,vorkers t efficiency is 10vJ4' This res1.1.1 ts partially from lack of pOlt/er ayailabili ty and from ina.dequa te industrial t echni Clues , and partially from a lack of education, the inadequacy and small number of vocational school's.  • • COLO~iB IA Chal-acteristics of Industries in S-oecialized Areas Total Value (In Pesos) Percent Local Total Horsepower Added vlorkers Value Added Fixed Fixed Assets Ra\r.J il:iaterials Horsepo\'Jer Per Worker 1,000 Pesos Employed Per vlorker Assets Per 1'lorker verage) 40 1.4 1,010 2,300 a) 27 24~250 1086 17,857 15,602 1~140 36,]86 2,333 0) 5t360 1.4 5.638 3,868 1,564 17,378 4~461 verage) 93 . 107 905 2.360 \.It 97 8, 01L~ . 2.9 2.,800 2~735 l i D21 2~4?4 948 1 1 cauc a ) 93 -12.397 - 1.9 5,298 6.529 815 18,642 2,867 v~rage) 75 1.9 1,920 6~OOO area) 87 4,777 1.7 7,085 2,831 2,.53 0 24,318 8,680 verage) 68 2.. 4 1~180 2~650 r'ca) 61 8,578 2 4 4 6,884 30 637 1,892 12,268 3,408  • .,-- ...... _......'" --... ~ TEXTILES (Nat'l. Average) """r o ... ~ ... ;* -:" • ._ . . . . .":" H •• , J (Ant ioquia) ~~.~.. ; ~ .\ i ~~ .. .. " '( .... ,; (Atlantico) . .. ~ c:::: . . :~ FOOD PROCESS (Nat 1 1. Average) ~:.. ~ ." ( Caldas) ,~ (Valle del Cauca) -u :-:' _ . .Jo -" BEVERAGES (Nat 11. Av~r~ge) (Cundinamarca ) CONS,!;RUCTION {Nat t 1. Average) MATERIAL ( Cundinamar-ca) ...... 1..' ..  APPENDIX V ANALYSIS OF :ez:- GOVERt~NT EXPENDITURES IN 1945 ¥ The analysis of the government expenditures is obscu~ed by the exis- tence of two different accounting system~ (Cont~aloria and Ministry of Finance), and four distinct catego:rie~ of budgets (National, Departmental (including Commissariats and Intendencia), Municipal, Autonomous Entities.) National Budget • j The analysis which follows assumes that (a) the accounttng system of the Contraloria is correct and (b) it covers only the government budget (ordinary and extraordinary). In 1945 expenditures on the national budget amounted to 199,249 thotlsand pesos. Wages, salaries and other remunerations of government personnel • accounted for roughly 39% of the budgetary expenditures, or 77.5 million pesoSe The administration of justice and economic development were the major sources of expenditures for personnel, as shown in the encloseq Table. Purchases of construction equipment, machines (except office machines) and of other capital goods amo~ted to 20% of total expenditures8 If we assume that payments to government personnel engaged in e'ecnomic development contributed equally to national capitalization, then 27.6% of total govern~ ment expenditures, or 55~3 million pesos, was the ~hare of government in gross capital formation. ' Of the 55.3 million, about 14% went to road conservation, 20% to road construction, ~% to port construction, 4% to the paving of roads, and about 10% to agricultural subsidies and irrigation. Payments for rents, services, office equipment and part~cipat~on to the • expenses of departments, municipalities, and entities amounted to 41% of total expendit~es. Aytonomous Entities Little is known about theeocpenditures of autonomous entities, exeept that they did not exceed 15 million pesos in 1945. Acco11..'Ylted in the National Budget (section economic development) are all government part:i.cipations to these entities. Pe so s) (T housand.....-.--- . ~ Institute de ,Fomento Ipdustrial 4,000 Credit Institutions 150 Contribution to "Other" Economic Development Entities 3,146 Assistance to "Other" Economic Development Entities 92 Indemnizations to Salt Mines 141 Assistanoe to Entities Engaged in Commerce 9 Assistance to Entities Promoting Hheat 50 Assistance to Entities Promoting Cotton 50 Assistance to Entities Promoting Coffee 1,290 A$sistance to Cultural Institutions 2,130 Assistance to Hygiene ~nd Social Assistance Entities 1,453 Assi$tance to Labor Entiti~~ 811 Assistanc~ to Other Service~ ... 113 -...,~ TOTAL 13,435  - 2 - Aside from these contributions certain entities benefited of extra re- venues yielded by their commercial operatfons, but these revenues were small. Expenditures and contributions of Entities to National Jncome and capital- ization unaccounte4 for in the analysis of the national budget will thus be tentatively ignored. Municipal -- Departmen~al Government Municipalities and Departments (including Commissariats ~nd Intendencias) in Colombia have separate budgets. No ~nformation is available as to their size, but it is doubtful that their aggregate exceeds one third of the national budget. As in the case of autonomous entities, a part of the expenses of muni- • cipalities and departments are sustained by the national budget. Government subsidies are estimated to have reached 18 million pesos in 1945. The actual size of other revenues is unknown. It will be assmned that they totalled 66 m~llion pesos, and that of the balance unaccounted for in the analysis