argued in the memorandum submitted by the Spanish Commissioners, that the United States in this relation stands as the agent of the Cuban people, the duty to resist the assumption of these heavy obligations would be equally imperative. The decrees of the Spanish Government itself show that these debts were incurred in the fruitless endeavors of that Government to suppress the aspirations of the Cuban people for greater liberty and freer government."

Memorandum of American Peace Commission, Paris, Oct. 27, 1898, S. Doc. 62, 55 Cong. 3 sess., part 2, pp. 100–107.

Closing Spanish argument.

"The American Commission affirms that Spain contracted (it does not say that it used the debt previously contracted) the greatest part of the Cuban debt in an effort, first to conquer the Cuban insurgents, and then to oppose the United States, and then discoursing upon the same theme, it says, 'that it has not been denied that a part of these loans was directly used to wage war against the United States. To make such statements it is indispensable to suppose that the dates of the creation of those debts are not known. One debt was contracted under the authority of the Decree of May 10, 1886, that is to say, eight years after the re-establishment of the peace in Cuba, and nine years before the fresh disturbances of the same in that island through suggestions and by means which now are known to the world. The second issue was authorized by Royal Decree of September 27, 1890, that is to say, twelve years after Cuba had found herself in a condition of perfect peace, and at the pinnacle of her prosperity, and five years before the work of her desolation began, through the new rebellion which more or less spontaneously broke out there. And the two Decrees explain also what were the reasons why the said issues were authorized, and what were the expenses to be met by them, the payment of deficiencies in previous and subsequent appropriation bills in the island being prominent among them. It is well known that these deficiencies were due to the great reduction of taxes made in Cuba by the mother country. "Will it ever be said that Spain, through some supernatural gift of divination, foresaw in 1886 and 1890 that in 1895 an insurrection was again to break out in Cuba, and that in 1898 the United States were to lend it their armed protection? Under no other hypothesis the correctness of the phrases of the American memorandum relating to this point could ever be admitted.

"And so far as the expenses incurred by Spain owing to the war with the United States are concerned, without doubt the American Commission is unaware of the fact that on the 20th of April of the present year, when the hostilities began, the Spanish Government was still engaged in operations of credit, in the shape of bonds, with the direct guarantee of the customhouses of the Peninsula, to the amount

of 1,000 millions of pesetas, as decided in 1896 and 1897, and in other operations to the amount of 223 millions of pesetas, as authorized on the 2nd of April, 1898, with the special guarantee of the stamp and tobacco revenues in the Peninsula, as well as the revenues called de consumo in Spain, and that, in order to meet the expenses of the war with the United States, a Royal Decree had been issued on the 31st of May in the present year, authorizing the creation of a 4 per cent perpetual domestic debt, to the amount of 1,000 millions of pesetas, out of which 806,785,000 were immediately negotiated. Upon acquaintance with these facts, it is to be supposed that the American Commission will not be willing to insist upon the statement so groundlessly made in its memorandum, as it will then understand that the expenses of the war with the United States have nothing to do with the Cuban colonial mortgage debt.

"The American Commission advocates once more in its memorandum the strange theory that the Spanish colonies are not bound to pay the debt contracted by the mother country to put down the rebellions, whether of few or of many, of their inhabitants. But this time, it reaches the extreme of putting such a singular doctrine under the shelter of common sense, by affirming that a doctrine to the contrary would be a threat to liberty and civilization.

“Ah! if the colonists, and the citizens of the Great Republic would have alleged, in justification of a rebellion, or should allege in the future, in an identical case, an emergency from which that powerful nation is certainly not exempted, a theory of that kind,-would the American Government have ever accepted it? Will it ever accept it in the future?-What is condemned not by common, but by moral sense, is the attempt to put all rebellion against legitimate authority under the shelter of liberty and civilization. Was Spain, or was she not, the legitimate sovereign of Cuba when the first insurrection broke out, and during the whole term of the second? Has anyone ever dared to deny, or to doubt even, the sovereignty of Spain over that island at the time to which we are now referring? Were not the United States themselves, and their Government, those who day after day urged Spain to put down the rebellion, without excluding the use of arms, and reestablish as promptly as possible the peace in her colony? And if Spain complied with such demands, who, the United States included, can deny the legitimate character of the expenses which, by virtue of that compliance, she necessarily incurred?

