Papers Relating to the Foreign Relations of the United States, Transmitted to Congress, With the Annual Message of the President, December 8, 1885
Mr. Foster to Mr. Bayard.
Madrid, August 3, 1885. (Received August 18.)
Sir: In my No. 364, of the 23d ultimo, I transmitted the financial budget of Cuba for the current year as passed by the Cortes. As a supplement to that dispatch, and as showing the present condition of Cuba as viewed by Spanish statesmen, I have thought it would be of interest to give some extracts from the debate which the consideration of the budget occasioned.
The discussion occupied a full week in each chamber; but I have confined my extracts to the speeches in the Congress of Deputies, as very much the same ground was traversed in the Senate. The financial condition of Cuba was naturally the prominent topic discussed, and a more wretched condition of affairs can scarcely be imagined in a responsible Government than that depicted in the speeches. Constantly growing deficits, temporary loans at more than 10 per cent, interest, the budget sought to be balanced by a bank loan in advance, the army four to six months behind in pay, rate of taxation more than double that of Spain, &c. Only two rays of hope could be given by the Government speakers: one was that the increased price of sugar might revive that industry, and the other that with the opening of the Panama Canal the harbors of Cuba might be made flourishing free ports and depots in transit.
Allusion was made to the fact that the Cuban debt, with the present deficit amounting to about $220,000,000, was mostly held by foreigners, to whom had been given a pledge of the public revenues, and that unless the interest was kept up promptly the dishonor of Spain might become worse than that of Egypt. But all the speakers declared that the very existence of the nation depended upon retaining Cuba, because with its loss the prestige of the Spanish people would be gone. At the same time there were not wanting deputies who recalled the history of the loss of the Spanish possessions in America, declared that the same governmental policy was now being pursued, and warned the ministry
that a similar result might attend Cuba.
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The deputies from Cuba lamented the indifference with which the affairs of the island were regarded by the Spanish Government and people, citing the fact that the sessions of the Cortes, when the budget was being discussed, were often attended by seven to eight deputies only in a Chamber of over four hundred members.
I am, &c.,
Debate in the Spanish Cortes on the Cuban budget for 1885–’86.
The debate on the Cuban budget in the Chamber of Deputies was begin on the 23d of June, and continued daily in afternoon and night sessions until the 30th.
Señor Tuñon, deputy from Matanzas, Cuba, opened the discussion in opposition to the budge Reviewing the “authorizations” voted by the Cortes one year ago, conferring upon the Government full power to arrange the public debt, he said the ministry had done nothing to improve the debt, but, on the contrary, it had aggravated the situation, until now the interest charge exceeds the third part of the total net productions [Page 743] of the island. As to the authority to negotiate a treaty with the United States, we have heard already too much of that subject: he would only say that the Government had gone so far with its concessions to the United States that he was almost disposed to congratulate Cuba on the failure of the treaty. The authority conferred to grant favors to sugars, tobacco, and other products of the island imported to Spain had not been used with-any benefit. Of the 540,000 quintals of tobacco consumed in Spain, 300,000 come from the United States and only 120,000 from Cuba.
The thirteenth “authorization” for the completion of the Central Railroad is a very important measure for Cuba, but he inferred from the statements made by the minister of ultramar that the law he has introduced will not be realized because the Peninsula will not guarantee the enterprise.
The authority to negotiate a loan of $20,000,000 to cover past deficits in the budgets is virtually an increase of the budget of expenses from $30,000,000 to $50,000,000. The interest charge is now $12,804,298. With the interest on the loans of $20,000,000 and $4,000,000 it will be increased to $15,000,000. The island cannot pay more than fifteen to eighteen millions of dollars of taxes, as the net value of its total exports is not more than thirty-five millions. It cannot bear this increased interest charge, and the deficits will be greater, and who will be able to administer its Government?
The ministry has done nothing to resolve the great problems of the island, notwithstanding the full powers voted by the Cortes last year, but, on the contrary, it aggravates the situation with this budget. Is it any wonder that the people of Cuba are without hope from the present Government?
Señor Garcia Lopez, of the committee having charge of the budget, replying to Señor Tunon, said the Government had done all that was possible in the way of reducing the expenses, and cited the reduction of the army estimates from $9,600,000 to $7,900,000. He said the failure of the commercial treaty was not due to the Government, but to a radical change in the politics of the United States. The tobacco of Cuba is the dearest in the world, and hence the consumption in Spain of the tobacco of the United States, because of its lower price. A deficit of $10,000,000 in the Peninsula budget causes no surprise, where it often occurs. Why should it occasion so much surprise in Cuba? The speaker attributed the present great depression of Cuba chiefly to the low price of sugar, but now that the price is improving we may expect better times there. The receipts for 1883–’84 were$24,000,000, and the current year it will be as much, with $20,000,000 of back taxes to be collected. The price of paper money in gold was 244 when the Government began last year to redeem it, and it declined to 218, although it has again advanced.