of then~tional budget, 16 million went to personnel payments, 16 ~illion to equipment purchases and 16 million to services and short term equipment~ •  • COLQiVlBIA Government Expenditures 1945 • (thousand pesos) ~ Develop- Construction Personnel ment 1/ Material L_achines ContractsY Othersll TOTAL Public Adnunistration 5,405 1,082 6,488 Justice· 18,713 5:e4 125 155 244 1,498 20,735 International Relations 1,719 5h7 2,)06 Tax Administration 2,393 11,022 13,416 National Services 10,,198 2,6)0 1,135 1,.008 487 4,401 17,229 National Defense 4/ n.a. n.a. n.a. n.a. n.a. 26,73 0 26,73 0 Culture - 6,236 1,J.i0 7 756 252 399 7,090 14,733 Hygiene 4,279 462 2hl 53 168 7,171 11,912 Labor and Social Security 961 1,025 1,987 Economic Development 21 14,943 26,442 21 2/ 2/ 157 41:;385 2,149 Control and Fisca1ization 1,991 Statistics 367 52 419 Various 1,,345 '26 15 11 5,561 6,932 0l Public Debt 32,823 32,,823 TOTAL, According to Contra1oria 68,595 199,249 Revised Sub-l otals 1 77,S05 40,401 81,339 §j 199~245 11 Breakdown of Government Expenditures: (aY to Income = 77,$05 ~-J9% (b) to Development ~ 40,401 =e 20% of total budget (c) to Others = 81,339 ·s 41% Expenditures Leading to Capital Formation e 55,344 27.6% of total budget I!!I Source: Anexo al Informe Financiero del Contral or General de 1a Republica de Co1or,p.bia,. Vigencia de 1945. II Includes construction material .- machines (v.;i th the exception of office ma.chinery) - contracts. Y Assumed to be with builders, architects. JJ Fuel, 'electricity, telephones, office equipment, rents, repair,)- books, reviews, and participations to expenses 'of departments and municipalities. W Breakdown not provided.. In Revised To·tal it will be assumed that 1/3 goes to personnel, 1/3 to development, 1/3 to others .. .5/ It is ass JIned that entire budget minus personnel is dedicated to development. 21 Total of the above minus 2/3 of national defense .• .Y Difference due to rounding of figures.  APPENDIX VI. BA~*ING STRUCTURE Central Bank By Law 25 of 1923, the Banco de la Republica was established as a central bank~· It has the sole privil~ge of issue and coinage; is charged with supervision and control of credit and foreign exchange; acts as fiE?- cal agent of the National Gov~rnment~ Departments, Municipalities, and ot~er official entities; accepts Government, official, member b~~k, and private depo$its; and acts as a clearing house for its affiliated ins~i7 tutions. Note issue is limited to gold purchases, purchase and discount of 90- • day drafts and bills of exchange in foreign countries, and discount and re- discount of commercial and agricult~al paper not in exce$S of ISO-day maturity, providing that paper with a maturity of more than 90 days does not exceeo. one-th:r,Y·d of the Bank's paid-up capital and surplus. Crec.it operations of the Bank include loans and d~1.scounts to membel." banks, credits to the Government and other official entities through drafts or promissory notes, J.oar·:~ to the public mostly on the security of ware- house receipts and warrants issued agairlst easily marketable products (of which 90% have been coffee loans), and r'ediscounts of obligations discounted by the commercial se~tions of the bank$ of territorial credit. In the field of exchange control, the central bank is the administrative authority, and is the only entity permitted free commerce in gold~ Almost 40% of the capital of the Banco de la Republica is owned by the Government, which appoints three of its nine directors. Domestic banks own • approximately 30%, foreign banks doing busine~s in Colombia about 6%, and the balance is held by the public. Banking institutions may affiliate themselves vrith the central bank by subscribing 15% of their paid ...up capital and reserves. The G~ntral bank is required to maintain against its note circulation a rese:f've of 25% in gold or demand deposits abroad. Against deposits it mu.st maintain ~eserves of 25% in gold, si~ver., or other cash legally computable as reserves (chiefly national notes and fractional currency)~ During the f1irst fe,., years of its existence, the Banco de la Republica played a rather passive role in Colombian money and credit management, mainly because of severe limitations originally placed on its lending powers. However, following suspension of the gold standard in 1931, the co"untry experienced a long period of domestic expansion, fostered by broadened credit operations of the central bank, \-'hieh loa:t:led not only to members and the public but to Government entities in large amounts. For the first few years after the outbreak of Horld vJar II, the Banco cie la Republica sponsored a vigorous l~uti-inflationary campaign, consisting of comp~lsory investment in Government bonds and in central bank certificates of deposit, price control, exchange control, and stock exchange ~egulatiQns.  - 2 However', the promulgation since 1943 of numerous regulations relaxing var- ious of the~e control measures, due largely to political pressure, has al- most completely nullified the anti-inflationary efforts. A decree law issu~d on February 9, 1949 provided that the Board of Directors of -the 13anco de la Republica would henceforth fix the legal reserves of the banks within certain limitations: the reserves of member banks must be kept between 10% to 30% while the reserves of non-members must be higher tha~ JO%~ Seven concurring votes are needed to establish the new reserve requirements, one of the votes requested being that of the Minister of Finance', This measure may prove a u~eful tool in the re~umption of a policy tending toward monetary com.pression. CommeTe.ial! Savings. Mortgage and Other Banks • '@ ,j. #. .' • C # ' ( The Colombian banking ~ystemJ exclusive of the ~anco de laRepublica, consists of mo're than 470 institut~ons inclusive of their branches and agencies-with total ~ssets of about 880 million pesos in 1947. The domestic commercial banks ~re the largest single group, their assets totaling in 1947 about 585 m~!llon pesos. The two ls:'/ge mortgage banks, Banco Agricola Hipotecario and Banco Central Hipotecario, ~re semi-official institutions, as are the principal savings bank (the CajaColombiana de Ahorros), the agric~tural and in- dustrial credit institution (Caja d€t Credito Agrario Industrial y:tvIinero), and the capital invesiment bank (Instituto de Fom~nto lndustrial). These institutions were all "established during the thirties, under Government auspices, with the Government or the Banco de la Republica holding sizeable prQPortions of their capital. All are playing increasing roles in the de- velopment of credit facilities in the specialized fields in which they • belong. Unfortunately, there bas been considerable overlapping of functions among these insti~ltions, which is gradually being corrected through co- ordinating measures. Supervision The Office of the Banking Superintendent, under the Minister of Fin- ance, has overall supervision and control over the Colombian banking system, including approval of applications for establishment of banks, conduct of bank examinations, receipt and preparation 9f bank statements, and ~~king over of banks in diffic1,1lty until they ~e liquidated or re-opened~i Insurance Comvanies There are more than 25 insurance companies licensed to do business in Colombia; 6 are Colombian, and the rest foreign~ All types of coverage are available. Total insurance in force at the end of 1945 amounted to almost ~;OOO million pesos, s-lightly more than hellf of which was written by Colombian companies. Capital in Colombia of all these companies amounts to close to 20 million pesos.  - 3 - Monev I~arket There is no call or short term money market. The structure of interest rates is influenced by institutional elements and especially by the action of the official banks. Discount rates of the Banco de la Republica have remained since 1933'at 4% on general loans and discounts, and at 3% on obligations secured by agricultural liens or warehouse receipts. The Caja de Credito Agrario, however, charges 7t% to 8% on its agricultural or in- dustrial loans. A 6% in;terest rate is normal in the commercial credit field, rates on mortgage loans are 8% or 9%, and interest on savings de- posits is 2t%. Deposits up to one year in foreign currencles earn no interest; one-year depos~ts earn one half of l% and 18-month deposits 1%. In Bogota and Hedellin tl1ere ~re w~ll~organized sec~ities exchanges whit~h are under the supervision of the Banking Superintendent • • •  APPENDIX VII statistical Tables , Table 1 National Income and Capital Formation 2 New Capital Investments 3 Production of Principal Agricultural Corrmodities 4 Industrial nenters S Foreign Trade • 6 7 8 Commodity EX90rts Major Commodity Trade Value, In Percent of Total Trade Receipts and Expenditures of The Petroleum Industry 9 Fluctuations in Prices and Volume of Exports 10 Distribution of Total Value of Trade Per Country 11 Im~orts Fron the USA In Percent of Total Value 12 Balance of Payments, 1940-h8 (Official 'Cxchance Trans- actions Ohly) 13 Balance of Payments e· ]).f Gold and Foreign Exchange Reserves 15 Federal Government Exnenditures and Means of Financing December 1939 - Jun~ 19h8 16 Federal Governm(;Jnt E1..'Penditures, Selected Years, 19hL~~h9 17 Federal Government Revenues and BorrQi!\fings, Selected Years 1939-1949 18 status of US Export-Import Bank Loans to Colombia As Of May 31, 19h9  Table 1 C n. J-l 0 IvI B I A National Income and Ca9i tal :L4'ormation 1940 ," ""!I-. 1943 ; 1944 1945 19hL...12.~7--29h~ (1) Current Net National Income at factor cost. 2117 2245 2280 2327 2397 2466 2536 (2) Net National Income at • factor cost exnressed in 1945 ~.)esos.'