Mr. Foster to Mr. Bayard.
Madrid, July 23, 1885. (Received August 10.)
Sir: After a lengthy discussion in both Chambers, the budget of Cuba for the fiscal year 1885–’86 was voted by the Cortes on the day before their final adjournment, and was published in the Gaceta de Madrid on the 17th instant.
The budget, as is usual, is preceded by a law conferring upon the ministry authority to adopt various important measures in connection with the finances of the island. It is authorized to revise the customs tariff in accordance with the law 1880–’81, which contemplates its consolidation and simplification.
The existing tariff was hastily framed in 1870, avowedly as a temporary measure, is possessed of very little classification or system, and contains over six hundred paragraphs of different dutiable classes.
Under the law of 1880–’81 the tariff of Porto Rico was revised in 1882, was reduced to two hundred and forty paragraphs, and greatly simplified and improved. A similar work has been projected for a long time past as to that of Cuba, but whether it will be realized the current year is doubtful.
Under the law of July 20, 1882, a gradual reduction of the duties of the first and second columns of the tariffs is to take place, so that in ten years all duties on Spanish or Peninsula products will be abolished, and a similar reduction is to be made in the difference between the third and fourth columns, so that in 1892 only the third column (on foreign products) will be in force. This reduction on the 1st of July amounted to 25 per cent, in the published tariff rates.
In the table which I embrace in this dispatch it will be noted that there is a deficit already anticipated in the estimate of receipts, which is provided for by a loan from the Bank of Spain of $4,134,499, and authority is conferred for negotiating further loans if during the fiscal year the deficit should be still greater, or if war or extraordinary disturbance of public order should occur. For several years past there has been a constantly growing deficit in the budget, that for the year just closed being stated during the discussion in the Cortes to be $10,000,000, but this was stoutly denied by the minister of the colonies (ultramar). At the end of each year this deficit is converted into a [Page 735] floating debt. To take up the debt of this character which has accumulated for the past three fiscal years, the minister of ultramar was authorized to negotiate a loan of $20,000,000, bearing 6 per cent, interest, redeemable in fifteen years, guaranteed by a pledge of the stamp-tax, which it will be noted is estimated for the current year at $2,119,000. The present interest and sinking fund charge on account of the Cuban public debt is estimated at $12,386,000.
When the new loans contemplated during the year are effected this charge will be increased to $15,000,000; and the recognized debt, now about $190,000,000, will be increased, to say, $220,000,000. The interest charge will then be, per capita $10, and the debt charge per capita $146.66. It was repeatedly stated during the discussion of the budget in the Cortes that in a very short time the interest charge alone would consume the entire receipts of the insular treasury, and the only practicable remedy proposed to escape complete bankruptcy was the assumption of the Cuban debt by the peninsula or national treasury. But the minister of ultramar replied to this proposition, that in the present condition of the peninsula finances no minister would recommend it, that if recommended no ministry would approve it, and that no Cortes would vote it.
The next charge in importance in the budget is $9,900,000 for the support of the army (22,000 men) and the navy; this item, added to the interest charge, constituting considerably more than two-thirds of the budget, and more than the total amount of the probable receipts for the year.
Efforts have been made to reduce the expenses of Government by the abolition of various offices, the reduction and discounting of salaries, &c., the total reduction, as compared with the preceding year, being, $1,300,000. The following are the estimates for the fiscal year ending June 30, 1886:
| Total expenses | $30,787,509 |
| Total receipts | 30,790,109 |
I inclose a copy of the law and budget in detail, from which I have compiled the following abstract:
expenses.
| General obligations: | ||
| Ministry of the colonies | $96,800 | |
| Tribunal of accounts | 115,500 | |
| Pensions, retired list, &c | 1,290,000 | |
| Interest, sinking fund, &c., of public debt | 12,386,608 | |
| Subsidy to steamers and railroads | 417,690 | |
| Miscellaneous items | 55,502 | |
| 14,362,400 | ||
| Discount on official salaries | 125,650 | |
| 14,236,750 | ||
| Grace and justice: | ||
| Tribunals | 466,696 | |
| Clergy | 480,668 | |
| Closed accounts | 38,110 | |
| 985,474 | ||
| Discount on official salaries | 103,216 | |
| 882,258 | ||
| War: | ||
| Total expenses of army, &c | $8,159,756 | |
| Discount on official salaries | 211,098 | |
| 7,948,658 | ||
| Marine: | ||
| Total expenses of navy | 2,057,814 | |
| Discount on official salaries | 87,484 | |
| 1,970,330 | ||
| Finance: | ||
| Total expenses of collecting revenues, &c | 1,380,692 | |
| Discount on salaries | 38,635 | |
| 1,342,057 | ||
| Interior: | ||
| Civil guard, police, &c | 2,732,283 | |
| Public health | 32,450 | |
| Postal and telegraph communication | 617,854 | |
| Charities | 93,153 | |
| Prisons | 236,709 | |
| Secret vigilance expenses | 25,000 | |
| Secret fund, legation at Washington | 20,000 | |
| Espionage, American consulates | 10,000 | |
| Miscellaneous items | 407,169 | |
| 4,174,618 | ||
| Discount on salaries | 120,177 | |
| 4,054,441 | ||
| Public works: | ||
| Construction of roads, &c | 270,409 | |
| Ports, light-houses, &c | 181,812 | |
| Public instruction | 286,075 | |
| Miscellaneous | 48,331 | |
| 786,627 | ||
| Discount on salaries | 51,470 | |
| 735,157 | ||
receipts.
| Contributions and imposts: | ||
| Tax on real property, mines, &c | 3,122,000 | |
| On industry, trade, and professions | 2,000,000 | |
| On cattle | 950,510 | |
| On liquors | 1,000,000 | |
| Titles of nobility and orders | 10,000 | |
| Domestic servants (freedmen) | 25,000 | |
| Railroad and steamship traffic | 463,000 | |
| Per cent. of municipal taxes, 5 per cent | 363,975 | |
| Miscellaneous | 5,000 | |
| 7,939,985 | ||
| Customs: | ||
| Imports | 9,000,000 | |
| Exports | 3,300,000 | |
| Navigation | 700,000 | |
| Fines | 100,000 | |
| Miscellaneous | 5,000 | |
| 13,105,000 | ||
| Stamp tax: | ||
| Post-office | $449,100 | |
| Telegraphs | 70,000 | |
| All other stamps | 1,600,000 | |
| 2,119,100 | ||
| Lotteries | 2,663,125 | |
| Properties of the state | 307,400 | |
| Unusual receipts: | ||
| Product of loan to balance the present budget | 4,134,499 | |
| Miscellaneous items | 521,000 | |
| 4,655,499 | ||
I am, &c.,