Papers Relating to the Foreign Relations of the United States, Transmitted to Congress with the Annual Message of the President, December 2, 1872, Part I

No. 426.
Mr. Sickles to Mr. Fish.

United States Legation,
San Sebastian, August 16, 1872. (Received September 3.)

No. 415.]

Sir: I have the honor to transmit herewith, for your information, an official publication of a decree, accompanied by a report of the colonial minister, authorizing the treasury of the island of Cuba-to issue bonds amounting to sixty millions of dollars, bearing 8 per cent, interest, and pledging for the payment of the interest and principal of the loan the proceeds of the war-tax, estimated at five millions of dollars annually, and the surplus derived from all other sources of revenue, ordinary and extraordinary.

It appears in the report of the minister that the Cuban treasury owes the Bank of Havana fifty millions of dollars. Twelve millions of this sum were borrowed to pay the expenses of the several expeditions against San Domingo and Mexico, and the remaining thirty-eight millions have been advanced by the bank toward the expenditure incurred in the present war in Cuba. The whole amount of fifty millions was loaned by the bank in paper money, and this large addition to the ordinary paper issue of the bank—ten millions—has, it seems, brought about, in conjunction with other causes, a grave financial crisis in that portion of the island held by the Spanish forces. It further appears that the amount raised in Cuba by taxes and imposts during the last fiscal year was twelve millions of dollars. The loan is to be negotiated in two parts. The proceeds of the first issue of thirty millions are to be applied, first, to reimburse the Bank of Havana the amount it advanced to the Cuban treasury to pay the cost of the Spanish contingent for the expedition against Mexico; second, to repay the amount advanced by the bank toward the expenditure incurred in the attempted re-conquest of San Domingo; third, to redeem in specie eight millions of dollars in bills of the Bank of Havana, the same being a part of the sum loaned to the treasury for war expenses, so as to reduce the outstanding paper money of the bank, issued on government account, to thirty millions of dollars; fourth, the balance, say ten millions of dollars, to be paid into the treasury to meet appropriations made for the prosecution of the war, and for the ordinary expenses of the next fiscal year.

The decree also provides for leasing the embargoed estates for a term not exceeding six years, the proceeds of which, together with certain treasury credits and the income of the crown property in Cuba, are applicable to the redemption of the remaining thirty millions of paper money issued by the bank on government account. These sources of revenue have not hitherto, it is understood, produced anything, so that it may be presumed that the second issue of bonds is reserved for the gradual redemption of the outstanding paper and the prosecution of the war.

Subscriptions to the loan are to be invited on the 1st of January, 1873, in Havana, Madrid, Paris, and London. The negotiation, the application of the proceeds, and the administration of the revenues appropriated to the payment of the principal and interest are confided to a commission of fifteen persons, three of whom are to be chosen by the bondholders.

You will remark in article 20 of the decree a provision characteristic of all Spanish legislation for Cuba. The captain-general is authorized to suspend at pleasure any determination made by the loan commissioners.

It will thus be seen that, after four years of war, without quarter, in Cuba, and having exhausted the resources of that rich and productive commonwealth to sustain a cruel conflict, Spain is about to appeal to the civilized world to lend money on a pledge of the revenues of the island, to continue a struggle intended to perpetuate the slavery of the greater part of the colored inhabitants, and compel the unwilling allegiance of a large majority of the sorely-oppressed native population.

In this relation I may state that it appears from a recent publication in the Impartial, a semi-official journal in Madrid, of which the colonial minister was director until he entered the present cabinet, that, “from the beginning of hostilities in Cuba, thirteen thousand six hundred insurgents have been killed in battle, (acciones de guerra,) and forty-three thousand five hundred taken prisoners; four thousand eight hundred and nineteen fire-arms, three thousand two hundred and forty-seven shards, malchets, and other side-arms, and nine thousand nine hundred and twenty-one horses, have been captured. Sixty-nine thousand six hundred and forty insurgents have voluntarily surrendered.”

As it is believed that all prisoners of war taken are shot or garroted, it would appear, taking the total of killed in battle and prisoners captured, that more than fifty-seven thousand insurgents have fallen since the war began. The Spanish loss is not stated, but it is known from official sources that their force under arms in Cuba exceeds one hundred thousand men, and, as more than half of these troops are unacclimated, their casualties cannot be estimated at less than 15 per cent., or fifteen thousand men annually; making an aggregate Spanish loss of sixty thousand since the declaration of independence pronounced at Yara, in October, 1869. Trustworthy sources of information in Madrid tend to show that this estimate would be exceeded by the official returns if they were published.

