The Provisional Government and Cuban Stability 195balanced against the cash surplus of $13.5 million, it looked
as if the government would end fiscal 1907 in the red.^12 In
his October, 1906, report to Magoon, Major Eugene F. Ladd
estimated that if Magoon paid for the revolt and carried out
the programmed Cuban budget, the government would spend
$31 million and receive $26.8 million. (By comparison, Estrada
Palma's government had spent $26 million in fiscal 1906.) By
July, 1907, however, the economy had revived enough to
bring revenues to $41.2 million of which the Provisional Gov
ernment spent $39.6 million.^13 In the following year, an eco
nomic decline caused by a weak harvest and the Panic of
1907 reduced Magoon's revenues to $34 million, but he
increased the government's expenditures to $44.5 million.^14
Although Magoon budgeted only $23.3 million for fiscal 1908,
he found it necessary to offset a general economic decline
with increased government spending.
The cost of pacifying Cuba came high, and subsequent
Cuban presidents made expenditures under the same economic
logic, though not as reluctantly as Magoon. Government spend
ing in times of low sugar prices was the easiest alternative to
economic collapse or public violence. When Magoon relin
quished the Treasury in 1909, he turned over a cash surplus
of only $2.8 million and obligations for fiscal 1909 totaling
between $6 and $8 million.^15 While many of the Provisional
Government's expenses were determined for it by Taft (e.g.,
claims settlement, census) and Root (e.g., yellow fever eradi
cation) and thus open to question, the bulk of the costs
of the occupation came from providing much-needed ser
vices and employment which, whatever Magoon's motives,
were necessary for good health, education, economic growth,
justice and order.
The August Revolution itself created an immediate financial
strain on the Cuban Treasury, which Magoon could not
correct simply by canceling public works projects. The estab
lishment of an American-controlled government set off a
wave of claims for damages and expenses caused by the
revolt. The claimants' expectations that the Americans would
settle quickly were realized. While the settlements did not