The minister of the colonies (ultramar), Count de Tejada, explained that the guarantee of the projected railroad extension is the treasury of the Island of Cuba, but the Spanish nation has a moral obligation to see that the guarantee is kept. He asserted that the receipts for the year just closed ought to reach $24,000,000. In answer to an inquiry, he said there had been no commercial balance or statistics of commerce formed since 1863. “There is a long period of confusion and disorder in the treasury department of Cuba.”
Señor Moret, late Liberal minister of the interior and formerly of ultramar, said that as Cuba had sent such large sums to the Peninsula in the times of its prosperity, the Peninsula ought to aid it in its times of adversity. He was of those who believed that the question of money is a political question, and the Spanish people will not pardon that Government which allows a question of money to break the ties of nationality. Cuba, to be released from her present situation, needs to be supported on the vigorous arm of her old mother, and this support we must render in order to give her treasury full freedom. He was one of those who never shall believe that Cuba can be separated from Spain—he believed it impossible; but if it should come, that day the sun will truly set on the Spanish dominions.
Señor Santos Guzman, of Havana (chairman of the committee on the budget), contrasted the present with former budgets, showing that taxation had been reduced from $34,000,000 in 1883–’84 to $27,000,000 (not including the four million loan). The failure to ratify tlie commercial treaty was brought about in part in the United States by the adherents of the celebrated Monroe doctrine, in combination with the great tariff monopolists, who fancy with the rejection of the treaty that they will bring ruin to Cuba, and, in the desperation of the Spaniards, that doctrine might be put in practice. He predicted great prosperity for Cuba with the opening of the Panama Canal, as it would become a great transit depot.
Señor Calverton, of Havana, called in question the receipts of the island for the year 1884–’85, as stated by the Government. He said the report for the first nine months showed that the receipts had been $13,000,000 in gold and $4,000,000 in paper—equivalent in gold to $15,000,000—and for ihe entire year they could not exceed $19,000,000. There will be a deficit of $10,000,000. To present a budget based on such estimates as those submitted by the minister of ultramar is not to present a budget at all. A deficit in the Peninsula of $10,000,000 is not so serious, as it is borne by 16,000,000 of people, but a deficit of $10,000,000 in Cuba is another matter, as it has to be borne by [Page 744] 1,500,000. The tax in the Peninsula is 10 per capita, hut in Cuba it is $20. The net value of the production of Cuba is $35,000,000 or $40,000,000, and the taxes are from $27,000,000 to $30,000,000.
To redeem $1,200,000 of paper currency the Government had to borrow money at 10 per cent., besides exchange, commissions, &c.; that is, to pay one debt by contracting a greater one. In most countries the interest on the public debt remains with the inhabitants, but in Cuba the entire sum of $12,000,000 goes abroad annually.
The economic condition of Cuba may have been somewhat influenced by the low price of sugar, but that alone never could have produced the present ruin of the island. It is occasioned by artificial circumstances, which the Government can remove; in fact, the impediments which the Government imposes, requiring the island to follow the antiquated régime, is the chief cause of its embarrassment. In Germany and France the Government is giving all possible encouragement to the production of sugar, whereas that of Spain is only imposing burdens and obstacles. The price of sugar in the Peninsula is 35 to 40 reales per arroba, while the planters of Cuba would be glad to get 20 reales; but they cannot send it to Spain because that market is closed to them by the high duties imposed. And the same policy is pursued as to tobacco.
Assimilation with the Peninsula and identity of laws is the remedy in great measure for the present evils of Cuba. It has no credit in the world because of its constant deficits. It must have the financial guarantee of the nation. In that way only can there be satisfactory consolidation of its debt, which now amounts to $198,000,000.
Referring to the failure of the commercial treaty, he said that there was a marked inequality in the powers of the two Governments in the negotiation of the treaty, greatly to the disadvantage of Spain; that the latter was fully authorized not only to sign but to ratify the treaty, while on the part of the United States the ratification was subject to the approbation of the Senate.
