The Provisional Government and Cuban Stability 201some radical changes were made in more than just its form
of government.^31
The Economics of Cuban Stability
The economic situation Magoon inherited in October, 1906,
was not promising. Though the Cuban economy recovered
from the credit scare and hurricane of that fall, its vulner
ability was a continuing problem for the Provisional Govern
ment. The United States concern was not simply to protect
foreign property; Roosevelt believed that unless these interests
were protected, the entire Cuban economy would crumble.
Happily, the tobacco and sugar crops of 1906-7 proved profit
able; agricultural and mining production picked up; and
the financial situation was momentarily stabilized.^32 The Panic
of 1907, which began a world-wide liquidation of credit,
rocked the economy, but Magoon successfully counteracted
the scarcity of funds by depositing $5 million from the Treas
ury in private banks. These funds gave the planters the oper
ating capital they needed to meet their harvesting expenses.^33
Nevertheless, national income in 1908 was not as high as in
- By la zafra of 1908, however, economic indicators
showed that a recovery was well advanced.
The Provisional Governor was aware of the basic instability
in the Cuban economy, its political implications, and the
poison it produced in Cuban-American relations. As he said
in his annual report for 1908, "the industrial situation in
Cuba is the same as it would be in a manufacturing com
munity in the United States, where, each year, the mills were
run to their full capacity, night and day, for six months and
then closed down for six months."^34 In a long letter to
Roosevelt in 1908, Magoon emphasized that political unrest
was directly related to the harvesting cycle. Only government
spending on public works could offset unemployment. Both
employment and the government's revenues were tied inex
tricably to the world sugar price, which meant that public