New-York tribune., 1918-10-02
Dollar Commands
A Record Premium
In Cuban Exchange
Inability to Ship Sugar
Sends Rate Soaring
Balance Favors u. S.

Drawing down Of Cuban bank bal
ances in the United States to the low
est level in years has resulted in New
York exchange ut Havana rising to Il
premium of 4 to per cent. Ordi-
narily the premium is about a Of
per cent. Bankers yesterday in dis
cussing the extraordinary situation at
tributed the reduction in Cuban bal
ances here partly to The fact that the
island banks have been compelled to
finance the carrying over of between
100000 and 100000 tons Of last sea-
sons sugar crop. This sugar would
have come to this market had it not
been for the shortage Of ships.
Meanwhile American exports to
Cuba have been fairly we'll maintained,
so that the trade balance is strongly
in favor of the United States. Infor-
nation received here from Havana is
to the effect that interests there in
need OF New York exchange have been
bidding frantically for funds for re-
mittance purposes. but have found the
available supply far short of the de-
mand. The state of affairs has existed
now for more than week. Shipment
of gold 20 New York from Havana
would rectify the situation, but the
Cuban bankers have no metal they can
spare. There is some talk in banking
circles about a credit being arranged
n Of Cyho 70
difficulty.
At Panic Level
j. T. Monahan, vice president OF the
Bank of Cuba in New York, discussing
the present disturbance in the Cuban
exchange market, yesterday said:
Inc situation is en- abnormal one
IN my experience Of about twenty wears
do not recall, with the exception of
the panic of 1907, ever having seen ex-
change on New York in Cuba selling at
as high figure as at present the
premium being about per cent.
The advices | have from Cuba are
to the effect that about one-sixth of
,he sugar crop, or, say. 100000 tons,
worth between s5o,ooo, 900 and $50 ,ooo,~
coo, is still in the island. This is an
unusually large amount to be carried
over by the banks at this time of the
year, due t. the lack of tonnage which
the Shipping Board would use for
transporting sugar. AS the coming CROP
according to latest advices, may ex-
ceed the last one, Of about 3,25O 900 tons.
there has been some apprehension in
commercial circles here that Cuba's
1acillties might be strained in handling
the coming crop before the present one
IS entirely removed from the island. 3
situation which would tend to keep the
rate on New York to a nigh figure. I
belleve this fear is ungrounded. and
the sugar will be removed in due time.
and if this is done in the near future
Inc unusual rate of l IL TO = per cent
on New York exchange should rapidly
decline, although do not expect to
see the normal rate of 4 of per cent
restored at en early date.
Reason for Stringcncy
THE fact that the banks have had to
carry the remainder Of the sugar crop
when IN other years it would have
been sold at this period means that
they have had to reduce their balances
abroad, and this has brought about the
stringency in the exchange situation.
J. have no doubt that Cuba, our ally.
Will soon take steps to correct the ex-
change situation, and if this is not
done by shipments of sugar perhaps
the restrictions with regard to ship
ping currency from the island will be
removed or, as some bankers have be-
lieved, a credit will be arranged here"
Cuba is enjoying exceptional pros
perit3, according to Mr.. Monahan, and
if the price for the new crop is to be
$50 cents pound the outlook for next
season is considered most brilliant.
Growers of sugar cane in the island
have greatly enlarged their acreage
under the stimulating influence of war
time prices for their product.