each year besides 4 for the King's service. But this did not include the entire category, for the church came in for the local taxes. The above mentioned were for the King and his Government, but the clergy took what was left in parish rates, tithes, and other forms of taxes, by means of which the churches amassed enormous wealth in Spanish America. So great was this later drain that it alone took enough of the wealth from the country for nonproductive purposes to prohibit any normal business arising from the rest of the free capital of the country. In brief, the financial policy of Spain in the sixteenth century was for the Government to tax everything to its fullest extent, and the revenue thus raised was to be exploited by its officers from the King down to the alcalde of the town. Whatever of income left was then taken by the church. Thus the colonists paid practically all they had, and the national Government continued to lose its territory, go in debt, and multiply the number of officials and grandees with interminable titles. MANY CHANGES IN METHODS. "The Spanish Government made various changes in constitution and laws from time to time, and yet the relation of the mother country to the colonists changed little as respects liberality of trade, commerce, taxation, and officialism. Whatever of improvement took place in the fiscal system of the home Government was eventually tried in the colonies, as they were considered provinces of the Kingdom, or, in fact, parts of the Empire of Spain. It was not until the beginning of the present century, under the influence of the constitution, that the old laws which originated with the Romans and built up through Teutonic and Arabic influences began to decline, and a new scientific classification of the laws began to appear. Nearly a century has been devoted to the organization of the laws and the establishment of a system of a constitutional government in Spain, many of these attempts only increasing the confusion, owing chiefly to two facts-one, that in legislation the reorganizers were not clear and positive in repealing the old laws, and, second, that the conservatism of the Spanish people made them slow to adopt new methods of procedure. Without referring specifically to the development of the Spanish codes, it may be said that after the adoption of the constitution of 1811 frequent revision of codes have taken place until the final revision in 1888. The present civil code was extended to the Philippines, Cuba, and Porto Rico in 1889. The present constitution of Spain was adopted in 1876 and extended to the colonial provinces in 1881. In this organic law provision is madefor the government of the colonial provinces by stating that they 'shall be governed by special laws, but the government is authorized to apply to them, with the modifications it may deem advisable, and informing the Cortes thereof, the laws enacted, or which may hereafter be enacted, for the peninsula.' In fact, the Spanish civil, criminal, and commercial codes are the codes in use in the colonial provinces without practical change. Various differences exist in regard to the application of common and statute laws, but these differences are greater in some of the provinces of the peninsula than in the insular provinces. The constitution provided for the representation of Cuba and Porto Rico in the Cortes 'in the manner determined by special law, which may be different for each of the two provinces.' This representation was resumed in 1878 after an interval. The central Government also determined 'when and in what manner the representatives to the Cortes from the island of Cuba should be elected.' "The constitution provides further for 'provincial deputations and municipal councils.' The law of Spain determines the manner of election of these, but both municipal councils and provincial deputations of each province or town 'shall be governed by their respective laws.' INSULAR GOVERNMENT OVERSHADOWED BY THAT OF SPAIN. "This appears like a fair promise of local self-government; but, in fact, the government of the peninsula so overshadowed the insular government that in reality it was the government of the provinces. * * * "No greater subterfuge was ever attempted in politics than the decree of autonomy respecting Cuba by the home Government. Subsequent events have rendered it unncessary to place any importance on the document except to show that the government of Cuba was practically an extension of the Government of Spain. While, indeed, there is a distinct colonial budget, under the supervision of the minister of the colonies, the procedure in the colonies is always after the plan of the peninsular government and in reference to its needs. SPANISH FINANCIAL SYSTEM EXPLAINED. "It is, therefore, best to refer briefly to the Spanish financial system as a preparation to a clear understanding of the fiscal system of the colonial provinces. The constitution of Spain provides (Title XI, article 85) that 'every year the Government shall submit to the Cortes a general budget of the expenses of the State for the following year, and the plan of ways and means to cover the same, as well as the accounts of the accounting and application of the public funds, for their examination and approval.' The law provides that this budget shall be made