"A doctrine of this nature, which the Spanish Commission, through considerations of respect, observed thus far by it, and which it has the duty to observe, does not deservedly characterize as it certainly would be by all the constituted Powers of the earth, can not be advocated in the face of men, except from the standpoint that the authority of Spain was illegitimate, and that her sovereignty was only an arbitrary act of

t

despotism. And is the crown of Spain characterized in this manner, concretely and specifically, for her domination in Cuba prior to the signing of the Washington Protocol? Can this be done above all by the very same nation which urged Spain to exercise her sovereign authority to conquer those who had risen in arins against her in the island?

"Let us pass to another subject, as the present is too delicate to be treated with calm and serenity in a diplomatic discussion wherein any attempt is made to controvert it.

"In the memorandum which we are now answering, the singular affirmation is made that the mortgage created by the two issues above named can be called more properly a subsidiary guarantee, and that the party principally bound to pay is the Spanish nation. Undoubtedly the American Commission in making this affirmation had not before its eyes Article II. of the Royal Decree of May 10, 1886, authorizing the issue of 1,240,000 hypothecary bonds of the Island of Cuba, or the 2nd paragraph of Article II. of the Royal Decree of September 27, 1890, authorizing the issue of 1,750,000 hypothecary bonds of the same island. Both texts read literally the same, and it will be sufficient for us to transcribe one of them. Their language is as follows: "The new bonds shall have the direct (especial) guarantee of the customs revenue, stamp revenue of the Island of Cuba, direct and indirect taxes now levied or to be levied there in the future, and the subsidiary (general) guarantee of the Spanish nation. They shall be exempt from all ordinary and extraordinary taxes, etc.'

"Nor can the American Commission have seen any of the bonds issued under these authorizations, which are scattered everywhere in the world, Cuba included, and are owned by third parties and private individuals; had it seen them it might have read the following: Direct (especial) guarantee of the customs revenue, stamp revenue of the island of Cuba, direct or indirect taxes therein levied or to be levied hereafter, and the subsidiary (general) guarantee of the Spanish nation.' 'The Spanish Colonial Bank shall receive, in the island of Cuba, through its agents there, or in Barcelona, through the Spanish Bank of Havana, the receipts of the custom-houses of Cuba, and such amount thereof as may be necessary, according to the statements furnished on the back of the bonds, to meet the quarterly payment of interest and principal, shall be retained daily and in advance.'

"If after this, the American Commission continues to understand that this debt was not contracted as a debt secured by mortgage, and that this mortgage was not placed upon the customs revenues and other taxes of Cuba; and further, that these revenues were not pledged principally and primarily, and therefore prior to the Peninsular treasury, to the payment of interest and principal, we shall have nothing to say. We are unable to prove what is self-evident.

"Turning now to the bondholders and to the severity, in our opinion unjustified, with which they are treated in the American memorandum, we shall say that the duty to defend them does not belong to Spain. When they know what is the opinion entertained about them, it is to be supposed that they will defend themselves, for after all they will not need any great effort to demonstrate the justice of their cause.

