"These rules embody many details. They are obscure and complicated.

According to them, long proceedings are made against morose taxpayers, a characteristic of Spanish bureaucracy."

The two tables which follow show the face value of the tax receipts placed in the hands of the Spanish Bank for a series of years and the actual amounts collected. They have been carefully compiled by the author from official sources and are believed to be reliable:

TABLE I.----FACE VALUE OF TAX RECEIPTS HANDED TO SPANISH BANK FOR COLLECTION

-------+---------------+-------------+--------------+-------------+-------------- YEARS. | City | Rural Real| Taxes on | Minor | Total.

| Property. | Estate. | Professions,| Taxes. | | | | Trades, etc.| | -------+---------------+-------------+--------------+-------------+-------------- 1886-87|$ 2,520,061.51 |$ 507,739.70|$ 1,963,778.53|$ 249,071.76|$ 5,240,651.50 1887-88| 2,565,834.77 | 472,909.25| 2,090,306.46| 257,577.35| 5,386,627.83 1888-89| 2,633,491.17 | 510,456.81| 2,030,542.86| 141,876.76| 5,316,367.60 1889-90| 2,451,866.27 | 393,938.19| 1,895,638.08| 136,604.67| 4,878,047.21 1890-91| 2,498,060.52 | 693,323.04| 2,027,435.32| 117,792.37| 5,336,611.25 1891-92| 2,093,492.10 | 386,578.79| 1,654,306.58| 108,604.87| 4,242,982.34 1892-93| 1,989,290.65 | 784,943.09| 2,452,044.86| 131,650.37| 5,357,928.97 1893-94| 1,889,814.97 | 804,838.90| 2,183,355.47| 214,191.07| 5,092,200.41 1894-95| 1,884,766.87 | 814,006.33| 2,297,452.23| 167,096.27| 5,163,321.70 1895-96| 1,905,731.44 | 823,609.47| 2,073,581.75| 104,731.51| 4,907,654.17 1896-97| 2,060,263.25 | 880,946.21| 1,995,542.42| 105,453.12| 5,042,205.00 1897-98| 1,924,866.65 | 811,470.78| 1,609,094.32| 85,163.40 | 4,430,595.15 -------+---------------+-------------+--------------+-------------+-------------- |$26,417,540.17 |$7,884,766.50|$24,273,078.88|$1,819,813.52|$60,395,193.13 -------+---------------+-------------+--------------+-------------+--------------

[Ill.u.s.tration: ROAD IN A PINE GROVE OF VUELTA ABAJO.]

TABLE II.---- ACTUAL AMOUNT OF TAXES COLLECTED BY THE SPANISH BANK

-------+--------------+-------------+--------------+-------------+-------------- | City | Rural Real | Taxes on | Minor | YEARS.| Property. | Estate. | Professions, | Taxes. | Total.

| | | Trades, etc. | | -------+--------------+-------------+--------------+-------------+-------------- 1886-87| $2,275,853.10| $468,245.88|$1,662,664.91 | $249,071.76| $4,655,835.65 1887-88| 2,347,957.42| 436,222.17| 1,716,689.28 | 257,577.35| 4,758,446.22 1888-89| 2,380,545.54| 466,897.68| 1,705,509.13 | 141,876.91| 4,694,829.26 1889-90| 2,227,503.12| 363,222.63| 1,576,865.82 | 136,615.59| 4,304,207.16 1890-91| 2,227,217.01| 619,271.48| 1,695,196.40 | 117,792.36| 4,659,477.25 1891-92| 1,851,515.43| 345,743.88| 1,391,013.56 | 108,604.87| 3,696,877.74 1892-93| 1,789,106.74| 717,760.37| 1,996,761.13 | 131,650.37| 4,635,278.61 1893-94| 1,728,234.60| 722,572.96| 1,842,921.66 | 214,191.07| 4,507,920.29 1894-95| 1,703,327.71| 684,296.62| 1,870,617.89 | 167,096.27| 4,425,338.49 1895-96| 1,594,158.79| 371,845.50| 1,468,294.18 | 104,731.51| 3,539,029.98 1896-97| 1,523,368.43| 224,870.98| 1,412,890.84 | 105,453.12| 3,226,583.37 1897-98| 1,140,230.12| 89,661.98| 1,062,686.71 | 85,163.40| 2,377,742.21 -------+--------------+-------------+--------------+-------------+-------------- |$22,789,018.01|$5,510,612.13|$19,402,111.51|$1,819,824.58|$49,521,566.23 -------+--------------+-------------+--------------+-------------+--------------

The following table is compiled from the totals of the detailed tables above, and shows the amount of the taxes collected by the Bank of Spain and the amount and percentage of delinquent taxes in each year for twelve years. It is probable that the amount for the half of the present fiscal year is relatively greater:

TAX RECEIPTS HANDED TO SPANISH BANK FOR COLLECTION

--------+---------------+---------------+---------------+--------------- | | Actual Amount | Total | Percentage of YEARS. | Face Value. | Collected. | Delinquent |Delinquent Tax | | | Taxes. | Each Year.

