Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 2, 1902
Mr. Squiers to Mr. Hay.
Habana, November 8, 1902.
Sir: I have the honor to transmit herewith copy of the President’s message to Congress presenting the project of the general budget of expenses and revenues for the year 1903, showing an estimated surplus of $2,614,032.28.
Mr. Palma calls attention to a decrease of $7,157,855.21 in the disbursements during the last fiscal year without making any reduction in services of sanitation, which he points out will yearly call for increased expenditures.
Educational matters are well supported, number of schools being 3,474, with an attendance of 163,348.
An agricultural station is to be organized, at a cost of $75,000.
The statistics submitted show a decrease in imports during the first six months of 1902 amounting to $1,700,000 and of exports $12,300,000, or 5 per cent in the former and 28 per cent in the latter, as compared with the year 1901, due, it is claimed, to the low price of sugar.
Estimated receipts on account of consular fees amount to $250,000, as compared with $850,000 estimated receipts under first consular-fee bill which passed Congress and $550,000 under the amended bill which passed the Senate and is now pending in the House.
It is stated that this is the smallest Cuban budget presented since the middle of the century, and when certain expenses are transferred from the general administration to the provincial or municipal there may be a still further reduction of 25 per cent.
I am, etc.,
Cuban Presidential Message.
To Congress:
I fulfill with true satisfaction the duty imposed upon me under section 5 of article 68 of the constitution, in presenting to Congress the project of the general budget of the nation for the fiscal year of 1903.
For the first time we, as Cubans, exercise the most important of the rights which a people can enjoy—that of freely regulating its revenues and expenses—and this must be for all a cause of true pleasure, because it was one of our most ardent aspirations, which, after bloody sacrifices, we see to-day happily realized. The Government congratulates itself upon contributing on its part to the regulation of the economic life of the State, proposing to the legislative power the estimates for the maintenance of the public services and the revenues deemed necessary to cover them.
During the existence of Spanish sovereignty the Cuban budgets were approved, first, without the concurrence of the representatives of the country, and, later, with the intervention of the few who were sent to the Spanish Parliament, and who, by [Page 339] reason of their small number and other causes, never had any effective influence in favor of interests genuinely Cuban. In the 31 tables accompanying the revenues and expenses are shown in detail which were estimated for Cuba from the year 1850 to 1898, and it may be seen from them what was the total amount of the obligations which were a charge upon the local treasury and the application given to the income which was exacted from the Cuban people, justifying the protest of the same against that system, which was contrary to its legitimate aspirations and most pressing necessities.
During the rule of the intervention budgets were not made, and on this account I requested in the messages which I addressed to the chamber under your worthy presidency on the 11th of June and the 22d of August last the necessary authorization to pay the expenses of the State until these general budgets were approved, indicating in those messages the causes which prevented the realization with the promptness desired of such an important work. A starting point was lacking because of the special organization given by the intervening government to the public services which discharged their duties without any budget, the needs of the State being paid by means of the concession of funds on the request of the disbursing officers of the various departments, in monthly requisitions at first, and afterwards bimonthly. On the cessation of that government on the 20th of May, services which before had an independent organization, or were directly subject to the headquarters of the Department of Cuba, passed over to form part of the departments of the cabinet, and on this account there did not exist any precedents in the departments. It has been necessary, therefore, as a preliminary task, to reorganize and distribute those bureaus in conformity with the new order of things established at the inauguration of the Republic.
In the project which I have the honor to submit to Congress the endeavor has been to establish the greatest economy, in accord with the manifestations which I made in my programme of the 7th of September, 1901, in which I expressed the necessity of organizing the Republic as modestly as was possible, so as to avoid difficulties and embarrassments for lack of foresight, for which reason we should carefully combine the organization of the public services, as well as their allowances of funds, adjusting them to the capacity of the island in the matter of income and resting upon actual data and never upon flattering hopes.
As a consequence of that purpose the expenses have been limited to the necessities which are a charge upon the State, in conformity with the laws and provisions regulating the public services and in accordance with one of the clauses of the appendix of our constitution in what relates to the land and marine sanitary service.
