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:

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 classes: 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, constitute 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 classifications, namely: (1) taxes and imposts, including excise and liquor taxes, and taxes on railway freight and passengers; (2) receipts from custom-houses, which include taxes on imports and exports, loading and unloading merchandise, fines and passports; (3) internal revenue, including stamped paper,[14] postage stamps, warrants for payment issued by the State, diplomas and titles, stamps on letters of exchange or deeds of transfer, on insurance policies, on matches, and on almost every other conceivable sort of deed and document; (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:

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 documents 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 institution 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 municipal 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 misclassification. 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 classifications and methods of administration are so complicated and obscure that they easily lend themselves to every known species of revenue fraud, from false classifications 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 circumstances 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 classes (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.

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

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:

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:

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.

Having treated as fully as possible on the revenue of Cuba in the past from customs and made such forecasts as to the probable revenue as would seem warranted by the official figures, the next chapter will be devoted to a summary of the schedules of the amended tariff now in force, which will probably remain during United States occupancy the customs revenue law of the Island.

PALM-TREE BRIDGE.
PALM-TREE BRIDGE.