up not by the ministry as a body, but by each minister making an estimate of the annual expenses of his department, which goes finally before the council of ministers for discussion. It is also necessary to propose plans for raising the revenue to meet the expenses before the budget is completed and referred to the Cortes. "The budget of expenditures is divided into two parts: First, the general obligations of State, and second, the obligations of the departments of ministers. The first part is again subdivided into expenditures of (1) the royal household, (2) legislative bodies, (3) public debt, (4) charges of justice and indemnities, and (5) annuities and pensions. The second part is divided into (1) presidency of the council of ministers, (2) foreign affairs, (3) war, (4) marine, (5) justice, (6) interior, (7) public works, (8) finance, (9) expense of collecting taxes, and (10) the colony of Fernando Po. The budget of receipts represents six chief resources of income, as follows: (1) Taxes, (2) imposts, (3) customs, (4) Government monopolies, (5) properties and rights belonging to the State, and (6) the public treasury. Each item of the budget is discussed in both houses of the Cortes before an agreement is reached. "In order to provide revenue to meet the necessary expenditure an elaborate system of taxation prevails, as outlined in the six main heads above. Taxes are laid upon real estate and agriculture, industry and commerce, and the transmission of property, upon consumption, salaries of Government officials, railway tickets and transportation, and certificates of fidelity, tax upon imports, exports, loading and unloading ships, travelers, quarantine dues, and colonial produce; on commercial paper and stamped goods, tobacco, salt, lotteries, etc. Besides this the revenues are increased by income from the State tobacco monopoly, the rental of quicksilver mines and other State property, the payment for exemption from military services, and from the mint and post-office. These are the principal sources of revenue, but there are other items, such as money left to be expended for the repose of the soul, on which there is a tax of 12 per cent. It is interesting to note that the tax on industries varies according to the locality, the population being a great item in determining this and the nature of the occupation. According to a medieval custom the taxpayers arrange themselves into companies according to their occupation and determine the proportionate amount of the total to be raised in a given district by a given occupation by each individual. That is, the guild or gremio is made responsible for the total amount at so much per capita. A guild may assess a number not more than eight times as much, or one-eighth as much as the average per capita rate. This custom of holding guilds or groups of people of a given occupation responsible for a certain amount of revenue is practiced in the colonial provinces in a more or less systematic manner. THE BUDGET OF THE COLONIAL PROVINCES. "The system of raising revenue in the colonial provinces is similar, almost identical, with that of the Peninsula. The sources of revenue are about the same and the method of assessment and collection of taxes vary but little from those of the Peninsula. The expenditures are along the same general lines and with the exceptions of the colonial government they run about the same. The budget is made up in the colony and is sent to the home Government for approval. The system of taxation is very oppressive on account of the shifting of the excessive export, import, consumption, and business taxes and the evasion of many of the direct taxes by those who have the opportunity. Part of the income goes to Spain for the support of the colonial ministry, and a part to the departments of the army and navy and other important expenditures of the General Government. Thus, the estimates in Cuba for the fiscal year 1888-89 were 26,356,731.41 pesos.1 Of this amount 22,500,808.59 pesos represented the sovereignity expenses, and the balance of 3,855,922.82 pesos was for local government. There is an insular treasury into which revenues flow, and only a part of this amount is sent to the treasury of Spain. The rest is spent in Cuba carrying on that part of the government which is under the direction of the Spanish Government. It includes expenditures for (1) Interest on the public debt and general expenditures (2) Justice and religion (3) Expenditures for war (4) Expenditures for navy (5) Executive government Total.. "Of the balance of the budget the local government estimates are for the following purposes: Pesos. 12, 574, 709. 12 2, 645, 149.98 22, 500, 808. 59 Pesos. 1,036, 582. 10 (6) Commerce, agriculture, and industry. Total 108, 178. 