Evening star. [volume] (Washington, D.C.) 1854-1972, 1900-03-21
CONDITIONS IN CUBA
A Legalized Banking System Badly
Needed.
N ERCHANTS AS BANKERS
Advantages of Paper Money at
Par.
THE SPANISH CURRENCY
Copyright, 1900. by j. d. whelpley)

HAVANA, March II. 1900.
No one thing would contribute more to
Cuba's commercial prosperity and prog
ress than a legalized system of banks
one in each of the larger cities of the
island. What is needed in every COM
munity is some institution financially
able to transact an unlimited loan and
discount business. What is needed by
the business of the entire island is a sys-
tenn of paper money, the value of which
would always remain at par regardless of
the condition of the banks of issue. In
brief, Cuba needs plentiful and stable
supply of paper currency of unfiuctuating
value
Whether this could best be accomplished
by the establishment of one great parent
bank in Havana, with branches in all the
provinces, or whether it would be better to
have independent banks in each locality,
is an important question, but one of detail
The island is small, its business interests
are closely entwined, and the people who
would do most of the business with the
banks have investments in all parts of
Cuba Under these circumstances II might
be best to establish parent bank at Ha-
vana and have branches elsewhere. the
parent bank TO be either government in
stitution out and out or else remain under
the strict supervision and control of the
government authorities.
Banking in Cuba.
The banking of Cuba is now done largely
by business firms. Nearly all of the large
merchants have a banking department in
their establishments. They loan their Gus
toners money, sell theme goods. buy their
products, care for their surplus funds, and
In fact do everything except actually super
wise the business operations of their clients,
though even in this they often act in ad-
visory capacity. These firms are heavy
operators. and possessed of large capital.
but they often reach the limit of their
carrying capacity. They have on hand
notes given by their customers amounting
to many thousands of dollars, and their
warehouses may be full of goods. not only
for sale, but held as security for loans
made to their customers. pending more
favorable market for tobacco, sugar, or
whatever 1t may be-
If there was a bank nearby of unques-
toned standing and practically unlimited
capital, the firms would take their paper
to this bank and discount the notes on
their own Endorsement. This would be
profitable business for the banks and for
the merchants. The former would make
the latter would again have their funds
available for more business, which would
greatly increase with these new facilities.
Harmonious Business Relations.
In course of time the banks would come
directly into large amount of this bust
ness and the merchants would find it un-
necessary to conduct banking department
and more profitable to extend their COM
mercial operations with their then avail
able capital. In a few years the business
of Cuba would be a very similar basis
to that conducted in the United States and
this in itself would have a tendency to in
crease the trade and render business rela-
lions more harmonious between the two
countries
Nothing can be done during the American
occupation in the way of establishing such
a banking system until the Foraker resolu-
ton is so amended so as to allow of char
tiers being issued for the bank or banks, as
the case may be. 1t has been suggested
that the American banking laws could be
promulgated in Cuba with only such modi-
hcatons as are necessary to bring them
into harmony with the customs of the peo-
pie, the peculiar needs of the island and
the laws of the land. The time is hardly
ripe for this, for the laws have yet to be
revised and codified, and until that is done
ii would be difficult to establish a working
basis.
Paper Money.
Equally important with the loan feature
of these Cuban banks would be the issue Of
paper money The currency OF Cuba is now
a varied assortment of American. Spanish
French. German and English coin. each
with its fiuctuating rate of exchange. This
exchange fiuctuates not only according to
the price of bills in New York or London
but also according to the will or opportuni-
" of the money changer, and he is always
ready to take advantage Of the ignorance
or necessity of his customer. A system of
money based on that of the United States
would work wonders for Cuban trade both
foreign and domestic. for il would give a
never varying standard of value, something
impossible under the present circumstances
at hnt IT.
thorzed or even thought of however. until
some definite scheme Of finance is agreed
upon for the island, and most certainly not
paper bill should be printed until an abSo-
lutte guarantee has been given to the people.
that the said bill should be then and al
ways literally as good gold in any money
transaction of any kind whatsoever The
Cuhans. like the people of all other coun-
tries of unstable finances, have passed
through several experiences of PAPER money
which was forced upon them at par. fuctu-
ated in value more than the coin in crcu-
lation, and finally sank below the possibili-
ty of redemption and became practically
worthless in the hands of innocent holders
1t is doubtful whether anything less than a
government guarantee would ever estab-
fish an issue of paper money in Cuba in the
confidence of the people to a sufficient de-
gree 70 make it the money of the country.
Such system of paper money would be
a marvellous convenience and stimulus to
trade. The present system is vexatious
and cumbersome. 1t brings some loss in
buyer or seller and hampers in every way
the free exchange Of commodities and the
extension of trade. Spanish gold is the
usual basis of exchange, and it is of awk-
ward denominations as compared with the
simple decimal system prevailing in the
United States. The current small change
of the country is Spanish silver. which.
while not passing at bullion value as does
the silver OF Mexico is not as good as
American money or Spanish gold. The list
| might be continued indefinitely for each
coin has value of its own and this value
| Is liable TO change every twenty-four hours
| In every commercial establishment is a
clerk who gives nearly all of his time 10 the
| question of exchange and the translation of
money. taken in or paid out by his firm
| from one coinage to another
American Currency.
American currency does not seem to be
making much natural Roadway in Cuba.
| This is due partially to the fact that It is a
| new thing, but largely to the greater value
| OF the American coins of sizes equal to the
| current Spanish pieces. Living is 5aar In