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UBA'S present is dark with the gloom of in

Her future is bright with the promise of peace and abundant prosperity. Given a land of im measurable fertility, readily accessible to the markets of the great world outside it,—a land receiving in due measure the kiss of the sun and the benediction of the rain, and, if that land be not unduly and artificially barred from the world's markets, prosperity is inevitable. That is Cuba's future. The days which lie immediately before her are filled with an uncertainty which renders prediction concerning them little else than folly. But, sooner or later, the clouds and the doubts which overshadow the Cuba of to-day will pass, and the island will take its place in the world as a land of peace and plenty.


Cuba's present distress is but the crisis of an economic disease of many years' standing. The original provoking cause was the unjust and unwise colonial policy adopted and maintained by the mother country. It began as far back as the year 1503, when a royal ordinance established the Casa de la Contratacion, or House of Commerce, at Seville. This body was empowered to grant licenses, to dispatch fleets, and to regulate and control Spanish colonial trade as an exclusive monopoly. In 1717, the institution was transferred to the port of Cadiz. The colonial trade was thus restricted to a single Spanish port. Further restrictions prohibited both intercolonial trade and trade with any country other than Spain. For a period during the seventeenth century such trade was made an offence punishable by the death of the trader and the confiscation of the property involved. In the first fifty years of Cuba's history, Santiago was the only port of the island through which merchandise could be either imported or exported without violation of the law. With the establishment of Havana as the capital, in 1552, that city became the only port officially recognized. With the exception of the brief term of British occupation, 1762-63, this condition obtained until the close of the eighteenth century. A royal order, issued in 1801, opened the other ports of the island to foreign trade. This was annulled

by another order in 1809. A few years later a new policy was adopted. The ports were opened, but the same results were accomplished by a system of discriminating tariffs which gave Spain a practical monopoly of Cuban trade. This continued, subject to sundry minor modifications, until the execution, in 1891, of the reciprocity treaty with the United States. With the termination of that treaty, in 1894, there came a reversion to the old system of discriminating, preferential, and special tariffs in favor of Spain and against all other countries.

This restriction of the fullest development of the resources of the island was one of the prominent fundamental causes of all the numerous revolts, large and small, which have occurred in Cuba since her first really notable revolt, in 1823. The Ten Years' War (1868-78) made no serious inroads upon Cuba's production. The abolition of slavery, finally effected in 1886, made a material difference in the cost price of her products. This was one of the direct results of the Ten Years' War. Coincident with the war and this enhanced cost of sugar production, there came the vigorous competition of Europe's bountied beet sugar, which forced the f. o. b. prices of Cuba's raw sugar down from 5 to 51⁄2 cents per pound, which it obtained from 187080, to 2 to 3 cents per pound twenty years later. To meet this competition, Cuban planters borrowed heavily for the construction of grinding mills equipped with modern machinery. In spite of the benefits of the years of reciprocity between Spain and the United States (1891– 94), the outbreak of the revolution of 1895 found many Cuban planters burdened with overwhelming mortgages, and facing a further downward tendency in sugar prices. The three years of devastating war destroyed scores of mills and plantations, but it did not destroy the mortgages and the financial obligations of the planters.


American intervention, in 1898, terminated a war which left Cuba an industrial wreck, with her finances in a state of chaos. Unfortunately for Cuba, and for the United States as well, her real condition was neither realized nor under

stood by those who essayed her political redemp-. tion. There was a distinct failure in the diag. nosis. Of those who were sent to administer the affairs of the island, only one man, Gen. James H. Wilson, correctly diagnosed the disease, and prescribed, in general terms, the proper remedy. In the report submitted by that officer, under date of June 20, 1899, there occurs the following:

I am so convinced of the futility of approaching the problem of reconstruction from any other direction that I must again urge the necessity of some action to relieve the wants of the agricultural population, and to put agriculture on a sound basis with the least possible delay.

In his report, dated December 31, 1900, Señor Perfecto Lacoste, the Cuban Secretary of Agriculture, Commerce, and Industry, states:

No order of general nature has been issued during the period to which this report refers, nor during the six preceding months, which comprise those of the occupation of the island by the intervening government, relating to our agriculture.

In a later report, dated March 15, 1901, Señor Lacoste makes the same statement for a second time, and it might with equal accuracy have been included in a report dated May 19, 1902. Cuba's present economic distress is no surprise to those who have watched the Cuban situation during the term of American intervention. For two years the Cuban press has sounded a warning; for two years bankers and merchants throughout the island have noted the coming storm. Those in whose hands lay the power of relief, and upon whom there rested the responsibility for relief, were blind to the danger signals and deaf to both protest and warning. As nearly all of these were printed in the Spanish language, they did not come to the general American reading public, and such translations as were submitted were brushed aside as the querulous complaints of the disgruntled or the pessimistic. For their bearing upon the subject, I quote the following translations from editorials which appeared during the winter of 1900-01:

Over a year ago it was clearly seen and predicted by those who took the trouble of looking into the matter, that unless some general measures were taken to assist the agricultural interests and other industries of the island, its productive capacities would be so crippled that the economic and commercial life of the country would dwindle to almost nothing. That is now taking place, and at so rapid a rate that, if immediate remedy is not applied to the evil, it will soon reach appalling proportions, and misery and destitution will become a sad reality. (El Avisador Comercial, Havana.)