"So far as Spain is concerned, and here the Spanish Commission proceeds to answer categorically the questions propounded in the American memorandum, it is sufficient for her to defend the legitimacy of her action and her perfect right to create that debt and the mortgage with which it was secured, and therefore the strict right vested in her not to pay either interest or principal, except upon proof of the insufficiency of the mortgaged revenues, out of which they should be primarily paid. If those who hold those revenues are not willing to comply with the obligations to the fulfillment of which said revenues were pledged, the responsibility therefor will belong to them, and not to Spain, who has neither the means to compel them to comply with that duty, nor is bound to do for the bondholders anything else than what she has honestly done up to now. But Spain, the Spanish Commission says again (and this is the only thing she has textually said, although the American memorandum seems to understand it differently), can not lend itself in this treaty with the United States, nor in any other treaty with any other power, to do or to declare in her name anything which may mean, or imply, that she herself has doubts, and much less ignores or voluntarily abridges, so far as she is concerned, the mortgage rights of the bondholders. She has no efficient means to cause those who may become holders of the mortgaged revenues to respect those rights. Therefore she does not employ them; did she have them, she would employ them, if not through strict justice, at least through a moral duty, thus following the dictates of probity, both public and private."

Memorandum of Spanish Peace Commission, Paris, Nov. 16, 1898, S. Doc. 62, 55 Cong. 3 sess., part 2, pp. 176–179.

"Another object of especial care and attention to the Government of Your Majesty has been that which refers both to the right of many natives of our former colonies to continue to enjoy the fixed annual payments which they receive from the treasury in the nature of pensions, as well as to the right of others to demand, on account of eminent services rendered to the country in person or by those from whom their rights are derived, pensions to reward therefor. It is furthermore but right that those who recover their citizenship should be restored to the enjoyment of the pensions to which they are legally entitled, making the payment of these, nevertheless, depend, as only seems just, upon residence within Spanish territory and the previous examination of their respective claims; and it must be understood that the restoration of their pensions will commence only from the time at which application therefor is made.

"Lastly, natives of the aforesaid territories who can not leave them and who may have rendered, as has been said before, distinguished services to the country, shall be entitled to obtain pensions as a reward, for the Spanish nation can not neglect to protect those who have nobly defended its interests; but the obtaining of said pensions must, in every case, be subject to the special proceedings prescribed by the law of the 12th of May, 1837, as the unusual character of this class of pensions calls for." (Report of Premier Sagasta, May 11, 1901, accompanying the royal decree of the same date, in which his recommendations were embodied, For. Rel. 1901, 475.)

For the text of the decree, see Nationality and the effect of a change of sovereignty thereon.

ican ultimatum.

"In citing the Royal Decrees of 1886 and 1890, and the contents of the bonds issued thereunder, as something with which Extract from Amer- the American Commissioners were previously unacquainted, the Spanish Commissioners seem to have overlooked or forgotten the paper which the American Commissioners presented on the 14th of October. In that paper the American Commissioners expressly mentioned and described the financial measures of 1886 and 1890 and the stipulations of the bonds thereby authorized. But they did more than this. Being concerned with the substance rather than with the form of the matter, they reviewed with some minuteness the history of the debt and the circumstances of its creation. They showed that it was in reality contracted by the Spanish Government for national purposes; that its foundations were laid more than twenty years before the Royal Decree of 1886, and at a time when the revenues of the island were actually producing a surplus, in national enterprises in Mexico and San Domingo, foreign to the interests of Cuba; and that it was soon afterwards swollen to enormous dimensions as the result of the imposition upon Cuba, as a kind of penalty, of the national expenses incurred in the efforts to suppress by force of arms the ten years' war for the independence of the island. At this point the American Commissioners in their paper of the 14th of October referred to the financial operation of 1886, but they properly referred to it in its true character of a national act for the consolidation or funding of debts previously incurred by the Spanish Government, and expressly quoted the national guaranty that appears on the face of the bonds. At the risk of a repetition which should be unnecessary, the American Commissioners will quote from their paper of the 14th of October the following paragraph:

"Subsequently the Spanish Government undertook to consolidate these debts (i. e., the debts incurred in Mexico, San Domingo, and the ten years' war) and to this end created in 1886 the so-called Billetes hipotecarios de la Isla de Cuba, to the amount of 620,000,000 pesetas, or $124,000,000. The Spanish Government undertook to pay these bonds and the interest thereon out of the revenues of Cuba, but the