Papers Relating to the Foreign Relations of the United States, Transmitted to Congress, With the Annual Message of the President, December 4, 1876
No. 252.
Mr. Adee
to Mr. Fish.
Madrid, October 7, 1876. (Received October 25.)
Sir: Referring to my dispatches numbered 248, 308, 313, and 319 on the subject of the lately-awarded Cuban loan of $15,000,000, and in completion of the record of the matter, I have the honor to transmit herewith copy of the royal order, dated 30th ultimo, awarding the loan to the original bidders, Messrs. Lopez, Calvo, Marques de Vinent, and Cabezas. This order is accompanied by a very full minute or “acta” of the proceedings of the formal adjudication. I regret that the length of these documents precludes my translating them at present without prejudice to other business; but I do not know that it is very needful after all to do so, as my previous dispatches will have made the matter sufficiently clear to you without inflicting upon you the task of reading the [Page 466] present document. The only points to which it seems worth while to direct your attention are the reasons for rejecting the bid of Mr. Campo, which are stated to have been, first, his exigence of a national guarantee of the Cortes instead of leaving the loan merely local, as the government desired; and, secondly, the circumstance that the joint-stock company to take it up still remained to be organized in the form of what is called here an “anonymous society,” whose bonds or shares, in open market, might fall for the greater part into the hands of foreigners, thus giving them the control of the customs of Cuba to the prejudice of native Spanish interests. There was, besides, a difference against Mr. Campo, and in favor of Mr. Lopez and his associates, of at least a million of dollars in the amount to be furnished to the government before the end of the present month, for the purpose of defraying the immediate expenses of shipping the new re-enforcement of 24,000 men to Cuba during the same time; and as that is the main object for which the loan is contracted, this motive alone would have been enough to insure the award being made to the signers of the provisional contract of August 5.
I have, &c.,
Royal order of September 30, 1876, awarding the Cuban loan to Messrs. Lopez, Calvo, Vinent, and Cabezas.
[From the Gaceta de Madrid, October 7, 1876.]
ministry of the colonies.
In view of the meeting held on this day in presence of the council of ministers for the final award of a loan of from thirteen to twenty millions of dollars, in order to provide for the wants of the treasury of the island of Cuba, the result of which was—
First. That on the said occasion the formalities were observed which were prescribed by the royal order of the 27th instant.
Secondly. That the council of ministers having assembled at the ministry of the colonies at 3 o’clock in the afternoon, in order to receive proposals until 4, at that hour there had only been presented one from Messrs. Antonio Lopez, on his own behalf and on that of various establishments of credit and individuals of Barcelona; Manuel Calvo, on his own behalf and on that of various establishments of credit and individuals of Havana; and the Marquis de Vinent and Don Rafael Cabezas, on behalf of the Bank of Castile, whose proposal had been considered as a provisional contract from the 5th of August last; and another, sealed and presented in person by the Marquis de Campo, which, when opened, was found to be signed by J. Campo & Co.; since, a third proposal, signed by Don Juan Slasera y Garrido, on the 7th instant, was withdrawn by that gentleman by special application, as stated at the meeting.
Thirdly. That Messrs. Calvo and Cabezas, by an official letter addressed to the minister of the colonies on the 29th instant, pledged themselves to advance to the government a million and a half of dollars during the next month of October, in addition to the 15,000,000 reals which they had advanced on executing the provisional contract, which pledge they ratified at the time of the meeting, extending it to 15,000,000 reals additional, to be paid by them to the supreme authority of Cuba on the 30th of the same month of October; total, $3,000,000, without interest or security; whereby the proposal of the signers of the provisional agreement was considered as increased, according to article 5 of the aforesaid royal order of the 27th.
Fourthly. That the Marquis de Campo withdrew the second part of article 12 of his proposal, which read thus:
“In case this contract shall not receive the legal sanction referred to within the present year, it shall be rescinded, de facto and de jure, and the government shall be obliged to pay in cash the sum that may be due in liquidation, and to pay damages.”
