INTRODUCTORY NOTE

When on April 20, 1898, the Congress of the United States adopted a joint resolution demanding that Spain at once relinquish its authority and government in the Island of Cuba, a step was taken fraught with consequences which at that moment were little realized.

Within the short period of four months the United States found itself charged with the responsibility of governing new possessions in the West Indies and in the far away Philippine Islands.

Problems of governmental administration called for immediate solution. The most elementary matters, such as sanitation, public education and the like, had to receive prompt attention, as well as providing for law and order and for the public income and expenditure of active communities, which, however, lived under very different social, governmental and business conditions from those known and practised in the United States. In brief, the United States Government was compelled by the logic of events to provide almost overnight a system of colonial government for possessions which it had not sought and which, in the main, certainly, it had no intention of permanently retaining.

This important duty was devolved upon the War Department under a special bureau organized for the purpose known as the Bureau of Insular Affairs.

The affairs of the Philippine Islands, of the Island of Guam, and of the Island of Porto Rico are still administered under the supervision of this department.

The government of Cuba was surrendered to the Republic of Cuba on May 20, 1902, although the United States was compelled to intervene for a period of about a year, from December, 1907, until January 24, 1909.

It is proposed, in time, necessarily perhaps many years hence, to turn over the government of the Philippine Islands to their own people.

It seems likely that the Island of Porto Rico will remain indefinitely a possession of the United States. It already has a considerable measure of self government. Undoubtedly it will, ultimately, be given a form of territorial government.

The Hawaiian Islands did not come to the United States from Spain, but after an independent existence of many years, at the request of their people, were annexed, on August 12, 1898, and organized as the Territory of Hawaii on June 14, 1900.

In a way, the United States stands sponsor for all four countries, if such they may be called.

Under the terms of the treaty of Paris, ratified December 10, 1898, and of the so-called Platt Amendment, the United States is obligated to see that a stable government is maintained in Cuba, that she is protected from foreign invasion, and that she incurs no indebtedness upon which she cannot meet from her current revenues the interest and amortization charges. Thus, while Cuba is an independent nation,

she is at the same time entitled to the protection of the United States, and in return therefor is obligated to maintain a stable government, as more fully explained in a later chapter. For this reason, Cuban bonds may be properly included in considering the obligations of the Insular Possessions.

It should be noted that while the United States Government exercises a supervisory power in connection with the issuance of bonds by the Republic of Cuba, the Territory of Hawaii and the Governments. of Porto Rico and of the Philippine Islands, it does not guarantee either the principal or interest thereof.

In the case of Porto Rico and the Philippines, however, the facilities of the United States Treasury have been placed at the disposal of these governments, the United States acting as fiscal and transfer agent for part of the Porto Rican issues and for all of the Philippine issues.

No debt may be incurred by the Territory of Hawaii without the consent of the President of the United States. Bond issues by the Government of the Philippine Islands must be similarly approved. No such provision exists in regard to the incurring of debt by the Government of Porto Rico, but as stated above, the United States retains a veto power in the case of Cuba.

In regard to taxation there is an unqualified exemption from state and federal taxes so far as the Philippine bonds are concerned. By a decision of the United States Supreme Court, the bonds of Porto Rico and Hawaii are apparently similarly exempted from taxation. Cuban bonds, being those of an independent government, are taxable in the United States.

The Hawaiian, Philippine and Porto Rican bonds are received by the United States Treasury as security for public deposits at their market value, but not exceeding their par value. They are also accepted at par by the Post Office Department as security for postal savings deposits.

Backed as they are by rich and prosperous communities, and issued under the supervision of the United States Government, the bonds of the Insular Governments, of the Territory of Hawaii and of the Republic of Cuba would seem to afford a safe and conservative form of security for the most discriminating of investors.

New York, December 20, 1916.