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.

1941: Cuba

Although not the first country to follow the United States into the War (See COSTA RICA), as President Batista predicted before a labor demonstration in November, Cuba promptly declared war on the Axis powers. A state of national emergency was voted Dec. 17, and special war-time powers were conferred on the President and Cabinet. Among these is authority to call civilians into military service and to sign military compacts with the United States and other nations. The Balán bill, providing for compulsory military service modeled on the United States selective service law, already had the support of the administration and of all opposition forces, including the Communists following the German invasion of Soviet Russia.

Foreign Relations.

Cuba's proximity to the United States and the strong economic ties between the two countries have made Cuban-American relations very close since the outbreak of the World War, and cooperation with the United States in its continental defense program has been relatively unquestioned. The strongest anti-democratic movement in the Republic has been the Falangist, but several steps have been taken during the year to suppress it. The Spanish Consul-General, Genaro Riestra, once expelled from Mexico for totalitarian propaganda, was declared persona non grata. The local head of the Falange, Francisco Alvarez García, however, was acquitted of charges of anti-democratic activities, due to insufficient proof. All the 'social welfare' organizations and soup kitchens operated by the Cuban chapter of the Falange were closed in mid-summer. A quantity of propaganda shipped from Madrid was seized in Havana. Cuba's large Spanish community has been under close surveillance for several months. The intrigues of the Franco Government and the activities of the Consejo de Hispanidad will be closely watched throughout Latin America now that the coming of war to the Western Hemisphere reduces the chances for Nazi propaganda.

Lease-lend aid to Cuba, of an unspecified amount, for the purchase of defense materials, was provided early in November. It has been implied that repayment would be in Cuban export products, such as sugar, tobacco and manganese. The 1941 output of the Cuban-American Manganese Corporation increased 85 per cent over that of 1940. Production of this strategic material here, as in Brazil, is capable of considerable expansion. Cuba is the only Western Hemisphere producer of another strategic metal, chromium, and normally supplies about one-fifth of the United States' import needs. With the Philippines cut off, the Cuban source will be even more important.

Trade Conditions.

Cuban exports for the first eight months of 1941 reached the highest figure for any corresponding period since 1937, and were P. 10,000,000 in excess of total exports in the full calendar year 1940. The increase in imports was small and the Republic had a favorable balance of P. 52,503,000. The United States in 1941 took all but 12 per cent of Cuba's exports. Ratifications of a reciprocal, most-favored-nation trade agreement with Argentina were exchanged Nov. 13. Its terms grant Cuba a 21 per cent reduction in Argentine customs duties on Cuban tobacco, while Argentina obtains tariff advantages on linseed oil, wheat, grapes, wines and other products. More important from the point of view of Cuba's dominant industry is the supplementary trade agreement with the United States, signed Dec. 23, which grants tariff concessions on sugar, molasses, tobacco, meats, fruits and other important products, in return for concessions on some thirty-eight items. Like the original pact concluded in 1934, and the first of the Hull reciprocal trade treaties, this is an exclusive preferential arrangement between the two countries.

The reduction in the tariff on Cuban sugar from 90 cents to 75 cents a hundredweight was not as great as Cuban sugar producers had hoped. Prospects for 1942 are very favorable, however, as a result of the curtailment of Philippine and Hawaiian sugar imports to the United States — hitherto the source of 30 per cent of the United States' supply. Furthermore, war-time requirements for industrial alcohol stimulate the demand for sugar. The United States and Great Britain have agreed to purchase the entire 1942 crop at a guaranteed price of 2.65 cents a pound, and will also take all sugar stocks remaining from the 1941 crop. The average price for the first ten months of 1941 was 1.57 cents. The prices obtained for Cuban sugar in the first World War, 4.60 in 1918, 5.50 in 1919, present an interesting comparison. In August the OPACS put a ceiling price of 3 cents on raw sugar in the United States. Cuba expects to produce about 3,500,000 tons of raw sugar in the 1942 grinding season, as compared with 2,400,000 in 1941. On Dec. 26 President Roosevelt signed a bill extending the 1937 sugar quota system for three years, with only slight changes. The quotas for 1942 show a 20 per cent increase over the 1941 total, and raise Cuba's allotment to 2,297,538 short tons. Attempts of the continental producers to have the Cuban quota cut, and their own increased correspondingly, were abandoned under pressure from the Roosevelt administration, which considered such a move contrary to the Good Neighbor policy and an unfair return to the island for its sympathetic declaration of war on Japan.

Finance.

The encouraging outlook for sugar has sent the Cuban peso from a low of 82 cents in July, 1939, up to parity with the United States dollar. The recovery in the exchange value of the silver peso is attributed, in part, to the $11,000,000 Export-Import Bank loan, signed June 12, to finance the grinding of 400,000 tons of surplus sugar. A law authorizing an Export-Import Bank loan of $25,000,000 was signed by President Batista on Nov. 21. This latter credit will be used for highway repair, construction of new highways and an agricultural diversification program, involving irrigation works.