I am, &c.,

D. E. SICKLES.

decree.

In accordance with, the suggestion of the minister of the colonies, and by the advice and consent of the council of ministers, I decree as follows:

• Article 1. The treasury of the island of Cuba is authorized to emit bonds to the amount of $60,000,000, in two issues. The first issue shall be to the amount of $30,000,000, and shall take place on the 1st day of January, 1873. The subsequent issues for the remaining$30,000,000 shall take place when the government shall so order, in view of the necessities of that treasury. The issues shall take place simultaneously at Havana, Madrid, Paris, and London, by public subscription, which shall be opened for the first issue on such day as shall be appointed by the board which is created by this decree to have charge of the loan.
• Article 2. This loan shall be represented by bonds of $500 each, payable to bearer, with thirty-four coupons attached, payable on the 30th of June and 31st of December of each year. The bonds shall pay an annual interest of 8 per cent., and shall be redeemable semi-annually by lot.
• Article 3. The following revenue shall be specially appropriated to the payment of the interest on this loan and its redemption:
  • First, the entire proceeds of the extraordinary war-tax, computed at $5,000,000 per annum. If the actual tax shall not be equal to this sum it shall be increased to such an amount that it shall in no case fall to produce it.
  • Second, all surplus revenues in Cuba, both ordinary and extraordinary.
• Article 4. These bonds shall be receivable in payment of all governmental taxes in the island of Cuba for the fiscal year preceding that of 1872–’73. It shall likewise in all cases be receivable as bail or security by the government in the island of Cuba.
• Article 5. Interest on this loan shall be paid in Havana, Madrid, Paris, and London, and the bonds shall be redeemable in the said cities, for which purpose bonds which shall have been taken by subscription in each of the aforesaid cities shall be considered domiciled in the same. In all operations with foreign coin, such coin as may be equivalent to the hard dollar shall be considered the standard.
• Article 6. The proceeds of the first issue shall be applied—
  • First, to paying to the Spanish bank of Havana, after presentation of its account with the treasury, the amount which it advanced to the said treasury in order to pay the cost of the Spanish contingent for the expedition against Mexico, and to repay the amount advanced by the bank toward the expenditure incurred in the Santo Domingo campaign. This operation, however, shall only take place on condition of the bank receiving the bonds at a rate which will make amends for the difference of interest between the same and that paid by its certificates of indebtedness against the treasury.
  • Second, to redeem $8,000,000 in bills of the bank of Havana, the same being a part, of the sum loaned to the treasury for war expenses, so as to reduce the outstanding paper money of the bank to $30,000,000. The redemption of notes shall be made in coin, and in such a manner that coin shall be substituted for them in circulation.
  • Third, to the treasury of Cuba to meet appropriations made for the prosecution of the war and for the ordinary expenses of the next fiscal year.
• Article 7. After the publication of this decree the issue of notes by the Spanish bank of Havana for the account of the treasury shall cease, and the reduction shall he commenced to the $30,000,000 to which the circulation of said notes is to be reduced, according to article 6.
• Article 8. For the redemption of the bills remaining in circulation the following revenue shall be appropriated:
  • First, the proceeds of property belonging to the Crown in the island of Cuba.
  • Second, sums due to the treasury for taxes and imports as well as treasury credits which the Crown at any time acquire in that island.
  • Third, the proceeds of property belonging to insurgents and disloyal persons which may have been or may hereafter be embargoed by order of a competent court.
• Article 9. For the execution of this decree a board shall be created having charge of the Cuban treasury loan, which shall have control—
  • First, of the issue and redemption of the loan provided for by this decree.
  • Second, of the redemption of $8,000,000 in notes of the Spanish bank, which are to be exchanged for coin by the proceeds of the issue of the loan.
  • Third, of the subsequent redemption of the thirty millions in banknotes issued for the account of the treasury, which shall remain in circulation.
  • Fourth, of the collection of the war-tax.
  • Fifth, of the management of embargoed property in Cuba, as well as of the collection of other funds appropriated to the redemption of the notes referred to in number two of this article.
  • Sixth, of the liquidation of debts and credits between the Spanish bank of Havana and the treasury of Cuba.
• Article 10. This board shall be composed of fifteen persons, whose qualifications and the manner of whose election shall be as follows:
  • Three shall be takers of the treasury loan, and shall be chosen by the other takers of the loan residing in Cuba.
  • Two shall be merchants, and two manufacturers, appointed by the board of trade of Havana.
  • Five shall be land-holders, two of them lawyers, chosen by the municipal government of Havana.
  • One shall be a stockholder of the Spanish bank of Havana, chosen by the board of directors of said bank.
