New-York tribune., 1920-11-21
Cuba Is Urged
To Issue Notes
To End Crisis
DR.. Orestes Ferrara, Former
President of the House
of Representatives, Calls
Plan the Best Solution
Discusses Loan Failure
Thinks Emergency Securi-
ties With Government
Guaranty May Be Adopted

Guaranty Way be Adopted
Cuba is now passing through ono Of
the greatest financial crises in her his
tory, principally because her leading
sugar interests and bankers were not
foresighted enough to anticipate the
collapse that has taken place in sugar
prices.
This is tho 1ist Of an interview with
The Tribune by DR.. Orestes Ferrara,
professor Of public law at the Univer-
sity of Havana, ex-President of the
Cuban House Of Representatives and at
present member Of the House of Rep
resentatives. Dr. Ferrara is the author
of several books, including Causes and
Pretexts of the World War and Les
sons of the War and the Peace Confer
ence. In addition, he is editor of the
magazine La Reforma Social and of the
Cuban daily Heraldo de Cuba.
DR.. Ferrara attributed the failure Of
the recent negotiations for a loan to
Cuban sugar interests to the manner in
which the Cuban government repre-
sentatives handled the matter. The re-
sulting necessity of extending the
moratorium in the island, he said.
would tend further to paralyze Cuba's
leading industry. DR.. Ferrara said:
In this prosperity lies the cause of her
present financial difficulties. Cuban
sugar producers followed the custom Of
hypothecating their sugar with the
banks, with a margin of approximately
SO per cent, which until recently was
considered ample margin.
Public Started Bank Loan
"But when sugar dropped suddenly
from % cents to cents a pound the
banks found themselves in a dangerous
position. The public, realizing. this
situation, rushed to withdraw their de-
posits, hence the panic.
"The banks had tried TO strengthen
their position by demanding more mar
gin on their loans, but the public con-
tinued to withdraw deposits, and tho
only recourse was for the government
to declare the moratorium now in ef-
feet.
"a way out Of Cuba's difficulty was
seen in loan by American banking in
terests. But the proposed credit, which
it was thought at first would be for
$780, 100000 and then for $4,000, 900,
failed for several reasons, the principal
one, in my opinion, being the manner
in which the Cuban government repre-
sentatives handled the matter.
opposes private Loans
"The President of the republic, for
example, assumed the right of auth or
izing this loan and Of obligating the
treasury Of the nation, which preroga-
tive he really did not possess. Con-
act because of the political disorder
on the island. Personally, I do not
believe in private bank loans, which
would have the effect Of temporarily
allaying the fears of the Cuban public.
"Anothcr solution for solving Cubn's
present financial problem would be to
sell the unsold sugar This would
bring about $50.00O,O00, but the diff
Guilty of carrying out this plan lies in
the fact that buyers are still holding
Off because of the uncertainty regard
ing future prices.
There is another solution which
have advocated from the beginning, and
that Is the issuance of emergency
notes, amply secured, at high interest
rate with government guaranty.
suggested this plan month ago to
the Secretary of the Treasury of Cuba,
who is my colleague in the National
University. l have also advocated this
proposal in my newspaper, The Heraldo
dc Cuba. The Secretary of the Treas
ury seemed kindly disposed toward tho
arrangement, but apparently was more
favorable to q direct loan. Now that
loan with New York bankers has
failed it may be that my plan will be
adopted.
Economic Situation Sound
"The Cuban economic situation has
been affected by the present financial
crisis, but a whole it continues good,
because the hurricane has come on the
crest Of great wave of prosperity. A
few spectators have been ruined and
few sugar producers have suffered,
but the latter will recupcrate with the
profits of the next year.
There is q world scarcity Of sugar,
which will undoubtedly continue for a
number of years. To avoid this short
age consumption has temporarily been
curtailed. The industry, however
should have q bright future for many
years.
"In addition to her financial Difficult
ties Cuba also is facing a bad political
situation. The party struggle now 60
ing on is rancorous, and the army has
turned against the civilian population
in the recent elections. Acts of vio-
lence and electoral frauds forecast seri
GUS conditions if the United States
does not keep its promise OF helping to
solve thr iSlaD Gin;rnlt;oc