In Cuba every possible consideration was shown to the writer and no pains nor trouble were spared on the part of the Spanish officials and business men to give all required information and to aid in the inquiry undertaken. In this work neither political prejudice nor nationality took any part. The Spanish bankers and merchants, whose influence a few weeks previously had been arrayed against the United States, came forward and placed such information as they had at the disposal of the United States Government. The Cubans engaged in business, and the military commanders in the field, from Generals Gomez and Rodriguez down, have alike assured me of their sympathy in the work thus instituted by the United States, and proffered their services in its prosecution. The following expression from the veteran warrior, General Gomez, dated Boffill Plantation, October 3, 1898, will be read in this connection with interest:
“I must congratulate you cordially for the high mission which you have had entrusted to you. I am completely identified in all and with all concerning it; I reserve for a better opportunity giving you my personal views on the matter.... On my side I am working in the same sense; I am doing all I can for the immediate reconstruction of the country; its wounds will heal with the rapid promotion of the work. This is the battle we are now fighting, and all men of good will should join us in our struggle. I avail myself of this opportunity to tender my services.”
The business men and merchants of Havana and other large cities, regardless of nationality, have rendered services of incalculable value to this inquiry, on the ground that the one thing that Cuba wants more than all else is, as General Gomez truly says, that its people should lay down their arms and take up the implements of peace. The Presidents of the Chambers of Commerce of Havana, Cienfuegos, and Santiago have all taken an interest in this work and elaborate reports were prepared by committees appointed especially to aid in gauging the industrial necessities of the Island. A similar report has been prepared for Matanzas.
Whatever may be the shortcomings of this volume on Industrial Cuba, they must not be attributed either to lack of interest on the part of the people of Cuba, or to any failure on their part to give information, especially on all matters relating to foreign commerce. There is, of course, a dearth of statistical information, in consequence of which it has been difficult to work out certain fiscal statements and estimates with the degree of exactitude easily attainable on the same lines at home. The information which has been obtained, however, would seem to leave no room for doubt as to the wisest course for the United States Government to pursue in adjusting Cuban customs duties, in establishing a sound currency, in protecting the savings of the people, in preventing usury, in abolishing onerous and iniquitous taxation, in establishing free schools, in starting new and reviving the old industries of Cuba, in increasing commerce, in improving the sanitary condition of the cities, in distributing labour, and in the general industrial and moral upbuilding of the people.
The present volume touches on all these topics, and endeavours to give the reader a clear and practical idea of the present industrial condition of Cuba. The present chapter aims to present in a concise form a few of the more important problems which the United States Government was called upon to face January 1, 1899, and with which it may have to grapple during the first years of the new century. No attempt is made to forecast the manner of their settlement. It is not, as a rule, wise to worry about how we are to cross a bridge until we get to it. Many Cuban economic problems which at a distance seem to be complicated, will simplify as we come within close range. Once the United States military authorities are in possession, ways and means will suggest themselves to overcome obstacles which now seem almost insurmountable. The most urgent needs of the Island, when it was turned over to our Government, were those briefly discussed in this review of the economic conditions of Cuba.
First among these needs of the Island was a tariff that should bear lightest in directions where the people could least afford the burden of taxation, and heaviest on commodities which the well-to-do and those engaged in large enterprises required. The Spanish tariff was made by Spaniards, for Spain, in the interests of the Spanish. That seems to be the actuating principle of it. On any other theory it was inexplicable. In adopting, July, 1898, for an exigency measure, the rates of duty which Spain levied for her own commodities, the United States acted wisely. These rates, however, were full of inequalities, and were not levied on any sound principle, but on the “heads, Spain wins; tails, Cuba loses” idea which prevailed in the whole fiscal fabric. It was found that the only way to remedy these inequalities, equalise the rates of duties, improve the administration, and reduce the rates of duties on all articles of general consumption, was to frame a practically new tariff. This was done, and the new tariff now in force will undoubtedly do its share in the industrial reconstruction of Cuba. In this tariff it was not thought advisable to make radical changes in the administrative branches, nor to change weights and measures into United States equivalents, because the people of Cuba are accustomed to the metric system. As a rule, all duties in Cuba are levied by the kilo and hundred kilos. United States currency, however, was substituted for the Spanish pesos. This will simplify collection of taxes, as customs duties were collected by Spain in three different classes of currency: gold, silver, and bank notes, all (for the gold coins used in Cuba have fictitious values) fluctuating in value.