What has the intervention done during the two years which have passed? Nothing has been done for our permanent interests; nothing to encourage our production; nothing for our extinct credit; nothing to revive our paralyzed industries; in one word, nothing by

which we could be assured of life, or which would give us confidence that the result of our energies would be the provision for our necessities. - (El Nuevo Pais, Havana.)

It was to be presumed that the intervening power, on taking charge, would attend more to giving an impulse to our agriculture and our few industries than to the production of that Niagara of unnecessary ordinances with which it has augmented the existing laws of our country. But it appears that the necessities of politics -which ought to be laid aside when it is a question of economical existence-overshadowed all other considerations.-(La Independencia, Santiago.)

I take these from such clippings as lie immediately at hand. They are sufficiently represen tative of a large amount of similar matter which has appeared within the last two years. Any thoughtful investigation of the past three years in Cuba will disclose ample evidence to show that America's responsibility for Cuba's present industrial distress antedates, by several years, the failure of Congress to agree upon a plan for a reciprocity treaty with the island. Cuba's normal position as a commercial country, in time of peace, is that of a creditor nation to the extent of $30,000,000 to $40,000,000 a year. After three and a half years of American government, her merchants are indebted to foreign creditors to the amount of nearly $50,000,000, and are relying upon those creditors to see them through an almost inevitable period of utter stagnation in commercial lines.


This is not a pleasant picture, but it is, unfor tunately, only too accurate. The fundamental purpose of the United States in her intervention in Cuban affairs was not the establishment of Cuban independence. It was the establishment in the island of conditions which would put an end to disturbances which were a "menace to American interests" and "intolerable" to the American people. A peaceful Cuba might be an independent nation or a colonial possession of any country. Our primary object was the establishment of that peace and order and governmental stability which rest upon the contentment of a reasonably prosperous people. Cuba's longstanding disorder was rooted in oppressive economic conditions. Spain failed to remedy the evil which existed in her colony. She was in large measure directly responsible for its existence. The United States interfered, and, blindly or otherwise, sought to remedy an economic evil by the application of political plasters. It is the testimony of competent observers, -Cuban, Spanish, American, and European,-that Cuba is today worse off, economically, than she was at any

time under Spanish domination. The proper remedy and the power to apply it have been in American hands for more than three years. Cuba's streets may be the cleanest in the world, and there might be a schoolhouse to every one of her 28,000,000 of fertile acres ; but if her industries are wrecked, her planters, the source of her wealth, bankrupt; and her laboring class without employment and destitute,-clean streets and schoolhouses will be an inadequate substitute for national prosperity. No parallel lies between the Cuba of to day and our own South in 1865. Northern capital went into the South to develop its resources, and the South had free access to the market for her products, -her cotton, her tobacco, her rice, and all the rest of her boundless resources. Give Cuba that market, even now, and her government is assured, and her people will knock at no man's door for alms or aid.

It is a frequent comment that the future of Cuba depends absolutely upon her commercial relations with the United States. That is true, as a broad proposition. Cuba's highest and most rapid development hangs chiefly upon the utilization of her resources by American capital, and upon an open doorway to the markets of her northern neighbor. Cuba is distinctly an agricultural country, dependent for her wealth upon the products of her soil. There is little or no probability that her manufactures will ever be more than a comparatively insignificant item in her economy. Her trade and her commerce are almost entirely in the hands of the Spaniards. The Cuban does not take to trade. He is a man of the soil; or, if he be not a planter, he takes to some profession,-law, medicine, engineering, or politics. It is entirely safe to say that, to-day, no more than a small percentage of the total wealth of the island is represented by the posses. sions of those who are distinctly Cubans. Taking the figures given in Sanger's Census of 1899, it appears that the total real-estate valuation of the island is, in round figures, $325,000,000. This is mortgaged to the amount of about $250,000,000.


