The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1898-03-14
Washington Bureau st. Paul Globe, |
Corcoran Building.
speclal to The 81. Pam Globe.

Corcoran Building. {
Special to The st. Paul Globe.
WASHINGTON, March IS. - 1t is
common to speak of Spain as bank
rupt nation" because this is the most
convenient term to convey the idea of
a not very definite financial status
which is nevertheless very bad. AS
the money resources of government
play, in these days, the most impor
tant part in war, pains have been
taken to obtain from a wholly trust
worthy source the facts as to SPANS
condition.
If, says your correspondents infor-
mant, Spain is to raise money for war
purposes, she will be obliged to depend
upon her own people. French and
Belgian investors are largely interest
ed in the Spanish railroads, but have
done little TO assist the government of
Spain to place the securities already
issued on account of the Cuban insur-
rection Furthermore, a recent appeal
to foreign lenders by the Spanish ad-
ministration was coldly received, and
pointed questions were asked as to the
assets to be provided. AS the finance
minister could not catisfy the inquir-
ers, the attempt fell through.
Spain'S Methods.
AS a curiosity in bookkeeping the
financial operations of Spain since Feb
ruary. 1895, are worthy of study When
the Cuban insurrection was first re-
garded as serious, Spain had about
$40, 5000 worth of Cuban bonds on
hand, intending to use them to refund
the debt of the island and pay off
arrears long overdue on Cuban account
These bonds were sold a prices rang
ing from so to 81, though bearing 4
per cent interest. The money thus OBJ
tained was soon exhausted, and an in
genious device was framed to obtain
more. During the domestic troubles
subsequent to 1873 the railroad prop
critics had suffered heavily by reason
of damage inflicted by both sides, by
large reductions from their revenues
through military interference and by
legislative control. The newly estab-
lished regency believed 1t would be
good policy to pay the roads some sub
sfdy in part compensation for these
diSarrangements, and thus at the same
time restore the confidence of foreign
investors. In 1897 the finance minister
submitted to the corteS a plan for an
nual subVentiOns under these condi-
uons. 1t was proposed to join the rail-
roads in a loan to the extent of 1,00O,-
100000 pesetas, or say 5000, 000 900, to be
placed in France and Belgium, and TO
be supported by a guaranty of the
state and of the railroads. Such an
operation is hardly to be matched in
financial annals. Private corporations
have served as basis of state credit
when they have been banking houses
or holders of state monopolies; but the
attempt of Navarro Reverter was
wholly original. 1t did not satisfy the
foreign money lenders. Some of the
railroads were reluctant to enter into
transaction of such magnitude, and
this cast doubt upon the ability of the
rest to carry out the contract. Not a
dollar of the $4,000, 900 loan first offered
was taken in Paris, and no proposals
were submitted by French bankers
The Spanish government was therefore
Obliged to have recourse to the home
market, where the fervor of patriotic
feeling floated $750OO,00O worth of
bonds. This was in November 1896
a part of this money was required
to pay off loan of 900 obtained
from the Banque de Paris ct Pays Bas,
which refused to carry it any longer
A still larger share was given to the
Bank of Spain to make good part
of Its advances to the government
These payments brought back into the
treasury a corresponding volume of
Cuban bonds, for all the indebtedness
contracted on account of the Cuban
tnsurrection had been nomnally on
Cuban account. the separation of the
Spanish and Cuban treasures being
strictly recognized in every loan.
The Cuban Debt.
In 1893 the Cuban debt was about
$50,00OOO0; 1t is now more than $780,
100000 Before 1893 the Cuban treas
ury was In default, and a heavy de-
hcit remained to be met at the end Of
each year; since the instruction the
Cuban treasury has existed on paper
only, and thus no credit could be based
upon It's operations. This Is why the
so-called Cuban debt is really a Span
Ism debt, issued by Spain on a guar
anty of Spanish credit, and held az
most entirely by Spaniards and loyal
Cubans.
The passing of the budget PROPOSE
ton last summer was a purely formal
matter, made all the more so by the
withdrawal of the opposition from the
cortes. War taxes were voted and full
authority conferred on the government
to use the public credit in any man.
ner. The first use of this power was
10 negotiate loan guaranteed by the
customs revenue Of the PHILIPPINE is
lands, resource hitherto unpledged,
and known to be substantial secur-
ity. This loan, issued in July, 1897, was
placed without difficulty, the local
banks acting as agents. and brought
the government nearly SIS, 400 900 with
out eXhausting its possibilities; it ap-
pears to have been the latest appear
ance of Spain in the money market.
The significance of all these transac-
lions lies in the fact that Spain has
had no encouragement from foreign
lenders. The ROthschilds have refused
to renew their contract for the Almad-
en- mines, a renewal from which Spain
hoped to obtain an advance of S1S. O00.-
600; and no Cuban bonds have sold in
either Brussels or Paris, centers where
Spanish securities have found BUYERS
in the past. How far the home market
can be tapped for future loans without
shaking it's confidence is yet to be dis
covered. For many years the Bank of
Spain has been unable to redeem its