Previous to 1886, for a quarter of a century and more, postal subventions had been given to private commercial houses, or individuals, providing steam communication with the Spanish colonies and foreign ports; but much of the service during that period had been performed by this company through cessions from the holders of the contracts.  Before the adoption of the private contract system, the service to the colonies had been performed by the first regular steamship line between the Peninsula and the Antilles (in 1850), established at the State’s expense.  The ships of this line were all under the command of officers of the navy, and performed various services for the Government besides carrying the mails and despatches.

Under the contract of 1886 (ratified by the Cortes in 1887) the company were to furnish all the mail steam communication between the Peninsula and the colonies and possessions, and foreign ports, for a total maximum subvention of 8,445,222 pesetas ($1,689,044) annually.  The subsidy was calculated on the number of nautical miles run.  The total sum was distributed among the budgets for the Peninsula and the several colonies.[DZ] In 1909 the subvention was redistributed over the various lines, the total amounting in round numbers to $1,665,600.  The contract went as a whole also to the Spanish Transatlantic Company, to run for twenty years.  A particular requirement was that the company must favor Spanish trade in every possible way.[EA]

The first construction subsidy law, that of 1880 (June 25), granted a bounty of forty francs ($7.72) per measured ton of 2.83 cubic metres on all ships built in Spain.  All tariff duties paid on imported materials for building, careening, or repairing ships or their machinery, were to be refunded by the Government.[EB]

During the decade between 1880 and 1890 the Spanish marine slowly increased.  Further to foster it, in 1895 a more general subsidy law was enacted.  This act granted a construction subsidy of forty pesetas ($7.72) per gross ton for wooden ships; seventy-five pesetas ($14.48), for iron and steel steamers; and fifty-five pesetas ($10.62), for ships of mixed construction and for sailing-ships of iron and steel.[EC]

The year following the passage of this law was marked by rapid expansion in the national marine.  Then came a more rapid decline.  This was due, it is assumed, to increased taxes, and business depression occasioned by the colonial wars, involving enlarged Government expenditures and the cutting off of much colonial trade.[EC] During the war with the United States (1898) Spain lost eighteen large steamers of 31,316 tons.  After that war, with the development of her national resources, the Spanish marine again began rapidly to grow.[EC]