The minister of ultramar, replying to the criticism of former speakers, said that the Government in its efforts to remedy the situation of Cuba had been contending against the triple plagues of the low price of sugar, the decline of the public credit, and the depreciation of private property. The Government could not work miracles. In seeking to make an arrangement of the public debt with the creditors, the latter have always asked not only the guarantee of the national treasury, but that the payment should be transferred to the Peninsula. Perhaps this may be done some day; but at present public opinion is not prepared for it; no minister of any party would dare to assume the responsibility of it; no minister of finance or cabinet would approve it, nor would the Cortes accept it.
If the Government should wait for equality of powers to negotiate a commercial treaty with the United States, there would never be a treaty, for the Executive of that country never possesses the power to ratify without the approbation of the Senate. The failure of the ratification may be attributed to the fact that the treaty was submitted to the Senate just after the Presidential election, and was really caused by the change of parties in the Government.
It must be borne in mind, in discussing the budget, that the customs receipts have been diminished by a 25 per cent, reduction of the tariff, and the modus vivendi with the United States, which abolished the differential flag duty, has also lessened the revenues. The deficits for the past three years have also to be provided for, amounting to $20,000,000, to be covered by a 6 per cent, loan secured by the stamp tax. For this loan there will be an increased charge of $2,000,000 by way of interest and sinking fund. The redemption of the paper currency begun by the Government has reduced the discount from 240 to 230. The national treasury has during the year sent $6,000,000 to relieve the Cuban treasury. Surely the Government must have some credit for what it has done and is doing to relieve the financial situation of Cuba.
Señor Calverton, as to the proposed loan, was disposed to authorize not $24,000,000 only, but $100,000,000, if it would restore the social and economic life of Cuba; but what he did not wish was to load down Cuba with debts which were of no utility.
Señor Villanueva, of Havana, asserted that with the twenty-four million loan contemplated by the budget the Cuban debt would amount to between $220,000,000 and $230,000,000. Who could assume the charge of such an inheritance, or how could a basis for an adjustment be reached? The Government had shown little foresight as to the negotiation of the treaty with the United States, as it ought to have taken into consideration that a national election was pending, and that it might result in a change of Government there. He recalled the history Of the events attending the loss of the countries of the American continent to Spain, when no party would acknowledge responsibility for the evils or seek a remedy, but matters were allowed to drift along without paying attention to complaints, until the two continents were lost and Spain was responsible for the event. The same indifference was being manifested in regard to Cuba. Do you wish that a similar event shall happen now?
Señor Duran y Cuervo, of Santiago de Cuba (of the committee) said: Spain will today aid Cuba, as it has done in past times, with the blood of its best sons to save the [Page 745] nation. As it has spent its blood, it will also be ready to exhaust its treasury for the Antilles if it becomes necessary; but it would be neither noble nor patriotic to abuse this generosity; the time has not yet come for the nation to assume the Cuban debt. Something has been said outside this chamber about suspending payment of interest on that debt, but he did not believe there was any deputy who would approve such a proposition. What would be its result? The bonds are mostly in the hands of foreigners, and their Governments would demand the fulfillment of the pledge of the customs, and the Spanish nation would suffer a greater shame than Egypt.
Señor Armiñan, of Havana, said it was necessary to maintain a strong army in Cuba for many years, as the peace now existing was only an armed peace. But a notorious injustice is being done the army. How can you expect volunteers or enlistments in an army to which is due from four to six months’ pay? Your discussion here of the army section of the budget is all “in the air,” and without any practical result, for the army in Cuba is always in deficit. It has already lost three back payments entirely, and with present arrears it is likely to lose another. Have not the bondholders been receiving their interest punctually in gold while the regiments have not enough with which to buy their rations? I do not say that the interest obligations are not sacred, but they are obligations which may admit of delays; but the first necessities of life of the soldier will not admit of delays of any kind—the stomach can’t wait.
If the financial system now pursued is continued, the day will come when the entire revenues will not be sufficient to pay the interest of the debt.
The people which at the cost of such great sacrifices discovered and peopled a new world will cease to be a nation if it allows that piece of soil, which we still preserve in America, to cease to be Spanish.
The minister of war, in answer to inquiry, stated that recruiting offices had been opened in Spain for the army in Cuba, but that up to the present only three volunteers have presented themselves in the Peninsula. It was now contemplated to let out the recruiting by contract.
Señor Labra, deputy for Porto Rico, formerly deputy for Cuba, had never entered upon the discussion of a budget under such bitter and sad feelings as now. Never was such indifference manifested. Here we have been discussing this important subject in the presence of only seven or eight deputies.