Whereas the aforesaid article 12 of the proposal of J. Campo & Co., even though it be modified as stated, in prescribing that “the Government shall submit the agreement to the Cortes as soon as they assemble, in order that through them the guarantee [Page 467] of the nation may be given for the principal of the loan and for the funding and interest,” really leaves the perfection of the contract in doubt, or at least subjects it to a condition; for, if submitted to the Cortes of the kingdom, that is, placed under their deliberation, it is evident that the Cortes may approve or disapprove it, or annul it by refusing the national guarantee, a condition sine qua non, according to the article for the validity and existence of the agreement.
Whereas the nature of the case, and of the grave and urgent matters to which the principal of the loan is to be devoted, do not permit the contract by means of which the loan is effected to remain in a state of uncertainty and without immediately and irrevocably producing all its effects, without furnishing to the government all the means that it needs in order to re-enforce and maintain the army of the island of Cuba, which is about to enter upon a new and decisive campaign against the enemies of the integrity of the country.
Whereas this peremptory necessity of the state, which renders all idea of delay in the consummation of the loan not to be thought of, can and must be satisfied by the government within the sphere of its powers, the question being concerning one of the ultramarine provinces which is governed by special laws, and with respect to which neither the constitution nor the constant practice of all former administrations requires, or has ever required, previous legislative authorization to borrow money on the security of their credit and revenues. The government is, of course, responsible to the Cortes, to which it proposes to give an account of the contract, as provided in article 14 of the provisional agreement, whereas the requirement contained in the same article 12 of the proposal of J. Campo & Co., of the unconditional guarantee of the nation for the entire principal of the loan, making the treasury of the peninsula responsible jointly and equally with that of the island of Cuba, not subsidiarily, and only for such amounts as may not be covered by the customs-revenues of that province, as was provided in the provisional agreement, would change the nature of the loan, altering its character from a local or provisional to a national one, and would cause it to weigh very heavily upon the already overburdened treasury of the mother-country.
Whereas Messrs. Campo & Co. expressly state in the seventh article of their proposal that for the fulfillment of the contract, in case of its being awarded to them, they would form an anonymous society of credit, and that this kind of society, as indicated by its name and confirmed by its nature and juridical conditions, by the representation of the capital in shares of free circulation, by the free choice of its management, by the vote of the shareholders, and the limitation of the responsibility of the latter to the capital invested, permit no sort of guarantee for the condition of nationality, for obvious reasons of patriotism required in article 11 of the provisional contract and in the royal order of the 27th of August last, since no one could prevent the whole or the greater part of the shares of the society formed by Messrs. Campo & Co. from falling into the hands of foreigners, who, by this fact alone, would obtain control, either directly or through their representatives, of the collection of the customs-revenues of the island of Cuba.
