Fourth: Mortgage notes of 1886.

Fifth: Mortgage notes of 1890.

The first debt, $600,000. is an engagement made by Spain and signed in Madrid on the 17th of February, 1834, to pay the United States the amount specified; it was confirmed by the minister of the Spanish Treaty in a royal order, dated April 8, 1841, ordering the payment to be made by the Havana Treasury.

The second and third debts have been almost entirely converted into mortgage notes.

The fourth debt: by a royal decree of May 10, 1886, 1,240,000 notes of 500 _pesetas_ each (about $124,000,000) were issued, redeemable by quarterly drawings and paying six per cent. per annum interest.

The fifth debt: by a royal decree of the 27th of September, 1890, 1,750,000 mortgage notes of 500 _pesetas_ each (about $175,000,000), were issued, redeemable at par by quarterly drawings, and paying five percent. per annum interest.

The notes of these last two emissions are placed in Paris and London, and the redemption and interest thereon are payable in gold or its equivalent. They are guaranteed by the customs, post-office, and stamp revenue of the Island of Cuba, and the direct and indirect taxes, and besides by the Spanish nation. Besides, during the last war, the Spanish Government made an internal loan against the Cuban Treasury of 400,000,000 _pesetas_ ($80,000,000) and another one of 200,000,000 _pesetas_ more ($40,000,000), guaranteed by the Spanish customs. The floating debt, caused by the war expenditure and payments of current appropriations in Cuba, was not less than $100,000,000. These are not exactly official statements, and yet they were obtained personally by the author from official sources, and come close to the mark.

Tabulated, we have this:

STATEMENT OF CUBAN DEBT, OCTOBER, 1898

Spain's debt to the United States $600,000 Notes by royal decree of May 10, 1886 124,000,000 " " " " " September 27, 1890 175,000,000 Internal loan against Cuban Treasury 80,000,000 " " " Spanish customs 40,000,000 Floating debt, war expenses, etc. 100,000,000 ------------ $519,600,000

Paul Leroy Beaulieu gives the bonded debt of Cuba as 2,032,000,000 _pesetas_, or $406,400,000. This evidently does not include the large floating debt included in the above estimate. So far as Cuba is concerned, this debt has been liquidated. It will, therefore, in the language of the French economist, be "absolutely necessary for Spain to meet the expenditure." Why not? Spain lost the game, therefore she must pay the cost.

The largest expenditure, next to interest on debt, was for purposes of war, $5,896,740.73. The expenses of the navy aggregate $1,055,136.13, and of the executive department, $2,645,149.98. Under the last section will be noted the salary of the Cuban Governor-General, $40,000, and the expenses of his office, $46,450, aggregating $86,450. In this division, it appears, the Civil Guards were paid; this body of men received, in all, $2,095,221.12. The second largest item in this total is the subsidy to the Compania Transatlantica, which amounts to $471,836.68. A study of these several items will at once show that the princ.i.p.al expenditures for the Island of Cuba are those which have, directly or indirectly, to do with the control of the Island by Spain. Ten and a half millions, annual charge for the debt; nearly $7,000,000, the combined cost of the army and navy; while upward of $2,000,000 of the total amount expended under the cla.s.sification of executive went to the Civil Guards, who have been used for patrolling the various parts of the Island. Here, then, we have a total of $19,500,000 for extraordinary expenditures, the larger portion of which will be abolished now the public debt is wiped out and peace restored to Cuba.

The second grand division of expenditure is the smallest, and represents the amount of money which was spent strictly for local affairs, and not in the defence of the sovereignty, in its possession of Cuba, and the payment of an unjust debt. One of the first items of expenditure under this latter head is the result of the concession last year by Spain of autonomy for the Island, and the round sum of $133,830 is paid under the head of "Colonial Legislature." The second section is for the church, justice, and executive; also for the courts of justice, expenses for prisons and charitable inst.i.tutions. It aggregates $1,612,859.44. The next most expensive department of the Government seems to be that of the Treasury, the salaries of the secretary, sub-secretaries, and other officers aggregating $218,725. This does not include general expenses, which make another item of this department, aggregating $33,500. Under the head of contingent expenses may be found the various provincial administrations of the Treasury; the cost of administration of custom-houses and revenue marine, amounting to $472,370, giving a total for the department of $708,978.51.

Public instruction fares badly in Cuba. Under this head, it appears, $247,033.02 were expended. The largest item in these expenditures seems to be for the University of Havana and its educational adjuncts, aggregating $172,840.80. The next largest item is the salary of the Secretary of Education and the inspectors of primary instruction, etc., aggregating $58,300. None of the total amount seems to go for common-school education, as it is understood in the United States. Under the head of "Public Works and Communications," $1,036,582.10 was expended. The proportion of this money which goes for salaries is very large indeed. The largest single item of expenditure is given under the rather dubious heading of "Communication," and aggregates $417,640.