The general summary of the project is as follows:
| Revenues: | |
| Customs | $14,781,000.00 |
| Tax on beverages | 1,200,000.00 |
| Consular fees | 250,000.00 |
| Internal revenue | 500,000.00 |
| Communications (posts and telegraphs) | 420,000.00 |
| Properties and dues of the State | 119.800.00 |
| Various sources | 243,200.00 |
| Total | 17,514,000.00 |
| Expenses: | |
| Legislature | 413,319.68 |
| Executive— | |
| Presidency | 85,700.00 |
| Department of state and justice | 310,396.00 |
| Department of government | 4,529,998.00 |
| Department of finance | 1,801,117.88 |
| Department of public instruction | 3,721,790.84 |
| Department of public works | 2,923,011.82 |
| Department of agriculture, industry, and commerce | 165,319.50 |
| Total | 13,537,334.04 |
| Judiciary | 949,314.00 |
| Total | 14,899,967.72 |
| Surplus | 614,032.28 |
Deducting from $14,899,967.72, the amount of the expenses in the accompanying project, the amount of the services newly created—i. e., Congress, the Presidency, the consular corps, and the increase of the rural guard—amounting to $1,457,947.68; also the amount of the contracts entered into by the military government, which the actual Government has to carry out, aggregating $1,085,271.38, it would result that the expenses for the services before established would amount only to $12,356,748.66, or $7,157,855.21 less than the sum of the disbursements in the past fiscal year of 1901–1902, without making any reduction in the services of sanitation and charities and others of not less importance. These sums, compared with those of the last three years, present the following results:
| Year. | Income. | Expenses. | Surplus. | Deficit. |
| 1899–1900a | $17,385,905.30 | $15,691,453.06 | $1,694,452.24 | |
| 1900–1901a | $17,154,929.28 | 17,644,991.81 | $490,062.53 | |
| 1901–1902b | 18,791,473.21 | 19,514,603.87 | 723,130.66 | |
| 1903–1904c | 17,514,000.00 | 14,899,967.72 | 2,614,032.28 |
Examining the expenses, it is to be observed that all those of the legislative power, those of the Presidency and Vice-Presidency, and those of the diplomatic and consular corps are of new creation and unavoidable constitutionally, the latter having a permanent character in conformity with the fundamental law, for which reason they constitute a portion of the fixed estimates and should govern until amended by special laws.
The expenses of the administration of justice also have a permanent character; but, as Congress has not yet enacted the organic law for the judiciary wherein those expenses should be definitely assigned, it is the duty of Congress to adopt such measures as it may deem proper in order that the constitutional provision regarding the legality of such expenses be complied with. In the meantime the necessary sums to maintain the actual organization are included in the project as the only existing legal organization. For this reason the allowance for the municipal courts has not been included in this project, because the fixing of its amount is an exclusive attribute of Congress.
In the department of government appear the obligations of a transitory character which the State has taken upon itself, such as those of the provincial governments and of sanitation and charities—the first, because the provincial councils are not yet organized, and the last, because by their own nature they require the tutelary action of the State whenever the local organizations have not the resources to attend to them.
It is possible that the expenses of the provincial government will figure in the actual budget only a few months, taking into account the proximity of the promulgation of the organic provincial law; and those of charities, amounting to nearly $1,000,000, will surely be decreased as soon as the municipal councils are in such condition that the Government can deliver over to them the beneficent institutions of a municipal character.
The cost of the sanitary service, far from decreasing, will increase, inasmuch as on the extension of the organization of the service to the entire country and even beyond it the amount required for its maintenance will have to be greater. Among those expenses appears the project of the establishment of a chemical bacteriological laboratory of a general nature, wherein shall be made the scientific preparations which to-day are very costly to the State, and wherein chemical analyses will be made, which at present are made under heavy expenses; for which reason it may be asserted that this laboratory will not only produce effective saving, but will yield a positive revenue.
Among the new expenses of government are included the cost of the rural guard under the law of October 18, amounting to $1,783,582; the secret police, previously supported in part by the municipality of Habana, and now a charge upon the State because of existing provisions; as well as the subvention assigned to the corps of firemen by order No. 103, series 1902, which is reduced to $6,000 in place of the $12,000 assigned in said order, for which reason the municipality of Habana should contribute a greater amount than the State for the maintenance of that useful institution, as it has been relieved of other expenses of a local character, and it is enabled, therefore, to attend with greater freedom to the municipal expenses.
