Industrial Cuba Part 17

ESTIMATE FOR PAYMENT OF INSURGENT TROOPS

11 Major-Generals $ 179,450 19 Generals of Division 296,175 54 Brigadier-Generals 682,825 153 Colonels 1,491,750 290 Lieutenant-Colonels 2,362,800 578 Majors 3,870,240 965 Captains 4,561,800 1245 Lieutenants 3,763,800 1794 Sub-Lieutenants 4,952,880 2130 1st Sergeants 3,796,200 3123 2d Sergeants 4,605,600 4509 Corporals 5,238,240 30,160 Privates 21,502,620 ------ ----------- 45,031 $57,304,380

The pay promised the Cuban army is very much higher (except in the grade of generals) than the amounts actually paid the officers and men in the United States army, as will be seen from the following comparison of the salaries of the two armies:

SALARIES PAID CUBAN AND UNITED STATES ARMIES PER MONTH

United Cuban. States.

Major-General. $500 $625 General of Division 450 -- Brigadier-General 400 458.33 Colonel 325 290.67 Lieutenant-Colonel 275 250 Major 220 208.33 Captain 130 150 Lieutenant 100 125 Sub-Lieutenant 90 116.67 1st Sergeant 60 25 2d Sergeant 50 18 Corporal 40 15 Private 30 13

It is not a.s.sumed by the gentlemen who prepared the above estimates that claims of such magnitude could be seriously considered by an independent Republic. The resources of the Island at present are entirely inadequate to shoulder such a debt. Upon the reduced basis of the salaries paid the United States soldiers, the reduction would be about one half, or less than $30,000,000, an equally impossible sum. On the other hand, that some aid should be rendered by the United States to enable these soldiers to disband and go to work would seem both feasible and just. It could easily be met by the revenue of the Island, and would have a decided effect in securing permanent peace and the early establishment of a stable government in Cuba. If done now under the guidance of the United States it would prevent excessive payment to the troops hereafter. In the same manner the liquidation of the small amount of outstanding obligation--not exceeding $2,500,000--might settle the debt question for all time to come. Especially if all other advances for these purposes were prohibited until such debt was adjusted to the satisfaction of the United States. In case the ultimate solution of the Cuban question should be, as it is quite within the range of probability, annexation, the independent government will not previously have had the opportunity of incurring improvident indebtedness, which ultimately may have to be a.s.sumed by the United States. In short, whatever may be done in this matter, or however it may be done, the United States should control and safeguard the finances of the Island for a considerable period. It has been very truly stated that should an independent government be established and recognised, the United States will no longer be able to control the financial legislation of the Island. It can, however, by the plan proposed, and very properly, not only save money for Cuba while under its military possession or control, but also prevent the making of unnecessary improvident or other loans by such independent government, except with the consent, or approval in advance, of the United States. This can be readily done, if, when making an advance for the benefit of Cuba, the right to apply the customs receipts and other revenues of the Island to the repayment of the princ.i.p.al and interest of such advance be reserved to the United States.

In this way all reckless expenditure may be prevented and all speculative or independent bond issues be avoided and at the same time quick a.s.sistance be rendered those whose position at present is deplorable in the extreme.

CHAPTER XV

REVENUE--CUSTOMS TARIFF

The revenues and expenditures of the Island of Cuba for the fiscal year 1898-99, according to the reports obtained by the author from the Secretary of the Treasury, Marquis Rafael Montoro, may be thus summarised:

BALANCE OF THE ESTIMATED RECEIPTS AND EXPENDITURES OF THE BUDGET OF THE ISLAND OF CUBA FOR 1898-99

--------------------------------------+----------------------------------- Expenditures. Amount. | Receipts. Amount.

--------------------------------------+----------------------------------- Sovereignty | Taxes and Imposts $ 6,142,500 Expenditure $22,500,808.59 | Custom-Houses 14,705,000 _Local._ | Internal Revenue 1,640,650 General Expenditures 159,605.50 | Lotteries 1,900,500 State-Church, Justice, | State Property 435,000 and Government 1,612,859.44 | Miscellaneous Revenue 1,536,000 Treasury 708,978.51 | ----------- Public Instruction 247,033.02 | Estimates of Total Public Works and | Revenue $26,359,650 Communications 1,036,582.10 | Agriculture, Industry, | and Commerce 108,178.52 | -------------- | $26,374,045.68 | Deduct Amounts not | Specified 17,314.27 | -------------- | Total $26,356,731.41 |

Receipts $ 26,359,650.00 Expenses 26,356,731.41 --------------- Surplus $2,918.59 --------------------------------------------------------------------------

While the revenues are all derived from the various species of taxation exacted from the people of Cuba, the expenditures are divided into two important cla.s.ses: those under the head of "Sovereignty Expenses," or expenses of the General Government, which, according to this estimate, aggregate $22,500,808.59, and those which, under the head of "Local Expenses" aggregating $3,873,237.09, const.i.tute the expenditures for the immediate necessities of the Island. In order to obtain a clear view of the possibilities of revenue and the probable future expenses of the Island of Cuba, these receipts and expenditures should be further examined.