Whereas the government, by reason of its duties and its constitutional responsibility, and because, after the realization of the loan under the guarantee of said customs-revenues, will still continue to be the party most largely interested, with an immense difference in the amounts yielded by said revenues, cannot abandon or permit its essential powers in the administration and collection thereof to be diminished, much less those of unlimited intervention and inspection, as it would do by accepting the aforesaid seventh article of the proposal of J. Campo & Co., inasmuch as said article provides that “the party to whom the loan is awarded, and in his stead the anonymous society which may be formed, shall establish, with the concurrence of the government, the form of organization of the management, collection, and control of the customs revenues of the island of Cuba;” which clause assigns to the government a secondary part in this important task; it contains no concrete guarantee for its indispensable control and vigilance, and would constitute an anonymous and perhaps foreign society as a board of managers offering the government no compensation for the principal source of revenue of the great Antille, save the right to annul the contract;
Whereas the same seventh condition of the proposal of Messrs. Campo & Co. would make the existence or annulment of the contract dependent upon the will of the parties making the proposal, or of the anonymous society of credit to be formed by them, since to secure such annulment it would be sufficient to establish rules which could not receive the approval of the government for the management, collection, or control of the customs-revenues of the island of Cuba;
Whereas, for the reasons hereinbefore stated, the proposal of J. Campo & Co. is unacceptable in principle, and cannot be compared with any other which fulfills the very important conditions in which this is wanting, on the points which have been examined, whatever may be its other conditions with regard to the immediate advancement of funds and to time of payment, interest, and participation in the increase which may be obtained in the customs-revenues of Cuba;
Whereas, moreover, J. Campo & Co. only offer the government one million of dollars [Page 468] at the time of the execution of the document making the award, although they promise an additional million in credits opened upon cities of Europe and America if the government fails to place the collection of the customs-revenues in their hands, for causes over which it has no control—a vague and indefinite promise, the fufillment of which it would be very difficult to exact, in view of the nature of the condition and the obstacles which would lie in the way of proving it, and impossible of fulfillment within the month of October, when much larger amounts than those offered by Campo & Co. are indispensable for the sending and first expenses of the 24,000 men who must go by the middle of that month to re-enforce the army of the island of Cuba;
Whereas Messrs. Lopez, Calvo, Vinent, Cabezas, and those on whose behalf they appear, offer, unconditionally, $3,000,000 during the month of October, the delivery of which sum assures the realization of the very important service in question, without which the sacrifice which the government is obliged to accept for the sake of the honor and integrity of the nation would be vain and improper;
Whereas the speedy delivery of the funds contained in the proposal of Campo & Co. for the $15,000,000, which is the minimum of the loan, with relation to the other proposals presented, is of no importance if it be considered that the government only needs the funds at the times mentioned in the provisional contract, and might even be considered as prejudicial in view of the speedy payment of interest on sums prematurely received;
Whereas the difference between the two proposals in question, with respect to the rate per cent. due to the lender in the increase which may be obtained in the customs-revenues, according as the loan is limited to $15,000,000, increased to $20,000,000, or reaches the maximum of $25,000,000, although favorable to the treasury, according to the proposal of Campo & Co., loses much of its importance if it be considered that it will disappear entirely in case, as the government expects, the loan reaches the sum of $25,000,000, since then both proposals provide for a participation of 50 per cent. in the increase of the revenues;
Whereas, therefore, there is no real appreciable difference in the details of the two proposals, save that of 2 per cent. in the interest of the loan; since, while the signers of the provisional agreement require it for failures in drawing and expenses on the interest of the 10,000,000, Campo & Co. do not make this requirement; which difference, even if the proposal of Campo were acceptable in principle, could not be utilized by the government, provided Campo does not assure the realization of the important service for which the contract is made; so that, on the hypothesis of his proposals being accepted and preferred, the government then being obliged to refund to Lopez and associates the 15,000,000 of reals which they have advanced, with interest, could only rely upon scarcely five millions for expenses, which, during the month of October, must certainly amount to more than fifty millions;
Whereas, finally, the proposal of the signers of the provisional contract unites all conditions of admissibility and fulfills the conditions of public interest, which make that of J. Campo & Co. unacceptable, and fully assures the accomplishment of the lofty and patriotic purposes of the negotiation:
His Majesty the King, (whom God preserve,) at the suggestion and with the approval of the council of ministers, has been pleased to give his royal approval to the meeting held this day for the negotiation of the loan of from fifteen to twenty-five millions of dollars, in order to supply the wants of the treasury of the island of Cuba, declaring unacceptable the proposal presented by J. Campo & Company, and declaring that the only admissible and in every case preferable one is that contained in the provisional agreement of the 5th of August last, signed by Don Antonio Lopez, Don Manuel Calvo, the Marquis de Vinent, and Don Rafael Cabezas, and with the increase made and ratified by the same at the meeting; and ordering that in accordance therewith the necessary public document be at once drawn up and the final contract be executed without delay, in all its parts; to which effect the necessary orders will be issued by this ministry; which, by royal order; I communicate to your excellency for the proper purposes.