You may make the budget what you please, $36,000,000 or even $40,000,000; as Cuba can only pay eighteen or twenty millions, you will always have to increase the floating debt, until at last bankruptcy will come. And this is the road on which you are hastening Cuba. The situation of the island is grave, gentlemen deputies. Individual effort can do nothing; all should be united, and yet the deputies of Cuba are all divided.
Think, think much of the significance, on the one hand, of the failure of the treaty with the United States, and on the other of the appearance of filibusters. For prudential reasons he would not dwell upon this topic.
If we make no effort to prevent the loss of the island, we shall lose our prestige in Europe. It is dishonorable in a people to have reached the height of greatness to declare itself incapable of maintaining the Empire which its ancestors left it. A little while ago he was reading the great debates in the English Parliament during the war of Revolution in the United States, and he found them identical with those pronounced here. What happened to England? She lost the United States. But England corrected its errors and gave reforms to Canada.
The minister of ultramar, to correct the statements made as to deficits in past budgets and the inability of Cuba to pay the present one, presented a table of statistics to show that up to the 11th of June the collections for the fiscal year had been $22,000,000. He said that all the financial troubles, the twenty millions deficits, the loans, and the debt, had their origin in the impious war which the island suffered seventeen years ago—the unhappy war of separation; thence came all the calamities of Cuba.
Señor Sagasta, ex-prime minister and recognized leader of the Liberal or Fusionist party said: If many nations of Europe are making great sacrifices to acquire colonies, the nation which has them ought to make great sacrifices to preserve them, and in this sense he believed and said that the Spanish nation ought to make all the sacrifices it can to maintain and preserve the island of Cuba. The day in which Spain can, in view of the state of its treasury and finances, arrange the debt of Cuba, it ought to arrange it, and the day in which it can give its guarantee for its loans, it ought to give it.
We believe that autonomy (in Cuba) is a danger, and we aspire to assimilation, approaching it with that prudence with which it is necessary to advance when grave matters are considered. But, gentlemen, what is assimilation? Why, assimilation is the constant aspiration toward equality of rights; but equality of rights with equality of duties. He did not understand that one of these could be demanded without admitting the other also.
[Page 746]As it appears that the treaty with the United States has failed, it is necessary to supply its place with tariff reforms, preparing Cuba for the opening of the Panama Canal, so that it may then be converted into a free port.
The minister of ultramar, again speaking, concurred entirely with the doctrines announced by the illustrious chief of the Fusionist party (Sagasta). In economic aid the limit is the possibility in the power of the forces of the country. In politics, assimilation by a prudent road, and if at the end of the road there is greater development of liberty, so much the better.
In the present moment it appears that the misfortunes of Cuba happily commence to diminish. He had the honor the day before to read a letter from an important official of the island announcing better times. Listen to the words of the last communication from the worthy captain-general. Is it not true, gentlemen deputies, that these, words make hope to revive in the breast? “With the failure of the filibuster expedition coincides the increasing price of sugar. These events have created a favorable reaction. Gold has rapidly fallen six or seven points. Planters are encouraged; possibly credit may improve, now ruined both in and out of the country.”
Señor Becerra, ex-minister of ultramar, said: If it were possible for Cuba to become free, liberty would be impossible for it; it would go from one decline to another, from one state of anarchy to another, until one race would exterminate its rival, or until Cuba would be annexed by the United States, a vigorous and industrious race, but much more harsh and less yielding than the Spanish race. There is no salvation for Cuba except by and through Spain; and I ought to add that there is no salvation for Spain if we lose Cuba. He and his political associates (the extreme Liberals) hoped to see the day when every decree published in the Gaceta de Madrid (the official paper) should be ipso facto applicable to Cuba and Porto Rico. While there are those who nobly and honorably advocate autonomy, there are also those defending these ideas who seek for the separation of Cuba from the mother country. If Cuba should cease to belong to Spain, it would become the depot of the negroes of the United States: it would be a means of the latter country freeing itself from those to whom it gave freedom. In giving full rights to Cubans, it ought to be assumed that on receiving those rights they would not employ them against the [mother] country.
Senor Portuondo, of Cuba, was one of those who had regarded the treaty with the United States as only an incomplete and partial solution of Cuba’s embarrassments, but there were those who looked upon it as the cure for all its ills. But the treaty has disappeared; that hope has vanished. What now will you attempt? Have you no remedy? Nothing but to pray Providence to help us? Blessed be your faith! No; a remedy must be found.