1938: Cuba

Congressional Elections.

In the Congressional elections held March 5, half of the House of Representatives was renewed. The 81 members elected were all supporters of Colonel Batista, Chief of Staff of the Army and Cuba's virtual dictator, since the elections were boycotted as a 'farce' by the only real opposition groups, the Republican party of Miguel Mariano Gómez, the Democratic Republican party of Menocal and the Cuban Revolutionary party of ex-president Grau. On March 30 these same parties presented a memorial to President Laredo Bru, protesting against the elections and reiterating a demand for the calling of a Constitutional Assembly to draft a Constitution to replace the provisional statutes in effect since 1933. The revolutionary plot to overthrow the Batista rule, reported early in the year and indicative of increasing unrest against military domination of the Government, had been used, according to enemies of the administration, as pretext for postponing any effort to return to constitutional government. In July, a bill providing for a new electoral census was passed as a preliminary step in that direction. The granting of legal status, in October, to the outlawed Autenticos, or Cuban Revolutionary party of Dr. Grau; to the Communist party; to Joven Cuba, and to the National Fascist party, indicated a new policy of permitting the participation of all groups in the elections, which are expected early in 1939. Dr. Grau returned to Cuba in December, to resume an active role in Cuban political life and to try to effect a consolidation of the two factions in his party, one of which is led by Sergio Carbo. The entire Cabinet resigned in August as a reorganization and efficiency measure, so as to make possible the appointment of a non-political, 'purely administrative' Cabinet. Following the closing of La Prensa, in September a decree was signed setting up legal procedure for the suspension of any publication the authorities might consider alarming or libelous. An amnesty bill was sent to the President on Aug. 4, replacing the measure he vetoed early in the year as too ample in scope. The second bill, considered more 'prudent,' commutes all death sentences to life sentences and grants pardons releasing at least 50 per cent of all the Republic's prisoners, common criminals included.

Economic Situation.

Economic conditions in the island have been bad in 1938, with revenues reduced, unemployment and living costs high and wages low, due primarily to the downward trend of sugar. As a result, Colonel Batista in May announced the suspension of his 'three-year plan' ostensibly pending the election of a Constitutional Assembly. This, he called 'the sacrifice of my most vehement desire'; in certain quarters, however, it has been interpreted as a master political stroke because it puts on the opposition the onus for halting reforms which have endeared Batista to the masses. Some of the provisions of this reconstruction program have already been translated into law; the coordination of the sugar industry; the reorganization of the agricultural army schools; and the distribution of state lands to poor farmers. Much remains unaccomplished, however. A plan for a $50,000,000 public works program was discussed by the Cabinet late in November. With this, rumors of a coming United States loan for economic reconstruction following Colonel Batista's visit to the United States have been associated. The rumors have been lent some support by the visit, in December, of Warren Lee Pierson. President of the Export-Import Bank, when he investigated public works projects in five provinces. A $6,000,000 unemployment relief program was announced in August, this sum to be raised through cuts in the salaries of highly paid government employees.

Trade Treaties.

A possible consequence of Batista's visit may be seen in the steps reported for a supplemental agreement to the reciprocal trade treaty of 1934, looking to reductions in the tariff on sugar, rum, tobacco and other Cuban products. Hearings in Washington on the proposed revisions have been set for Jan. 3, 1930. In return for new tariff concessions Cuba is expected to throw open its market for Louisiana rice (rice is one of Cuba's most important foods) and other North American products, and to grant certain exemptions to United States workers under the nationalistic labor laws. The United States State Department's announcement regarding the proposed revision emphasized its limited nature and fell far short of Batista's assurances to the Cuban people on his return. The Cuban request is for a lowering of the preferential tariff on its sugar from 90 cents to 75 cents per hundred weight, the maximum reduction possible under President Roosevelt's reciprocal trade powers. (The tariff for other countries is $1,875 per 100 pounds.) Cuba is also anxious to secure a permanent quota of its sugar imports to the United States, but since this is regulated by the Sugar Control Act of 1937 and not by the trade treaty, it will not be affected by the proposed modifications of the reciprocal trade pact. Cuba is now permitted an annual quota of around 2,000,000 tons (the quota for 1938 was fixed at 1,662,771 short tons). The production of raw sugar authorized for 1938 was 2,950,000 tons. The balance, after the United States quota allotment has been filled, is sold in the world market for about one cent a pound less than that sold in the United States can secure 11.00 cents in contrast to two cents, duty unpaid, in the United States). This has been called 'a direct contribution by the American sugar consumer in the hope that it will mean increased purchases of American goods by Cubans.' All other Latin American countries are excluded from the United States sugar market. The Sugar Coordination Act passed in August 1937, fixed domestic quotas, regulated wages and land rentals, and provided an extension of the present moratorium on unadjusted debts owed by sugar planters.