[Page 341]Regarding the branch of finance, the greatest economy has been observed in all the services attached to the department. On the termination of the American occupation the reorganization of all the services was effected, seeking uniformity in the economic and financial administration of this island. By order No. 113, of March 7 last, it was provided that the offices of the treasury and of the general auditor (to-day general auditing department of the State) should pass over to that department, and by order No. 142, of the 10th of the same month, the same disposition was made of the customs service, the coast guard, and the bureau of mercantile statistics.
It was also provided—order No. 133—that the immigration and quarantine services should be attached to that department, and by a resolution of headquarters on the 19th of the same month it was given possession of the arsenal, Camp Colombia, the Triscornia Railroad, and various other properties of the State which had been administered directly by said headquarters.
In the estimate of the department of finance are stated the sums considered indispensable for the expenses of transportation; the commission of the National Bank, according to the contract of February 18 of this year the increase of the coast-guard service; the cost of leasing the lands at Triscornia according to the instrument of November 13, 1900; the expenses under the contract of the ice plant and electric-light plant of Hospital No. 1, and of the electric plant established at the Quartel de la Fuerza; the $91,027.56 to be paid annually to the clergy according to the instruments of October 2, 1901, and January 11, 1902; the amount calculated as necessary for reimbursement and returns for account of land and marine rents; and that which is believed to be indispensable to satisfy the “censos” recognized as liens upon properties of the State.
By the decree of the 7th of June of the present year the marine sanitary service, which had been attached, by order No. 133, to the department of finance, was transferred to that of government, inasmuch as the general direction of sanitation created by the intervening government belonged to that department. To the latter belonged also, by reason of its special character, the matters relating to that branch.
By the decree of June 9 last the administrations of rents and taxes of the fiscal zones of Guanajay, Cardenas, Cienfuegos, and Manzanillo were suppressed. This reform represents for the Treasury a saving of $39,800 a year. The suppression of various municipalities of the island, having been provided by order No. 23, current series, the action of some of these zones was diminished, and consequently the work intrusted to them decreased.
That of Cienfuegos collected in the year 1901 only 4.321 per cent of the total of the internal revenues of the island; that of Cardenas, 4.146 per cent; that of Manzanillo, 1.379 per cent; and that of Guanajay, 1.349 per cent.
The receipts of these suppressed zones, as compared with their cost, was as follows in the year 1901:
| Zone | Collections. | Cost. |
| Guanajay | $9,060.56 | $9,060.00 |
| Cardenas | 27,846.10 | 9,360.00 |
| Cienfuegos | 29,020.03 | 12,320.00 |
| Manzanillo | 11,688.11 | 9,060.00 |
| Total | 77,614.80 | 39,800.00 |
It results, therefore, that the budget of these branches would absorb more than 50 per cent of their collections.
The service for payments has not suffered any injury with the suppression of said zones, because they continue to be made, as previously, by the administrations of the provincial capitals, with the exception of those in the zone of Holguin.
On the creation of the zones of Cienfuegos and Manzanillo, various municipal districts belonging to the province of Puerto Principe were attached, altering the provincial division, which was reestablished with the suppression of those offices, as was just and proper, according to the provisions of the constitution.
The zone of Holguin has been left in existence because of the great distance which separates it from the capital of the province, and its preservation facilitates the service without doing violence to the provincial regimen.
By the order No. 78, dated June 14, 1899, of the military governor, the suppression of all the captaincies of the port of the island was provided, intrusting the same to the administrators of customs, with the exception of that of Habana, which was left in existence and in absolute independence of every other administrative organism.
[Page 342]To put an end to that exception, which was of no benefit to the service, but rather, on the contrary, was an obstacle to the same, the office of captain of the port of this capital was suppressed by decree of May 29 last, its functions passing over to the administrator of customs.
It has been necessary to increase the personnel somewhat in the central offices in order to attend to the new duties to them intrusted.
In the department of public instruction it has been necessary to preserve the actual regimen as much in higher instruction as in intermediate and primary, because the organization of the university, the institutes of secondary instruction, the academy of arts and trades, and the schools of primary instruction follow plans of study established by existing legislation, and the executive lacks power to make alterations in organizations created by law and in the allowances therein assigned for them all.