52 3,873, 237.09 "Of the general expenditure for the local government of the island, the large part, 133, 380 pesos, goes for the support of the colonial legislature. But the largest items of public expense are the low, ecclesiastical, and territorial courts and police, the collection of taxes, the management of the treasury, public works, etc. The sources of revenue to meet these expenditures were: "The method of making out the budget in Porto Rico, as well as collecting and expending revenue, vary but little from the method in Cuba. The budget approved by the Cortes at Madrid, November 8, 1898, is as follows: "A review of these budgets will show at once the nature of the fiscal system as to the methods of raising revenue and the expenditure of the same. It shows how great a factor the Government of Spain was in the colonial system. "A careful examination of the affairs of Cuba and Porto Rico prior to the occupation of the United States reveals the fact that Spain had not abandoned her ancient methods, and had not departed from the principles and practice of a colonial policy presented in the first part of this paper. The governor-general, an emanation for the Spanish Crown, had a large appointive power, which he used to the fullest extent. "The provincial and municipal governments had some privileges, but they were not practiced. The municipalities, including towns and the surrounding country, had the privilege of electing a mayor and council through the vote of the people. But as the population of the towns was in excess, the councilmen and mayor always came from the town, where the Spanish element was in control, so that native Spaniards nearly always held the power. More than this, the governor-general nearly always appointed all of the municipal employees and alcaldes. The law provided that the council should choose these if the governor-general did not wish to do so. The municipal government, which made a show of local government, could do but little without the consent of the central government, which was immediately subversive to Spanish rule. While it was provided that the council would regulate hospitals, jails, and police, among other municipal duties, it must all be referred to the governor-general for his approval. While the council and mayor must make up the budget, containing estimates of receipts and expenditures, it must be referred to the insular government and incorporated into the annual budget of the island, which must be referred to the Cortes of Spain for its approval. "In the provincial government the same conditions existed so far as the power of the governor-general was concerned. He appointed nearly all of the officers and removed them at his will. It is true that the legal voters could elect members of the provincial deputations; also the deputies representing Cuba in the Cortes at Madrid. An excessive poll tax of $25 reduced the representative voters to 53,000 at one time, and reduced the representatives of Cuba to 3 members out of a total of 430 at Madrid. The whole tendency was to make the representation of the insular governments in the Cortes of the Peninsula merely formal and valueless. One-half of the senators sent to the upper house of the Cortes were appointed by the Crown, the other half were elected by the voters of Cuba." FINANCIAL METHODS IN THE BRITISH WEST INDIES. The statement which follows is from a paper on finances in the British West Indies, prepared by Prof. Chas. H. Hull, and published as a part of a series, issued by the American Economic Association, August, 1900, under the title of Essays on Colonial Finance: "At present the British West Indies, together with British Guiana, present the most serious problem in colonial finance with which the Government of the Empire has to deal. Not even the fiscal difficulties of India are more perplexing or more urgent. The smaller islands have, as a rule, large debts and chronic deficits, while it is impossible-so the secretary of state for the colonies asserts—either to cut down their expenditures without abandoning necessary medical and educational services, or to raise their rates of taxation without decreasing their receipts. Either imperial relief must be afforded or the colonies must be allowed 'to fall into anarchy.' Such is the financial difficulty. Underlying it is an industrial difficulty-the decline of West India sugar. As to the causes of that decline, there may be dispute, but there is none as to the fact. * * * "The agricultural population of these colonies consists mostly of blacks and colored persons. The climate and soil and their standard of living are such that they seldom find themselves in pressing want of food beyond what a small 'provision ground' spontaneously supplies, or of shelter beyond what a simple hut will afford. Even their clothing is inexpensive, and as they generally exhibit considerable improvidence they do not long retain such small amounts of money as they have occasion to handle. It is, therefore, only with extreme difficulty that direct taxes can be collected from them. For example, in the year 1897-98 there were issued in Jamaica no less than 32,951 warrants for the seizure and sale of property in satisfaction of defaulted taxes, though the total receipts from the direct tax on houses and lands were only £82,183 out of aggregate public revenues of £681,043. Under such circumstances it is not surprising to find that the customs duties are supplemented almost exclusively by indirect forms of taxation, such as rum excise, business licenses, and stamps. REVENUE METHODS IN JAMAICA AS AN EXAMPLE OF THE WEST INDIA SYSTEM. "A nearer view of the fiscal system of these colonies is best based, perhaps, upon a somewhat detailed account of one of them. For that purpose I have chosen Jamaica, the largest and richest of them all, and the colony possessing the most varied