> 1280 1672 2052 2327 2636 3205 n. a. (3) Current Gross Capital Fornation. n.a. 213 221 235 333 279 n. a. (4) Gross Ca~ital Formation e}~ressed in 1945 ~esos. n. a. 158 199 235 366 360 n. ~1.. (5) 4 in %of 2. n. a. 9. 5~·; ). 7:~ 10.1% 13.7% 11.2:,! n. a. (6) Index of PO"l.llation Increase (1911.5 - 100). 91 100 102 104 106 (7) Index of Co st of Li vinr.r (1945 - 100) ~ 60.5 90 100 110 130 150 • (1) • Net National Income at factor cost r8al terms. Base ~rear 19h5,; Fi£.:ures adjusted by po::mlation indices. POI' cap:i.ta increase of 1~& as sumed in 1946~h 7-1.1.8 • (2) Net Hationa1 Income at factor cost. Ficures under (1) rrei :--:111,8(1 by cost of livine; index. (3) and (4) Source: nha:f)ter on Capital :?ormation. (6) Source: Cha::!ter on Po},)ulation. (7) I;,'iF ?inancial statistics fif::ures.  • Table 2 • COLOMBIA New Capital Investments in million pesos (a) absolute figures (b) sub-total participation to gro88 capital formation 1943 . 1944 1945 _ 1946 1947 (6) (b) (a) (bl (a) '(b) - (a) CbJ_ (a) (b) A. INVES~MENT IN SECURITIES 1. Bogota 89 ID6 125 181 143 2. Me de 11in (25%) 22 2-6 31 45 36 3. Total III 132 156 226 179 of which 4. To Capital ]'ormation (65%) 72 86 102 147 117 B. CAPITAL OF NEW CORPORATIONS AND CAPITAL INCREASES 5· Bogota 43 51 64 137 122 6. Barranquil1a 8 12 7 25 18 1· Cali 10 26 22 32 53 8. Manizales 1 2 2 8 8 9· Medellin 24- 40 ·64 46 52 10. Rest of Country (15% of 11) 15 18 ·28 44 45 11. Total 101 149 181 292 298 of which 12. Share of Capital For- mation (60%) 60 60 90 90 112 112 175 175 179 179 C. INVESTlvIENT IN REAL PROPERTY 13· Medellin 2~ ,/ 39 40 65 61 14. Bogota 39 54 87 98 65 15- J3arran<luilla 7 13 17 20 16 16. Cali 14 19 29 38 49 17. Manizalea 4 5 5 9 9 18. Rest of Country 16 23 31 40 35 19· Total 105 153 209 270 235  • Table 2 (Continued) • 1943 1944 1.9~5 -- 1946-- --1947 ( a) ( b >- (a) (b ) (a ) (b ) f a ) ' (b) (a ) (b] D. VALUE OF NEW BUILDINGS 20. Bogota 14 22 30 44 30 21. Barranquilla 2 4 9 15 8 22. Cali 3 6 7 15 13 23. Manizales 1 2 2 24. Medellin 4 8 10 18 11 25. Rest of Country 5 6 8 12 15 26. Total 28 28 46 46 65 65 108 108 19 79 = Participation to Capital Formation E. INVESTMENTS BY GOVERNMENT 27. Public Works 21 36 43 69 77 28. Autonomous Agencies 43 27 15 14 25 29. Total 70 10 63 63 58 58 83 83 102 102 GROSS CAPITAL FORMATI ON 158 199 235 366 360 Computation by Real Capital and .Durable Goods Con- sumption 200 Total Cepita1 Invested 11 f 19 f 26 f 29 304 411 519 153 71'4 Source: Various Tables. Boletin Mensual - Banco de la Republica. Notes: 2. Investment in securities in Medellin (only other financial market in Colombia) is arbitrarily assl1med to be 25% of Bogota value. 4. In Bogota, 65% of the stock exchange investments go to industrial shares, 8% to Banks, insurance cor- porations, etc., and 21% to bonds. 10. Investments in the rest of the country assumed to be 15% of total investments, by similarity with in- vestments in new buildings, for which figures are known for the whole of Colombia. 12. Ratio of 60% derived from statistics for Bogota (Investments in agriculture, mining, industries, transport) •  Table 3 COL a MB I A Production of Principal Agricultural Commodities Commodity Volume (000 tons) Value (m. pesos) Average Pre-'war 1945 , AVerage Pre-war 194'S" ----------------~--~--~----~--~I~7~·~'i-~~-~--.------ Maize 500 600- 42.7 ----- 66.2 • r:heat Rice Barley 100 65 10 109 80 12 12.8 10.5 32.5 25.0 3,,,6 Potatoes 330 450 93.6 Yams and Cassava 650 730 32.5-· 54·.8 Plantains 750 750 15.0 22.5 Bananas 350 250 7.0 Fhite Suear 40.5 76.5 5.2 19.1 •• Panela Miel Cacao 381 77 11 650 10.2 39·3 1.8 n.a. 177.1 23.5 n.a. Coffee 250 328 188.7 Cotton Tobacco n.a. 6.8 rique n.a. 10.0 1.2 3.0 Meat 274.4 331.9 101.6 213.2 2/ Milk- 585.0 916.0 21.8 50.1 Y Estimated. ~ Fluid milk basis of all milk ,roductse  Table.4 .:a: . .• COLOMBIA ; Industrial Centers I i Qund.tnamarcat Antio(lUia Atlantica Valle ~. t . Gel C(i.uca (Bo[ota (Medellin) (Manizales (B~rranquilla) ( c~. .liJ- Zip~quira) Armenia Pereira) • .1 , j Nur:1ber of Il1clustrial Workers Employed 27,69h 34,648 8~660 l4.,J.,J.o5 17,979 Percent Engaged in: Food 20% 9% 32% 11% 37% Textiles 13% h5~ 12% 27% 11% Beveraees 10% 2.5~ 8e-:' .. 0 5r,f ;0 )I~' 4/0 Construction ~aterial (Cement, Bricks) IJ~& 11% 5s; et 3;0 8ri .b Leather _5.5% 6% ., ... [, 1 10% 01 81" r.: .,'. 501 ,0 Total 61 •.5% 73.~% 67% 54% 65.5% Percent of Total Indus~ trial rTorkers t. popula- tion employed in • Province - Percent of Industrial '-'orkers relative to total of Industrial and Handicraft ... 20% 26% ll;s 13% ':Torkers. 89% 82% .)  Ta.ble ·5 • • LOMBIA 'y IEIGN TRADE Dna of pesos) .- '.~ "~ .. :: ..... t - .!.':'"" ~l' "1942 1943 1944 . 1945 1946 1947Y . 194B.Y -, . . . t:'~ . . ~~ ,.' ", . l .. .., ..; 218.-5 .. I.!: 3·5 170·9 227.1 246.2 351.8 444..4 468 ::..