Taxes in Cuba, as will be seen from the above exhibit, are collected under six general cla.s.sifications, namely: (1) taxes and imposts, including excise and liquor taxes, and taxes on railway freight and pa.s.sengers; (2) receipts from custom-houses, which include taxes on imports and exports, loading and unloading merchandise, fines and pa.s.sports; (3) internal revenue, including stamped paper,[14] postage stamps, warrants for payment issued by the State, diplomas and t.i.tles, stamps on letters of exchange or deeds of transfer, on insurance policies, on matches, and on almost every other conceivable sort of deed and doc.u.ment; (4) lotteries, are put down in the above table as yielding $1,900,500; (5) revenue from State property, including rents and sale of lands and rent from docks; (6) revenue from miscellaneous sources, some of which seem somewhat mythical. These comprise the general sources of revenue which appear in this report, and from which the Secretary of the Treasury, Marquis Montoro, informed the author he hoped to secure for the fiscal year 1898-99 the following sums:

Estimated Amount Sources of Revenue. Spanish Gold.

Taxes and Imposts $ 6,142,500 Custom-Houses 14,705,000 Internal Revenue 1,640,650 Lotteries 1,900,500 State Property 435,000 Miscellaneous Revenue 1,536,000 ---------- Total Estimated Revenue $26,359,650

As to how much of this has been collected or how much can be collected, it is impossible to say with any degree of certainty. Spanish official reports are not very reliable doc.u.ments at the best, and during the last three years of internal dissensions, frequent changes in officials, and war, they appear to be at their worst. The only possible light on the subject which the author was able to obtain was a statement of the actual taxes as levied between 1887 and 1897, inclusive, and the actual amounts collected at the custom-houses and by the Spanish Bank of the Island of Cuba, for under Spanish administration the latter inst.i.tution collected all taxes other than customs.

According to these figures, the custom-house receipts of Cuba fell from $14,708,509.10 in 1895 to $9,648,369.94 in 1897-98. While the value of the tax receipts handed to the Spanish Bank for collection for the fiscal year 1896-97 exceeded $5,000,000, the actual money collected was only $3,266,583.37, while for the next fiscal year, 1897-98, out of receipts aggregating in the neighbourhood of $4,500,000, only $2,377,742.21 was realised. The exhibits show that rural real estate, which, under prosperous conditions, should yield in taxes from $880,000 to $1,000,000, is incapable of paying anything. Out of receipts aggregating in 1897-98 over $800,000, the Spanish Bank only collected $89,661.98 from these properties. Nor will it be possible in the reconstruction of the Island to secure revenue from these sources, for the burned and destroyed estates are yielding nothing to their owners.

City property which, in times of prosperity, should yield upward of $2,000,000, or even $3,000,000, in 1897-98 only yielded $1,140,230.12.

This tax, however, and the receipts from customs will be the first to recover, as the immediate effects of permanent peace and honest government will be felt in the cities and towns and seaports. Lotteries will become a doubtful, if not impossible source of revenue. The collections from internal revenue may keep up to the estimate, though the income from State property and miscellaneous revenues seems upon examination a rather doubtful resource for the new government to rely upon. Judged from the actual revenue collected in 1897-98, had present conditions prevailed, it is extremely doubtful if the real revenue collected for 1898-99 would have reached more than half the rosy estimates put forth by the Marquis Montoro. The fact is apparent to those who know existing conditions in Cuba that the people of the Island are just now in such an impoverished condition that the agricultural interests are simply incapable of paying taxes.

