Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-31
CUBAN FINANCES
IN CHAOTIC STATE
Government and Business
Both Face Critical Short
age of Money.
BY WILLIAM 81. FORT.
aclal nisnatch To The Star.

Special Dispatch to The Star.
HAVANA, Cuba, July S1.-Cuba'S
financial condition is rapidly approach
ing the hopeless state. At present it is
chaotic, to say the least. Ofacial fig
ures show that rs per cent Of the
Islands business is bankrupt and the
remainder we'll on the way toward that
classification.
The president Of one Of the larger
Cuban corporations said that last year
at this time his firm was doing q gross
business Of 100000 q month. This
year it will not average one-tenth that
amount.
Another American who has been in
business here for 80 years and who had
built for himself comfortable fortune
tells the same story. During the last
few years he has seen that fortune
dwindle until now he finds himself, an
old man, in comparatively the same
state financially as when he first
started.
other business men generally are los
ing money and many have been forced
20 close their doors.
Living Hand to Mouth.
The people themselves are living from
hand to mouth, with at least 100000
actually destitute and hungry.
The position of the government Is
fully as critical as that Of its people,
with q funded external debt of $751;
100000, outstanding public works bonds
of $120,000,0O0 and a floating debt of
nearly $4,000, 900. At present there is
approximately $4,000 900 in the national
trA EIIndrndc If
ployes have been discharged, other
hundreds have been waiting for their
pay for as long as 10 months and pri-
vate firms having money due them
from the government are unable to col
1ect.
In seeking the answer to this fnan-
cial muddle and its causes, it Is only
necessary to examine the conditions in
the island during the years which form
the background to its present chaotic
state. Obviously, the basic reason IS an
economic one. but politics and blum
dering governmental MANAGEMENT also
must be allotted their share Of the
blame.
Cuba is essentially Q one-crop coun-
try. It Is sugar which is the backbone
of the islands trade, and the price of
sugar is the barometer OF its peoples
prosperity.
Depends on One Crop.
There has been some increase lately
IN cattle-raising and dairy products and
coffee, but there is, nevertheless, no di-
verSification Of crops. Analysis Of ex
ports show that 80 per cent Of these
--.ports is sugar, 1914 per cent tobacco
and the remainder miscellaneous.
Until 1924 there was big profit
in sugar, the sugar prosperity reaching
its peak in the Spring and Summer OF
1920, from which time it receded dur
ing the following four years. This Pc
Rod is enviously spoken Of now as the
time of the fat cow" Wages were high,
values were inflated and extravaganza
and speculation flourished.
These sweet conditions led the Cuban
government early in 1925 to initiate the
governmental budget and lay an am
bilious program of public improvements.
The price of sugar tumbled, and the
end of Cuban prosperity was in sight.
Despite this, the government went
ahead with its public works program.
Plans were formed for the new National
Highway which runs the length OF the
island; the new Capitol Building, new
schools and new waterworks. Business
in Cuba doomed for q while then, en-
ployment was heavy and new industries
were started.
Relief Efforts Fail.
Meanwhile, Hawaii, the Philippines
and Porto Rico increased their sugar
crops all Of which entered the United
States free Of duty. The price of sugar
continued to drop and Cuba took fran
tic measures.
In 1925 the crop was limited by law
to $500 900 tons and in 1927 there was
established a National Sugar Defense
Commission & Export Co. Both these
moves failed, and in 1929 the Gu
bans made their final attempt. There
was formed the Cuban Cooperative
Sugar Expert Agency, to handle all ex-
port sales and withhold Cuban sugar
from the market except at a fixed price.
This also failed for there was no de-
mand for sugar.
The governmental revenue continued
to decrease. Credit became difficult to
obtain, debts mounted AMI values de-
creased.
Taxes have been increased until now
the people are unable to meet them
and the government, badly in need of
money, finds it extremely difficult to
collect those already in force.