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The agricultural resources of Cuba have never been more than partially developed. Its largest crop of sugar, 1,200,000 tons, was made with only a small portion of the available sugar lands under cultivation. Cuba is as yet an undeveloped island and possesses infinite possibilities. Its present population is only a fraction of the population which it can support and which is needed to properly develop it.
In the mountains of the east some of the best coffee in the world is grown. In former times this industry was extensive, but it was largely destroyed during the ten years' war and has never recovered. Cocoa of the best quality is also produced in large amounts. Lemons and oranges of excellent quality also grow with little cultivation. There are large forests of valuable hard woods and inexhaustible supplies of iron. There are numerous mines of oxide of manganese, copper of excellent quality, and some zinc. Only a very small portion of the province of Santiago has ever been under cultivation, and the great central section, which contains some of the richest land in Cuba, is entirely untouched. The construction of the proposed Central Railroad will do much to develop this portion of Cuba. In Puerto Principe are many tracts of grazing lands for cattle, mines of excellent iron ore, and considerable copper; also large amounts of timber in the southern portions.
The four western provinces, although much more fully developed than the two eastern, still present enormous tracts of land awaiting cultivation. Almost all kinds of vegetables and fruits grow in abundance. Frost is unknown in Cuba. The opportunities for the agriculturists and planters are unexcelled. There are also valuable sponge fisheries on the north coast in the vicinity of Caibarien and on the south coast to the east and west of Batabanó. In short, Cuba is an island of almost incredible richness and as yet undeveloped. I can not imagine a better country for young men with moderate capital. island, under a stable government, has wonderful possibilities.
There need be no hesitation on the ground of health. Moderate care at first and a regular life during the period of acclimatization are the only precautions necessary. Land of excellent quality can be purchased for $1.50 per acre in the interior, all of which will soon be opened up. Even near the seacoast excellent fruit and tobacco land is sold to-day for $5 to $8 an acre. Men coming here should have sufficient capital to establish and maintain themselves for one season. One of the greatest needs in the island at present is the establishment of agricultural banks, as they are called in Cuba-banks loaning money at reasonable rates to planters, farmers, and stock raisers. Owing to the uncertainty of Cuba's political future, rates of interest are high and loans difficult to obtain, and when obtained are usually subject to harsh conditions. In certain of the rural districts interest is as high as 24 per cent. The prorogation of the stay law, by which foreclosure of mortgages is prohibited, has in many cases simply deferred the day of settlement, and its general effect has been to tie up capital. No one with money has been willing to loan it, fearing an extension of the stay law or the publication of another of similar character. In order to circumvent the conditions imposed by this law money has been loaned mostly on rural property on what are known as conditional sales "-transactions which are nothing more or less than mortgages from the standpoint of the common law.
The war taxes of 3 and 10 per cent which the railroads were collect
ing on passengers and freight have been abolished. There are no export duties on sugar, and it is believed that a reduction of 50 per cent on the export duty on tobacco will be granted in the near future.
The great desire of Cuba to-day is to obtain a reduction on the import duties of Cuban products into the United States, and strong efforts are being made in this direction. All farseeing business men realize that Cuba's prosperity and advancement depend absolutely upon her commercial relations with the United States, where her two main products have their principal market. High duties against Cuban products mean that the development of Cuba will be slow, if at all. The importation of United States products into Cuba, while it is increasing, is yet considerably below the total importation from other countries. The establishment of reciprocity in commercial relations between Cuba and the United States means everything to Cuba, for if she can obtain favorable duties on her tobacco, and especially on her sugar, her development will be immediate. The greater proportion of her available sugar lands have not yet been touched. The same is true of coffee and tobacco lands.
Cuba must now market her principal products in the United States. New conditions have changed her old commercial relations, and if she is to live and prosper she must have lower duties on her sugar and tobacco, especially the former. With such reduction the development of the island will be rapid and immediate.
DEPARTMENT OF FINANCE.