The cities will soon be all right again, and under honest munic.i.p.al government, taxes on urban property will be paid. The influx of commodities of all sorts, to make up for losses and destruction by war and low stocks due to the blockade, will increase the custom-house receipts. The reduction of duties on machinery and railway supplies may increase the importations of these articles, and thus the lower rates of duty will yield a revenue which the present high rates, by making importations impossible, fail to do. By putting an end to smuggling, and by honestly administering the custom-houses, the United States Government may increase the revenue, but the proposed reduction of duties of the amended tariff in a measure offsets this. Unless, therefore, some new source of revenue is found practicable (and the Spanish seem to have exhausted all known means of raising revenue), reliance for the future will have to be on five of the six revenue sources above enumerated. If for the first year or two they should yield in all $15,000,000, it will probably be all the revenue that may safely be estimated. Much will naturally depend upon the foreign imports. The cable despatches from Havana, as this volume goes to press, indicate that the customs revenue will be fully up to the author's estimates.

Aside from special imports, such as specie, leaf tobacco, etc., the value of the imports of merchandise proper into Cuba the last normal year (1895) was upward of $60,000,000. An average tariff rate of twenty-five per cent. on this valuation of imported merchandise would itself yield $15,000,000. As a matter of fact, the duties collected in 1895 were $14,587,920.57, on a total importation of merchandise other than specie of $61,443,334.65, or about an average of twenty-five per cent. To be sure, the nominal tariff rates were much higher in 1895 than they will be in 1899, but there is a possibility of making up for the loss by reason of lower duties by abolishing smuggling and honestly administering the custom-houses. It is impossible, however, to estimate on this, because, to do so with any degree of success, it would be necessary to reduce to figures the losses of revenue by smuggling, undervaluation, and miscla.s.sification. This is an impossibility.

The tariff which the Spanish Government enacted and put in force in the Island of Cuba in September, 1897, and which, with modifications in the shape of war taxes, was in force in ports of Cuba in possession of the Spanish Government until the change of government, January 1, 1899, is based upon the preceding tariffs. Both this tariff and its predecessors seem to lack rational basis, so far as Cuba is concerned, the aim apparently being to secure, by the means of exorbitant customs duties revenue for the Spanish exchequer and profits for Spanish subjects, without the slightest regard for the welfare of the people of Cuba.

While the duties seem to have been levied with this idea, the cla.s.sifications and methods of administration are so complicated and obscure that they easily lend themselves to every known species of revenue fraud, from false cla.s.sifications and undervaluations to smuggling of the most barefaced character. In fact, the author, after a careful inquiry into the Cuban tariff and an examination of several hundred witnesses in Havana and other cities of Cuba, reached the conclusion that almost every form of revenue iniquity has been perpetrated upon the people of this Island by the ruling powers.

Not only was the tariff constructed in a way that compelled the Cuban producer to purchase the articles he needed and could not himself manufacture, of Spain, instead of in the cheaper markets, but also it levied almost prohibitive duties on such articles as Spain could not under any circ.u.mstances send to Cuba. For example, the Spanish exporter was able, by a discriminating duty of more than one hundred per cent.

against other countries, to import from Minnesota to Barcelona American flour and reship it to Cuba at a price just below the price of the American article shipped direct to Cuba, upon which a duty nearly three times as great as that exacted from Spain had to be paid. On the other hand, Spain took little interest in such articles as machinery and railway supplies, including steel rails and locomotives, because she neither produced them nor could she purchase elsewhere and reship as Spanish production.

The amended tariff for the Island, which went into force January 1, 1899, was framed on the general plan of the "open door" for all nations; that is, the merchandise of all nations will be admitted on an equal footing, or at the same rate of duty. There is but one uniform rate of duty, and that, as far as possible, a revenue, not a protective rate. In a few cases, a protective rate has been allowed, for the purpose of encouraging Cuban home industry, but as over half of all the imports into Cuba are food products, not produced to advantage in the Island, the rates of duty rarely exceed twenty-five per cent. ad valorem. In this connection, it will be interesting to note the value of the merchandise imported, divided by schedules or cla.s.ses (page 217).

It will be seen from the following exhibit that Schedule 12, "Alimentary Substances," covering all food products, is the most important of all the schedules, representing more than half the total imports into Cuba during 1895, and aggregating over $31,000,000. Next in importance to this is Schedule 4, "Cotton and Manufactures thereof," aggregating nearly $6,000,000, or ten per cent. of the total imports; Schedule 1, "Ores, etc.," aggregating in the neighbourhood of $4,750,000, ranking third, and so on through the list.

TABLE SHOWING VALUE OF IMPORTS INTO CUBA BY TARIFF CLa.s.sES FOR THE LAST NORMAL YEAR, 1895-96

----------+---------------------------------------------+--------------- Number of | | Value Imports, Schedule. | Commodity. | 1895-96.