Repairs and care of public buildings, including rent of buildings, aggregates $79,500; postal communication, $114,514. Marine navigation, including docks and sheds, lighthouses and buoys, aggregates $98,058; and the construction of the San Cristobal bridge, $49,000. The care and repair of public roads cost $100,000; in all making the above-mentioned total.

[Ill.u.s.tration: A COCOANUT GROVE.]

The agriculture, industry, and commerce of Cuba, like the public instruction, in the broader sense of the word, comes in for a meagre share of the small amount of the total budget, which seems to be reserved exclusively for expenditures for the benefit of the Home Government. The aggregate under the t.i.tle of "Agriculture, Industry, and Commerce" is $108,178.52, the most of which is used in salaries and expenses for the secretary's office, for which one-third of the total appropriation is expended. Under the head of "Local Fairs of Agricultural Industries," $40,000 is appropriated. The forest lands seem to come in for some attention; at least $16,175 is expended for inspection under this head.

These form the chief items of expenditure for all purposes for the Island of Cuba. Perhaps it would be more accurate to say these are the estimates of the appropriations which the Secretary of the Treasury thought would be necessary to run the government on the present plan. It is only necessary to study these interesting tables in detail to see where a large amount of this expenditure can be reduced or abolished altogether. In doing this, however, it must be borne in mind that other expenses will be necessary in order satisfactorily and honestly to administer the affairs of Cuba in the interests of the people of the Island.

At this moment it is impossible to make a satisfactory estimate of the new budget, nor can it very well be done until after the United States authorities have been in full possession for at least twelve months, and are thus able to secure complete data as to the pressing needs of the Government of Cuba. Of course, the large items, such as interest on the public debt and expenditures of Spain for the purpose of conquering the Island will have disappeared, making a reduction, if we include the Civil Guards, of $18,000,000 or $20,000,000. To forecast how much of this amount will be required for immediate expenditures under the new order of things is impossible.

In recommending revenue laws for Cuba, the author was aided by the suggestions of Mr. Fran Figueras, who has given the subject intelligent consideration. To emphasise the importance of giving immediate attention to a careful division of the expenditures for the central government and the expenditures for local purposes (something the Spanish Government, in the whole history of its management of Cuba, has failed to do), the following is given from a statement made to the author by Mr. Figueras:

"The right to impose customs duties has a rational and just limit; it is determined by the legitimate needs of the Treasury. All in excess of these needs converts tax into an unjust, and therefore insupportable exaction. With due attention to these considerations and bearing in mind that the customs duties are the real source of revenue in the Island of Cuba, it is indispensable to determine the total amount of expenditure which this revenue must liquidate. If these expenditures are those used for public defence, central government administration of post-offices, justice, public works, education, and any other which it would not be advisable to turn over to the munic.i.p.al or provincial governments, we may safely consider that six million to eight million dollars annually would be quite sufficient. This is the largest revenue the American Government should expect from the administration of customs duties in Cuba."

Another statement well worth attention in this connection is that of Mr.

Philip Pelaez, a former official of the Spanish Government in Cuba, who said to the author when in Havana:

"Neither in the administration of the islands, nor in the ministry of the colonies, are there any statistics with respect to the composition of the tariffs, and only a few data with regard to valuations. This is as much as can be stated precisely offhand concerning the said tariffs, an a.n.a.lysis of which, article by article, it would be very difficult to get, seeing that there are no statistics of the real importations. Even without asking these investigations, there remains for the Government of the United States the most interesting problem on the making of peace, with the cession of the two islands. Is free trade convenient? Is a simple tariff preferable? Would it not be more prudent to keep to the existing one? Free trade at the present time would impose the burden of the general expenses without any profit and with great dangers, the most immediate being the paralysation of business, the flight of existing capital, etc. The _ad valorem_ tariff diminishes the receipts and gives advantages to a mult.i.tude of foreign articles. The tariffs now in force would, with a few changes, suit the islands and the United States for a long time to come."

This sets forth substantially what has been done. The United States Government has made no violent fiscal changes in Cuba. Where the old laws and methods and customs could be fitted to the new order of things, they have been so fitted. The first and only radical change in the revenue system of Cuba is the speedy and absolute separation of local and general revenue. That which is local should be collected by local authorities and regarded as munic.i.p.al revenue, to be expended for munic.i.p.al purposes; while that which is general should be levied and collected by general authorities and expended for the general welfare of the Island. The general fund, after careful consultation with the governor of each province, should be apportioned geographically, and also into funds, such as the following:

_a._--Maintenance of the general government, 20 per cent.

_b._--Sanitary and other improvements, and loans to cities therefor, 10 per cent.

