FINANCE. The history of the currency of Cuba does not differ much from the lamentable record made by nearly all of the Spanish-Ameri can countries as well as Spain. It is the story of desperate, but in the end of vain, attempts to make the fiat of Government pass for commodi ties of intrinsic worth in the monetary trans actions of the people. For a time, such attempts succeeded, but in the end the Government was compelled to refuse its own worthless currency. This is particularly true of the paper currency of the Spanish Government, which was worth at the time of American occupation but seven cents on the dollar. Even before that event, when the Spanish Government accepted 10 per cent. of customs dues in that currency, the price rose only to 15 cents, varying between that value and 12 cents. The last issue of Spanish paper cur rency took place during the late war, when $20, 000.000 of paper money was put in circulation through the Spanish Bank of the Island of Cuba upon the security of $6,330,000 (silver) deposited with the bank. In spite of having been made legal tender, the paper went at a discount from the start, and as soon as the Government had shown by its illegal withdrawal of the silver fund from the bank that it did not mean to de part from its old-time methods, the paper was repudiated throughout the island, until, as stated above, the action of the Government in accepting the paper in payment of 10 per cent. of customs dues raised it from 12 to 15 per cent. of its par value.
The standard of money in Spanish Cuba was Spanish gold, the centen or alfousino—a 25-peseta piece—being the principal coin. In addition to that there was a large amount of silver currency. The principal silver coins in circulation were: the peso (dollar), medio peso (half-dollar), peseta (quarter-dollar), real (bit), medio real (half-dime). Since silver was not exchangeable for gold at its face value, it tended, as is always the case (see GRESHAM'S LAW), to drive the gold out of circulation. To counteract that tendency the Government by a royal decree artificially inflated the value of the gold eenten to $5.30, the
real value being only about $4.80. In 1S93 the French louis„ a 20-franc piece (real value $3.S6) was similarly and for the same reason inflated to $4.24.
On taking over the island, the Government of the United States found itself in a predicament. The only rational course lay in reducing the coin to its face value and putting an end to all in flation and artificial substitutes for currency of intrinsic worth. On the other hand, the people had become accustomed to existing conditions: prices had adjusted themselves to the level of the inflated currency and all contracts had been concluded on that basis. Nevertheless, by order of the President of the United States, which took effect January 1. 1S09, the United States gold dollar was declared the standard in which "all customs, taxes, public and postal dues in the island of Cuba shall he paid." and "foreign gold coins such as the Spanish alfonsinos (center) and the French louis" are accepted at their real value, i.e. at $4.82 and $3.S6 respectively. At the same time, since retail prices and wages have been usually fixed on the island on the basis of silver money, and in order to prevent a sudden rise of wages to the detriment of the planters who could not expect a corresponding rise in prices of their products in the foreign markets, the Spanish silver money was also declared legal tender. The old inconveniences of a fluctuating currency were done away with by giving the coins a fixed rate in exchange for gold as follows: peso, 60 cents; medio peso, 30; peseta, 12; real, 6; medio real, 3 cents. A fixed value was also given to the bronze and copper coins, which were 'made legal tender for sums not exceeding one dollar. As the legal value given the silver coins by the Presidential order is somewhat below the value at which it is accepted in Spain, it be comes profitable to ship that coin to the latter country. The ultimate result of this operation will be the gradual disappearance of Spanish silver from the island without sudden distressing effects upon its industry and commerce.