Evening star., 1899-03-24
MILLIONS FOR CUBA
Considering the Effect of Increased
Monetary Circulation.
PAYMENTS TO INSURGENT TROOPS
Artificial Value of Spanish Gold and
Silver Maintained.
WORTH MORE THAN RATED
Copyright, 1899, by Charles NJ. Pepper.)

1 Special Correspondence OF Inc Evening star.
| HAVANA March 90, 1899.
| Cuba will soon know what it means to
! have its monetary circulation increased at
| a jump. American officials themselves
| wondering what the effect will be of put
| ting out the $3,OO0OOO among the insurgent
soldiers. That means an increase in the
| currency of the country of pretty nearly
So for every man, woman and child, for the
best information is that the total number
| of inhabitants is not far in excess of 1,0OO,-
600. The Kansas populist who likes to
argue about the effect of currency per
| capitar,' would find in Cuba a fine field in
which to work out his theory.
| There is not simply this $5O000OO of
| American money. 1 asked a number of
| bankers and merchants to the amount of
| American money which has been put into
| circulation during the last six months and
| which remains in the island. Several of
| them placed the sum as high s2000.0G0.
| That seems a large estimate but there
| have been $4,000 American troops in Cuba
| for three months, and a portion of them for
| five or six months. They have been paid
| fully S1Je0,0oO, and much of their pay has
| remained in Cuba. The general story of
the soldiers is that more money would stay
II the country was not so poor that there
| is little for them to buy.
The payment of the customs duties in
American money has also added to the cir
culation. The importing houses have con-
trived that their balances did not re-
| Quire much money to be returned to the
United States. Both sugar and tobacco are
| going northward this season, and Cuba is
collecting more than she has to pay out in
| the natural course of business. Some pay
ments of American money have been made
| on the railroad properties, and the tobacco
| and timber lands which have been bought
by American capitalists 1t was only a
| guess. but one Havana banker told :1e that
| within a year he believed there would he
| Slo,ooo,0OO of American gold, silver and
greenbacks in circulation in Cuba He did
| not believe that the withdrawal of a large
| mass of the troops or that industrial con6i-
! tons would create vacuum which would
! draw the money back to the United States
| Spreading American money through the is
! lana and Keeping it there is natural and
healthy means Of Amercanizng Cuba 1t
| IS better than the hot house plans Of some
| of the theorists.
| 1t will probably be long time before
| Cuba has settled currency system Never
| theless, there is less confusion and less ir-
| STABILITY than might be inferred. One rea-
| son is perhaps the absence of any DaDer
| currency except the United States notes
| winch the Cubans and Spaniards have
| learned are as good as gold. The issue of
the Spanish Bank of the Island of Cuba,
| known as 'Weyler's scrip" went out of
| circulation soon as Spain got into trouble
| with the United States.
| Depreciation of Weyler's Scrip.
Previous to that time it had been steadily
| depreciating. 1t is held now by speculators
| The amount outstanding is SIS 900 600 Sew
eral suits are pending to determine the Ii
ability of the Spanish Bank. The bank re-
| pudiates all liability and declares that the
| spanish government alone can be held re-
| sponsible. Yet the existence of this scrip
| IS constant irritation to the bank 1t
| would probably have been willing to accent
| u limited responsibility if the scheme of
| he
| had not been upset. Some of the credulous
! members of the assembly really thought
that might be done, and that the insurgent
| soldiers would take the "billetcs,' as they
| are called, in preference to gold and silver
with the stamp of the United States on It.
| That would have been fine harvest for the
| SPECTATORS. The scheme never made much
| Roadway. The billetes have nominal
value which ranges from ) to 10 cents on
| the dollar, varying with the speculative
| possibility of forcing the Spanish Bank
| through legal processes, 10 redeem them al
| something on their face value. They are
| rot in circulation and will never get into
circulation. because nobody will take them
| in trade. A Havana hackman who would
| be offered one of the billetes now would
! take the offer as casus beili, and public
| opinion would extend to him belligerent
rights.
The maxim about bad money driving out
| good money does not seem likely to be veri-
! fled in Cuba. for as before stated. Ameri-
! can money has come to stay. The only
question is how many years will it take to
squeeze the initiation out of the Spanish and
| French gold coins. The processes are also
| uncertain, but they are bound to work
themselves out.
Spanish Coins worth More Than
| Rated.
The Spanish Alfonso, or centen, still
| passes current at $3.50, and the French
| Luis at $4.24. The exchange value Of the
| centen, as fixed by President McIinley's
| order. is $4.S2. That is cents more than it
is usually quoted in New York and London
| on its bullion value, but allowance is made
| for cost of transportation and other Incl
| dents of exchange. AS all the banking and
| commercial houses had for years received
| the centen at valuation of $500 they con-
| tinue to receive ii at that valuation and to
pay it out on the same basis. The Havana
| bankers thought that monetary conditions
| would adjust themselves more quickly if
| the United States were to give it's own
money an artificial valuation in Cuba. So
they pettiored President Mckinley to have
| the American five dollars received in Gus
toms dues at a valuation of $3.50 as COM
pared with the centen at $3.50 That would
have been simple means of measuring
| American money by Spanish money. But
the President rejected their petition and
| decided that American money had the same
value the world over and that Spanish
| money must adjust itself to the standard of
| the United States. So 81 bill is a 81 bill
and Spanish centen is "a. 81 in paying Gus
| toms dues to the American authorities and
in all other fiscal affairs in which the Unit
ed States is interested.
When the Spanish centen will drop to its
actual value can only be guessed. 1t seems
| not to be understood in the United States
why it was given an artificial and inflated
| value. The purpose was to keep gold coin
| whether Spanish or French, in Cuba and it
| must be said that the purpose succeeded
! With the introduction of American money
| the necessity of artificial value in order
! to keep the gold is not so apparent.
Artificial Value of Silver.
The silver question in Cuba is almost as
complicated as it once was in the United
| States. Anybody who undertakes to study
it out in its relation to gold and the pro-
| cesses of international finances is apt to go
| crazy. All that needs to be said for q sur
face understanding of the conditions is that
| Spanish silver also had an artificial value
and that its value was regulated by what
| happened in Spain. The best financial opin-
ion now is that with the influx of American
money Spanish silver will gradually disap-
pear from circulation, or will be measured
by its bullion value and occupy place rel
atively the same the Mexican silver dol
lar. ..
1t has not followed the usual processes