CHAPTER II CONDITIONS WHICH CONFRONT US

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TO treat of Cuba as an American country is the purpose of this volume. If the people of the Island, regardless of nationality, will only postpone the question of the particular form of government for the present, and give all their attention to the new economic questions which confront them, the future will be full of promise. Cuba is no longer a European colony, but an American country, under the protection of the United States. So long as the Island is occupied and governed by the military forces of the United States, law and order will be maintained and equal rights will be granted to all the people. From an industrial point of view Cuba will have practically obtained what she has been fighting for for nearly a generation: namely, industrial and commercial freedom. The United States will administer the laws for the Cubans in the interest of Cuba. The United States asks nothing in return but the same opportunity for trade and commerce as is accorded to the other countries of the world. The Republic will levy no tribute, nor will it exact a dollar of taxation over and above the revenue necessary for protecting life and property, and the cost of inaugurating such works for the improvement of sanitation, or the carrying on of industries, as may become necessary.

Many Cubans, and a very large number of Spaniards, who appeared before the author when in Cuba, for the purpose of giving testimony on industrial and commercial matters, took it for granted that the United States would, in making up the new fiscal laws for the Island, exact discriminating duties in favour of the United States and against European countries. When told nothing of the sort was contemplated, the Cubans were surprised and the Spaniards incredulous. Indeed, the latter were astounded, and seemed to wonder what the United States was in Cuba for. Even American citizens interested in pushing their Cuban trade have expressed surprise at the absolute freedom which has been allowed all fiscal legislation, and the scrupulous care exercised by our Government not to exact any right itself which is not accorded to other nations. In such matters we are of course bound by our international treaties, and so long as Cuba remains under the protection of the Republic, and not part of it, she must be treated, so far as customs regulations and navigation laws are concerned, as a free country. In the preliminary work of economic reconstruction these sound principles have been kept in mind and adhered to. In fact, the fullest and broadest plan was chosen by the Administration to secure information in Cuba; and the refrain of the instructions, both from President McKinley and his able and broad-minded Secretary of the Treasury, was, to spare neither time nor money to secure the views of all the people of Cuba; for whatever the United States Government finds necessary to do in the Island must be done, as far as possible, by the people of Cuba, for Cubans, and in the interests of Cuba. By this it must not be inferred that those of Spanish birth were to be excluded, but, on the contrary, that the views of all who proposed to remain in Cuba and help by their labour and thrift to build up the industry and commerce of the Island should be sought and considered.

In following out the spirit of these statesmanlike instructions, the author invited, through the newspapers, all persons interested in the industry, trade, foreign commerce, and currency and banking system of Cuba to express their views on these and kindred topics. Many responded, and as may be imagined the information gathered took a wide range, and will, it is hoped, be of practical value in adjusting the questions with which the Government of the United States will have to deal during the military occupation of the Island. In the prosecution of this work, public hearings were given in Havana, Cienfuegos, and Santiago; and to committees of persons representing interests at Trinidad, Caibarien, Sagua la Grande, and other parts of the Island an opportunity was given to express their views as to the industrial necessities of their respective communities. In New York and Washington opportunity was given to those interested in Cuban commerce and such American citizens as represent large sugar estates, iron mines, and tobacco and fruit interests in the Island of Cuba, to present a full and free expression of their views on all topics included in the scope of the investigation. A large amount of information was thus obtained, and no inconsiderable assistance rendered by these gentlemen. With hardly an exception, such assistance has been rendered freely and disinterestedly, and the author takes this occasion to thank a large number of business men who have been found ready and willing to drop their business at any moment and devote much valuable time in an endeavour to elucidate the somewhat complicated conditions which surround the commerce and industry of Cuba.

SKETCH-MAP OF THE PROVINCES OF HAVANA AND MATANZAS
SKETCH-MAP OF THE PROVINCES OF HAVANA AND MATANZAS

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.

BATEY OF SANTA CATALINA.
BATEY OF SANTA CATALINA.

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
STATEMENT SHOWING ACTUAL VALUE OF $1. SPANISH SILVER
100,000 dollars Spanish silver can be bought to-day here with $66,000 Spanish
gold, equal to $60,000 U. S. currency.
100,000 silver dollars shipped to Spain after deducting 1% shipping expenses
would produce $99,000.
99,000 dollars Spanish silver on Spain will buy at rate of £1, which is $7.88,
£12,563. £12,563 would produce in the U. S. at $4.84, $60,804.92.
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.

The United States Government will not continue taxes that yield nothing in revenue and were simply the means by which unprincipled officials whose cupidity seemed to know no bounds were enabled to plunder and distress the weak and the unfortunate. The “consumption tax,” the “cedula,” and the revenue from “lotteries,” must necessarily disappear with the advent of United States administration of affairs.

Until the tax laws of Cuba can be thoroughly revised, the revenue from customs, from the various forms of internal revenue (and there are many), and from the receipts from taxes upon municipal real estate will, if the strictest economy prevail, suffice for immediate wants, without resorting to measures of taxation which are alike debasing and tyrannical. It is impossible to make specific suggestions at this time in relation to a subject so hopelessly complicated. After the administration of affairs of the Island has been longer in the hands of United States officials, these matters may be carefully studied and adjusted on a basis of equality and justice to all concerned. The true inwardness of Spanish taxation, as developed in the Island of Cuba, can be studied and remedied only after time has elapsed and all the facts are in possession of those who have assumed the responsibility of control.