~- : • ': ~.;~ <, :>.-0 105. 0 ~46.1 17.4··1 281.2 403 . 0 596.0 620 ": '.~." ;.. ":;' ~~ ......~;~ ~ " ~...... ~" 5.; 165~9 f71.8 152 •4 -35.0 -51.2 -163 ...152 -., •t .~ 4 '':-~';;':'" .~. ::.J.•-. 2~6 2l.0 0.2 0.2 0.6 38.4 ........... -. _ ._ .... "',.....~ ~ ........ _........... _-_ • .........:0."" ~~ ...... "" ~ ' .. ~ ..... ".. lions of US$)!! .. .,. .... _ " ..... \- tI .... . . . - - · . __ 004" _..... •.. - - ...... _ ... r. ... - ....... ,.- . ," .,/. .- . .. \l:~·r·:'- . ·- '.. ,'-.t.. .... . ~." .~ :': " .. # ...'"~. 5.1 97.5 125·1 l30.1 14-0.5 200.9 253.,3 -273 .... ~. .'. J.: -. ... t 51' 9 83.9 ...... " 1-\ .. ! ... !. • 59·9 100.0 160.5 230.l 339.7 354 . - :..~:! ~.' /30 ... 20 -30 -81 ...l . .-\:~ ~·3 12.0 0;1 0.3 Jo • O.l. 21.9 ...."'.:.;.••.~) :..,t· ~:. :~C':. :....~. . ldicated. ~. ;~ :_~. .. :.- .... :.~... ..~; J \;'~ • .. j . ..4"• .s, '.j. : :~ ~:~ ..\. .. : ~:.: ;!~. t~ :.~... ~ • ..:;.!~~. !'~!>'.  • • Table i6 COL{)MBIA COi~IDDITYEXPORTsll (in million pesos) 1940 i941. 1~44_ 1941 1944 1945 1946 ~ 194'l.~ ~'" .... ~ ~: . : ...."'" 5~6 2.9 -o .. .} 0 • .5 li9 3.·9 74.0 83.3 144.7.' 176 .,1 164,,7 182~·t 269.8 .'" ~~ f..:.~~ 1.:5 1:5 2.0 2.·7 2.9 2.3 4.2 ,..·t......... "r:;:: ~ ~.: .0. v' < • :. ":!~i~; ~ ... >~\,~ 39.9(¥) 40.5 14.1 20.0 37.3 38.9 41.7 75. 2 L 1.7 1.7 2.3 1.9 i.8 lj7 :34 ( ':\~J' .~ ) .. ~. ~ '; "~ ~ ~.; ~~ .ci. " :: 5. :". 0.2 -' 1.3 0.6 2.3 3-.2 2.7 .4.5 2.' 4.,' 3.6- 5.9 {~~ (~::;~ ~ :,1' . .~.. ;; "; ~~~ 1,,0 1.7 0.4 0.5 41.8 42 • .5 20.9 0.2 0.2 ~- ! :~- ~ it:' , ,. ..... ,," " " . 1 }:- h.'~\ ..:. J:; ~ 126.0 lIl. 5 170,. 9 218 .. 5 227.1 246.,2 .3 st. 8 444-; 4 .... , .. -\,.. ... tOt ~ ~ P't ~ :,,~ -4" :NA~IONS OF COMMODITIEs6I 1941-1944 ~94$-=19~ Y§. !ffi - Sweden - Benelux 'US - Canada Q.2. .... Canada ;. - ..~~...~" Me'xicQ - US - t1X Mexico - US .~ " : ...~':~. : Canada - Curaca~ - US Canada - US .t· ':if· or:;' US TJ8 - UX ~~ ~ 4::- Canal Zone • - .. ' . 0. . . Canal Zone - Curacao .... Venezuela ).p~ ?r'!; i. Venezuela .- Ecuador Venezuela - Ecuad.r "~ ..1 ~~ " US US - France #o· • .-f :'" .~ r\ . .; US US -., ",~; ~~ #;\ ndicated. ~I Main purchaser is underlined. (*) Also reported as 0".2 ..'  .ble 7 • • OMBIA IN PER CENT OF 1J:'OTALTRADE • • ........... '. _ .. " ........ H ....... - _ . _ ......... , .... _,,-, flo ~ 14.' lit ~.l'£. '.",~. . , ' .... .,.... ...,.~ ..... _.#0: ~rts, ExcludingG61d, 1926-19~6 . . ... ~ .... - ....' - ,:-:: ... ,-- ...:" , . -;~ ......,.. ~.' "' , - .'~,~.. - 1941.. 1242 1943 1944 1945 i946 i941 . :ct !.""'.: ~~ ~t~·, ~~ ,. . ''': \;~:':!)' •• :.:::":' ·62 85 81 74 74 11 77 .s:·.• · -:\ ~.J ",'~ C~ ~' ?~. ~./..i.::··:'.{.~ . .:~:~; .:~ t.i" . ~·.': }-;!.: :'::. ~ ~f 2 !I -8 Y 1/ 16 Y 16 12 1 ·15 t'~j~~-i ~.t ,"! . 30 9 2 1 1 1 1 1 ~'. ,':...4 ," ........ 'C...... 1 1 1 1 1 1 3 5 8 8 8 8 .:(:·t .h.1.Ji· ,-. lOO 100 lC'O 100 100 100 ~:.... '~. 1':~.. ..!.~ .. -: ." ... "l" • -! ./: ::.: ~.;::~~.( ~:r~ .:~~~. 24 11 - . '".': ~-.... - '~.;..::-~: ..:-::-.-;,:•. ;-. ~"'":-' ;'~"'I';:;:::;::' ~... :~. ,-' .. ·ts, 1937.. 1939 and 1940-45 .. '-~"._~~'".-.':"'''~-''~~ ~r:'''''--~'''''''''-'-""",," 4.0,- . : •• P~ 1940-45 ~~T _ ____ u -- - 1942 ::: ~.:,Ji. 'iJ;! . ~ ~:. ,4"~l,. .,.-::, :. . :::!~; ......~., ~ '.-:: ~ 85 84 ;~"'.... ;.: .' . F:' .;'" ~. ;jl;:'" bB b9 11 15 .: •. f.~ H:!.~·:~ ! ~-:,'" i-~':' ~.;' '!;:'. ,. .. :. .. ~t ;~':~~.:;' .. - ..... - 11 l! :,; t . .~. ~ .. ;~ S .. ,,,~ :. _}'l. 4 5 . ·1 6 ~~~' t: . :" . 4 .2 i.~!:! ~'~ _ ..... ",., !~,.~-_. , .. l· _ .... ~. ,'r ~J _ ............ -... 6> 100 100 ~; .~.; ':~;'~:c.:_1~ • ":; :~.'!.. ~~~ ~  Table - ..--8 Receipts and Expenditures of The PetroleuDl Industry ~~-( In Colombia (O~~ - 1944 Pesos) 1945 1946 19117 ~r ... ---- I. Cost of Production: Royalties 3,571 3,,746 4,571 Tfl~~es 2,853 7,234 8,000 (E) • naces & Salaries 21,086 30,263 39.,901 :1 iiscellaneous 1,000 (E) 1,,000 (E) 1,,000 (R) Total '28,S10. . ~ 42 J 2[~'3' 53"h7 2 --- 2. E;~port Sale s 37,450 38,850 )-1. 2 ,000 63,350 3. Internal Sales 9,800 (E) 9,800 (E) 12,,200 2l.i,500 (E) h, Total Sales L17,250 48,.650 54,200 87,,850 5~ Profits 18,740 6,4.07 728 (4-1) 6. Pesos Needed to Cover Cost of Production (1-3) 18,710 32,J.~43 41,272 • 7. Pesos Received for Dollars Sold to Banco de la Republica 35,200 56~OOO 58~000 65,000 8. Investments from Abroad (7-6) 16,h90 23,557 16,,7 28 9. I~!1orts of l'JI£.chinery (from USA only) 5,000 (E) 6,354 8,668 8,351 10. Total Investments ( 9 "" 8 ) 21,490 29,911 25,396 From Profits Earned During Year 18, 7'-~0 6,407 728 New Investment 2,750 23,,504 24,,668 . -........ _---- (E) Estimated  Table 9 • • -~ .. ~ ............ -- . _..... . JLOMBIA _~" <1'.- _.-_4* -_ .... .,.-- ~ICES AND VOLtn~ OF EXPORTS - .... .....-........ 4 , -',,- ~~ .. J,.-""". 1930 1931 1932 1933 ~934 . .1935 1936 1937 ~- .. ".,. ... ~ ., #' • .. .. • 1- '1- -, ~j . "s,:-: ., .