agriculture. It is in : consequence less dependent upon sugar than the other islands or British Guiana, and has suffered less by the fall in that commodity ensuing upon the increase of the beet-sugar bounties in 1896. After describing the finances of Jamaica I shall add a few words comparing the other colonies with it, and pointing out the reasons why they make an even stronger claim for Imperial relief. "The colony of Jamaica, exclusive of its dependencies, contained, at the census of 1891, 639,491 inhabitants upon a small area of 4,207 square miles. It is thus somewhat smaller than Connecticut, by which it is slightly exceeded in population, and a trifle larger than Porto Rico, which has nearly 50 per cent more people. Jamaica is by much the most important of the British West Indies, exceeding in area all the British islands lying to the south of it, and almost equalling them all in population. Less than 15,000 of the inhabitants are whites. After the disturbance of 1865 Jamaica was brought under Crown Government and many reforms were effected. Schools were established, the judiciary reorganized, and those medical and sanitary services were devised to which the island owes its present exceptionally low death rate among the West Indies. HEAVY EXPENDITURES FOR LOCAL IMPROVEMENTS. "After 1884, when the legislative council was given control of the finances, improvements were carried on with a lavish hand. In March, 1889, there were 790 miles of main roads under the department of public works. In December, 1897, there were 1,879 miles. Meanwhile the parochial roads had extended from 2,300 to over 4,000 miles. The governor and council seem to have shared the delusion that there was no bottom to the public pocket. Hotels were subsidized by a guaranty of 3 per cent on their cost, which aggregated £48,000. In 1889 a contract was made virtually guaranteeing 3 per cent on a million and a half sterling of bonds of the Jamaica Railway Company, issued to pay for unprofitable extensions. In addition, £700,000 was borrowed for unproductive public works. "For a time the revenues almost kept pace with the expenditures. The fruit trade in particular was expanding, and exports increased from £1,280,000 in 1885-86 to £1,983,000 in 1893-94. Such prosperity caused large imports, and customs grew from £247,745 to £320,976, excise from £80,455 to £127,479, total receipts from £557,309 to £746,068. In 1894 the reaction set in. Trade languished and revenues fell off. Customs declined to £282,751 in 1897-98, excise to £104,961, total receipts to £628,481. Expenditures exceeded revenues by £186,182. The railway company failed to earn its interest, and in 1890-1900 the colony will have to add to its expenditures almost £40,000 on account of its guaranty. Under the circumstances it was natural that differences of opinion should rise both as to the proper line of retrenchment and as to the best means of increasing the revenue. The legislative council demanded an immediate revision of the civil list. The new governor, supported by the colonial office, stood upon the 'vested rights' of present officials, and the deadlock was resolved only by the unusual means of filling the council with nominees as already described. Thereupon Sir David Barbour, a member of the West Indies commission of the preceding year, was sent out to report upon the finances of the colony, and it is largely upon his report that the following account of them is based. HOW THE FINANCES ARE MANAGED. "The finances of Jamaica are in charge of a collector-general of customs, excise, and inland revenue, assisted by his staff, and by a collector of taxes and various assistant collectors in each parish. The parish collector of taxes is also parochial treasurer, and parish expenditures are met directly from the parish treasury, wherever local revenues suffice. But through the operation of the auditor's office all receipts and expenditures find their way into the colonial accounts. It would, therefore, be easy to get a comprehensive view of the expenditures were it not for certain peculiarities in the method of stating the accounts. At present receipts from certain taxes are paid into a general fund, out of which most expenditures are made. But there are other taxes whose yield is specially appropriated to designated purposes. * * * "Even when this is done there remain minor uncertainties and discrepancies, in part due, apparently, to the incompleteness of the published account, and part to the fact sometimes more and sometimes less than the whole yield of an appropriated tax in any year is spent within the year in question. It may be inferred that the balances in the special fund may vary from time to time, but I have not been able to get figures of those balances. *** SOURCES OF REVENUE. "The sources of Jamaica's revenue for 1897–98 are revealed by the following table, which gives the amounts in thousands of pounds and indicates the percentual importance of each sort of revenue: CUSTOMS REVENUE THE MAINSTAY OF JAMAICAN FINANCE. "The customs duties are thus seen to be the mainstay of Jamaican finance. The tariff consists of specific duties on special goods and an ad valorem duty on all other imports except those enumerated in the free list. The general rate in 1897-98 was 12 per cent. In the tariff for 1899-1900, passed