An unfortunate mistake has been made in the presentation of the Cuban case during the past winter. She has been put, and to some extent has put herself, into the attitude of a petitioner if not a beggar. The truth is, that Cuba can offer an ample quid pro quo for any concessions which might be made in our tariff. Out of her long list of customers, the United States can show only five foreign nations whose annual purchases exceed $75,000,000. A reasonably pros

perous Cuba can offer us a trade which would give her the fourth if not the third place on our list, while a highly developed Cuba might well become a purchaser of some $200,000,000 worth of food and manufactured products per year. This highly developed Cuba is a ready possibility. But it is quite within bounds to say that the development must and will come through the investment of American capital. Spanish capital is not inclined to industrial exploitation. More or less of it is available for loans and for investment in fairly stable enterprises after they are established, but it is rarely available for the initiation of such enterprises. The Cubans have no money for either investment or development. Few of them now have enough for even the proper up-keep of their mills and plantations. Some European capital is already in Cuba, notably the English investment in Cuban railways and cigar factories. But it is to American capital that Cuba will look for its widest development.


In 1894, the year preceding that of the insurrection, it was estimated that some $50,000,000 of American money were invested in various properties and enterprises in the island of Cuba. During the war period there was little or no increase of that amount. The estimates for the present time are in the vicinity of $80,000,000. It is impossible, under existing conditions, to obtain exact figures, but this sum may be accepted as a fair approximation of American investments in Cuba at the present time. A part

of this sum is represented by the holdings of non-resident investors; a part by the property of native-born Cubans who have become American citizens by naturalization, though their property and their homes are in the island; and a part shows as the possessions, generally small in amount, of Americans who have gone to Cuba for permanent residence and business.

For various reasons, chiefly because of political uncertainty and the unavoidable conditions of a period of transition, American investment in the island, during the last three years, has come short of the optimistic predictions which found circulation during the opening days of the American occupation. Notwithstanding the unfortunate conditions of to-day, there has been a notable rehabilitation of the industries of the island. Credit for this is due, almost entirely, to the efforts of the Cubans themselves. Although woefully destitute of resources, they have struggled manfully to pick up the threads of the old life, to establish homes where there were but ruins, and, by a most commendable method of mutual helpfulness, to provide for themselves

and for those dependent upon them. To those of us who saw the devastation and the destitution of three and four years ago, this is one of the most impressive and hopeful features in the life of the island.

Among the outside influences which are now contributory toward the reconstruction of the island, the most important and the most valuable is found in the department of railroad communication.


The first railroad in Cuba was built more than fifty years ago. The system developed gradually until, at the outbreak of the war, it represented about 1,100 miles of road, much the greater part of which was in the western portion of the island, with a center in Havana. About twothirds of the island was practically without railway facilities. The war left the railways in bad condition, and many of the Cuban and Spanish stockholders were ready to part with their holdings. American investors looked the properties over, but decided that the prices asked were entirely unreasonable, and declined to purchase. An English company already owned the line from Havana to Pinar del Rio. Another English company bought up the system known as the United Railways, which covers, generally, the ground for a hundred miles or so to the eastward of Havana; and another English organization secured the Cuba Central Railway, which occupies a portion of the field eastward of the United Railways. These companies have done something in the way of improvement and reconstruction, but nothing in the way of extension.

The leading railroad feature of the island is the work being done by the organization of which Sir William van Horne is the directing head. The company holds a New Jersey charter, and its purpose is a colossal development enterprise in which. its railway line is but an incident, although, necessarily, the whole scheme rests upon means of transportation. Up to the present time nearly, if not quite, $10,000,000 has been actually expended. For some months a force of 5,000 to 6,000 men has been busily at work clearing a way through forest and jungle, grading, bridging, ditching, and laying tracks and rails over a stretch of about 450 miles through the heart of the prov. inces of Santa Clara, Puerto Principe, and Santiago. Unless the work be blocked by the rainy season, August 1 should see a rail connection from Pinar del Rio, 100 miles west of Havana, to Santiago de Cuba, more than 500 miles east.

A unique difficulty was encountered at the be. ginning of this enterprise. The so-called Foraker Law of the American Congress prohibited

the granting of any concessions or franchises to individuals or corporations during the period of American occupation. In the face of this, Sir William van Horne and his associates began their work upon an enterprise which, before it is definitely concluded, may, in the words of Sir William, involve twenty millions, thirty, fifty, or a hundred millions of dollars." It has been asserted that the work was, in fact, a violation or, at best, an evasion of the Foraker Law. That is not the case. It has complied with the law. That law prohibited concessions and franchises. The Cuba Company, as it is called, neither has nor has asked for either. It has bought lands throughout its intended route and has laid down rails and ties upon the lands thus bought. It has purchased a continuous strip of land some 450 miles in length and 30 meters in width. It obtained a revocable license to cross streams and highways, and thereby placed itself at the mercy of any government which might be established. It encountered obstacles in the shape of individ ual owners who refused to sell except at exorbitant figures. It encountered areas to which no owners at all could be found, and other areas of doubt. ful and complicated title. Upon its surface, it was a gigantic speculation whose outcome was exceedingly doubtful. Yet it went ahead, spending its millions along the way.