This department is, as heretofore stated, charged with the care and safe-keeping of public buildings and public properties, the collection of State taxes, the preparation of tax laws, regulations, and instructions, etc.; supervision of municipal taxation; collection of internal revenue; and under Spanish administration it also had direct control of the treasury, which under the military government has been maintained as a distinct department under the direct control of the military governor. The office of the secretary of finance also contains records of all public properties, and to the secretary are submitted all appeals against municipal tax ordinances and decisions under general tax laws. The department is also charged with the disbursement of all funds expended for the payment of the salaries of the various departments of the government, public works in all its branches, schools, etc. Cuba is divided into eleven fiscal zones, which are each presided over by an agent of the finance department, to whom are sent the pay vouchers and pay rolls of all government officials and employes within his district, and to whom are sent the funds needed to cover all disbursements. This department has been called upon to perform an enormous amount of work. Innumerable decisions have had to be rendered on appeals against tax laws and regulations, new tax lists have been made up, a great deal of work connected with establishing title to public property has been performed, and the numerous details incident to the establishment of the civil disbursing system have been carried out.
Enrique José de Varona was secretary of finance until the 1st of May, at which time he was appointed secretary of public instruction, and Leopoldo Cancio, then assistant secretary, was made secretary of finance. During the secretaryship of Señor Varona many important measures were proposed and promulgated; among them that of the
liquidation of inheritance and transfer taxes, unknown ownership of property, and various regulations referring to the inspection and collection of taxes. On May 1 Secretary Varona was succeeded by Señor Cancio, under whose administration this department has continued to the present time.
Señor Cancio's main labors have been devoted to regulating and improving the details of the general system of taxation, and every effort has been made to render the system as equitable and just as possible. I think the whole system is wrong and that the tax on incomes should be abolished and a tax on values established throughout the island.
On January 22 Order No. 34 was issued, as follows:
HEADQUARTERS DIVISION OF CUBA,
Habana, January 22, 1900.
The military governor of Cuba directs the publication of the following: The herein-named persons are hereby designated as members of a commission to consider the general subject of taxation in all its aspects in the island of Cuba; to wit: Enrique José de Varona, Pablo Desvernine, Leopoldo Cancio, Horatio Rubens, James E. Runcie.
The commission is requested to meet in the office of the military governor on Wednesday, January 24, 1900, at 3 p. m. for organization.
ADNA R. CHAFFEE, Brigadier-General, Chief of Staff.
The purpose of this commission was to consider the general subject of taxation in all its aspects. I hoped that the commission would recommend the abandonment of the tax on incomes and adopt one on values. This, however, was not done, and perhaps the decision not to change at this time was a wise one, for there had been so many radical changes in the method of administration and so many of the new officials were entirely without experience that each and every serious change meant a good deal of confusion and delay in the conduct of public business in this department. The present principle of taxing only productive property works as a hardship in many instances, the result being that those who have large properties live abroad and permit them to lie idle, pay little little or no taxes, their hard-working, industrious neighbors, who, by their thrift and energy, reconstruct the country, being compelled to bear practically the entire burden of taxation. The landholders or plantation owners whose properties are idle are in the meantime benefited by the labor of the industrious planter, whose taxes commenced with the output of his first crop. The system has worked a great injustice. Many of the largest property owners live abroad. They have taken no interest whatever in the reconstruction of the country, but in the meantime their estates have been protected and their property safeguarded by the government maintained and supported by the taxes paid by those who, by industry and thrift, have partially reestablished the natural order of things. If Cuba were densely populated and all her lands under cultivation the present law would be a fair one, but under conditions existing in Cuba to-day it is a law which throws the burden of reconstruction entirely on the hard-working men and places, as it were, a premium on the idleness of the nonproducer. The amounts derived from taxation have been comparatively small; few of the state properties are rented, and on many which have been rented it has been impossible to collect rents in accordance with the value of the property.
The department of finance has been charged with very many investigations of the financial accounts of municipalities, a great portion of which have been unable to properly render their accounts or assess the taxes in accordance with law. It has had to establish the various fiscal zones, with suitable paymasters, and instruct them thoroughly in the use of the forms and blanks required by island regulations. In addition to this work, the finance department has been called upon to make many examinations as to the status of ownership of numerous properties claimed by the church as church properties.
In making the rules and regulations for municipal taxation a maximum limit of assessment was given to the municipalities of the various classes beyond which they should not under any circumstances collect. No minimum limit was fixed, the purpose being to encourage each municipality to economize and make as good a record as possible in econom ical administration. These rules and regulations were promulgated in Order 254 of June 28. Many of the municipalities applied the full limits of the tax and many others have kept well below it.
