SPAIN. 



655 



Ministry of Finance to 18,238,083 pesetas, the 

 cost of tax collection to 29,759,904 pesetas, and 

 even the contribution to Fernando Po to 533,051 

 pesetas. The army budget was reduced to 165,- 

 974,331 pesetas, that of the navy to 25,002,973 

 pesetas. An act was passed taxing the interest 

 on the public debt 20 per cent., which lowered the 

 expense of the debt to 418,557,138 pesetas, the 

 sinking fund being suspended also. The altered 

 scheme of taxation accepted by the Cortes made 

 the revenue from direct contributions 370,020,790 

 pesetas; from indirect taxes and customs, 325,- 

 640,000 pesetas, from stamps and monopolies, 156,- 

 650,024 pesetas. The total revenue according to 

 the revised budget was 885,998,215 pesetas, and 

 the total expenditure 905,451,827 pesetas. The 

 people at large were still extremely dissatisfied 

 with the new taxes, although they fell far short 

 of the sacrifices required to meet the additional 

 burden caused by the wars with the colonies 

 and the United States and by the loss of the 

 colonies. In January, 1900, representatives of all 

 the chambers of commerce and of many of the in- 

 dustrial, agricultural, and labor associations met 

 at Valladolid and formed a National Union un- 

 der the presidency of Seiior Paraiso, which, stand- 

 ing outside of the parties, formulated a pro- 

 gramme of reforms that would be imposed on the 

 Government, whichever party was in power. The 

 alternative of not carrying out the demands of 

 the reformers to be faced by the Government was 

 a general refusal to pay taxes on the part of the 

 people, all sections of whom were represented in 

 the National Union. The demands were thor- 

 oughgoing and comprehensive. The first was a 

 reduction of at least 100,000,000 pesetas in the ex- 

 penditure contained in the budget. The reformers 

 called for the complete reorganization of all the 

 public services of justice, by assuring the inde- 

 pendence and responsibility of the judges; of pub- 

 lic instruction, by making compulsory schools 

 effective; of the army, by reducing the dispropor- 

 tionate number of officers and improving the con- 

 ditions of the service; of the navy, by limiting ex- 

 penses to the maintenance of the few useful ships 

 that were left; of the civil service, by reducing 

 by half the number of officials; of the Cortes, by 

 freeing elections from the influence and control of 

 the authorities and making electoral representa- 

 tion a reality. Commerce and agriculture and 

 the development of the natural wealth and ca- 

 pacities of the country should be the special care 

 of the Government, and for this object the re- 

 formers demanded a judicious expenditure of 

 large sums' of money in subsidies, and on public 

 works. 



The financial result of the w r ars by which 

 Spain lost Cuba, Porto Rico, and the Philippines 

 was the accumulation of a floating debt of 1,445,- 

 000.000 pesetas, offset only by 119,000,000 pesetas 

 paid by the United States in accordance with the 

 treaty and 500,000 pesetas paid later for small 

 islands outside of the accepted boundaries of the 

 Philippine archipelago. In addition to this new 

 debt Spain had to assume several redeemable 

 debts formerly paid by the colonies, amounting 

 to 1,469,000,000 pesetas. The budget had for sev- 

 eral years past shown an average deficit of 50,- 

 000,000 pesetas, and now Spain had to face an ad- 

 ditional burden of more than 300,000,000 pesetas 

 a year, which is equivalent to an increase of 37 

 per cent, over the normal budget, taking this to 

 be 803,000,000 pesetas. The Cortes in consequence 

 were obliged to impose heavy sacrifices on all 

 classes of the population. In the budget for 1900 

 as finally adopted the redemption of all amorti- 

 zable debts was suppressed, and taxes were in- 



creased or created affecting consumers of coffee, 

 chicory, sugar, and other articles of common use, 

 importation duties were made much higher, the 

 tobacco tax was increased, the stamp duties and 

 royalties were raised, a high income tax was im- 

 posed, duties were levied on successions, and 

 the war tax already paid by merchants and 

 manufacturers was made higher, and many other 

 taxes were introduced. The imposition of an in- 

 come tax of 20 per cent, on the interest of the 

 public debt could not properly be enforced on the 

 foreign holders of the external bonds because the 

 Spanish Government in 1882 had declared the 

 coupons of the stamped bonds to be exempt from 

 taxation. The bulk of this debt was held by 

 French, German, Belgian, and Dutch investors. 

 A considerable amount was owned by English- 

 men, too, and when Spanish commissioners in 

 June, 1900, asked the committee that in connec- 

 tion with the council of foreign bondholders 

 looks after the interests of British investors in 

 foreign loans to agree to the reduction they met 

 with a refusal. Subsequently a compromise was 

 effected with the Continental bondholders, which 

 the English were constrained to accept under the 

 threat that otherwise the deduction of one fifth 

 of their interest ordered by the Cortes would be 

 enforced. Under the arrangement finally agreed 

 to, the tax was 12 J per cent., an eighth instead of 

 a fifth, reducing the interest on 4-per-cent. rentes 

 to 3J per cent, instead of 3 4. per cent., and the 

 Spanish Government promised to restore the in- 

 terest up to the full rate if ever the tax of 20 per 

 cent, on the interest of the internal debt should 

 be suppressed; and if this were diminished to di- 

 minish proportionately the tax on the foreign 

 bonds. It was also agreed that the \ per cent, 

 deducted from the annual interest handed over 

 to the foreign holders of the external 4-per-cent. 

 stamped bonds should not be applied to the ex- 

 penses of the Government, but should form a 

 sinking fund with compound interest by which 

 the whole debt is to be extinguished in sixty 

 years. Unless holders of three quarters of the 

 bonds signified their acceptance, and unless the 

 Cortes prior to Jan. 1, 1901, ratified the agree- 

 ment, the convention would be null and void. 

 On Feb. 9 the Chamber agreed to an increase in 

 the octroi duties. The Cortes authorized the con- 

 version of the Cuban 6-per-cent. mortgage bonds 

 of 1886, amounting to 565,750,000 pesetas, the 

 Cuban 5-per-cent. bonds of 1890, amounting to 

 391,558,000 pesetas, the Philippine 6-per-cent. ex- 

 terior debt, amounting to 197,950,000 pesetas, and 

 the Spanish 4-per-cent. redeemable bonds, amount- 

 ing to 1.503,635,000 pesetas, into perpetual 4-per- 

 cent, consols. The conversion was effected at the 

 rate of 113 per cent, for the Spanish internal 

 bonds, 120 per cent, for the Cuban bonds of 1886, 

 par for the Cuban issue of 1890, and 127 per cent, 

 for the Philippine exterior bonds. The Philip- 

 pine mortgage bonds were converted at the rate 

 of S2J per cent. The amortization of the redeem- 

 able bonds was suspended indefinitely by laws 

 passed in 1897 and 1898 and the law of Aug. 2, 

 1899, which imposed a tax of 20 per cent, on their 

 coupons and those of the internal and the un- 

 stamped external 4-per-cent. bonds. The conver- 

 sion added over 3.000,000,000 pesetas to the nomi- 

 nal amount of the Spanish internal perpetual 

 debt, which was 2,543,361,578 pesetas. The con- 

 version of the unstamped external bonds into the 

 same stock was authorized previously. A loan 

 issued in the beginning of June was subscribed 

 many times over, so that when popular sub- 

 scribers had received each one bond the banking 

 houses received less than 4 per cent, of the amount 