  • Two shall be functionaries of the government, to be chosen by the superior civil governor.
  • The offices of president and vice-president (without vote) of the board shall be held by the superior civil governor, and the intendant of finance of Cuba, respectively.
• Article 11. The board shall be formed and shall commence the legal discharge of its duties previously to the issue of the loan. When this shall take place the takers of the loan shall select the three persons who are to form part of the board. If they shall not do so within six months after the closing of the subscription, the government may fill the places of said three persons with others of its own choice; but no public functionaries shall be chosen for this purpose.
• Article 12. The superior civil governor shall proceed to the installation of the board immediately after the persons of whom it is to be composed (excepting the three takers of the loan) shall have been appointed and shall have accepted their appointments. Information shall at once be sent, both of the appointment and acceptance, to the superior civil governor.
• Appointments shall be made within fifteen days after the publication of this decree in the Gaceta de la Habana; and if, within this time, they shall not have been made by the persons to whom it belongs to do so, they shall be made by the government. Acceptance on the part of the appointees must he signified within eight days subsequent to their appointment, it being understood that any person who shall not have signified his acceptance to the superior civil governor within eight days, shall be considered as declining the appointment. When this shall take place a new appointment shall be made in due form; and if it shall not be made, or the appointees shall not accept within the period above mentioned, the government shall make any appointments which may be necessary, always of persons belonging to the classes which are to be represented in the hoard.
• Article 13. The board, after the first issue of Cuban treasury bonds, and after having received the proceeds of the same, shall proceed—
  • First, to balance the account of the treasury with the bank in the form provided for in article 6.
  • Second, to redeem the notes of the bank issued for the account of the treasury, in the proportion and form prescribed in numbers 2 and 3 of article 7. Third, to deposit the rest in the treasury.
• Article 14. The board shall, moreover, as soon as it shall be installed, proceed to take charge of funds appropriated to the redemption of the loan and of the notes, and also of the management of embargoed property. To this effect the superior civil governor shall order that the proper authorities and departments deliver to the board such documents, books, and other articles as may be necessary. The superior civil governor shall adopt all necessary measures for the most speedy and thorough collection by the board of the war-tax, and of the funds appropriated to the loan and to the redemption of notes.
• Article 15. The management of embargoed property shall be performed by the board in conformity with the following bases:
  • First, formation of partial inventories of the property within six months (which term shall in no case be extended) from the day of installation of the board.
  • Second, leasing of the property at public auction, which shall be advertised three months previously in the Gaceta de la Habana, for a term not to exceed six years, and at a rate suited to the appraisement which shall be made in the inventory.
  • Third, appraisement by experts, for the fixing of the amount of rent to be paid, when a proposal shall be made for property, the inventory of which shall not have been finished.
• Article 16. One-half of the members of the board shall be changed every year. For the first renewal, the persons belonging to each class shall draw lots, the’minority of those represented by an odd number being renewable. The persons constituting this board shall not be re-elected unless a period shall have elapsed during which they have not formed a part thereof.
• Article 17. The officers shall be appointed by the government on proposal of the board, and shall be functionaries of the administration who have served for three years in the peninsula.
• The subalterns shall be appointed by the board, according to a classification which shall be approved by the government.
• Article 18. The expenses of the board, as well as those of the issue of the loan, shall be defrayed from the fund known as the “Cuban treasury loan fund,” which shall be included in the budget for the island.
• Article 19. The board shall form regulations for its own government, and the instructions necessary for the execution of the services intrusted to it, and shall submit them to the approval of the government through the superior civil governor. The regulations and instructions adopted by the board shall go into operation at once, but shall be considered as provisional until they shall have been approved or modified by the government.
• Article 20. The superior civil governor may suspend any determination of the board reporting at once to the minister of the colonies, by whom such measures will be adopted with regard to the suspension as may be deemed proper.
• Article 21. The minister of the colonies will adopt all necessary measures for the due execution of this decree.

Done at Bilbao, on the ninth day of August, one thousand eight hundred and seventy-two.

• AMADEO.
• Eduardo Gasset y Artime,
  Minister of the Colonies.