The question of education is one that will receive early attention, and in which the President of the United States has personally evinced considerable interest. Free public schools exist, but the teachers have the right to take pay scholars, and naturally those who do not pay get little or no attention. In the cities from which data are available it was found that only a small portion of the school population attend school. There were 888 schools for boys and girls in 1893 and the amount paid for their support was $775,646. It is impossible even to approximate the situation at the present moment. In a general way, it may be described as simply deplorable. A free public-school system must be immediately established, for much of the misfortune and suffering Cuba has undergone may be traceable to the neglect of education. The number of people who are illiterate is very great. Some statistics show only one in forty of the labouring classes able to read and write. There can be no stable government in Cuba until this has been remedied.

The reader familiar with Cuban history will remember that the first movement toward the emancipation of the slaves was the practical freeing of all children born subsequent to 1868, the year the revolution started which ended in the abolition of slavery. In the same way, the first act looking toward political emancipation should be the establishment of a free public-school system, which shall have for its aim the preparation of the young Cubans for self-government, whether exercised as part of a Cuban republic or part of the greater republic the basis of which is industrial freedom and the common school.

SKETCH MAP OF THE PROVINCE OF SANTA CLARA.
SKETCH MAP OF THE PROVINCE OF SANTA CLARA.

Manufacturing in Cuba is limited to a few industries in Havana, to the manufacture of sugar and tobacco, and to machine-shops and small foundries scattered over the Island for the convenience of the railway companies, sugar-centrals, and harbours. The author visited all the manufacturing plants in Havana, some of which were located in quarters of the city reeking of filth and teeming with disease germs. There is little hope for industrial enterprise in the broader sense until the sanitary conditions have been improved in all the industrial centres of the Island. The fear of that deadly enemy to all enterprise and thrift, yellow fever, which lurks in the vicinity of the most flourishing industries of Havana, makes it dangerous for those unacclimatised to enter these occupations. The initiatory success of manufacturing in Cuba must depend upon the importation of skilled labour from the United States or Europe. With this invisible and deadly foe in the background, ready to strike when least expected, and against which, as a Confederate officer now in the United States Army at Havana said, “You cannot even raise an old-fashioned rebel yell,” the outlook is far from attractive.

Not only the commercial prosperity of Cuba, but to a considerable extent that of the southern portion of the United States depends upon the possibility of destroying the foci of yellow fever which exist in the larger cities and towns—especially in Havana and Matanzas—and which have been the cause of the epidemics of this disease which have occurred in the United States during the present century. It is believed that to destroy these germs is possible, and from a mere industrial and commercial point of view it would be a paying investment to spend several millions of dollars, if necessary, to effect it. Until this has been accomplished, and the centres of industrial activity of Cuba made safe for the influx of skilled artisans, whose advent alone will make it possible for Cuba to diversify its industries and elevate the condition of its labour, it will be vain to hope for the establishment of new manufactures. The importance of sanitation is so great and the subject of so much general interest to all those looking towards Cuba with the idea of residence or investment there, that considerable space in this volume will hereafter be devoted to a consideration of the subject.

The railway system of Cuba, consisting of seven companies, the aggregate length of whose lines is only 1,467 kilometres, or 917 miles, is entirely inadequate in bringing the extreme ends of the Island together; Santiago and Havana in point of time being as far apart as San Francisco and New York, though only separated by a distance of a few hundred miles. The facts gathered on this subject and the maps presented elsewhere point to the advisability of immediately constructing a trunk railway from end to end of the Island, with branches extending north and south to the important cities and ports. From whatever standpoint it may be viewed, no one enterprise could do so much to improve the situation on the Island. No revolution could have existed in Cuba if such a railroad had been completed by the former Government, and nothing will so rapidly tend to the revival of commercial and general business as the facility for quick passage from one end of the Island to the other, and from the trunk line over branches to the seaboard cities. All political turbulence will be quieted thereby and prevented in the future. The entire country will be open to commerce; lands now of practically no value, and unproductive, will be worked; the seaport towns will become active and commerce between the Island and the United States will soon be restored to the former figures of approximately one hundred millions of dollars per annum. Business enterprise, ever alert to conditions such as herein described, has already surveyed the route, and there are several projects on foot looking toward prompt action in this direction. After a careful study of the situation, it would seem extremely doubtful if such an enterprise could be made a commercial success for many years to come, without material assistance from those responsible for the industrial future of Cuba.

The questions arising in relation to navigation between Cuba and the United States are delicate, and involve, as does the question of discriminating duties in favour of the United States, in a greater or less degree our international relations with other countries. Those interested in American shipping suggest discrimination in favour of American vessels between Cuba and the United States, and some go so far as to indicate that a joint arrangement of the American and Cuban flags would be a solution of the problem. Much of this is mere speculation. We cannot discriminate in favour of American vessels in the trade between Cuba and foreign countries, just as we cannot do so in the case of American vessels in trade between New York and foreign countries, on account of our commercial treaties. The chapter on this subject has been submitted to Mr. Eugene T. Chamberlain, Chief of the Bureau of Navigation of the Treasury Department, and this experienced and efficient official has thrown considerable light on the subject which, it is believed, will be of value to the commercial interests of both Cuba and the United States.

These are some of the most important economic questions with which the United States will be called upon to deal during its military occupancy of Cuba. That we are capable of dealing with them intelligently and satisfactorily can hardly be doubted. Questions of far greater magnitude are continually presenting themselves at home, and as a rule the people of the United States have been found equal to the task of adjustment. To doubt our capacity as a nation to bring about complete pacification of the Island, industrially and politically, is to throw a doubt on our most cherished institutions and to cast a shadow on the Republic itself.

                                                                                                                                                                                                                                                                                                           

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