First among these needs of the Island was a tariff that should bear lightest in directions where the people could least afford the burden of taxation, and heaviest on commodities which the well-to-do and those engaged in large enterprises required. The Spanish tariff was made by Spaniards, for Spain, in the interests of the Spanish. That seems to be the actuating principle of it. On any other theory it was inexplicable. In adopting, July, 1898, for an exigency measure, the rates of duty which Spain levied for her own commodities, the United States acted wisely. These rates, however, were full of inequalities, and were not levied on any sound principle, but on the "heads, Spain wins; tails, Cuba loses" idea which prevailed in the whole fiscal fabric. It was found that the only way to remedy these inequalities, equalise the rates of duties, improve the administration, and reduce the rates of duties on all articles of general consumption, was to frame a practically new tariff. This was done, and the new tariff now in force will undoubtedly do its share in the industrial reconstruction of Cuba. In this tariff it was not thought advisable to make radical changes in the administrative branches, nor to change weights and measures into United States equivalents, because the people of Cuba are accustomed to the metric system. As a rule, all duties in Cuba are levied by the kilo and hundred kilos. United States currency, however, was substituted for the Spanish pesos. This will simplify collection of taxes, as customs duties were collected by Spain in three different classes of currency: gold, silver, and bank notes, all (for the gold coins used in Cuba have fictitious values) fluctuating in value.

The tariff adopted by the United States, when the military forces took charge of the custom-houses, reduced all duties about sixty per cent. on the old Spanish rate, and averages fully two-thirds less than the rates exacted by Spain in Cuban ports during the last five months of its occupancy of the Island. The reasons for these reductions, together with the reasons which led up to the decision of the President to admit cattle and agricultural implements free into Cuban ports in possession of the United States, are fully given in another chapter. Still another chapter will be devoted to an analysis and discussion of the Cuban Budget, in which the effect of the new tariff on the revenue of the country, together with the other sources of revenue, are explained and discussed. It will naturally be asked: With such a large reduction of duties, how does the United States expect to secure revenue for the purpose of administering the government of the Island? There are several answers to this question, and the facts bearing on the subject are given in full in the chapter on the Cuban Budget. The general answer is that by reason of fraudulent classification and smuggling, much of the revenue collected from the people of Cuba never found its way into the treasury of that Island, nor of Spain. The cupidity and rapacity of the Spanish officials in Cuba are beyond conception, and, if one may judge by the reports of the United States customs officials at Santiago, as much revenue will be received from a tariff whose duties are from a half to two thirds less than the Spanish tariff as was received under the iniquitous and exasperating law which has been abolished by the advent of the American forces. As the officials recommending the measure believed, the reduction to a reasonable rate of duty in certain schedules--such, for example, as those relating to machinery and railway supplies--would increase importation, and certainly the revenue would be greater than during the period of prohibitory duties. A railway company naturally hesitated to import a locomotive when the duty was equivalent to the value of the engine. With a revised tariff of twenty-five per cent. ad valorem, it may import two, or four, or even six. In adjusting such schedules, the revenue features alone need be considered, because Cuba has no locomotive works, or any iron or steel industry. The same is true of a variety of other articles.

In all cases where there are home industries in Cuba capable of supplying a manufactured product made by home labour, care was exercised by those who framed this tariff (either by making free the raw material, or by not making a too radical reduction of duty) not to injure their prospects. In so doing, the Administration is only carrying out the policy which has been fruitful in developing the industries of the United States and in securing diversified employment for its labour. If honestly enforced, the new tariff established in Cuba by the United States will yield sufficient revenue, enable Cuba to buy in the cheapest markets of the world, and not compel her to purchase from Spain inferior commodities at a high price. In every section it is a Cuban measure, and in no single case can there be found a section that discriminates in favour of the United States as against any other market. The United States purposes to take its chances for the Cuban trade with the rest of the world. If Cuba can purchase cheaper and better articles on more favourable terms of the United States than of Europe, we shall secure the trade. If not, the Cuban consumer is free to purchase in the markets of the world. In this one act alone, conservative, thoughtful Cubans must realise that they have attained to the commercial freedom which some, not without reason, contend was the real object of the two insurrections. However that may be, Cuba has secured a right which England would never concede to Ireland, namely, a separate revenue system. In granting this economic freedom to her other colonies, England has strengthened their ties to the mother country. With industrial freedom assured, a colonial country may be indifferent to the form of its political government.

Next in importance to the fiscal laws for the revenue of the Island comes the currency question. No country can be permanently prosperous unless its currency is sound and its credit good. Bad financial management of state affairs begets bad credit, and impaired credit is the forerunner of depreciated currency. Although Cuba is afflicted with many kinds of depreciated currency, the established basis is strictly gold, and in any commercial engagement the value is understood to be in Spanish gold, unless there is a specification to the contrary. Indeed, there is something almost pathetic in the manner in which Cuba, though plundered and depleted of her resources and wealth, has never wavered from the gold standard. The business interests of the Island are, as the author found, unanimously in favour of a continued gold basis; for the Cubans have suffered so much from Spain's various attempts to force upon the people a depreciated currency, both in the form of silver and bank bills, that they want no further experiments with the currency. The Spanish silver money current in the Island is taken at the daily value only, which is fixed, partly by the larger or smaller demand for wages and necessities of the Government to pay troops, but principally by the continually fluctuating value of the Spanish money in the European markets. As this Spanish silver is legal tender in Spain for its face value, it is able to maintain a fictitious value for purposes of shipment to that country. This silver dollar, therefore, fluctuates in value with the fitful changes in Spain's credit, and it is probable, should the United States establish American currency as sole legal tender for the Island of Cuba, that all the Spanish silver dollars will be shipped to Spain. There was in Cuba during the last months of Spanish control a margin of thirty per cent. on the silver dollars. It is not probable that these dollars will go down to a point where it will not pay to ship the Spanish silver to Spain and utilise the American dollar in Cuba. In this event the United States Government will, of course, ship its own silver dollars to Cuba; which, with the subsidiary coins, will be required for small payments. At Santiago the immediate disappearance of Spanish dollars and minor coins has made small transactions extremely difficult. Some think that the present stock of Spanish silver in the Island exceeds the necessities; but however this may be in the western part of the Island, it was evidently not the case in Santiago.

Besides the silver, there is a bank-note circulation, but that has no actual bearing on the question of currency, as the trade and business of the Island has refused to accept it, and the present quoted value is less than ten cents on the dollar. The greater part of this emission, which was a war issue made by the Spanish Government at Madrid through the Banco Espanol de la Isla de Cuba (not by that bank), is largely in the hands of speculators and government contractors. The only public application is for the payment in the custom-house of the so-called ten per cent. ad valorem duty assessed on the official value of imported merchandise in addition to the regular specific rate of duty exacted. The abolition of this duty, under the new tariff, ends the life of these bank bills. There still remains a question as to whether the Spanish Bank of Cuba was in any way responsible for these bills, and the question will come up for future adjustment. The Bank will probably deny responsibility and refer those who hold this depreciated currency to the Spanish Government at Madrid. It is an interesting fact in this connection that the credit of the Spanish Bank of Cuba is of a higher standard than the credit of the Spanish Government, for the Bank has never failed to redeem its own paper during nearly half a century of its existence, first as the Bank of Spain of Havana and subsequently under its present name. It has at times suffered embarrassment, but ultimately the bills of the Spanish Bank of the Island of Cuba have always been redeemed.