_c._--Public schools and education, 10 per cent.

_d._--To pay the bonds and other obligations issued by the Provisional Government of Cuba and its duly authorised agents since February, 24, 1895, which in the aggregate must not exceed $2,500,000, and to pay amounts due the soldiers of the Army of Liberation, 20 per cent.

_e._--Development of the Island by the building of railroads, properly constructed highways, and other means of communication, 25 per cent.

_f._--The repayment of the cost to the United States of the temporary military occupation pending the establishment of the proposed stable and independent government, 15 per cent.

As all the expenses of the munic.i.p.al and local government can be readily provided from taxes on real estate, income tax, liquor licences, and other internal-revenue taxes, the customs revenue can, without embarra.s.sment, be devoted to and amply satisfy all general governmental requirements as scheduled above. The percentages above suggested are, of course, tentative, and must not be regarded as more than a rough apportionment. The widest possible lat.i.tude should be given each provincial governor in the expenditure of the share of the general funds allotted him for sanitary and other improvements, public schools, for building railroads, and constructing highways. A study of the Jamaica budget, presented in Chapter IV., might help in a fair apportionment of funds for the new budget of Cuba. The subject has not yet been taken up systematically by the United States Government, but will soon need attention, or the old haphazard Spanish methods will receive a new lease of life. Such a contingency would indeed prove a misfortune.

CHAPTER XIX

COMMERCE

Speaking in round numbers, the commerce of Cuba during the last normal year aggregated about $100,000,000 of exports and a trifle over $60,000,000 of imports. From these figures it would seem that the balance of trade is about $40,000,000 in favour of Cuba. But this is more apparent than real. In one way and another Spain has annually turned away from the Island $40,000,000, which, had it been expended in Cuba every year, would have added immeasurably to the prosperity of the country. This money went to Spain in a variety of ways. Ten and a half millions of it were used in payment of a debt which did not justly belong to Cuba, and with which the people of the Island had been arbitrarily burdened without their consent. Large sums also went to Spain through the constantly changing Spanish civil and military officials, who regarded Cuba as their legitimate field for plunder.

It has been estimated elsewhere in this volume that the total commerce of Cuba, had the affairs of the Island been honestly and economically administered, would have reached from $200,000,000 to $250,000,000, so prolific is the country, and so valuable in the world's markets are its two staple productions, sugar and tobacco.

To indicate more definitely the extent of Cuban commerce, the reports for 1893, which was a good year, are given below, presenting, among the princ.i.p.al exports from Cuba to the United States, the following:

Fruits and nuts $2,347,800 Mola.s.ses 1,081,034 Sugar 60,637,631 Wood, unmanufactured 1,071,123 Tobacco, manufactured 2,727,030 Tobacco, not manufactured 8,940,058 Iron ore 641,943 ------------ Total $77,446,619

In the same year the princ.i.p.al exports from the United States to Cuba, aggregating $15,448,981, were distributed as follows:

Wheat flour $2,821,557 Corn 582,050 Carriages and street cars 316,045 Freight and pa.s.senger cars (steam railroad) 271,571 Coal 931,371 Builders' hardware 395,964 Railroad rails 326,654 Saws and tools 243,544 Locomotives 418,776 Stationary engines 130,652 Boilers and engine parts 322,284 Wire 321,120 Manufactures of leather 191,394 Mineral oil 514,808 Hog products 5,401,022 Beans and peas 392,962 Potatoes 554,153 Planks, joists, etc. 1,095,928 Household furniture 217,126 ------------ Total $15,448,981

These tables show the extent of Cuban commerce with but one country, the United States; and though, naturally and logically, that is the country with which Cuba must always do the vast bulk of her business, the other countries of the world have not been shut out; the average annual amount of exports from the Island to foreign countries other than the United States fell between $13,000,000 and $15,000,000, and the imports were upward of $40,000,000, the most of which, of course, was compulsory commerce with Spain.

A casual inspection of the above table of imports to Cuba, covering only a portion of the articles taken from us by the Cubans, shows at once what the demands of the Island are for even the simplest necessities beyond bare existence. The million and a half people of the Island want our flour, our lard and pork, our oil, our barbed wire--our soldiers found samples of it strung around San Juan hill,--our manufactures of leather, our household furniture of all kinds, our locomotives and cars and steel rails, our saws and mechanics' tools, our stationary engines and boilers, our lumber in its various shapes for framing and building, our locks and hinges and nails, our corn and beans and potatoes; our coal, our street cars and carriages, and any and every kind of the manifold things we produce in this country for the comfort and convenience and economy of mankind. In part exchange for these things, we get from Cuba sugar and tobacco, and control the markets of the world in these products; mahogany and all manner of beautiful hard woods; bananas and cocoanuts and fruits, pleasing to the palate and wholesome to the health; honey from the flowers; glycerine, no less sweet, from the fats of cattle; manganese and mola.s.ses; cigars and coffee; beeswax and birds, and the vast fields of tropical wealth and luxuries for the millions of our colder clime scarcely yet touched.