In the last few months the question of church property has arisen and the department of finance has had great additional labors thrown upon it in the way of searching titles, collecting evidence, etc., on behalf of the state.
The work of the department has been well and promptly performed. Many important measures were formulated and proposed by it and promulgated, among which was the aforementioned Order 254 of June 28 and No. 335 of September 4, the latter containing regulations for the formation of assessment records that will serve as a basis for the direct taxation of real estate in this isiand.
These orders have been carefully drawn by the secretary and govern the question of municipal and general taxation and the collection of delinquent taxes.
The efforts of the department have been sincere and directed toward removing harsh or unjust features in the old tax law. The duties of the secretary have been extremely disagreeable, as he has had to represent the department responsible for the collection of taxes under laws and regulations most of which had been entirely disregarded for the past six years.
At the present time many of the municipalities are only collecting a portion of the taxes which they should collect. The desire for popularity on the part of city officials, combined with a feeling that the state is going to help them out of all financial difficulties, has led them to be unduly lenient in the enforcement of existing regulations.
There are numerous serious problems which present themselves to the department of finance. Among the more important are the devising of some scheme for the just division of the numerous estates held in common, which are known as "haciendas comuneros," the framing of a new tax law which shall be based upon valuation, and a rigid supervision over municipal taxes.
Attention is invited to the report of the secretary of finance, which accompanies this report.
THE INSULAR TREASURY.
The treasury properly belongs to the department of hacienda or finance, but has been maintained as a distinct division under an officer of the army, Maj. Eugene F. Ladd (captain, Ninth United States Cav
alry), who has conducted it with ability, gradually building up the present system of the office, which fills the requirements of the island
The duties of the secretary of finance have been so numerous and complex in dealing with the difficult situation resulting from the war, and calling for the exercise of the most diverse talents, that it has been deemed better not to impose the additional burden of the treasury at the present juncture.
All moneys received from customs, internal revenues, and postal and miscellaneous receipts are deposited with the treasurer of the island and issued only on warrants signed by the military governor. The great bulk of receipts comes from the customs, internal-revenue receipts being as yet comparatively small and far below the amount collected in former times. Postal receipts are gradually increasing, but are still considerably less than postal expenses. Much of the money received is in Spanish and French gold. These coins have been shipped, as a rule, to the United States and recoined, then sent back to the island as American gold coinage of various denominations. Most of this money has been sent by United States transports, and every effort has been made to avoid unnecessary expense to the island. The principal loss has been from the underweight of Spanish coins from wear and tear. This, however, has not been excessive.
The amount of currency usually held in the treasury varies from $1,500,000 to $2,500,000. All funds are disbursed through the North American Trust Company, which receives a commission of one-fourth of 1 per cent for disbursements made in Habana and at other points where moneys are deposited to its credit by the treasurer of the island. At all points where moneys have to be transferred by the company for the purpose of disbursement a commission of one-half of 1 per cent has been charged. The military government holds bonds and securities securing this deposit, and $750,000 in the form of a bond of the Maryland Fidelity and Trust Company. The amount held by the trust company varies from less than $1,000,000 to $2,500,000 and represents the allotments made to disbursing officers, civil and military, throughout the island and deposits of the treasurer.
REQUISITIONS FOR DISBURSEMENT OF FUNDS.
All officers, civil and military, requiring funds submit estimates on regular printed forms through the proper channels, either civil or military, to the auditor of the island, who indorses thereon the amount of money for which the officer is already accountable, as represented by unaudited accounts, and submits the requisition to the military governor, in whose office it is carefully examined and the requisition under each head scrutinized for the purpose of ascertaining whether or not it is for a duly approved project or purpose. The requisition, as approved by the military governor, is then sent to the treasurer of the island for an accountable warrant. It is then returned to the military governor, who signs the warrant, which goes to the treasurer, who places the money to the officer's credit.
Disbursements by disbursing officers are made practically in accordance with the rules and practices governing in the United States, and their accounts are submitted to the auditor for final settlement. In case of a suspension of account, he calls upon the officer for explana