The laws, as they existed, gave the company no rights of expropriation. Those laws gave the right to construct railways upon private lands, and many miles of such railways were in operation upon the sugar estates, but they gave no right to operate them for public uses. Such roads could carry no passengers and no freight except their own. The company bought an existing line, of some twenty miles in length, running from Santiago northward to San Luis, and leased the military line which Spain built in connection with its line of blockhouses, trenches, and barbed-wire fencing, from Jucaro to Moron, in the hope of confining the insurrection to the area of its inception in the eastern part of the island. To the outsider, the whole scheme presented every sign of an extremely precarious undertaking. Newspapers attacked it, and various local politicians frankly declared their purpose to make the company open its check book whenever it should come into their power to regulate the laws of the island. But the company proceeded with its work, placating here and receiving sup port there, gradually and surely diminishing its opposition throughout the entire area of its oper ations. Its processes of construction put large sums of ready money into circulation in a region where it was greatly needed. While in that section a few weeks ago, a number of the leading

people told me that without the money which had followed the work of the Cuba Company, it was by no means improbable that the people of the region would have been starved into a condition of revolt.

On February 7, 1902, there was issued from the headquarters of the military government an order known as No. 34. This is unquestionably one of the ablest railroad laws which was ever drafted. It is concise, yet comprehensive. It protects both public and private interests, is broad in conception and extensive in scope. An objection undoubtedly lies in the fact of the creation of so important a law by the American authorities at a time so little preceding the day when the Cubans were to undertake the control of their own affairs. But its justification lies in the merits of the law itself, and in the fact that it makes possible the rapid prosecution of an enterprise whose development constitutes, beyond all question, the key to the future of the island of Cuba. The railway and development scheme of the Cuba Company, in which English and Canadian capital is associated with American capital, will open to settlement and productive cultivation an area, hitherto little more than a vast wilderness, of twelve to fifteen millions of acres of the richest land in one of the richest spots on the surface of the globe.


A somewhat general circulation has been given, within the last few weeks, to allegations that certain interested persons are seeking to force the economic destruction of Cuba in order that they may purchase sugar properties in the island at prices far below the actual value of those properties. While it is only too evident that there is an effort on foot to effect annexation by any and all means, creditable to the United States or otherwise, I cannot accept that interpretation of the underlying motive. Such purchases would involve large investment of capital. Those who contemplate such investment are fully aware of the fact that only a limited number of the already established estates would be in any way a desirable purchase, in view of the much greater advantages offered to the investor in virgin lands for plantations and the erection upon them of up-to-date grinding mills. Any number of the old estates can now be purchased at almost any price, and there have been few transactions. Nor is there any probability that, under any circumstances, the virgin lands could be bought at any lower prices than those which are now quoted. With the exception of a small number of estates, which the present owners can afford to hold and operate, the opportunity for

profitable investment lies distinctly upon the side of the virgin land with the modern mill. Before many years, these will almost inevitably crush out a large number of the old estates. The new lands are available to-day at prices which offer no probability whatever of reduction, and there appears no competent reason for forcing general disaster in order to purchase undesirable or less desirable properties.

The total of American investment in Cuban sugar production is to-day probably not far from $40,000,000, - about equally divided between Cubans who have taken out naturalization papers and those who are citizens of the United States by natural right. Of the amount held by the latter class, about two-thirds is of a standing which antedates the insurrection of 1895. This is represented by such estates as the Constancia and the Soledad, both near Cienfuegos. These have been owned by native-born Americans for the last twenty or thirty years; $7,000,000 to $8,000,000 will probably fairly cover all American investment in Cuban sugar properties since the Spanish evacuation. There is no doubt that many other millions are ready and waiting to move in if the movement be justified by political conditions and a fair market, particularly the latter.

The sugar industry is a business for large investors. Renters or owners of comparatively small properties, located in the vicinity of the large centrals," or grinding mills, find the production of cane a reasonably profitable enterprise under normal market conditions as a cash crop. Many of the mills depend largely upon this source of supply. This is indicated by the fact that during the last season the number of mills in operation was about 160, while the number of cane-growers, large and small, is estimated at from 18,000 to 20,000.


Although many metals and minerals are included among the potential interests of Cuba, few mines of any importance have been developed thus far. As far back as the early days of Spanish settlement, the copper mines near Santiago, across the bay to the westward, were a source of supply, and they have been, in later years, a highly profitable investment. The war of 1868-78 stopped their operation for a time, and no extensive work has been carried on since that date. The numerous properties have now been bought up by American capital, represented by Messrs. Rand and Chanler, and they will soon be reopened. Some $600,000 has already been expended, and it is probable that half a million dollars or so more will be laid out before

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