May God preserve your excellency many years.
Minutes of the public session held by the council of ministers in order to negotiate a loan of funds, under the guarantee of the customs-revenues of the island of Cuba, for the necessities of the war in that island.
The council of ministers having met in Madrid on the 30th day of September, 1876, at 3 o’clock in the afternoon, at the ministry of the colonies, I being present as director-general of finance ad interim of said department, acting as secretary, in order to receive and decide upon the proposals to advance a sum of not less than fifteen nor more than twenty-five millions of dollars, to supply the demands of the treasury and [Page 469] of the war in Cuba, according to the royal orders of August 27 and the 27th instant, the meeting was opened by the president of the council of ministers, stating that proposals would be received until 4 o’clock in the afternpon. That hour having arrived, his excellency the president gave permission to any persons who might desire it to be present, and then stated that only two proposals had been received, one constituted by a provisional agreement of August 5, guaranteed by a new deposit of 15,000,000 reals, a draft for which had just been presented by Mr. Cabezas, and another, contained in a sealed document from Don José Campo & Co., likewise accompanied by their respective draft for $750, deposited in the general-deposit fund as a guarantee for their proposal.
Immediately his excellency the president ordered me to read the aforesaid royal order of September 27, which states the formalities to be observed on the present occasion, and also to read the provisional agreement of the 5th of August last. I then read the three following official letters:
I.
Most Excellent Sir: In view of the royal order, bearing date of yesterday, of which your excellency was pleased to send me a copy, a doubt arises in my mind which I beg your excellency to be pleased to solve.
Those intending to present proposals for an increase are obliged by article 3 to deliver previously $750,000, as a guarantee of their proposal. This grave measure, adopted one or two days before the holding of the meeting, would place us in a position different from that of the signers of the provisional contract should it not extend to them. These gentlemen have given an equal sum, it is true, but in the character of a loan, and fixing their guarantees, their interest, the precise time of payment, means of re-imbursement, and profits to be reaped by them, whereas the delivery on our part neither has that character nor those advantages nor any of those circumstances. Without seeking to avoid the responsibility imposed by the royal order of yesterday, I understand it to be obligatory upon all, and thus the signers of the provisional convention will neither be able to ratify nor increase it, even verbally, without depositing $750,000 in the deposit fund, in due fulfillment of the royal order of yesterday, since the contrary would argue another advantage in their favor, which the high sense of justice of the worthy government of His Majesty cannot grant.
I give this upright and faithful interpretation to the royal order, and although I suppose your excellency has foreseen this case, I have the honor to call your attention to it in the interest of the country and of the operation, and for the avoidance of serious difficulties which would involve an impairment of the public credit.
May God preserve your excellency many years.
His Excellency the Minister of the Colonies.
II.
Ministry of the Colonies.
Messrs. Manuel Calvo and Rafael Cabezas y Montemayor:
His excellency the Marquis de Campo, in a letter which I have just received, writes to me as follows:
(Here follows a transcription of what is inserted under No. 1.)
The considerations presented by the Marquis de Campo having been duly appreciated by the government of His Majesty, it has determined to lay the same before you, that you may state whether the $750,000 which you have advanced for the embarkation of troops, according to article 12 of the provisional agreement of August 8, are to be considered as a deposit and guarantee of the same agreement in case of its ratification, and on the same conditions as any other deposits which may have guaranteed other proposals, and if all that refers to the interest and repayment of these $750,000 is to be understood in case of the non-ratification of the agreement on your part, or of the presentation of another and more advantageous proposal.
The government of His Majesty has always believed that the money thus advanced was a guarantee of the agreement in case of its ratification, but this authoritative interpretation is necessary in order to exempt you from the obligation of making a new deposit.