Article 31 of the constitution ordains that primary instruction shall be compulsory, and that it, as well as that of arts and trades, shall be free, both being in charge of the State, while the municipality and the province are unable to sustain them, respectively, for lack of sufficient resources. Consequently the 3,474 schools are maintained, having an attendance of 163,348 scholars of both sexes, such primary instruction using up the greater part of the estimate for the branch.
It is evident that if schools were suppressed it would be easy to reduce the expenses of primary instruction, but this would be a saving to the prejudice of the social culture of the Cuban people, which requires that the Government should further education by all the means within its reach as the basis of our national life.
In public works the Government has had to accept the contracts made by the American military government, which left in plan and under contract various works whose completion must be attended to, as well as the carrying out of those demanded by the necessities of the island, among them the construction of several bridges and highways, the improvement of harbors, and the service of light-houses to facilitate the interior and exterior traffic of the Republic, and consequently the commercial movement.
In the budget of this branch the items destined for certain expenses of a municipal character, which have passed over to be obligations of the respective municipal councils, have been suppressed, which councils the State assists with some pecuniary subvention, having ceded to them in addition all the properties and implements with which the works were carried on, which were partly, and still are partly, for account of the public treasury.
For the branches of agriculture, industry, and commerce the credits only are assigned which are necessary for the maintenance of the department and the creation of the meteorological service and that of crops, together with a small credit of $75,000 to organize an agricultural station.
The Government laments the meagerness of the allowance for this department, and it hopes that when the loan is approved which is now under discussion by the chambers the organization will be provided for the services of the same, so that it will reach the importance which corresponds to it and which it should have in a country like ours, essentially agricultural.
Whatever may contribute to the betterment and prosperity of agricultural wealth will be the object of the attention of the executive, who will favor within his power the initiative and purposes of all to the end that its reconstruction may be effected with the greatest brevity, carrying out the improvements which the actual cultivation exacts and devoting itself to the development of others which offer appreciable advantages in other countries and which can yield them in our own by virtue of the exceptional conditions of our soil, for the greater part still uncultivated.
The economic situation of the country is certainly not satisfactory, but there is no reason to entertain doubt regarding a very near improvement, as soon as the reciprocity treaty is negotiated with the United States and an outlet can be given, under favorable conditions, to our two principal products—sugar and tobacco.
According to statistical data compiled by the department of finance, the commercial movement between the Republic of Cuba and foreign countries during the first six months of 1902 shows a result inferior to that of the like period of 1901. The decrease of imports is equivalent to $1,700,000, and represents 5 per cent of those of the first six months of 1901. In exports the decrease is greater—$12,200,000, or 28 per cent of those for the like period of 1901.
So remarkable a decrease is due to the low price of the sugar shipped abroad and to the diminished sale of this product in expectation of the tariff concessions for Cuba which were urged in the United States and which might bring about more favorable prices.
In the first six months of 1901, 465,000 tons of sugar were exported, 132,000 tons remaining in storehouses.
In the like period for 1902, the exportation has only reached 332,000 tons, and the amount on hand in store on the 30th of June was 450,000 tons, which facts permit [Page 343] the total exportation for the year to be calculated at about 760,000 tons, deducting the consumption of the island; but in spite of this probable larger exportation in 1902, if the sales are effected at the average price of 3 reales per arroba, the value would result $2,000,000 less than last year.
The general commercial movement of Cuba during the last three years is as follows:
| Year. | Imports. | Exports. | Excess of imports over exports. | Excess of exports over imports. |
| 1899. | ||||
| First 6 months | $35,911,800 | $31,600,600 | $4,311,200 | |
| Second 6 months | 39,391,700 | 19,332,100 | 20,059,600 | |
| Total | 75,303,500 | 50,932,700 | 24,370,800 | |
| 1900. | ||||
| First 6 months | 37,478,200 | 30,066,600 | 7,411,600 | |
| Second 6 months | 32,601,100 | 21,385,800 | 11,215,300 | |
| Total | 70,079,300 | 51,452,400 | 18,626,900 | |
| 1901. | ||||
| First 6 months | 33,663,800 | 42,942,500 | $9,278,700 | |
| Second 6 months | 34,089,300 | 23,559,600 | 10,529,700 | |
| Total | 67,753,100 | 66,502,100 | 1,251,000 | |
| 1902. | ||||
| First 6 months | 31,977,100 | 30,687,000 | 1,290,100 | |
| Grand total | 245,113,000 | 199,574,200 | 45,538,800 |
For the comparison of values, the reduction in the price of the sugars which were exported must be taken into account, as well as the amount on hand for sale, which, fortunately, has so diminished in the last two months that it will probably be entirely realized upon in the remainder of the present year.