- l7.24 15·55 11.35 10.46 13.10 10.26 11.26 11.60 I .• . :!~. 12.E8 8.75 10.59 9·12 11.11 8.88 9.45 11.04 .c . ~ 3.0 3.2 3.3 3.0 3.8 3.9 4.1 4.2 .. -3.1- - ~ ~ - - - - - - - - - -3.8- - - - - - - - - - ~ =.••.•t. ••::. - - __ 'ri ... 'lt~ ',:., " t,~ f "f ":-:' », 1941-~~-1942 - 19li3 1944 1945 1946 1941 1948 . - .. ...... ' " . 14.99 15.87 15.87 15.87 16.22 22.5 1/ =·i ....~. • ~~". : ~j: ~ 11.34 30.11 34.3~/ ," : ..... ' . 13.37 13.37 13.37 13.72 19.78 26.7 27.08= .- 2.9 4.3 5·2 4.9 5.1 5.7 5.4 5.6 -4.1- - - - - - - - - - , ~ - - - - - - - - - -5·3- - - ~ - - - - - - ~  Table 10 COL 0 1': n I A Ii DISTRII3UTIO:J OF TOT,:l.L V;tLUE OF r-:;li.EE PER. CQUI;TRY- 1938 1946 19L7 -- Per Cent of Total Exports (gold excludedf United states 53 82 • Germany Netherlands Canada liJ. T .1... 15 12 10 1 5 Per Cent of..,.Tot.al Imports United states 50 6e Gerr::any 17 n.a. Ur-i ted Kinrdom 11 n.B • • Y Source: r:F Fina~cial C:tatiE'tics ~'~'). 12, u!'~less "1t1'if~::~;ise 5Ti:'icatec~.  Tabie 11 COL 0 L: B I A 1: :PO~~TS FRO!! ~'HE USA Y IH 7:-::lCEl'iT 0F TOT11.L Vi\.LUE --2] 1946 1947 1948 - • A~ricultural Food others Sub-total _._l_ 11 4 10 6 4 4 4 8 Industrial Semi-proc~~ssed or raw materials 17 16 19 ::Ianuf ac t ure s 6S 67 66 Sub-total 82 83 85 others 7 7 7 Total Value in rli.llion US~ Itt3.7 215.5 226~4 • 11 Source: !1evista del Banco de la I"G;?ublica" !Jovember, 19h2. Y On 6 months basis.  Table 12 • • COLOMBIA BALANCE OF PAYMENTS, 1940-48 (OFFICIAL EXCHANGE TRANSACTIONS ONLY) (millions of U.S. dollars) 1940 1941 1942 1943 1944 1945 1946 1947 1948 xports 46.1 51.4 16.7 111.0 102.9 113.6 193.5 216.2 200 ...8 s 23.5 27.6 32.9 19.2 18.9 11.8 15.5 13.7 10 .. 4 6.1 11.6 5.6 Colombia 11.6 9.0 5.9 1.0 70.2 85.0 .109.6 130.2 133.4 140:-4 220.8 241.4 217.8 ~orts. 13.3 82.0 67.9 74.8 88.3 138.2 220.6 299.l. 247.6 4.4 3.8 5.5 5.4 1.6 8.0 1l.9 13.9 6.8 s·: 15.6 14.6 13·5 23.8 18.7 (23.3) (29.·7) t Transactions ce on Public Debt 11.3 10.2 8.0 B.8 Expenditures 2.·3 7.9 7.4 5.0 ~bt 0.4 1.3 0.4 0.4 4.8 4.3 4.5 2.0 (use of patents ~emarks) 0.2 1.2 1.7 1.1 all,d He-Insurance 1.0 0.9 1 .. 9 0.1 eous .Expenditures 3.3 3.9 6.5 5.6 93.3 100.4 86.9 104.0 114.6 169.5 262.2 343.5 218.0 1 JCQl1tin1.led  • • ... "". ... .. , --..;..;--:..;::: ,."" :. ..... ~.~;. .. , ~ ... "" ." .... ~ .. - -- - .\ ........ ~~ , ~ I. Current Account A. Receipts: 1. Merchandise 2. Gold Purchas 3. Services 4. Residents in ..l '; 5~ Total. ~, " , B. Pa~ents: .. . , ) . . . . 1; ~ ~~ .. ~ 1 .. M~rchandiae 2. Residents '... 11 • -==.~~~ t ::L .... ....... ..1 3. Other Payme ... "" " l ' -( .- a. Governme ~ r f .. (1) Serv (2) Othd . '} b. Private ~ • t c. Div.idend ... d. Royaltie and tr :-: .. ':4 e. Ineuranc' .' f. Mis,cella J., \: .~ 4 • .'1 4. Total :...~-~.~ ~~ .. ;, :\[ ~ .- ~ . ;. <::; ::: :;t ~.;. .'  • • ~ab1e 12 - Continued '. 1940 1941 1942 1944 '1946 - - - 1943 1945 1947 ~946}!f -. E,d) ~ Current Account -23.1 -15.4 122.1 126.2 /-18.. 8 -29.. 1 -41.4 -102.1 -60.2 ies -- -- -- -- 20.1 31.9 33.2 37.1 30.1 -- -- - ..' -- 1.9 3.2 8.4 2.6 0'.6 O.s. -- -- -- -- -- -- -.,. -- 2.3 1.4 3.3 6.0 1.0 2.9 -- 0.2 -- 0.3 -- -- -- -- 0.9 0.8 , 3.7 5.3 2.8 115.4 /15.0 /21.4 /32.0 /26.7 /45.2 149.3 45,.2 33.8 -.. -- -- -- 1-.5 5'.6 2;4 1-•.6 ., .-to a1 Account /15 .. 4 115.0 /21.4 132.0 /26.7 143-.1 !-43.1 142.8 1-32.2 ceding Items - 707 - 0.4 144.1 1-58 •.2 145.5 /-14.6 I 2.3 -61.8 -28-.0 .ted for - J.O .. 2.1 /4-.7 I- 6.6 I 0.6 t 3.9 - 2.8 - 2.4 I 2.0 u'y Reserves -10·7 - 2.5 /-39.4 151.6 144.9 J,18.5 - 0·5 -65.2 -26.0 dicate'6 unavailability of data. ~ 1b11ca, Ofieina de Control de Cambios, Importaci one s I y Exportaciones, Boletln de Inf"ormacion Meneual. -1948.  • • ,. ".. ,,,., ". .. - .... ~- ... ." -.-. ~- ~;::- ~;~ .. ... • _.,- - ... - A - ._ _ ..... , . .. .. t .. • .. _ • ' *" ..... - i ... ! '_I ~ r .",- I,. Current Account (Contin :;,. .) .," .. ' ............. , • ! ,6 • # . .- "'\ C_. SurpluB of Deficit II. Capital Account A. Receipts of Capital . '- ,...- 1. Petroleum Compa :. .j. 2. Other Industrie 3. Agencies of the ,. ..... "," 4. Loans . ~ ..;. ~ •• "_ J,._ . . . . ..,' •• 5. Other Sources u .. ::.;: ~' ... I 1 •• 6. Total .. ~- ~ ,. ~ . ...... .. .... ...... B. Outflow of Capital '. -:: .:. ;.,,~ ~. c. Net B~celpt8 onCap .,. ~ .... _. #0 - III. SurpluB or Deficit ,on P .. "'! '1- ... "'t ~ IV~ Errors and Items Unacco ....... ,- -; .. ~i" \, v. Change in Official Mone ------..- ---------------..... , . 'I ... ....... ~- Note; Use of the dash 6' .#- t :+- '" " 0- .. ~ .source! Be.Ileo de la Be '" ... " r .:'., _:-;.., • Y Basis: First half  Table 13 C 0 JJ 0 ~.T B I A Balance of ?a~iffients ( III . . 11 ml . ___ lons US"<"\ ..') (at the rate of exchan~:e 1. 75 ~esos =1 US:::) _.. _- .- 194L 19L~5 . 