reduction, if we include the Civil Guards, of $18,000,000 or $20,000,000. To forecast how much of this amount will be required for immediate expenditures under the new order of things is impossible.

In recommending revenue laws for Cuba, the author was aided by the suggestions of Mr. Fran Figueras, who has given the subject intelligent consideration. To emphasise the importance of giving immediate attention to a careful division of the expenditures for the central government and the expenditures for local purposes (something the Spanish Government, in the whole history of its management of Cuba, has failed to do), the following is given from a statement made to the author by Mr. Figueras:

"The right to impose customs duties has a rational and just limit; it is determined by the legitimate needs of the Treasury. All in excess of these needs converts tax into an unjust, and therefore insupportable exaction. With due attention to these considerations and bearing in mind that the customs duties are the real source of revenue in the Island of Cuba, it is indispensable to determine the total amount of expenditure which this revenue must liquidate. If these expenditures are those used for public defence, central government administration of post-offices, justice, public works, education, and any other which it would not be advisable to turn over to the municipal or provincial governments, we may safely consider that six million to eight million dollars annually would be quite sufficient. This is the largest revenue the American Government should expect from the administration of customs duties in Cuba."

Another statement well worth attention in this connection is that of Mr. Philip Pelaez, a former official of the Spanish Government in Cuba, who said to the author when in Havana:

"Neither in the administration of the islands, nor in the ministry of the colonies, are there any statistics with respect to the composition of the tariffs, and only a few data with regard to valuations. This is as much as can be stated precisely offhand

concerning the said tariffs, an analysis of which, article by article, it would be very difficult to get, seeing that there are no statistics of the real importations. Even without asking these investigations, there remains for the Government of the United States the most interesting problem on the making of peace, with the cession of the two islands. Is free trade convenient? Is a simple tariff preferable? Would it not be more prudent to keep to the existing one? Free trade at the present time would impose the burden of the general expenses without any profit and with great dangers, the most immediate being the paralysation of business, the flight of existing capital, etc. The ad valorem tariff diminishes the receipts and gives advantages to a multitude of foreign articles. The tariffs now in force would, with a few changes, suit the islands and the United States for a long time to come."

This sets forth substantially what has been done. The United States Government has made no violent fiscal changes in Cuba. Where the old laws and methods and customs could be fitted to the new order of things, they have been so fitted. The first and only radical change in the revenue system of Cuba is the speedy and absolute separation of local and general revenue. That which is local should be collected by local authorities and regarded as municipal revenue, to be expended for municipal purposes; while that which is general should be levied and collected by general authorities and expended for the general welfare of the Island. The general fund, after careful consultation with the governor of each province, should be apportioned geographically, and also into funds, such as the following:

a.-Maintenance of the general government, 20 per cent. b.—Sanitary and other improvements, and loans to cities therefor, 10 per cent.

c.-Public schools and education, 10 per cent.

d. To pay the bonds and other obligations issued by the Provisional Government of Cuba and its duly authorised agents since February, 24, 1895, which in the aggregate must not exceed $2,500,000, and

to pay amounts due the soldiers of the Army of Liberation, 20 per cent.

e.-Development of the Island by the building of railroads, properly constructed highways, and other means of communication, 25 per cent.

f. The repayment of the cost to the United States of the temporary military occupation pending the establishment of the proposed stable and independent government, 15 per cent.

As all the expenses of the municipal and local government can be readily provided from taxes on real estate, income tax, liquor licences, and other internal-revenue taxes, the customs revenue can, without embarrassment, be de voted to and amply satisfy all general governmental requirements as scheduled above. The percentages above suggested are, of course, tentative, and must not be regarded as more than a rough apportionment. The widest possible latitude should be given each provincial governor in the expenditure of the share of the general funds allotted him for sanitary and other improvements, public schools, for building railroads, and constructing highways. A study of the Jamaica budget, presented in Chapter IV., might help in a fair apportionment of funds for the new budget of Cuba. The subject has not yet been taken up systematically by the United States Government, but will soon need attention, or the old haphazard Spanish methods will receive a new lease of life. Such a contingency would indeed prove a misfortune.

SPE

CHAPTER XIX

COMMERCE

PEAKING in round numbers, the commerce of Cuba during the last normal year aggregated about $100,000,000 of exports and a trifle over $60,000,000 of imports. From these figures it would seem that the balance of trade is about $40,000,000 in favour of Cuba. But this is more apparent than real. In one way and another Spain has annually turned away from the Island $40,000,000, which, had it been expended in Cuba every year, would have added immeasurably to the prosperity of the country. This money went to Spain in a variety of ways. Ten and a half millions of it were used in payment of a debt which did not justly belong to Cuba, and with which the people of the Island had been arbitrarily burdened without their consent. Large sums also went to Spain through the constantly changing Spanish civil and military officials, who regarded Cuba as their legitimate field for plunder.

It has been estimated elsewhere in this volume that the total commerce of Cuba, had the affairs of the Island been honestly and economically administered, would have reached from $200,000,000 to $250,000,000, so prolific is the country, and so valuable in the world's markets are its two staple productions, sugar and tobacco.

To indicate more definitely the extent of Cuban commerce, the reports for 1893, which was a good year, are given below, presenting, among the principal exports from Cuba to the United States, the following:

In the same year the principal exports from the United States to Cuba, aggregating $15,448,981, were distributed as follows:

These tables show the extent of Cuban commerce with but one country, the United States; and though, naturally and logically, that is the country with which Cuba must. always do the vast bulk of her business, the other countries of the world have not been shut out; the average annual amount of exports from the Island to foreign countries other than the United States fell between $13,000,000 and $15,000,000, and the imports were upward of $40,000,000,