purpose is not by any means to have a fixed sum adjudged at this time, as a colonial debt to be paid by the Spanish Antilles, they have decided to withdraw Articles II., IV. and V., as drawn up by them in their former draft, and offer as a substitute for the three a single article, reading as follows:

"Article II.

"The relinquishment and transfer made by her Catholic Majesty and accepted by the United States of America embrace:

"1. All the prerogatives, powers and rights belonging to her Catholic Majesty as a part of her sovereignty over the Island of Cuba and its inhabitants.

"2. All the charges and pecuniary obligations, outstanding at the date of the ratification of this treaty, which upon careful examination of their origin, their purposes and the conditions of their creation, should be adjudged according to strict law and undeniable equity to be different from the charges and obligations which properly and specifically belong to the Peninsular treasury, owing to their having been at all times properly and specifically belonging to Cuba.

"To secure the careful examination provided for in the foregoing paragraph, a Commission consisting of competent and impartial persons shall be appointed by the two High Contracting Parties. The manner of this appointment shall be determined in this treaty by a separate article.'"

Memorandum of Spanish Peace Commission, Paris, Oct. 26, 1898, S. Doc. 62, 55 Cong. 3 sess., part. 2, pp. 85-90.

"In the Spanish memorandum an effort is made to answer that part of the argument submitted by the American CommisAmerican response. sioners on the 14th instant in which it is maintained that the so-called Cuban debt is not in any sense a debt of Cuba, but that it is in reality a part of the national debt of Spain. The American Commissioners were able to show that the debt was contracted by Spain for national purposes, which in some cases were alien and in others actually adverse to the interests of Cuba; that in reality the greater part of it was contracted for the purpose of supporting a Spanish army in Cuba; and that, while the interest on it has been collected by a Spanish bank from the revenues of Cuba, the bonds bear upon their face, even where those revenues are pledged for their payment, the guarantee of the Spanish nation. As a national debt of Spain, the American Commissioners have never questioned its validity. "The American Commissioners, therefore, are not required to maintain, in order that they may be consistent, the position that the power of a nation to contract debts or the obligation of a nation to pay its debts depends upon the more or less popular form of its government. They would not question the validity of the national debt of Russia,

because, as the Spanish memorandum states, an autocratic system prevails in that country. Much less do the American Commissioners maintain that a nation can not cede or relinquish sovereignty over a part of its territory without the consent of the inhabitants thereof, or that it impairs the national obligation of its debt by such cession or relinquishment.

"Into these questions they do not think it neccessary to enter.

"As to the rights, expectations, or calculations of creditors, to which the Spanish memorandum adverts, the American Commissioners have only to say that as regards the so-called Cuban debt, as explained in their memorandum of the 14th instant, the creditors, from the beginning, took the chances of the investment. The very pledge of the national credit, while it demonstrates on the one hand the national character of the debt, on the other hand proclaims the notorious risk that attended the debt in its origin, and has attended it ever since.

"The Spanish memorandum observes that in the last twenty years the Antilles have been represented in the Spanish Cortes and declares that their representatives have participated in all legislative acts bearing upon colonial obligations without ever protesting against their lawfulness or binding force. The information in the possession of the American Commissioners leads to a different conclusion.

"The American Commissioners have in their hands the Diario de las Sesiones de Cortes, for Thursday, the 29th of July, 1886, when the Cuban budget for 1886-1887 was introduced and discussed. By this record it appears that on the day named Señor Fernandez de Castro, a Senator from Cuba, referring to the budgets of 1880, 1882, 1883, 1884, and 1886, declared that he had objected to all of them, and that no Cuban debt ought to be created, since the obligations embraced in it were national and not local. He entered into a brief examination of the items which constituted the debt, and created something of a sensation by pointing out that quinine had been consumed in Cuba, during the war of 1868-1878, at the rate of $5,000 a week.

"Another Cuban Senator, Señor Morelos, supported the views of Señor Fernandez de Castro.

"Senator Carbonell, representing the University of Havana, in a speech of great power, continued the argument, saying: 'Have the people involved in this matter ever been consulted? The country has not been heard, and now for the first time has become acquainted with the fact that it has to pay such debts.'

The Cuban and Porto Rican Senators, Señores Portuondo, Ortiz, Labia, Montoro, Fernandez de Castro, Figueras, and Vizcarrondo, went further, and introduced a bill to provide for the payment by Spain of the so-called Cuban debt in proportion to the productive capacity of the various provinces.

"The protests of the colonial Senators were not heeded, but their

justice was recognized by no less a Spanish statesman than Señor Sagasta, the present Premier of Spain, then in the opposition, who said:

"Our treasury is not now sufficiently provided with funds to aid Cuba in the way and to the extent that we would like to do; but I say the Peninsula must give all that it can, and we must do without hesitation all that we can.'

"Was not this a clear acknowledgment of the national character of the debt?

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"Perhaps not so clear as that made in the decree of autonomy for Cuba and Porto Rico, signed by the Queen Regent of Spain on the 25th of November, 1897, and countersigned by Señor Sagasta, as President of the Council of Ministers. In Article II. of the Transient Articles' of the decree, we find the following declaration: "ARTICLE II. The manner of meeting the expenditures occasioned by the debt which now burdens the Cuban and Spanish treasury, and that which shall have been contracted until the termination of the war, shall form the subject of a law wherein shall be determined the part payable by each of the treasuries and the special means of paying the interest thereon, and of the amortization thereof, and, if necessary, of paying the principal.

