Lopez de Ayala to Messrs. Lopez, Calvo, Vinent, and Cabezas, September 30, 1876

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to be signed by J. Campo & Co.; since, a third proposal, signed by Don Juan Slasera y Garrido, on the 7th instant, was withdrawn by that gentleman by special application, as stated at the meeting.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 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 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.