The situation through which the sugar industry is passing is not exclusive for Cuba, for all countries which produce cane sugar are feeling as she does the rigor of the competition of the beet, which, thanks to very advanced methods of elaboration and the protection afforded to it by bounties, direct and indirect, can be placed in all the markets of the world under favorable conditions. For us this competition has been more keenly felt because of the afflictive circumstances through which Cuba has passed and because the reduction has not yet been reached in the tariff duties which are collected in the United States upon our products; but we should have faith that so soon as the reciprocity treaty is entered into with that nation, whose first magistrate is carrying on an active campaign in furtherance of this just cause, with the suppression of the bounties agreed upon in the Brussels conference and the measures which Congress will adopt to favor agriculture, industry, and commerce, the reconstruction of our wealth will, within a few years, be complete.
The conditions of our soil and the energy of its inhabitants, demonstrated under all circumstances, are factors which will aid also in the accomplishment of these patriotic desires.
Congress has already demonstrated the importance which it attributes to the development of the cattle industry by enacting the law of September 15, which grants tariff franchises for the importation of some classes of cattle as a powerful stimulus for reaching, by that branch of our wealth, its complete development.
Taking into account the circumstances set forth in the preceding paragraphs, the income has been calculated with some reductions as compared with the collections for the last three economic years and the result of the first three months of the current year.
The same items of taxation are left in force, to which the revenues of the State were reduced since the reform of the tax system of the island was made by the decree of March 25, 1899, all direct taxes and some indirect passing over the municipal councils, the State, reserving for itself only the indirect revenues of customs, posts, telegraphs, real property, transfer taxes (impuestos dederechos reales), the fees from banks and corporations, the income of its estate and properties, and the dues imposed upon the same.
It is for Congress to determine at the proper time whether the obligations of the State ought to be met, as actually happens, only with the proceeds of indirect taxes [Page 344] of an uncertain amount and subject to variations from natural causes, or for unforeseen circumstances or external causes, or whether a complete transformation should be effected in the actual revenue system of the Cuban State by virtue of the attributes conferred by section 8 of article 59 of the constitution, so that in turn the provinces and the municipal councils may make use of the rights conferred upon them by articles 93 and 105 of the same.
It is proposed to restore the tax on the importation and manufacture of beverages, created by the budget law of 1892–93, which yielded approximately $1,250,000.
The tax on alcohols constitutes one of the bases of the budgets of the principal European nations and of that of the United States. In England it yields 36 per cent of the total of the budget of revenue; in France, 19 per cent; in Germany, 18 per cent; and 29 per cent in the United States. Now, then, although it is not possible for it to yield in like proportion in Cuba, because a great part of the spirituous beverages which are consumed among us is imported and is subject to the payment of tariff duties, and also because we have to attend to the development of our local industry, it may be asserted, nevertheless, that the proceeds will be of considerable importance. Under that aspect, wines and spirituous and fermented beverages should be subjected to the proposed tax, regulating at the same time the tax upon the factories established in the country, with the exception of those that exist in the sugar mills, all being under obligation to contribute to the State in the amount proposed, and omitting from the tariffs of the industrial tax the items which said factories contribute to the municipal councils, for the purpose of unifying the collection of said tributes.
By reason of the creation of the consulates, the corresponding fees will be exacted, which it is calculated can produce approximately $250,000 a year.
The surplus which results from a comparison of the income and the expense is justified by the necessity of attending to the new expense which will be caused by the increase in the artillery corps, the allowance for municipal courts, and the interest and sinking fund for the loan which is pending approval in the Chambers, the latter of which items is properly given the character of permanent, in accordance with the provisions in section 2 of article 59 of the constitution.