----------+---------------------------------------------+--------------- Cla.s.s I. | Stones, earths, ores, etc. | $ 4,733,358.12 " II. | Metals, and manufactures of | 2,063,281.95 " III. | Pharmacy and chemicals | 2,166,414.92 " IV. | Cotton, and manufactures of | 5,908,202.23 " V. | Hemp, flax, jute, and other vegetable | | fibres and manufactures of | 3,587,713.23 " VI. | Wool, bristles, etc., and manufactures of | 1,060,192.13 " VII. | Silk, and manufactures of | 315,010.00 " VIII. | Paper and its applications | 1,257,132.94 " IX. | Wood, etc., and manufactures of | 2,054,057.57 " X. | Animals and animal wastes | 3,880,209.64 " XI. | Instruments, machinery, etc. | 2,123,315.43 " XII. | Alimentary substances | 31,179,289.98 " XIII. | Miscellaneous | 1,115,156.51 | +--------------- | | $61,443,334.65 ----------+---------------------------------------------+---------------

In conjunction with the above table, the following recapitulation of values of exports and reshipments into Cuba during 1895-96 is given:

RECAPITULATION OF VALUES OF EXPORTS AND RESHIPMENTS IN CUBA DURING 1895-96

------------+---------------+---------------+ | First | Second | Exports | Quarter | Quarter | ------------+---------------+---------------+ Cla.s.ses of | | | goods: | | | Timber | $ 286,190.70 | $ 267,068.47 | Cigars | 6,616,458.97 | 4,374,938.70 | Sugar | 26,288,456.91 | 30,457,278.50 | Mola.s.ses | 427,886.11 | 1,010,657.35 | Rum and | | | liquors | 352,393.44 | 292,808.18 | Other | | | articles | 1,332,714.86 | 2,538,509.69 | +---------------+---------------+ Total | 35,304,100.99 | 38,941,260.89 | +---------------+---------------+ Reshipment: | | | Foreign | | | goods | 15,462.65 | 8,477.91 | Spanish | | | goods | 61,343.08 | 27,477.62 | +---------------+---------------+ Total | 76,805.73 | 35,955.53 | +---------------+---------------+ Special | | | exports | 207,477.55 | 166,881.15 | +---------------+---------------+ Grand | | | total |$35,588,384.27 |$39,144,097.57 | ------------+---------------+---------------+

------------+---------------+---------------+--------------- | Third | Fourth | Exports | Quarter | Quarter | Total ------------+---------------+---------------+--------------- Cla.s.ses of | | | goods: | | | Timber | $ 200,878.03 | $ 130,463.90 | $ 848,601.10 Cigars | 6,389,770.95 | 6,666,672.71 | 24,047,841.33 Sugar | 10,679,269.55 | 7,572,016.36 | 74,997,021.32 Mola.s.ses | 152,205.65 | 8,846.30 | 1,599,595.41 Rum and | | | liquors | 267,277.53 | 121,991.00 | 1,034,470.15 Other | | | articles | 2,738,024.01 | 1,112,242.44 | 7,721,491.00 +---------------+---------------+--------------- Total | 20,427,425.72 | 15,612,232.71 | 110,285,020.31 +---------------+---------------+--------------- Reshipment: | | | Foreign | | | goods | 17,567.05 | 27,524.08 | 69,031.69 Spanish | | | goods | 28,718.17 | 29,276.53 | 146,815.40 +---------------+---------------+--------------- Total | 46,285.22 | 56,800.61 | 215,847.09 +---------------+---------------+--------------- Special | | | exports | 2,092,960.13 | 153,326.30 | 2,620,645.13 +---------------+---------------+--------------- Grand | | | total |$22,566,671.07 |$15,822,359.62 |$113,121,512.53 ------------+---------------+---------------+---------------

The grand total of the trade of the Cuban ports for the last normal year was nearly $175,000,000. Perhaps with allowance for smuggling and undervaluations, this total may have reached $200,000,000; possibly it may have exceeded those figures. However this may be, Cuba, under a satisfactory government and normal conditions, may be easily said to represent from $200,000,000 to $250,000,000 in the world's commerce.

This fact gives some idea of the vast trade possibilities of Cuba after a complete rehabilitation and industrial reconstruction of the Island.