152;6 19h7 l)I~S -- ----- • Receipts: 1 a) Fxports b) Gold Purchases - Gold excluded 130.1 18.9 140.5 17.8 200.9 15.5 253.3 13.7 27] .0- / 1'" _~ I. )..,. ~~ c) Invisible Trade 11.6 9.0 12.0 11.6 ,. f? C'. v':.:.!I d) Capital Receipts Non-Petroleum 6.6 13.3 16.1 3.1 e) Capital Receipts Petroleum 1.5 13.1~ 1!i .1 18~.5 f) Private Ca~ital Movements 2~1 2.1 Sub-total r:eceipts - IbU.7 1)4.00 2bO.7 307.7 --.oo.<!'.-.-~- - ... -------....---- Payments: 1/ g) Inports 100.0 160.5 230.1 33?7 3511.0- • h) Invisible Trade 2(.3 31.3 lJl.6 hh.L. 3~).4Y i) Ca:;ital Pa~iT:tents 1.5 ).6 2.h 1.6Y j) Payments of PetrolelU~ COT1!)anies 0.5 0.6 0.7 0.8 k) Ca~i tal i::v.o.sion 3.6 2.7 Sub-total Pu:t7Elents 130 .J~ 19c·.l) 27P.O 307.3 -~ ..----~ ...- ..... ~---- ... -- ......------------ ~---.-- 1) Sur~lus or Deficit f3B.3 - 2.6 -17.3 -73.6 .---. m) Act·U.al "Sxchanee Fl,,~.;tuation fh6___ 120 -66 Y On basis 9 months. y On basis 6 months.  Table 14 • • COLOMBIA GOLD AND FOREIGN EXCHANGE BESERVESY (in equivalent millio~ U8$) --_....__... _---_ ----- Dec. _---------------------- Dec .. Dec .. Dec. .. _-_ .... _--- '-_ ...._- .. -- ... --_._._--- .. _ . _--- .. _--- ..._- ~------ ,. ~ . -------.-- --"' -._-_. __.... - . ...- ... .... ~ -. .Dec. .Dec. -Dec. .Dec • ~Dec • June Nov. Dec. Mar. April ,1939 1940 1941 1~42 1943 1944 1945 1946 1947 1948 1948 1948 1949 _ i9~9. 21 17 16 25 59 92 127 145 83 65 83 84 67 64 3 7 6 37 54 66 50 31 28 30 j .I 1 2 1 2 1 2 3 4 3 3 1 4 3 n.a~ 25 26 23 64 114 160 180 180 114 98 85 88 10 n.a. -2 11 -3 141 /50 /46 /20 -66 -16 -26 cs No. , unless otherwise specified.  .' • , oJ :::=.::::--.-=-:-::::-. -- .- = :. ;:':'-. . . 00 ~ <I' ". ........, .. . ,. Dec. ., ._......-----=1938 ,I, . .. :.~ '. :'" .: ... ,_to _ .... # • , PJ3::!.1:,'--'::,£.':·}-:,3 _ P,3jnlb11.9 ... Gold 24 ..J~'. ,. ~ .;;:a1 ~:} - ,) , " 1- Foreign EXChang~1 3 Colombian Ba.t:1k.a ... ., .. .t,... ... -;. ,. " Foreign Exchang~/ .....:: .. f ~ ~:i ,', ~.:; " Total Assets 21 Flue tu~,ti .:rns " G~ . :~ ~ .::~ "dlll'i~.!.ict; Year 11 I~W Fina~cia1 Statia Y Virtually all U8$.  Table 15 • • " COLOMBIA FEDERAL GOVERNMENT EXPENDITURES AND ~{EANS OF FINANCING DE CElVIBER 1939 - JUNE 1948 , , '"': ".- ..... - (mi.1Iions of pesos) ...,'t .. . . . 't ~ ~ ..... " , ,. - 39 ,1940' 1941 1942 1943 1944 1945 1946 1947 --~--i948lT~ 9.0 83.7 81 •. 0 86.3 87.7 113.8 151.7 ' , 210.1 281~3 136.9 1.. 5 28.9 ' 11.6 43.6 57.6 46.1 45.7 60.3 67.7 40.4 ).2 " ' ., 19.6 20.6 33.4 . , , 43.1 26.7 14.8 14.4 . 25.0 . " - 3'.8 . 132.2 113.2 , 163.2 188.5 186.6 212.9 . 284.8 374.0 . 177.3 _ l.6 98.1 109.7 118.1 _ 140.. 8 137.4 166.6 23~.,2 312.4 138.9 .. 2.2 -34.1 .- 3.5 . -45.1 " --47.7 -49.2 -46.3 -48.6 -61.6 -3a.4 . 1.9 33.4 4.4 14.4 25.9 4.3 2]..6 21.6 17.,.6 2.5.8 . 2.9 2.5 1.5 3.2 2..3 5.9 1.3 9.3 32.2 1.1 - 0.2 1 .. 3 11.0 15.0 3.4 10.2 11.3 '6.1 . - - - 19.• 6 Q.2 1Q.0 5~'l - - -- ... ·6 1.8 2.6 6.9 8 .. 2 14~0 14.9 7.5 0·5 5.. 4 's) ( s) ( s) Finance -- Budget Department.  • • :; .. -~ •• - . •~ . . . O\~ •• . . -..... ~ _ _ 4_ _ __ • _ , ••____ ~." . . . . . . . . . . . . . . .- . . ~ "'.~' ..... ,-- n· 'u,' ~'''''''''' ... - .......-: ." t, • _',fp'" " ...... "'" ... _....... ." ~. -. ~. '"' • _.. .._. .U "L< " ,'" . . . . . . . . ............. " .... _ .... _ •• _.,j- .. :~:'._ I. .- .... :.. ~. .... , •< ," Expenditure.s ..,.... ...... .. " ... ~-"., ..... - _ . , . ..... _ . . . ..# • ,. .... .. ~~..... • .... - . . . . .#~ ... ,~..,..... ... Ordinary . ~ Extraordinary Semi-Fiscal Agencles Total 1 Receipts '. Taxes Surplus (I) 1 Deficit (-) ]3 0 rro'lrrings , , Central }tank Credit Institutions Others .~ Eximbank Residual.Deficit or Surplus 11 Six months only (s) Surplus Souree: Ministry o  _Table 16 • • COLOMBIA FEDERAL GOVERNMENT EXPENDITURES, SELECTED "YEARS, 1944-l94~ (millions of pesos) t939-43u#/ %of % of' %or Average 1944 Tot§:l 1945 1246 ,. Total ;1.947 \1948 &949 Total J- 9.6 < 18.4 \ 9.4 }24.2 ./ 30.4 'i 10.8 .{33.5 18.2 "23.2 6.0-' I. '0,-- , " 18.2 23.4 6.1 1.3 2.1 1.1 2.6 -6.8 - 2.4 " 4.6 4.7 5.2 . 1.3 7.3 47.7 29.0 30.8 39.2 l.3.9 29.6 38.5 38.5 10.• 0 15.6 20.1 14.1 32.1 45.5 16.2 41.2 42.0 55.9 14.6 11.0 21.5 10·9 26.2 28.6 10.1 31.8 44.6 " 61.3 16.0 ( : 4.9 : 9.6 \ 5.0 ; 12.9 . .: 15.1 ! 5.6 .=; 20.1 .2.6 1D.3 4.3 2.1 1.1 t I \ 11.6 18.8 4.9 6.8 1.8 '0.6 0.3 0.3 0.8 0.3 1.1 1.1 2.0 "0.5 5.0 9·5 5.0 12.8 16.2 5.1 21.3 2o~6 25.2 6.6 5·0 7.8 4.0 ." 10.2 13,,5 4.8 15,.4 16.6 ."19.1 " .. 5.0 38.5 35·7 18.5 '42 .. 8 69.2 24.5 78.6 86.6 -85.6 22.3 l.6 0.8 2.0 3.0 li.l 3.0 3.1 6.6 " 1.7 3.6 2.0 7.2 13.1 4.6 11.5 11.0 ts 7.8 186.6 205.2 282.0 100.0 291.7 ~25.4 "3~6.~ 100.0 General de la Republica: Informe Financiero ( annual) • enditure are taken from the annual reports covering the year in queation~ Because of the accrua].'element data they may be sli.S;:ltly at variance with later revised figures. nsidered practicable to present a complete series for this period becauaechanges in nomenclature between ter years make complete reconciliation doubtful.  • • ... ... \. \ . Government Administrati Justice a:l.!cl lx~:terior ",,- .. f , £!J \ r .N Foreign Af:re.irs , ., . Finances (Ordinary) ;. ..... -\,.( ..... . .- -, ~ :;~ Public Debt War Agriculture ." ... ).", .. Labor i'/ .~ -1 ::; ....\ ., ..... . . Hygiene Commerce .\ ..... Mines .' .' ..... .' .. Education Post Office ..... .,,,,.: Public Works • , .. .J Budget ~ " • <. Economy . 'til I " ~ -~ .t • '. • I _ Previous Budgetary Defi y of $ ~ ". . -* ... ,..... - -. .'..... ~ Source: Contralori • J ........4 '. ~~ . 11 Data of actual e ......................-..". ,.,- " -.. ' involved in thes . ~J. , !"- -; '4:; :~'~. :~:;. ;.. ' :. : gj It haanot been ~,. _:.\.. this period and . . ,.,,:, ... ::." 1> ., ' •• ..... ,-" .t,  Table 17 • • COLOMBIA FEDERAL GOVERNMENT REVENUES AND BORROWINGS, SEIJJCTED YEARS, 1939-1949 11 (millions of pesos) t::. 61 to 0 f ,.,j jo 0 f %of y JJ %of 1939 Total 1943 Total 1944 1945 1946 Total 1947 1948 1949 Total 40.6 38.6 21.7 12.1 26.0 41.3 49.0 17.7 65.8 :;2.1 60.0 15.6 19.4 18.5 42.5 23.6 48.6 59.2 77.8 28.1 95.9 127.4 148.0 38.6 s 1.7 1.6 3.8 2.1 4.0 4.6 5.5 2.0 8.5 5~7 10.'; 2.7 5.5 5.2 5.3 2~9 6.4 8.3 10·5 3.8 13.4 12.0 18.5 4.8 4.4 4.2 4.4 2.4 4.8 5.4 8.2 3.0 14.9 12.7 16.5 4.3 8.6 8.2 14.9 8.3 17.2 24.1 7.4 2·7 8.5 7~3 31.1 8.1 80,.2 76.3 92_,6 51.4· 107.0 142.9 158.4 57.'1 207.0 217.2 284.6 74 .. 2 :n 1.3 2.6 1.2 2.5 0.5 1. 9 0.3 1.1 1.9 2,6 3.8 3.5 4.4 3.0 1.6 1.1 6.0 3.3 6.6 2.4 10.5 4.0 2.7 1.0 ~s 3.6 12.4 3.4 11.8 4. 0 3·~.6 2.2 18.7 4.8 10'.0 5~5 16.3 4'~7 54:9 1.7 19.8 4.?ju 129. 4.?pJ 112. 5;.0 79.4- 1.3 20.7 100 . 1 95.3 132.5 73.7 126.3 172.0 225.4 81.3 n.a. n.a. 383.5 99.9 4.8 4.6 47.4 26.1 44.0 24·2 51.9 18.7 n.a. n.a. n.a. n.a. 104.,9 99.9 179.9 100.0 170.3 196.9 277.3 100.0 350.5 342.4 383.5 99.9 publica: Reviste (monthly). Contraloria General de la Republica: Informe Financiero (annual). a consistent series, the data used here are those carried monthly in the Banco de la Republica's monthly bulletin. d that these data are freauently subject to revision and adjustment. It has not ceen attempted t~ spparate ordi- ry revenue sources since the extraordinary budget was in theory at least discontinued in 1945. rationsll. • • Import Duties Income, Patrimony and Excess Profits ~axes Inheritance and Gift Ta Stamp Xaxes Gasoline Consumption Ta Other Taxes 0' Total Taxes Revenue from Participat in Petroleum Exploita Revenue from Salt Mines Revenue from Communica Revenue from Other Sour Total Revenues Credit Operations Total Sources: Banco d~ la 11 In order to presen though it is belie nary and extraordi £I First ten months. 11 Estimated. !±! Includes "cre("!i t o  Table 18 COLOMBIA • • STATUS 0]' US EXPORT-II1iiPORT BANK LOANS TO COLOIvtB IA AS OF MAY )1, 1949 Amount Amount Gross Net Outstanding Undisbursed ber Purpose Aut~orized Cancellations Authorized Repaid (Various-paving, hi€;h,vays, 1 2 .4 . 5/31/49 5/3.~ $ 9,947~71 $ 9.947.716 $ 4,426,774 $ 5.520,942 (military supp~ies, docks, etc. 10~052~284 • • • I 10,O.52,28.q. Rubber development, construc- 3.431~850 6,620~43'4 10,000,000 10.000,000 .446,500 tion of a dam, machinery for 191,.500 9.360~00O irrigation project, fertilizer and other ~urposes 1 Equipment for electrical plant una110tted 875,000 875~OOO Baldwin Locomotive ~""l"orks 367~380 The Kerite Company 16,738 T30~647 73,476 257~166 157,523 157,52) 31.504 86;6)6 Taylor Forge & Pipe Works 450,807 45,080 39,)83 u.s. Steel Export Company 405.;727 90.160 315,567 326,693 21,855 304,838 76,.149 228~689 !"lestinghouse Elec. Int. Co. 1~322.598 1,3 22 ,598 ~ Railway Eq~ipment ° ( 2 ~.OO ~.OOO ( 3,000,000 2,000,000 280,854 961~646 : 867, 86 3 1,.0)8,354 173,.881 1.000 .. 000 298,856 2,384,090 317,054 -13 Goods & Services for Hotel ),057,600 3,057,600 Co~struction 3,057,600 9 Locomotives 517,800 43,150 474.650 302,050 172,600 Baldwin Locomotive \'1orks Seagoing hopper dredge 1,978,609 1,.978,609 (George Wagner Associates) It750 .. 000 228,609 Construction steel, cast and gal~ 10 t.OOO J 000 500,000 9 t.500 ,.000 vauized pipe, agricultural 842,380 8,657,.620 equipment. electrical equipment, plumbing fixtures. paint· and var- nish,. and other purposes. 54,054,010 1,521,823 52,532,.187 10,419,819 20,278,221 21 ~ 8 . . :l.} ~ lLf7  • • .' Name N ~ . ., . Republic of Colombia I Republic of Colombia .: f .. Caja de Credlto agrario, . , Indus. y Minero (Re- public of Colombia) Empresa de Energia Electric a , S.A.{Banco de la Republica et al) Republic of Colombia - Consejo Adm. de Ferro-3 carriles Nac. de Col. . .. • I" • Hotel San Diego S.A. (Banco de la Republica 3 ~ Ferrocarril de Antio- 3 quia S.A. ~ . (Banco de 1a Repub- lica et a1) - Republic of Colombia 4 • r" • 1 Republic of Colombia 4 ;-*. • ~~ ....." 1 ---------,--.----, ----