The golden dream of Columbus and his followers, when they beheld for the first time the purple peaks of the strange land rising out of the sea before them, are as poverty and nightmare in comparison with what is actual and real, for the more material age of the twentieth century.

The greatest obstacle in the way of Cuban commerce, and the peculiar disadvantage under which the Island laboured was in a large measure attributable to the fact that Spain compelled Cuba to purchase merchandise in Spain which could have been bought in other markets at prices far below the figures which Cuba was forced by these discriminating duties to pay to Spanish merchants and manufacturers.

The most glaring ill.u.s.tration of this may be seen by reference to the following table of Spanish imports into Cuba in 1896, which the author has prepared from the report of the Bureau of Statistics in relation to Spanish trade with Cuba and the West Indies:

ARTICLES. VALUE.

Marble, and manufactures of $ ......

Mineral waters 29,031 Gla.s.s bottles, etc. 66,889 Bricks, tilings, mosaics, etc. 28,371 Earthenware 77,853 Lime and cement 5,036 Silverware and jewelry 6,800 Iron bars, etc. 176,719 Fire-arms 1,872,240 Copper, and manufactures of 15,772 Lead, manufactured 15,344 Zinc 6,373 Other metals 52,654 Oils and paints. 117,542 Salt 51,030 Chemicals, medicines, etc. 35,365 Soap 635,369 Wax and stearin 419,124 Perfumery, etc. 12,722 Cotton thread 67,451 Other manufactures 3,676,807 Flax, hemp, etc., and manufactures of 740,017 Woollen blankets 219,971 Other woollen manufactures 73,007 Silk goods 74,206 Paper in rolls 82,457 Writing paper 88,219 Smoking paper 377,046 Packing paper 284,047 Books, music, etc. 39,655 Other paper 107,917 Wood, manufactures of 451,568 Leather 110,955 Shoes of leather 3,449,952 Saddlery 102,122 Machinery and musical instruments .....

Hams and meats, salted, etc. 75,679 b.u.t.ter 171,918 Rice 298,970 Corn 286,563 Wheat flour 4,065,376 Beans 375,604 Other dried vegetables 128,254 Onions, garlic, and potatoes 241,023 Almonds 80,298 Olives 121,765 Raisins 44,982 Saffron 234,252 Pepper, ground and unground 61,582 Oil, common 663,244 Wine, common 1,469,409 " other 18,752 Preserved food 948,472 Pressed meat 316,314 Soup pastes (vermicelli, etc.) 287,200 Sandals 2,686,702 Playing cards 34,345 Felt hats 28,079 Cartridges 69,719 All other articles 614,196 ------------ Total $ 26,892,329 ------------ Gold .....

Silver $ 24,288,640

The most casual observer and the person of the most superficial knowledge in trade matters must be well aware that Spain is by no means as good a market in which to purchase such commodities as are noted above as is the United States, or as is any other country, for that matter; yet Cuba, by reason of iniquitous discriminating duties, was forced to buy these commodities of the mother country, and to pay a higher price for them than that at which they could have been bought elsewhere. And not only was the price exorbitant, but the articles were of inferior quality, and, especially in the line of all machinery and the appliances of modern industrial progress, the types were primitive and the models were as old and ineffective as the workmanship and material were poor. To any Government seeking the best interests of the governed, these discrepancies would have suggested themselves; and in the logic of location and the invincible combination of first-cla.s.s goods, low prices, cheap freights, and quick delivery, the trade of Cuba would have been turned to the United States. The Spanish Government would have been the gainer by the greatly increased prosperity, progress, and wealth of her Island dependency. But Spain pursued a different policy, and by the overwhelming force of natural laws, regulating the relation of the governing to the governed, she has lost not only the trade of Cuba, but also the Island itself, and by trade laws not less immutable than those of civil government, the compulsory commerce she exacted from Cuba goes freely, naturally, and logically, to the United States. It is scarcely necessary to say what the Great Republic will do in the premises. The youngest of nations, it stands to-day to the fore with the oldest and the greatest of the powers of the earth in every field of human intelligence, industry, and endeavour, and it will scarcely leave the great work it has undertaken in Cuba to others for that final accomplishment which it is best qualified to carry to perfect completion. Cuba looks to the United States for encouragement, for strength, for education, for development, for business--for union, shall we say?--and, as her nearest neighbour, the United States will pledge itself that the Queen of the Antilles shall not look in vain.

[Ill.u.s.tration: A SUGAR-CANE TRAIN.]