in April, 1899, it was raised to 163 per cent, and at the same time a number of articles were stricken from the free list. The more important specific duties are high, e. g., $1.92 per barrel on flour; $1 per hundredweight on bread and crackers; $4 per hundredweight on hams and bacon, sausages, and butter. Sir David Barbour estimates that in 1897-98 the duties were equivalent to 19.8 per cent on salt fish; 22 per cent on bread, biscuits, and salted beef; 34 per cent on rice, and 36 per cent on wheat flour. He also prints, with apparent approval, a table of cost prices and of specific duties per hundredweight actually paid upon 'fourteen articles-foodstuffs and necessaries of life-which the people in Jamaica can only get at a fair living price from the United States.' The average rate of duty is therein shown to be 54 per cent. If we leave out of account matches and kerosene, which occupy an anomalous position, the rate for the rest is 32 per cent, which is probably a more typical average. Put in another way, duties of £282,751 were collected in 1897-98 upon total imports valued at £1,674,380, or an average of about 17 per cent on all imports, including those on the free list. THE EXCISE DUTY. "Next in importance to the import duties is the excise, consisting chiefly of the rum duty. By law 10 of 1875, as amended by law 8 of 1890, it is a tax of 6 pence per gallon upon all rum or other spirits distilled in the island and sold for consumption. The rum tax is very sensitive, falling off rapidly with a decline of general prosperity. The excise includes a cigar and cigarette tax which produced £4,500 in 1897-98. But this is so hard to collect, and is thought to interfere so seriously with a growing industry, that Sir David Barbour favored its abandonment. "The stamp taxes, which are numerous, follow the general lines of the English stamp duties, taxing commercial paper, deeds, leases, mortgages, customs warrants, bills of lading, probate of wills, and all sorts of insurance policies. A complete list of the rates is given in the 'Jamaica Handbook.' THE PROPERTY TAX. "There is no general property tax in Jamaica, but no less than seven taxes or 'rates' are levied upon various forms of real property. First, there is a quitrent of 1 penny per acre on patented land. The yield in 1897-98 was £7,349. Second, there is an acreage tax upon agricultural land, differing with the sort of agriculture pursued. The rate is 3 pence per acre on all land under cane, coffee, ginger, tobacco, cotton, cocoa, vegetables, bananas, cocoanuts, or ground provisions, 3 half-pence upon guinea grass, 3 farthings upon common pasture or pimento (the tree that bears the commercial 'allspice'), and 1 farthing on wood or 'ruinate' (land exhausted by ginger culture). This tax is obviously unfair, and is said to be much evaded. It produced, in 1897-98, £5,404. Third, there is a holdings tax (law 17 of 1890 and law 11 of 1891), as follows: Holdings of less than 5 acres, 2s.; of 5 to 10 acres, 3s. 4d.; of 10 to 20 acres, 4s. 8d.; of 20 to 50 acres, 5s. 4d.; of 50 to 100 acres, 6s. 8d.; of 100 to 200 acres, 10s.; of 200 to 500 acres, 20s.; of 500 to 800 acres, 30s.; of 800 to 1,000 acres, 36s. 8d.; of 1,000 to 1,500 acres, 53s. 4d.; over 1,500 acres, 60s. The total yield of the holdings tax in 1897-98 was £11,309. Fourth, there are a number of house taxes. These are called by different names and are appropriated to different purposes, but they are all levied upon the same principle. For purposes of assessment houses are divided into three classes: (a) Houses of the annual value of £4 and upward; (b) huts in provision grounds, used as a temporary shelter, the owner having another residence in respect of which he pays rates; (c) other houses. The houses of class a are taxed at an amount determined by reference to their annual value. Classes b and c are taxed a specific sum. * * In 1897-98 these four general rates on houses yielded over £60,000. THE BUSINESS TAX. "Business licenses also constitute a productive form of taxation. Some of the more important rates in the last year for which data are at hand were as follows: "The receipts from such licenses were £12,789 in 1897-98. There were also 'general internal taxes' on horses varying from 7s. to 11s., on asses at 3s. 6d., and on vehicles at from 6s. to £1 per wheel, with a surtax in Kingston for repairing the city streets. The proceeds of the licenses and of the horse and vehicle tax are appropriated to the roads, and furnished between them over £50,000 of the £63,000 of 'expenditures from appropriated revenue' made upon the roads in 1897-98. "The remaining British West Indies are geographically divisible into a group lying north of Jamaica, in which no sugar has ever been raised, and one lying south of Jamaica, in which, as in British Guiana, sugar raising is, or has been, the exclusive industry. "The area of the 600 islands to the north-the Bahamas-exceeds that of Jamaica, but they are inhabited by less than 50,000 people. Their chief source of revenue is their tariff. Specific duties are levied on flour and food stuffs, liquors and oils, ad valorem duties on hardware and textile fabrics, and on boots and shoes, and there is a general ad valorem rate upon unenumerated commodities which was raised in 1895 from 20 to 25 per cent. * * * |