As a result of the reciprocity treaty exports from the United States to Cuba increased 114 per cent from 1934 to 1937 and the United States share of Cuban imports increased more rapidly than that of other countries, although imports were not increased comparably to exports. This is in line with the trade gains with all the countries with which the United States has signed reciprocal trade agreements, the gain in average annual exports over the 1934-35 pre-agreement period being 66 per cent. An additional protocol to the Cuban-Italian commercial pact of 1903 was signed Aug. 29, granting Italy most-favored-nation treatment, with the exception of the United States. This clause had been denounced in 1935. In the first year of the new agreement Italy guarantees to purchase 6,000,000 lire of coffee, cacao, molasses and tobacco, and will buy from Cuba 50 per cent of the amount of its exports to that country. A proposed commercial treaty with Mexico was rejected by the Cabinet May 31, following protests from commercial and industrial interests that it would be prejudicial to the Cuban-Chilean treaty of a year ago. Cuba's unfavorable trade balance with Mexico could not be remedied by the agreement because its chief exports, sugar and tobacco, are also produced by Mexico. Due to the efforts of Sr. Octavio Reyos Spindola, chargé d'affaires of the Mexican Embassy in Havana, closer relations have been stimulated between the two countries for a number of years, but without commercial outcome so far. It has been reported that the Cuban Labor Department has arranged to relax the strict nationalistic labor laws so as to grant permits to Mexican workers on the island.

Internal Affairs.

The much-disputed Public Works bond issue of the Machado Government, in default since 1933, was put on a basis acceptable to the United States investors and the Securities and Exchange Commission by a law passed over President Laredo Bru's veto on Feb. 13, providing for the flotation of an $85,000,000 issue of external 4 per cent bonds of the Republic, for which the 5 per cent Public Works bonds may be exchanged. The President's veto was due to the highway tax, designed to finance payments on this issue, and to the inclusion in the new issue of some $10,000,000 owed the railways and transportation companies for services rendered up to June 30, 1937. This last provision has been the subject of scandal involving an agreement between the railroad companies and Cuban Congressmen for distribution of the bonds. In July the Supreme Court was asked to appoint a special judge to investigate the alleged irregularities. On Aug. 9 the Havana Audiencia Court ordered the inquiry opened. Congressional immunity will shield present members of Congress, however. The highway tax bill was the occasion for a truck and bus drivers' strike in Oriente province, the first strike movement of any importance since the repression of the general strike in May, 1935. Collections of the tax were suspended in August; as a result its repeal has been promised.

Finance.

Colonel Batista's three-year plan among other things called for the establishment of a national bank of issue and of a national currency system, but liquidation of the Public Works obligations and the restoration of Cuba's credit were essential before this step could be taken. Cuba's currency is not independent but is rigidly tied to the United States dollar. A commission has been sent to Washington to study the United States currency system. The President has recommended to the Cuban Congress a new $20,000,000 silver issue, although under protest from the Havana Produce Exchange and the Cuban Chamber of Commerce, who maintain it would be an unsound financial measure. The branch bank of the United States Federal Reserve system in Havana was closed during the year, due to operating losses caused by the increases in silver coinage issue in the last few years. The budget for 1938-39, calling for revenues of $86,099,510 and expenditures of $86,077,035, provided increases of about $7,000,000 in the 1937-38 budget, although special appropriations made expenditures at the end of the last fiscal year total $83,000,000. These budget increases were opposed by Colonel Batista, in view of Cuba's depressed economic condition, and were hence not approved by the Congress. The budget for 1937-38 will, therefore, be continued.