May God preserve you many years.
III.
To His Excellency Don Adelardo Lopez de Ayala:
In communicating to us by an official letter from your excellency, dated yesterday, the letter addressed to you by his excellency the Marquis de Campo, with regard to the [Page 470] interpretation of the third rule of the royal order of the 27th instant, your excellency states that the government of His Majesty has always believed that the advance of $750,000 already made by the signers of the agreement of August 5 was a guarantee of the contract in case of its ratification, this authoritative interpretation being necessary in order to exempt us from the obligation of making a new deposit. Such an interpretation is authoritative and not to be doubted. Our advance is at an end, and the money delivered to the government now constitutes a real deposit, designed to serve as a guarantee in case of the ratification of the contract.
When the agreement of August 5 was discussed and signed the government of His Majesty firmly intended to commence recruiting at once, and diligently to make every preparation in order that the 24,000 men by whom the army in Cuba was to be re-enforced might embark in September and October, to the end that the winter campaign might be opened early and vigorously. The government therefore desired to be sure of the funds required for recruiting, and to secure those which were indispensable to enlist the entire number of troops needed, and to send them out and maintain them until the termination of the war, which is the patriotic object that it has in view.
The advance having been made, and knowing the result of the subscriptions in Cuba and Barcelona, His Majesty’s government relied upon the material guarantee of the $750,000 which had been received, and upon the moral guarantee, which was still more important, of having fully secured the fulfillment of the conditions stipulated, and, moreover, upon the promise made to your excellency to continue advancing, during the month of October, a million and a half of dollars for the enlistment and embarkation of all the troops that are to be sent to sustain the integrity of the Spanish territory.
The royal order of the 27th instant, although it contained no reference to the moral guarantee upon which it relied in the agreement of August 5, and made no mention of the new advances of funds asked for and offered, demanded a simple material guarantee, equal in amount to that which we had given, which was the least that could be required, the question being to secure a service of such importance, the results of which may perhaps prove barren, not only from a failure in its fulfillment, but in consequence of a simple delay.
The interpretation given by the Marquis de Campo to the third rule of the royal order of the 27th instant is therefore entirely without foundation when he states that a new deposit of $750,000 should be exacted from us, as from those who now come, without antecedents in the case, without previous pledges, and without the capital already subscribed and disposed of to present proposals. So far from any privilege existing for us, the disadvantage is evident, since every one knows the conditions of the agreement of August 5, any of the conditions of which may be positively or apparently changed, whereas those who sign it are ignorant of the text and even of the nature of the proposals to be presented.
At all events, as the question is not to obtain more or less profit in a mere public service, but the performance of a patriotic duty of the highest importance, the undersigned, who will be very glad if it be thus realized, obtaining at the same time positive advantages for the state, thought that, although the claim of the Marquis de Campo is without foundation, they ought to avoid giving any cause for protests, unjustifiable though they be, by making a new deposit of $750,000, a draft for which they will present to-morrow, although not pledged to do so by the royal order of the 27th instant, the operation of which, we repeat, is highly disadvantageous for us, inasmuch as, representing, as we do, three parties, one in Barcelona, and another in Cuba, who have made their subscriptions on a definite basis, we are neither at liberty to change them, nor have we time to come to an understanding with the subscribers, being ignorant, as we are, of the proposals that may be presented.
Finally, we assert that, if the agreement of August 5 does not become a definite contract, on account of the admission of more advantageous proposals, we will have a perfect right not only to an immediate return of the new deposit, but also of the $750,000 already advanced, which now constitute a guarantee.
May God preserve your excellency many years.