I will conclude by stating that the present project presents the smallest budget which Cuba has had since the middle of the last century, with the favorable circumstance that now for the first time all of its appropriations will be applied to necessities and obligations resulting in her own advantage; and I may add that when Congress enacts the provisions to regulate and organize everything related to the general administration, the provincial, and the municipal—and it will be possible for the provinces and the municipality to bear their own special expenses—the general budget of the State will be considerably reduced, for more than 25 per cent of its total is devoted to-day to the payment of provincial and municipal obligations.
It will then be possible to devote annually important sums to the reconstruction of the country and the furthering of its general interests, and their development will solidify the work of our independence upon the firm foundation of labor, education, and public and private wealth.
The project is accompanied by the bases of those provisions which are deemed necessary for the application and orderly operation of the budget, it being understood that in this case the Executive only suggests a series of ideas or principles of a general character, which Congress may accept in part or in whole, as it may deem most convenient for the public service and the general interests of our Republic.
Yours, respectfully,
Republic of Cuba, Department of Finance—Project of the Budget for the Fiscal Year 1903.
Revenues.
| Customs | $14,781,000.00 |
| Tax on beverages | 1,200,000.00 |
| Tariff fees [evidently consular] | 250,000.00 |
| Internal revenues | 500,000.00 |
| Communications | 420,000.00 |
| Properties and rights of the State | 119,800.00 |
| Various sources | 243,200.00 |
| Total | 17,514,000.00 |
Expenses.
| legislature. | |
| Senate | $125,739.68 |
| House | 266,820.00 |
| Journal of sessions | 20,760.00 |
| Total | 413,319.68 |
| executive. | |
| Presidency | 85,700.00 |
| Department of state and justice: | |
| Office of secretary | 6,000.00 |
| Direction of state | 85,826.00 |
| Diplomatic corps | 167,100.00 |
| Direction of Justice | 51,470.00 |
| Total | 310,396.00 |
| Department of government: | |
| Office of secretary | 132,724.00 |
| General archive | 13,500.00 |
| Secret police | 52,620.00 |
| Rural guard | 1,783,582.00 |
| Artillery | 123,133.00 |
| Habana prison | 147,628.00 |
| Women’s prison | 8,880.00 |
| Jails | 352,898.00 |
| Charities | 873,659.00 |
| Sanitation | 292,048.00 |
| Communication | 623,628.00 |
| Civil governments | 125,698.00 |
| Total | 4,529,998.00 |
| Finance: | |
| Secretary’s officea | 618,469.00 |
| Fiscal Zones | 116,540.00 |
| Customs | 766,010.00 |
| Properties of the State | 197,287.56 |
| Immigration | 56,811.32 |
| Drawbacks | 36,000.00 |
| Contingent | 10,000.00 |
| Total | 1,801,117.88 |
| Public instruction: | |
| Secretary’s office | 124,274.00 |
| University | 290,530.00 |
| Institutes and schools | 285,673.00 |
| Primary instruction | 3,021,313.84 |
| Total | 3,721,790.84 |
| Public works: | |
| Secretary’s office | 163,720.00 |
| Highways and bridges | 661,272.82 |
| Ports | 805,239.00 |
| Light-houses | 147,416.00 |
| Sanitation | 863,680.00 |
| General express, new works | 256,684.00 |
| Railroad commission | 25,000.00 |
| Total | 2,923,011.82 |
| Agriculture, industry, and commerce: | |
| Secretary’s office | $43,020.00 |
| Meteorological service | 7,808.50 |
| Provincial boards (agriculture, industry, and commerce) | 11,064.00 |
| Inspection, public lands and mines | 10,650.00 |
| Provincial sections— | |
| Public lands | 10,904.00 |
| Mines | 6,873.00 |
| Agricultural station | 75,000.00 |
| Total | 165,319.50 |
| Judiciary | |
| Supreme court | 109,050.00 |
| Audiencias | 348,802.00 |
| Trial courts | 395,112.00 |
| General expenses | 96,350.00 |
| Total | 949,314.00 |
| Grand total | 14,899,967.72 |
Résumé.
| Income | 17,514,000.00 |
| Expenses | 14,899,967.72 |
| Surplus | 2,614,032.28 |
- Data from the report of the Secretary of War of the United States of America.↩
- Data from the report of the Secretary of War of the United States of America.↩
- Data from the report of the general treasurer of the island.↩
- Estimated.↩
- This item includes expenses of general treasury, general auditor, central section of customs, and central disbursing office.↩