--------+---------------+---------------+---------------+--------------- 1886-87 | $5,240,651.50 | $4,655,835.65 | $584,815.85 | 11.16 1887-88 | 5,386,627.83 | 4,758,446.22 | 628,181.61 | 11.66 1888-89 | 5,316,367.60 | 4,694,829.26 | 621,538.34 | 11.69 1889-90 | 4,878,047.21 | 4,304,207.16 | 573,840.05 | 11.76 1890-91 | 5,336,611.25 | 4,659,477.25 | 677,134.00 | 12.69 1891-92 | 4,242,982.34 | 3,696,877.74 | 546,104.60 | 12.87 1892-93 | 5,357,928.97 | 4,635,278.61 | 722,650.36 | 13.49 1893-94 | 5,092,200.41 | 4,507,920.29 | 584,280.12 | 11.47 1894-95 | 5,163,321.70 | 4,425,338.49 | 737,983.21 | 14.29 1895-96 | 4,907,654.17 | 3,539,029.98 | 1,368,624.19 | 27.88 1896-97 | 5,042,205.00 | 3,266,583.37 | 1,775,621.63 | 35.21 1897-98 | 4,430,595.15 | 2,377,742.21 | 2,052,852.94 | 46.33 --------+---------------+---------------+---------------+--------------- Total |$60,395,193.13 | 49,521,566.23 |$10,873,626.90 | 18.04 --------+---------------+---------------+---------------+---------------

Of course this difference does not absolutely represent the uncollected taxes, because the Government officials may have subsequently been able to secure collections from some of the delinquents. The delinquent column is also very greatly enlarged by reason of the fact that the Government authorities place in the hands of the Spanish Bank a large number of worthless receipts--that is, receipts in which the taxpayer is dead or the properties destroyed. This explanation, of course, exonerates the Spanish Bank, and shows that it collects the taxes in a businesslike way; but it does not change matters from a revenue point of view. That remains the same. It is probable, however, that under the new conditions it will be easy so to levy these taxes that they will yield annually from $4,000,000 to $5,000,000 in revenue. In thus proceeding the United States authorities will unquestionably abolish some of the most onerous.

The receipts from internal taxes are estimated as follows:

INTERNAL REVENUE

Stamped paper $350,000

Postage stamps 300,000

Stamped paper for payment to the State 250,000

Stamps for the same 50,000

Telegraph stamps 40,000

Bills of Health 3,000

Stamps for diplomas and matriculation 90,000

Stamped paper for munic.i.p.al fines 1,000

Postal cards 2,000

Papal Bulls 1,000

Revenue stamps for drafts, etc. 60,000

" " " receipts, etc. 300,000

Stamps on policies 20,000

Revenue stamp on consumption of matches 260,000 ---------- $1,727,000

Deduct commission for sale of the above 86,350 ---------- Total $1,640,650

This source of revenue will be greatly increased under American control, though it will come from improved postal and telegraph facilities, increase in banking business, and other legitimate sources of internal revenue. The internal taxes of Cuba must be fully revised. If this work is intelligently performed, the same revenue can be obtained in a manner far less odious to the taxpayer.

This table practically completes the sources of Cuban revenue, for the miscellaneous sources are of an intermittent character, and the lotteries revenue is not likely to cut any figure in the future finances of the Island. In the next chapter the author will briefly consider how the money has been expended and give some suggestions as to the future division of the funds collected.

CHAPTER XVIII

HOW THE REVENUE WAS SPENT

In dealing with expenditures, the factors become more certain quant.i.ties than those present in the forecasting of possible revenue. The money collected from Cuba, whether it was $26,000,000 or more, has all gone, and nothing was found in the treasury when the United States forces took possession but numerous evidences of promises to pay, records of receipts given by the Government for goods not paid for, and debts of all kinds, including the salaries of a large number of the minor officials. The first and most important item of expenditure is, as has been said, for sovereignty expenses, and aggregates a sum exceeding $22,000,000. These expenses are subdivided as follows:

I. Interest on Public Debt and General Expenses $12,574,709.12 II. State Church, and Justice 329,072.63 III. War 5,896,740.73 IV. Navy 1,055,136.13 V. Executive 2,645,149.98 -------------- $22,500,808.59

The largest single item in these expenditures is that of the interest on the public debt and general expenses, which aggregates $12,574,709.12.

Of the total, about $10,500,000 undoubtedly found its way to Spain to pay interest and sinking-fund payments on the enormous debt which Spain had saddled upon Cuba. There has been much controversy over this debt, and as the discussion has ended by the American Peace Commission insisting on Spain's a.s.suming the debt, and thus freeing Cuba forever from the legal obligation, a brief review of the subject will be of interest to the reader. Owing to the fact that Cuba has been, until United States occupancy, a colony without personality and without real representation, the question of the public debt was never properly settled. The Spanish Government, the Cubans contend, arbitrarily burdened the Island with the weight of the whole war debt of 1868-78.

