Besides the silver, there is a bank-note circulation, but that has no actual bearing on the question of currency, as the trade and business of the Island has refused to accept it, and the present quoted value is less than ten cents on the dollar. The greater part of this emission, which was a war issue made by the Spanish Government at Madrid through the Banco Espanol de la Isla de Cuba (not by that bank), is largely in the hands of speculators and government contractors. The only public application is for the payment in the custom-house of the so-called ten per cent. ad valorem duty assessed on the official value of imported merchandise in addition to the regular specific rate of duty exacted. The abolition of this duty, under the new tariff, ends the life of these bank bills. There still remains a question as to whether the Spanish Bank of Cuba was in any way responsible for these bills, and the question will come up for future adjustment. The Bank will probably deny responsibility and refer those who hold this depreciated currency to the Spanish Government at Madrid. It is an interesting fact in this connection that the credit of the Spanish Bank of Cuba is of a higher standard than the credit of the Spanish Government, for the Bank has never failed to redeem its own paper during nearly half a century of its existence, first as the Bank of Spain of Havana and subsequently under its present name. It has at times suffered embarrassment, but ultimately the bills of the Spanish Bank of the Island of Cuba have always been redeemed.
The gold coins current in Cuba are the Spanish and French coins, the bulk of which consists of Spanish twenty-five-peseta pieces, so-called Alfonsinos, which for many years have been inflated by royal decree to $5.30, and the French twenty-franc piece, so-called Napoleons, which have also been given a legal value of $4.24 and decreed since the end of 1893 as legal money.[1] When the necessity for adopting and inflating another gold coin besides the Spanish Alfonsino was under discussion, the suggestion was made that the United States gold eagle would make an excellent coin for this purpose, as it would figure out almost exactly eleven dollars Spanish gold.[2] The idea was not entertained, because of the general distrust of Americans, and the fear lest the relations between the United States and Cuba should become too intimately interwoven.
| STATEMENT SHOWING VALUE OF UNITED STATES GOLD IN COMPARISON WITH SPANISH AND FRENCH GOLD ON THE BASIS OF PAR VALUE | |||
| Spanish Alfonsino | $5. | ||
| French Napoleon | 4. | ||
| Spanish Alfonsino, value in Havana | $5. | ||
| Value in United States mint ($4.80 less shipping expenses, .024) | 4.776 | ||
| $0.224. | |||
| Exchange | 4-11/16% | ||
| French Napoleon, value in Havana | $4. | ||
| Value in United States mint ($3.84 less shipping expenses, .0192) | 3.8208 | ||
| $0.1792 | |||
| Exchange | 4-11/16% | ||
| Value of $5, less ½% shipping expenses $4.975. At 4-11/16% | |||
| Quotations: £ Stlg., Spain, $39.40 currency in Havana, 10% £ in U. S. 4.84 | |||
| Cost | $60,000 |
| Proceeds | 60,804.92 |
| $ 804.92, from which deduct commission, revenue stamp, interest, and profit. |
While the principal banking concerns are unanimous as to the gold standard, there is a difference of opinion in relation to the advisability of squeezing the inflation out of these gold coins. Some of the Cuban bankers and financiers contend that the United States Government should add another gold coin to the currency, namely, the American eagle; and, by maintaining the fictitious value given to the other two gold coins, leave it equivalent to eleven dollars in Cuba. This, it is claimed, will be a very easy way of leaving matters in statu quo, as it were, until such time as permanent government and laws shall be provided for the Island. They fear that to make the United States currency legal tender would work an injury to the creditor class, whose contracts would then be payable in gold worth six per cent. less than the gold specified in such contracts. There are others, whose opinions are equally worthy of consideration, who recommend as the only logical remedy for this situation the substitution of the American currency as sole legal tender. Such action on the part of the United States Government it is believed would not seriously interfere with present contracts, which are invariably expressed as payable in Spanish gold, and which might be arranged for accordingly.
The premium on Spanish gold was never agreed to by the business people. Having thus arbitrarily put a premium on Spanish gold, the same authorities later put a premium on French gold, and to make the matter more complicated, the United States Government is now requested, by some of the Cuban financiers, to introduce another gold coin, which, practically, will be worth ten per cent. more in Cuba than in the United States; that is, a man owing $1,100 gold in Cuba may pay that debt with $1,000 gold in United States currency. As a temporary measure, and in view of the fact that this inflation so far as Spanish coin goes has been in force for over half a century, this may be justifiable. The process, however, is entirely artificial, and to continue it would certainly result in many complications. Some Cuban financiers think it inadvisable to introduce American money at this time, while certain planters are fearful lest their labourers should refuse to take one American silver dollar instead of two Spanish silver dollars. The latter looks larger in amount, it must be granted; but if the purchasing power of the American dollar, by reason of the sound credit of the United States, is double that of the depreciated dollar, with only Spain’s guaranty between it and its intrinsic value of fifty cents, there will be no difficulty in the end. A country which is just now going through an operation involving its very existence will hardly be seriously affected by taking this fictitious value out of the gold coin and establishing once and for all a sound currency that will be good for a hundred cents on the dollar—no more, no less—the world over.
Cuba has no banks in the national sense. There are some excellent private banks, and since its establishment, nearly half a century ago, the Spanish Bank of Cuba has cut an important figure in the finance of the Island.
In another chapter, a brief history of banking in the Island from the earliest period to the present time will be given. For the present, the banking facilities are adequate to the business, because it would be extremely hazardous to loan money in Cuba on any kind of collateral or property. Upon the revival of business, however, the agricultural interests will require facilities for obtaining money in advance of the crops at reasonable rates of interest, and protection from the abominable usury which heretofore has blighted the strongest industries of the Island and added materially to the burdens of the Cuban planters.
There are so many forms of obnoxious taxes in Cuba that even a brief description of them would occupy considerable space and convert this volume into a treatise on the evils of Spanish taxation. Foremost among the taxes which the United States will abolish is the “consumption tax,” on the killing of cattle, which is an exaction that greatly increases the price of food to the people. This tax, like many others, was simply farmed out to private firms or corporations, whose emissaries in its collection became a constant menace to thrift and industry in their respective districts. Another tax, which will fall of its own weight, now that the United States forces control the Island, is the “cedula,” or head tax, which varied in amount from a few cents to one hundred dollars, according to the rank and importance of the individual. Curiously enough, this tax, when not collected, became under Spanish rule a greater source of injustice and annoyance than when collected. It was generally allowed to run until some occasion came for the unhappy victim of Spanish rapacity to require a public document, a permit to bury a child or relative, a licence to marry, a transfer of real estate, or a notarial acknowledgment. Then it was that the petty rascals in charge of public business came down heavily, and unless the fines and back “cedula” and a handsome “gratification” to the official was forthcoming, the body must await interment, the marriage must be postponed, or the transaction be delayed.