Kansas City journal., 1898-04-18
THOSE CIRAN BONDS.


how the United States could lie held ac
countable for the so-called Cuban debt in
event of our dispossessing Spain of the ISL
and. This debt is in reality an issue of
Spanish bonds and therefore d debt owed
by Spain, and its character cannot alter
simply because Spain has pledged the reve-
nues of Cuba as security.
Spain has resorted TO all sorts of cXpedi-
ents TO sustain her waning credit. One of
them was the issue of lot of bonds Sc
cured by the customs receipts in Cuba and
the Philippines. The issue on account of
the Philippines now amounts to $i0.600.0o0.
and the issue on account of Cuba amounts
10 more than seOovO0.0oO. In 1888 the so
called Cuban debt was only S5o.o0ooeO. but
the Spanish government has made Cuban
credit bear the expenses of the Cuban war
and thus increased the debt to its present
enormous proportions. In both instances
these bonds were issued by Spain and the
proceeds were used by the Spanish gov
eminent. The ordinary bonds of the
tion would not float in the markets. for
the national debt had already been forced
beyond safe limits. To convince the bond
buyers that they would receive their
money, the Spanish cortcs pledged the Gus
toms receipts in the two provinces to the
payment of interest and the creation of a
sinking fund. The transaction was exactly
the same as that of n business man who
lypothecates his accounts for the pay
merit of his debts. 1t would not be argued
for a moment that the business man could
escape his debts if the accounts should
prove worthless or Inadequate. and it cam
not be argued for a moment that the Span
ish bonds become less a Spanish debt be-
cause the security has vanished.
Another eXpedient recently employed by
Spain to raise revenues takes on a char
acter scarcely to be found outside the realm
of comic opera. During the domestic trou-
bic, subsequent 10 1873 the government be-
came largely indebted TO the railroads. The
newly established regency believed 1t would
lie good policy 10 grant the railroads a
subsidy in part cancellation of this debt,
and so, IN 1896. the government fnan-
ciers provided for the issue of 500, coo 600 in
bonds which were TO he jointly guaranteed
by the government and the railroads. The
proceeds of this loan were TO be divided
between the railroads and the treasury de-
p.r,ment. 1t WAS thought this double guar
antec would float the bonds in foreign
markets. but the plan utterly failed. Not
a dollar was taken anywhere abroad. and
the government was AT last forced to have
recourse TO the home market. where the
feryor of patriotic feeling fioated $4,000 OOO
This plan of raising the revenue is very
suggestive of an anecdote related about
Daniel Webster. who. like many another
man of genius. was deficient in financial
credit. One day in Washington an ac-
Quaintance came TO him and asked for his
Endorsement upon a note for 500. My
dear fellow" said Webster. II will gladly
indorse your note, but there isn't bank
in Washington that will take my indorse-
ment." ''oh. yes. there is" responded the
acquaintance, that new bank down on the
avenue says it will be all right if I secure
your Endorsement" Webster struck a med
itativc attitude for a moment and then
said Fact is. l myself need 500. Make
the note for 81. .0oo and then we will divide -
This procedure was accomplished and the
money WAS divided. and it never occurred
10 the borrowing acquaintance that Web
ster had not done him great favor until
he was called to the bank by the eypira-
tion OF the borrowing period and had TO
ray the whole sl,oo0. The railroads of Spain
are finding themselves in precisely the same
dilemma. Though the government got a
portion of the money. 1t is leaving the rail-
roads 10 hold the bag.
Fog many years the Bank of Spain has
been unable 10 redeem its notes and they
now circulate at discount OF SO per cent.
The reason for this is that the government
has demanded advance after advance from
the bank until its note issues now amount
10 three times its total combined capital and
reserye. In round sum. the bank has ad-