His excellency the minister of the colonies stated that he had felt much surprised that Mr. Campo, in a letter just read, said that he had only known for forty-eight hours the necessity under which he was of making a deposit of 15,000,000 reals in order to have a right to present his proposal, when, in an official conference held between his excellency, Mr. Campo, the under secretary, and the director of finance of this ministry, eight days before the publication of the royal order, he had been informed of the necessity of said previous deposit, and he did not then manifest any surprise or make any objections. The two drafts were then read, each being for 15,000,000 reals, which guaranteed the provisional agreement and the proposal presented, Mr. Cabeza [Page 471] saying that, although he had stated that the 15,000,000 reals which the signers of the provisional agreement had advanced to the government might be considered as a guarantee, the said signers had decided to make, this day, a new deposit of 15,000,000 additional, in order to prevent any doubt of the legality of their representation in this matter. A communication was also read, bearing date of to-day, from Don Juan Llasera y Garrido, in which he abandoned the proposal presented by him on the 17th instant, because, in his opinion, the royal order of the 27th made notable alterations in the matter, and because he could not accept the condition of the provisional deposits remaining for the benefit of the state in case of a failure on the part of the contractor to fulfill the contract in any of its clauses, or in case of the final contracts not being made. The official correspondence between his excellency the minister of the colonies and Mr. Llasera was then read, in which the latter stated that he knew that the government required the deposit to be made before to-day, in consequence of which the said proposal was declared withdrawn.
A statement of his excellency Don José Emilio Santos, representative in Madrid of the Spanish Bank of Havana, was then read, in which he argued that the contracts for loans previously held between the Cuban treasury and the aforesaid bank should be considered at this meeting. These contracts, he said, gave to that establishment rights to the customs-revenue of the island of Cuba, and his excellency the president, without considering as accepted the facts or the conclusions of the statement just read, made, in the name of His Majesty’s government, the following declaration:
“The government will reserve such part as may annually remain of the proceeds of the customs-revenues to meet the lawful obligations contracted by it upon said revenues with the Bank of Havana, when the expedientes now being prepared shall be terminated.”
His excellency the president, in ordering the reading of the sealed document containing the proposal of Don José Campo & Co., declared that the signers of the provisional agreement were at perfect liberty to increase the amounts to be loaned by them according to article fifth of the royal order of the 27th instant, and Mr. Calvo, in consequence, ratified, in his own name and in that of his associates, the aforesaid agreement, asking that the fourth paragraph of the official letter printed above (which, together with Mr. Cabezas, he had yesterday addressed to his excellency the minister of the colonies) might be considered; in which paragraph the pledge is made to deliver to the government during the month of October next 30,000,000 reals; offering, moreover, to furnish on the 30th of the same month 30,000,000 additional to the governor-general of the island of Cuba, which sums, together with the 15,000,000 advanced by the signers of the contract, amount to 60,000,000 reals.
The signers of the provisional contract being asked by Mr. Campo how they would give this money, Mr. Calvo replied that it would be delivered on account of the first payment, and therefore without any interest.
His excellency the president declared that the provisional agreement, amplified in this manner, thenceforth constituted the proposal of Messrs. Lopez, Calvo, Vinent, and Cabezas. The proposal of Mr. Campo was then opened, and found to read as follows:
Most Excellent Sir: The very short time intervening between the publication of the royal order of the 27th of August last and the provisional agreement signed on the 5th of the same, and the still shorter one of the 27th instant, in which a guarantee of fifteen millions of reals is required in order to be present on the 30th, which is to-day, at the adjudication, have rendered it impossible for the undersigned to present greater advantages than those resulting from the following proposition, which Messrs. José Campo & Co., domiciled in this city, present for the objects of the royal order of the 27th of August last, and article 11 of the provisional agreement of the 5th of the same month:
- 1st.
- On the execution of the document of adjudication, he shall deliver $1,000,000 in cash, as an advance, without interest or security. When it loses this character of an advance, it shall form a part of the first installment of the loan. If, in consequence of any unfortunate event, no delivery of the guarantee shall be made by the government, the latter shall immediately return the aforesaid million of dollars, paying them in bonds of the floating debt of the treasury, at the current price, and at the rate of interest then paid.