The Cubans have rightly taken the ground that this debt was Spanish, not Cuban. As a matter of fact, the Spanish Government, during the insurrection of 1868-78, never admitted that there was any war in Cuba, affirming, on the contrary, that the trouble was only a disturbance limited to some parts of the Island, and that the immense majority of the population of Cuba were loyal Spaniards. The conclusion to be drawn from this official fact and from its a.s.sertion by the Government was that Cuba was not bound to pay the expenses of that revolt. A somewhat similar instance occurred in the Peninsula at the same time. The Carlist War was likewise a very serious disturbance spread over some important provinces of Spain. The cost, however, of that war was not charged to the revolted provinces, but was considered a national debt. Besides, there are some items which have been held as forming part of the Cuban debt, which by no means can be accepted as such. Thirty or forty years ago Spain sustained war with Mexico, San Domingo, and Peru, the cost of those three wars having been charged to the Cuban Treasury, which, since then, has annually paid the interest thereon. In 1878 or 1879, a general liquidation of Cuban accounts took place, in which the "Banco Hispano-Colonial" of Barcelona a.s.sumed a very important position.

Probably the cost of the three above-mentioned wars (in Mexico, San Domingo, and Peru) and some other accounts were then settled.

Not even the smallest part of the whole debt has been employed in any kind of Cuban improvement. A memorandum prepared by the Cuban planters and addressed to Madrid in 1894 thus referred to the debt:

"This debt has its origin in the extraordinary expenses of the civil war (1868-78), and it has since been increased, first by the administrative demoralisation which is so evident to all those who live in Cuba, and which has been so well described in the Cortes by ministers and by representatives belonging to all political parties; and secondly, by the deficits originating in the fiscal laws, the first object, or aim, of which has been (particularly since the year 1882), more than the regulation of public expenses, to secure an excessive protection to the Spanish industries. And, so formed, the public debt, which, as well in the years of insurrection as in the years of peace, has enriched so many people, represents the ruins of the war, the disorders of the public administration, and the injustice of the fiscal laws."

During the discussion of the Cuban debt by the Peace Commission in Paris last autumn, the _Economiste Francais_ contained an article by Paul Leroy Beaulieu, proposing an arrangement or compromise, with the bondholders, of part of the Cuban debt (about $140,000,000). The author of the article admitted that Cuba was not bound to pay the cost of the last insurrection (of 1895-98). As the _Economiste Francais_ represents the interests of the French public and of the great French banking houses that have largely invested in Cuban bonds of the issues of 1886 and 1890, the inference to be finally drawn from the above-mentioned article is rather in favour of Cuba. If Spain thus lent her guarantee, she did so in obedience to a necessity and as a business convenience, in order to prop up her colonial and commercial system. The Spanish nation believed that her domination in Cuba would be lasting, and that the remote danger of being called upon to pay the Cuban debt was more than compensated by the enormous amount of wealth which she drew every year from the colony.

If, instead of extorting, yearly, millions of dollars, the Government of Spain had applied the superabundant resources of the Island to the extinction of the debt, it is certain that in 1895 the whole of it would have been paid off. It may unquestionably be a.s.serted that Cuba has, in many ways, from 1878 to 1895, spent enormous sums of money, millions of dollars, in payment of debts not really her own,--but with this difference, namely, that the whole of the money lost to the colony, instead of going to redeem the outstanding Cuban bonds, has been spent in Spain, either in a reproductive way, or otherwise. The amount in Spain of the manufacturing, commercial, and agricultural riches, dwelling-houses, and even palaces, country villas, and other investments, representing Cuban wealth which has been transferred without any return, is incredible. The magnificent fleet of steamers of the Transatlantic Company enters into this category. At the same time, the unhappy Cubans who produced that wealth suffered want and went into bankruptcy; for the Spanish exactions absorbed not only the profits of Cuban industries, but also a part of its gross production, and in that way encroached on the industrial capital of the Island. The encroachment was shown and evinced by the acc.u.mulation of public and private debts in all forms. The productive cla.s.ses of Cuba have always, though in vain, protested against the injustice of having this burden thrown upon the treasury of the Island, which, as is shown above, has been compelled to pay more than $10,500,000 every year for the interest and sinking fund of this unrighteous debt.

The debt which was, so far as Cuba is concerned, wiped out by the American Commission in Paris must have amounted to over $500,000,000.

From a variety of rather sc.r.a.ppy data, obtained by the author in Havana, a brief statement of the Cuban debt has been made up. The debts of the Cuban Treasury before the war can be reduced to five.

First: Spain's debt to the United States.

Second: Redeemable debt of 1 per cent. per annum and 3 per cent.

interest.

Third: Annuity debt.