Until the Cortes of the Kingdom shall decide this point, there shall be no change in the conditions on which the aforesaid debts have been contracted, or in the payment of the interest and amortization, or in the guarantee of said debts, or in the manner in which the payments are now made.

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When the apportionment shall have been made by the Cortes it shall be for each one of the treasuries to make payment of the part assigned to it.

"Engagements contracted with creditors under the pledge of the good faith of the Spanish nation shall in all cases be scrupulously respected.'

"In these declarations we find a clear assertion not only of the power of the Government of Spain to deal with the so-called Cuban debt as a national debt, but also a clear admission that the pledge of the revenues of Cuba was wholly within the control of that Government, and could be modified or withdrawn by it at will without affecting the obligation of the debt.

"As to what is stated in the Spanish memorandum touching the aid given to Cuba in the last century or the early part of the present century by the Vice Royalty of Mexico, the American Commissioners might offer certain pertinent historical observations; but they deem it necessary now to say only that Mexico is not making any claim. before this Joint Commission, either directly or indirectly. As to the statement that Cuba has produced during a very few years in the

H. Doc. 551-24

present century a surplus which was turned over to the treasury of the Peninsula, the American Commissioners will cite the justly celebrated Diccionario Geográfico-Estadístico-Histórico de la Isla de Cuba, by Señor Don Jacobo de la Pezuela, by which (see article on Señor Don Claudio Martinez de Pinillos) it appears that after 1825 not only were all the expenses of the island paid out of its revenues, but surpluses were sent, annually and regularly, to the mother country. These surpluses from 1850 to 1860 amounted to $34,416,836. is to be observed that in addition to the regular annual surpluses turned over after 1825, extraordinary subsidies were from time to time granted to the home Government. It was for services rendered

in matters such as these that Señor Pinillos received the title of Count of Villanueva.

6

"As to the recent advances' to Cuba, referred to in the Spanish memorandum, it is to be regretted that details were not given. But, by the very term 'advances,' it is evident that the Spanish memorandum does not refer to gifts, but to expenditures for the reimbursement of which Cuba was expected ultimately to provide; and the American Commissioners do not doubt that these expenditures were made for the carrying on of the war, or the payment of war expenses in Cuba.

"When the American Commissioners, in their memorandum of the 14th instant, referred to the Cuban insurrection of 1868 as the product of just grievances, it was not their intention to offend the sensibilities of the Spanish Commissioners, but to state a fact which they supposed to be generally admitted. They might, if they saw fit to do so, cite the authority of many eminent Spanish statesmen in support of their remark. They will content themselves with mentioning only one. On February 11, 1869, Marshal Serrano, President of the Provisional Government at Madrid, in his speech at the opening of the Constituent Cortes, referred to the revolution in Spain and the insurrection in Cuba in the following terms: The revolution is not responsible for this rising, which is due to the errors of past Governments; and we hope that it will be speedily put down and that tranquillity, based upon liberal reforms, will then be durable.' (Annual Register, 1869, p. 255.)

"The American Commissioners have read without offense the reference in the Spanish memorandum to the Indian rebellions which it has been necessary for the United States to suppress, for they are unable to see any parallel between the uprisings of those barbarous and often savage tribes, which have disappeared before the march of civilization because they were unable to submit to it, and the insurrections against Spanish rule in Cuba, insurrections in which many of the noblest men of Spanish blood in the island have participated.

"Nor are the American Commissioners offended by the reference of

the Spanish memorandum to the attempt of the Southern States to secede. The Spanish Commissioners evidently misconceive the nature and the object of that movement. The war of secession was fought and concluded upon a question of constitutional principle, asserted by one party to the conflict and denied by the other. It was a conflict in no respect to be likened to the uprisings against Spanish rule in Cuba.

"The American Commissioners are unaware of the ground on which it is asserted in the Spanish memorandum that the United States has been compelled to admit that the Cuban people are as yet unfit for the enjoyment of full liberty and sovereignty. It is true that an intimation of such unfitness was made in the note of the Spanish Government on the 22nd of July last. The Government of the United States, in its reply of the 30th of July, declared that it did not share the apprehensions of Spain in this regard, but that it recognized that in the present distracted and prostrate condition of the island, brought about by the wars that had raged there, aid and guidance would be necessary.

"The reference in the Spanish memorandum to the obligations of Porto Rico is not understood by the American Commissioners, who had been led to believe that there was no Porto Rican debt. On June 30, 1896, Señor Castellano, Colonial Minister of Spain, in submitting to the Cortes the budget of Porto Rico for 1896-97, the last one, as it is understood, ever framed, said:

The duty to report to the National representation the financial condition of Porto Rico is exceedingly gratifying. It shows the ever growing prosperity of the Lesser Antille, which, through the multiplicity of its production and the activity of its industry, has succeeded in securing markets for its surpluses in the whole world.

"It being without any public debt (sin deuda pública), all its necessities being covered, its treasury being full to repletion, its public services being fulfilled with regularity, with economy in the expenses, and with a constant development of the revenues of the state, the spectacle afforded by Porto Rico is worthy of attention.'

"The Gaceta de Madrid of July 1, 1896, which published this budget, published also a Law, approved June 29, 1896, providing for the disposition to be made of the surplus of $1,750,909 in the treasury of Porto Rico at the expiration of the fiscal year 1895–96.

"No Porto Rican Loan was ever contracted or floated before 1896. "No Porto Rican bonds are quoted in the markets of Europe or America.

"It is possible that the Governor General of Porto Rico may have borrowed money from a bank or from private persons in order to meet in advance expenses authorized by the budget, and that he may have given promissory notes for the amount borrowed, but these notes, paid