- 2d.
- He also pledges himself to open credits to the amount of an additional million of dollars in Europe and America on the same terms. If, from causes over which the government has no control, it shall have been unable to take possession of the guarantee of the loan in order to make the first payment, these credits, if used, shall preserve the character of an advance, without interest, until the payment of the first installment, and they shall then form a part of the second payment or installment.
- 3d.
- The delivery of the loan shall take place in four installments, to be received by the government; the first when the society takes possession of the sum collected in the custom-houses, and it shall amount to $3,000,000, including the million of dollars in cash already advanced; the second, two months afterward, and it shall be [Page 472] $4,000,000; the third, two months after the delivery of the second, and it shall be $1,000,000; and the fourth, at the expiration of three months from the delivery of the third, and it shall be composed of the remaining $4,000,000.
- 4th.
- This loan shall bear interest at the rate of 10 per cent. per annum, and it shall be paid in ten years, in equal parts, by means of the customs-revenues of that island, which shall be mortgaged for the fulfillment of all the obligations accruing to the government from the present proposal.
- 5th.
- The society shall also receive during the same period of ten years, 35 per cent. of the increase which may be obtained from the customs-revenues of the island over the present income, graduated according to the last six half-yearly periods. If the loan amounts to twenty millions of dollars, it shall receive 40 per cent., and if to twenty-five millions, 50 per cent., during the period for which the contract is made. The present customs-tariffs of the island of Cuba shall not be changed without the mutual consent of the government and the party to whom the loan is awarded.
- 6th.
- Of the amount yielded by the customs-duties of the island, there shall be retained every month the aliquot part sufficient for the amortization of the loan and the payment of the interest; and there shall be made, likewise, each month a liquidation and provisional distribution of profits, the final one being made at the close of each one of the ten years for which the contract is made.
- 7th.
- The party to whom the loan is awarded, and in his stead the anonymous society of credit which shall be formed, shall establish, with the concurrence of the government, the form for the organization of the management, collection, and control of the customs-revenues of the island of Cuba.
- 8th.
- Said society and its issues of shares, bonds, and other values of whatever kind, shall be forever exempt from any tax or impost, both ordinary and extraordinary.
- 9th.
- If it shall prove true that any part of the customs-revenues of the island are appropriated to the payment of obligations previously made with the Spanish Bank of Havana, the government will take the necessary steps, and to aid it the undersigned and the society, whenever peace shall be restored, pledge themselves to negotiate with the government a new loan, with the same security as the present, and no other, to be devoted exclusively to the said Spanish Bank of Havana, and to remedying the difficulties now afflicting the island of Cuba, using for this purpose the most efficacious measures.
- 10th.
- In payment of the cash received according to articles 3 and 4 of the royal order of the 27th instant, the exact fulfillment of the present proposal is guaranteed by means of 15,000,000 reals in real property, situated in Madrid, or by an equal sum in shares of the railways from Almansa to Valencia and Tarragona, at the price at which they are quoted at the Barcelona exchange, or in bonds of the state at the market-price.
- 11th.
- The government reserves the right to annul the present contract at the expiration of the fifth year, or at any time thereafter, giving the society six months previous notice, and paying it in cash the amount which may be due in liquidation, together with 10 per cent. of this sum as an indemnity. The government shall submit the present agreement to the Cortes as soon as they shall assemble, in order that, they may give the guarantee of the nation for the principal of the loan and the payment of the amortization and interest. In case this contract shall not receive the legal sanction referred to during the present year, it shall be null and void de facto and de jure, and the government shall be obliged to pay in cash the amount due in liquidation, and also to pay damages.