The tariff adopted by the United States, when the military forces took charge of the custom-houses, reduced all duties about sixty per cent. on the old Spanish rate, and averages fully two-thirds less than the rates exacted by Spain in Cuban ports during the last five months of its occupancy of the Island. The reasons for these reductions, together with the reasons which led up to the decision of the President to admit cattle and agricultural implements free into Cuban ports in possession of the United States, are fully given in another chapter. Still another chapter will be devoted to an analysis and discussion of the Cuban Budget, in which the effect of the new tariff on the revenue of the country, together with the other sources of revenue, are explained and discussed. It will naturally be asked: With such a large reduction of duties, how does the United States expect to secure revenue for the purpose of administering the government of the Island? There are several answers to this question, and the facts bearing on the subject are given in full in the chapter on the Cuban Budget. The general answer is that by reason of fraudulent classification and smuggling, much of the revenue collected from the people of Cuba never found its way into the treasury of that Island, nor of Spain. The cupidity and rapacity of the Spanish officials in Cuba are beyond conception, and, if one may judge by the reports of the United States customs officials at Santiago, as much revenue will be received from a tariff whose duties are from a half to two thirds less than the Spanish tariff as was received under the iniquitous and exasperating law which has been abolished by the advent of the American forces. As the officials recommending the measure believed, the reduction to a reasonable rate of duty in certain schedules—such, for example, as those relating to machinery and railway supplies—would increase importation, and certainly the revenue would be greater than during the period of prohibitory duties. A railway company naturally hesitated to import a locomotive when the duty was equivalent to the value of the engine. With a revised tariff of twenty-five per cent. ad valorem, it may import two, or four, or even six. In adjusting such schedules, the revenue features alone need be considered, because Cuba has no locomotive works, or any iron or steel industry. The same is true of a variety of other articles.
In all cases where there are home industries in Cuba capable of supplying a manufactured product made by home labour, care was exercised by those who framed this tariff (either by making free the raw material, or by not making a too radical reduction of duty) not to injure their prospects. In so doing, the Administration is only carrying out the policy which has been fruitful in developing the industries of the United States and in securing diversified employment for its labour. If honestly enforced, the new tariff established in Cuba by the United States will yield sufficient revenue, enable Cuba to buy in the cheapest markets of the world, and not compel her to purchase from Spain inferior commodities at a high price. In every section it is a Cuban measure, and in no single case can there be found a section that discriminates in favour of the United States as against any other market. The United States purposes to take its chances for the Cuban trade with the rest of the world. If Cuba can purchase cheaper and better articles on more favourable terms of the United States than of Europe, we shall secure the trade. If not, the Cuban consumer is free to purchase in the markets of the world. In this one act alone, conservative, thoughtful Cubans must realise that they have attained to the commercial freedom which some, not without reason, contend was the real object of the two insurrections. However that may be, Cuba has secured a right which England would never concede to Ireland, namely, a separate revenue system. In granting this economic freedom to her other colonies, England has strengthened their ties to the mother country. With industrial freedom assured, a colonial country may be indifferent to the form of its political government.
Next in importance to the fiscal laws for the revenue of the Island comes the currency question. No country can be permanently prosperous unless its currency is sound and its credit good. Bad financial management of state affairs begets bad credit, and impaired credit is the forerunner of depreciated currency. Although Cuba is afflicted with many kinds of depreciated currency, the established basis is strictly gold, and in any commercial engagement the value is understood to be in Spanish gold, unless there is a specification to the contrary. Indeed, there is something almost pathetic in the manner in which Cuba, though plundered and depleted of her resources and wealth, has never wavered from the gold standard. The business interests of the Island are, as the author found, unanimously in favour of a continued gold basis; for the Cubans have suffered so much from Spain’s various attempts to force upon the people a depreciated currency, both in the form of silver and bank bills, that they want no further experiments with the currency. The Spanish silver money current in the Island is taken at the daily value only, which is fixed, partly by the larger or smaller demand for wages and necessities of the Government to pay troops, but principally by the continually fluctuating value of the Spanish money in the European markets. As this Spanish silver is legal tender in Spain for its face value, it is able to maintain a fictitious value for purposes of shipment to that country. This silver dollar, therefore, fluctuates in value with the fitful changes in Spain’s credit, and it is probable, should the United States establish American currency as sole legal tender for the Island of Cuba, that all the Spanish silver dollars will be shipped to Spain. There was in Cuba during the last months of Spanish control a margin of thirty per cent. on the silver dollars. It is not probable that these dollars will go down to a point where it will not pay to ship the Spanish silver to Spain and utilise the American dollar in Cuba. In this event the United States Government will, of course, ship its own silver dollars to Cuba; which, with the subsidiary coins, will be required for small payments. At Santiago the immediate disappearance of Spanish dollars and minor coins has made small transactions extremely difficult. Some think that the present stock of Spanish silver in the Island exceeds the necessities; but however this may be in the western part of the Island, it was evidently not the case in Santiago.
