1942: Cuba

Entrance into War; Cooperative Measures.

As one of the twelve American republics at war with the Axis Powers, Cuba's strategic position makes its wholehearted cooperation in hemisphere defense especially significant. A pact signed in June, 1942, which offered certain facilities to the armed forces of the United States, with reciprocal rights to Cuba's forces, was extended on Sept. 7, so that provision is assured for military and naval cooperation between the two nations. Compulsory military service went into effect in August. In accordance with resolutions of the Inter-American Financial and Economic Conference, enemy alien trademarks and patents have been confiscated. On Oct. 11 Cuba recognized the Soviet Union, being the first Latin American republic to do so.

The German submarine campaign in Cuban waters, which subsided sharply following the opening of the Allied offensive in North Africa, in November, 1942, has focussed attention on Cuba's inadequate radio communications and control. To minimize the submarine danger throughout the Caribbean area by means of shorter hauls, the United States has been permitted to establish a supply depot in Cuba, which will serve as a distribution center for essential products to the various Caribbean countries.

Politics.

Special war taxes imposed in January 1942 on incomes, luxuries, sports and gambling establishments have been the subject of political inquiry in Cuba, the local press charging that the proceeds have been diverted to current uses. Attempts in the summer to form a 'national unity Government' brought assurance of support for President Batista by the seven-party coalition and, under specified conditions, by the ABC opposition group. The Auténticos, party of ex-President Ramón Grau San Martín, alone criticized the treaty providing military and naval cooperation with the United States, and refused to support the War Cabinet appointed Aug. 16, with Ramon Zaydín, a Liberal, as premier. Communists were excluded from Cabinet posts by the Democratic party, a very important member of the Batista coalition. The ABC party refused to accept a portfolio. Charges of fraudulence in the March elections left many vacant seats in the House of Representatives when Congress assembled in October. The first of the supplementary elections ordered by the Supreme Court in four provinces was held in Havana on Oct. 16. The lower house of the Congress has also been intentionally decreased in size to one representative for every 35,000, rather than 25,000 inhabitants.

Appropriations.

A budget of $89,993,595 for 1943 represents an increase of $600,000 over the 1942 budget, which is expected to show a deficit of about $10,000,000. The largest appropriations in the new budget are $22,000,000 for the armed forces, $17,000,000 for education, and $7,000,000 for health.

Sugar Marketing.

As a co-belligerent with the United States, economic cooperation between the two countries has been very close. The entire 1942 sugar output, except a small amount retained for domestic consumption, was sold to the United States under contract of Feb. 28, by which the Defense Supplies Corporation agreed to pay $3.74 per hundred pounds for an estimated crop of 3,950,000 long tons. Although the actual size of the 1942 crop is a war secret, the maximum quantity of sugar and molasses requested was manufactured, an amount estimated at 4,200,000 tons. A grant of $11,000,000 from the Export-Import Bank to the Cuban Institute for the Stabilization of Sugar had made it possible to grind an additional 20 per cent of sugarcane beyond the original quota for 1942. This loan has already been entirely liquidated. In the February contract the United States was acting indirectly as purchaser for Great Britain and Russia, as well as directly for itself. Payment of 95 per cent of the purchase price was agreed upon in December, although shipping difficulties made it necessary to place a large share of the crop in Cuban warehouses. All sugar quotas were suspended in April 1942, because of depleted supplies due to the cessation of Philippines shipments and the decline in Hawaiian sugar, as well as the conversion of much sugarcane into industrial alcohol. The International Sugar Agreement of 1937, which expired in August, was continued by all the non-Axis signatories, except India, presumably as a post-war arrangement.

Mineral Production.

In the spring, a $20,000,000 credit was advanced by the United States for the production of nickel, a metal much needed by North American alloy steel furnaces. Two United States Government agencies were involved in the agreement, the Defense Plant Corporation and the Metals Reserve Company, as well as the Freeport Sulphur Company, operator of the world's largest manganese concentration plant at El Cristo, which, through a subsidiary, the Nicaro Nickel Company, will undertake to exploit Cuba's low-grade nickel reserves in El Oriente Province. Besides nickel and manganese, Cuba's mineral resources include copper, chromium, tungsten, antimony and iron ores. The iron ore reserves are the largest in Latin America from the angle of immediate commercial development.

Currency Problems.

By a currency agreement signed July 6, designed to guarantee parity of the peso with the United States dollar, the United States will sell gold to the Cuban Government — not dollars, as in the agreement with Brazil. It is hoped that this stabilization measure, and a Central Bank, with an exclusive power of issue, which has been recommended by a United States technical mission to Cuba but not yet established, will help solve the Republic's currency problems. Currency shortage and the high cost of importing dollar bills, which are legal tender in Cuba, has sent the value of the peso above one dollar, compared with an all-time low in 1939 of 82 cents. Plans are under consideration to withdraw United States banknotes from circulation and to replace them, as authorized by decree of March 1, with Cuban silver certificates.