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 arms 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

national character of the debt was shown by the fact that, upon the face of the bonds the Spanish nation' (la Nación Española) guaranteed their payment. The annual charge for interest and sinking fund on account of this debt amounted to the sum of 39,191,000 pesetas, or $7,838,200, which was disbursed through a Spanish financial institution, called the Banco Hispano-Colonial, which is said to have collected daily from the custom house at Havana, through an agency there established, the sum of $33,339.'

"The American Commissioners then referred in the same paper to the authorization by the Spanish Government in 1890 of a new issue of bonds, apparently with a view to refund the prior debt as well as to cover any new debts contracted between 1886 and 1890, and stated that, after the renewal of the struggle for independence in February 1895, this issue was diverted from its original purpose to that of raising funds for the suppression of the insurrection.

"The American Commissioners are at a loss to perceive how, in reciting these transactions, in which past and not future obligations were dealt with, they could have been understood to intimate that Spain, through what is described in the Spanish memorandum as a 'supernatural gift of divination,' foresaw the insurrection of 1895 and the ultimate intervention of the United States. The American Commissioners will not indulge in the ready retort which this fanciful effort at sarcasm invites. Whether the consequences of imposing upon Cuba burdens not to be borne were or were not foreseen by Spain is a question upon which it would be idle now to speculate.

"As to the special Cuban War Emergency Loan,' composed of 'five per cent peseta bonds,' which were referred to as part of what was considered in Spain as properly constituting the Cuban debt, the American Commissioners expressly declared that it did not appear that in these bonds the revenues of Cuba were mentioned.

"The American Commissioners, in reviewing in their paper of the 14th of October the history of the so-called Cuban debt, necessarily invited the fullest examination of their statements. They have yet to learn that those statements contained any error.

"They freely admit, however, that they had never seen it asserted till they read the assertion in the Spanish memorandum, that the deficiencies in the Cuban appropriation bills or budgets which the debts are said to represent were due to the great reductions of taxes made in Cuba by the mother country.' If, as they are now assured, this is a fact well known,' they are compelled to admit that they were, and that they still remain, ignorant of it. Indeed, the American Commissioners were not aware that Cuban appropriation bills or budgets existed prior to 1880, in May of which year the first measure of the kind was submitted to the Spanish Cortes. During the discussion of that budget, a distinguished Senator, not a Cuban, who had been Min

ister of State in the Spanish cabinet, Señor Don Servando Ruiz Gomez, presented to the Senate an official statement of the Colonial Department, showing that the alleged debts of Cuba amounted to $126,834,419.25 in gold and $45,300,076 in paper, or, in round numbers, $140,000,000 in gold.

"It is true that after 1880, and especially after 1886, deficiencies appeared in the budgets, but a correct conception of their cause may be derived from the budget of 1886-1887, when the prior debts were consolidated. The amount of the burdens imposed upon Cuba by that budget, eight years, as the Spanish memorandum observes, after the reestablishment of peace,' was $25,959,734.79, which was distributed as follows:

"Of the sum total of this burden, it is seen that the three items of General Obligations, War, and Navy, constitute nearly three-fourths. And what were the General Obligations? The principal itemnine-tenths of the whole-was that of $9,617,423.02, for interest, sinking fund, and incidental expenses on the so-called Cuban debt. The rest went chiefly for pensions to Spanish officials.

"The budget for 1896-1897 amounted to $28,583,132.23.

"These figures, which speak for themselves, seem to render peculiarly infelicitous the novel suggestion that the deficiencies in the Cuban budgets have been due to the reduction of taxes.

"As to that part of the Spanish memorandum in which the so-called Cuban bonds are treated as 'mortgage bonds,' and the rights of the holders as 'mortgage rights,' it is necessary to say only that the legal difference between the pledge of revenues yet to be derived from taxation and a mortgage of property can not be confused by calling the two things by the same name. In this, as in another instance, the American Commissioners are able to refer to previous statements which, although the Spanish memorandum betrays no recollection of them, for obvious reasons remain unchallenged. The American Commissioners have shown, in their argument of the 27th of October, that the Spanish Government itself has not considered its pledge of the revenues of Cuba as in any proper legal sense a mortgage, but as a matter entirely within its control. In proof of this fact the American Commissioners quoted in that argument certain provisions of the decree of autonomy for Cuba and Porto Rico, signed by the Queen Regent of