In the following table the author has carefully compiled from the several available sources of information the average receipts from 1886 to 1897, inclusive, of the several custom-houses of Cuba:

TOTAL CUSTOM-HOUSE RECEIPTS IN ISLAND OF CUBA FROM 1886 TO 1897, INCLUSIVE

------------------------+-----------------+----------------+--------- | Total for | Average per | Ratio of Custom-Houses. | Twelve Years. | Year. | Total.

------------------------+-----------------+----------------+--------- Havana | $106,132,753.38 | $ 8,844,396.11 | 69.9 Cienfuegos | 13,691,144.65 | 1,140,928.72 | 9.0 Matanzas | 9,381,754.10 | 781,812.84 | 6.2 Santiago de Cuba | 7,668,501.66 | 639,041.81 | 5.1 Cardenas | 4,363,935.76 | 363,661.32 | 2.9 Sagua la Grande | 2,994,082.56 | 249,506.88 | 2.0 Caibarien | 1,705,523.71 | 142,126.97 | 1.1 Nuevitas | 1,564,595.30 | 130,382.94 | 1.0 Guantanamo | 1,380,693.44 | 115,057.79 | 0.9 Gibara | 1,186,480.34 | 98,873.37 | 0.8 Manzanillo | 913,896.91 | 76,158.07 | 0.6 Baracoa | 373,498.11 | 31,124.85 | 0.2 Trinidad | 194,656.85 | 16,221.40 | 0.1 Santa Cruz | 107,935.59 | 8,994.63 | 0.1 Zaza | 91,276.51 | 7,606.38 | 0.1 ------------------------+-----------------+----------------+--------- Total | $151,750,728.87 | $12,645,894.08 | 100.00 ------------------------+-----------------+----------------+---------

During the twelve years, it should be stated the largest amount of revenue was collected in 1886, when it was $15,330,778.96, and the smallest amount last year, namely, $9,648,369.94. The receipts show the working of the Reciprocity Treaty with the United States, which, while it greatly added to the prosperity of the Island, decreased the revenues which Spain sought to secure for herself.

From the above table it will be seen that the total amount of revenue collected during these twelve years averaged $12,645,894.08 per year; that the custom-house of Havana collected 69.9 per cent, and Cienfuegos--which is an important city, and, in the opinion of the author, the city which, under the new conditions, will show the most rapid development--9 per cent., ranking second. In the custom-house district of Santiago, the average revenue receipts per year have been 5.1 per cent. The inclusion in this district of Guantanamo, Gibara, Manzanillo, and Baracoa will probably increase the collections for the province to nearly ten per cent. of the total revenue of the Island.

The following is a similar table to that given above, but gives at a glance the customs receipts from imports and exports at each port:

RECEIPTS FROM IMPORTS AND EXPORTS--1886-1897

----------------+---------------------------+------------------------- | IMPORTS. | EXPORTS.

+---------------+-----------+--------------+---------- | | | | | Average | Per Cent. | Average | Per Cent.

Custom-Houses. | Twelve Years. | of Total | Twelve Years.| of Total | | imports. | | Exports.

| | | | ----------------+---------------+-----------+--------------+---------- Havana |$ 7,882,855.48 | | $ 961,540.63 | Cienfuegos | 1,094,962.53 | | 45,966.19 | Matanzas | 723,978.04 | | 57,834.80 | Santiago de Cuba| 625,517.97 | | 13,523.84 | Cardenas | 297,738.05 | | 65,923.27 | Sagua la Grande | 207,422.23 | | 42,084.65 | Caibarien | 127,011.98 | | 15,114.99 | Nuevitas | 122,282.25 | | 8,100.69 | Guantanamo | 103,198.88 | | 11,858.91 | Gibara | 63,371.21 | | 35,502.16 | Manzanillo | 60,664.85 | | 15,493.22 | Baracoa | 31,122.49 | | 2.36 | Trinidad | 11,963.02 | | 4,258.38 | Santa Cruz | 4,679.98 | | 4,314.65 | Zaza | 4,520.12 | | 3,086.26 | ----------------+---------------+-----------+--------------+---------- Aggregate |$11,361,289.08 | 8.33 |$1,284,605.00 | 8.33 ----------------+---------------+-----------+--------------+----------

During the war, as already explained, the customs receipts have naturally declined, therefore the year preceding that has been selected as indicating the average revenue from custom-houses, when not disturbed by commercial treaty, such as that made in connection with the McKinley Tariff law of the United States, nor the other disturbances, such as civil war and subsequently the blockade of Cuban ports by the United States navy. The value of the following table is in the fact that it shows customs receipts from the several sources other than those which may be considered strictly import duties.