The declared policy of the Government is to revise all existing commercial treaties which contain fixed or consolidated tariff rates, with the intention of replacing these rates by mutual most f avoured-nation clauses.
It is undoubted that the general policy formulated above has received the wholehearted support of the manufacturing and banking classes of the community. One instance where this satis faction with the existing state of affairs is perhaps best evidenced is to be found in the prices of Government securities during the year 1927, the funds in general rising during the course of the year from 1 to 3 points.
Under a Decree of July 9, 1926, an Extraordinary Budget was instituted for public works, over a period of just over ten years, terminating at the end of 1936. The amount of money provided in this Extraordinary Budget was 3,538,000,000 of pesetas. Of this total 878,000,000 were to be devoted to naval constructional work, 632,000,000 to the Army, including aviation, while no less a sum than 1,600,000,000 pesetas was to be spent by the Ministry of Public Works on port and hydraulic works, roads and re-affor estation. The sum of 200,000,000 pesetas for expenditure on schools and other buildings was allotted to the Ministry of Education.
It must, therefore, be borne in mind in considering the public finances of Spain that, concurrently with the Ordinary Budget, there is going on an expenditure, over ten years, of 3,538,000,000 of pesetas on a public works constructional programme, while, in addition, there is in existence a five-year programme for the ex penditure of sums up to 2,600,000,000 pesetas on railroads. This means that, if an average be cut across the two funds during the next five years after the institution of the Railway Fund, the sum of approximately soo,000,000 pesetas a year must be added for expenditure on railroads, and about 350,000,000 for expenditures on public works construction. Thus, during the first years, an extraordinary expenditure of 85o,000,000 must be reckoned with, while after that date, and provided there is no extension to the railroad fund, an expenditure of about 350,000,000 pesetas yearly is provided under the Extraordinary Budget.
It is certainly the hope of the Spanish Government that these large sums will be provided by the Spanish money market on a low interest basis, and this expectation seems on the way to being realized. The successful issue of some thousands of millions of 3% tax-free bonds, at the price of 8o per hundred, made at the conversion of the Perpetual 4% Internal Loan in April, 1928, seems to show that the Spanish Government can secure money in Madrid for 4% and, so long as this is the case, it seems likely that the borrowing programme will be continued in order to pro vide for large expenditures on public works.
Conditions in Spain during the last few years have shown an improvement. Progress was helped by the political situation of the country, which evidenced a reaffirmation of assent to the present Government. The country has had the advantage of good crops in general, and the policy of industrial nationalisation has been carried a step further without any manifestation of ill effects. In 1927 the olive crop may perhaps be signalled as the best, and the wine output was very satisfactory.
The ordinary budget estimates for 1927 were as follows: The Minister of Finance, when publishing these estimates, admitted the possibility that the deficit on the ordinary budget might reach 200,000,00o. The reality has proved to be much better than was expected, for, according to a provisional statement issued on April 8, 1928, the results were as follows: The reason for the excess of actual revenue over the estimates is to be found in the increases in taxation yield. The elasticity of the revenue from taxation is shown in the following table giving to the nearest million of pesetas the collections in 1925-26, the estimates for 1927, and the provisional returns of collections in 1927: The total revenue of 3,218,000,00o pesetas compares favourably with that of 2,964,000,000 pesetas for the completed year 1925-26. The expenditure of 3,242,000,000 pesetas is an excess of less than 3% over the estimates. This has been brought about partly by the decline in expenditure in Morocco, where only 74,000,000 pesetas were spent, in comparison with 176,500,00o pesetas in 1925-26.