This paragraph having been read a second time, paragraph by paragraph, in order that the ministers as well as the party interested might make remarks, as provided in article 5 of the royal order of the 27th instant, Mr. Campo explained that the credits mentioned in paragraph second would be in gold. His excellency the minister of the colonies and Mr. Cabezas made the remark on paragraph 3 that the signers of the provisional agreement understood that it was a clerical error, when, in said agreement, the sum collected in the custom-houses is spoken of, and that it should say the collection; and this explanation was unanimously agreed to.
The same minister of the colonies said that, it being necessary to fix the time when the parties whose proposal should be accepted might begin the performance of the service, he asked the signers of both proposals if they could undertake it as soon as the government could give it to them, even before the close of the month of October, to which Messrs. Campo and Cabezas replied in the affirmative. With regard to article 12 of the proposal of Mr. Campo, which refers to the submission of the contract to the Cortes, his excellency, the minister of the colonies, said that he called the attention of Mr. Campo in order that he might make the necessary explanations with regard to the form in which it was drawn up, since, in addition to other misunderstandings, it might be uncle stood that an effort would be made to exert a certain pressure upon the Cortes. [Page 473] His excellency the President added that the signers of the provisional contract, as appeared in their fourteenth article, agreed that the government, should give an account of the contract to the Cortes in order that they might approve or disapprove its conduct; hut that the said contracting parties being firmly and definitively bound to comply with all the terms imposed by it whenever the government should require such compliance, that the government, on its part, considered itself, as had been all its predecessors, without exception authorized by the special regimen which still exists in the island of Cuba to receive loans upon their revenues, and to modify and even change the management of the same, according to the requirements of circumstances; that the proposal of Mr. Campo and company was not, according to its twelfth article, definitive, since its efficaciousness remained dependent upon the previous appropriation of the Cortes, which, in the present case, was unnecessary; that the said article 12 of the proposal of Campo and company tended, moreover, to settle indirectly a question of political order, such as was that of the date of the re-assembling of the Cortes; and finally, that the government, which could receive advances of funds on the local revenues of the island of Cuba, could in no wise pledge the guarantee of the nation for capital received as a loan, this being a prerogative of the Cortes and of the King, in virtue of which it had only offered, in the provisional agreement, to ask such a guarantee of the Cortes, leaving that body entirely at liberty to grant or refuse it as it should deem proper, and that subsidiarily, and only in case that at any time the amount yielded by the customs revenues of the island of Cuba should not be sufficient to cover the interest and amortization of the legal advance or loan in question; and that all this should be remembered by the gentlemen signing the proposal, for the proper understanding of their requirements in so grave a matter.
The discussion having been opened on this point, Mr. Cabezas said that the signers of the provisional agreement had always understood that the contract was final, and that, as to asking the national guarantee for the amortization and interest of the advance, it would only be in case the revenues of all kinds of the island of Cuba should at any time not be sufficient to cover it.
Mr. Arnús asked what would be the situation of the shareholders if the Cortes should not approve the agreement, and the President again stated that, without giving any assurance, he hoped that the Cortes would furnish the guarantee which would be asked of them, and approve the conduct of the government, but that the contract which it was proposed to execute would always be valid on the ministerial responsibility, subject to the supreme rescissory powers which our administrative law recognizes in the state. In view of these explanations, and after some remarks by Mr. Campo, he withdrew the second part of the twelfth article of his proposal.
It now being 6 o’clock in the evening, his excellency the President declared the point sufficiently discussed, and, according to article 7 of the royal order of the 27th instant, all those present, excepting the ministers, withdrew from the room.
At half past 8 o’clock I was summoned by his excellency the President, from whom I received the order, which was immediately obeyed, to notify the parties interested that the government of His Majesty, after lengthy deliberation, had unanimously agreed to accept, as the one most advantageous to the general interest of the state, the proposal, amplified as aforesaid, of Messrs. Lopez, Calvo, Marquis de Vinent, and Cabezas.
This closed the meeting for the execution of this service.
In testimony whereof I signed the present minute with the approval of his excellency the President.
Secretary.
Approved.