The budget for 1942 shows a 19 per cent increase over the preceding budget, and reaches a new high for expenditures (P. 89,956,138). The largest increase is accorded to national defense, direct military expenditures totaling P. 22,000,000.

Politics.

The only serious political disturbance of the year was the Pedraza revolt in February, which was quickly and bloodlessly quelled by the president. The conspiracy to overthrow President Batista was led by Col. José Pedraza, chief of staff of the army, who resented Batista's move toward non-military, constitutional government. Associated with him were Col. Angel A. González, chief of staff of the navy, and the chief of national police. All three were ousted and exiled.

Opposition to the Batista coalition has been strong enough in Congress to delay action on important government measures, such as the Export-Import Bank loan, the budget and tax reforms. Congressional elections scheduled for Dec. 1 have been postponed to March 1942, to allow time for party reorganization. New coalitions among both government and opposition parties are expected.

1940: Cuba

Havana Conference.

The Havana Conference, formally known as the Second Consultative Meeting of Ministers of Foreign Affairs of the American Republics, took place July 21-30. Following logically, as it did, the Lima and Panama Conferences of 1938 and 1939, as an expression of inter-American unity it exceeded any previous Pan American gathering and represented a real advance in the operation of consultative machinery. The common threat from Europe gave poignant significance to questions of continental solidarity and hemisphere defense, economic and political. The problem of European possessions in the Western Hemisphere, the major objective of the Conference, shadowed consideration of a program of economic defense, since it most immediately concerns the security of the Americas and especially since the confused situation at Martinique focussed attention on it. The original United States proposal for a Pan American mandate system was opposed by the Argentine delegation, which favored postponing a decision until an emergency presented itself. Brazil, possibly with an eye on the Guianas, favored such a system. The Act of Havana finally went beyond the original proposal, shifting in terminology from 'mandate' or 'joint protectorate' (Cuba's proposal) to 'provisional administration,' which might be established 'when American islands or areas at present held by non-American nations are in danger of becoming the subject matter of exchange of territories or sovereignties.'

After the crisis is passed, the possessions would either be independent or returned to their former sovereigns, providing that it 'would not be prejudicial to the safety of the American republics.' In addition, any American republic may act alone if the emergency should be so urgent that action of the 'emergency committee' created to implement the agreement could not be awaited. This committee, composed of one representative for each of the twenty-one republics, should be considered constituted on the date of the appointment of two-thirds of its members. Ecuador's selection of its representative in October, the fourteenth appointee, brought the emergency committee into existence, and it will function until the Convention of Havana is ratified by two-thirds of the American republics and a permanent Inter-American Commission on Territorial Administration is set up. Sumner Welles, Under-Secretary of State, has been designated United States representative. With the adoption of this resolution the Monroe Doctrine passes from a unilateral declaration to an inter-American instrument of common policy.

Secretary Hull, who headed the United States delegation, recommended a four-point program of co-operative action, providing for (1) the strengthening and expansion of the activities of the Inter-American Financial and Economic Advisory Committee as 'an instrument for continued consultation with respect to trade matters'; (2) the creation of facilities for orderly marketing of accumulated surpluses of the key commodities of the American republics; (3) the development of commodity agreements to assure equitable trade terms for producers and consumers; and (4) consideration of methods for improving the standard of living throughout the Americas. The economic resolutions adopted amplified these points and laid down the broad lines of economic policy for the Western Hemisphere but left the details to be worked out by the Inter-American Financial and Economic Advisory Committee, working in cooperation with the Inter-American Bank and Inter-American Development Commission. It was recognized that the shifting world situation made it desirable to leave the program for economic cooperation flexible, so, although the surplus commodities problem received primary attention, no cartel or marketing board plan, such as was earlier under discussion in the United States, was proposed. Instead, the Conference merely recommended the creation of 'instruments of inter-American cooperation for warehousing, financing and transitory disposition of the surpluses, as well as for their orderly and systematic distribution and sale,' a program presumably linked to the increase in the capital of the Export-Import Bank (see ARGENTINA).

The third section of the agenda pertained to neutrality. Such questions were referred to the Inter-American Neutrality Committee, sitting in Rio de Janeiro, which functions now with greatly enlarged powers. It is entrusted with the drafting of a convention on general principles of neutrality and another to implement the 300-mile wide 'safety zone' established during the Panama Conference, in this latter case to define what might be considered acts of war and the nature of the sanctions, short of force, to be applied. Patent violations of the zone, such as the cases of the Graf Spee and the Wakama, show the necessity for such a convention.

Finally, a resolution was passed providing for the suppression of foreign subversive activities, including provision for the exchange of information and immediate consultation 'in the event that the peace of any of the American republics should be menaced by such activities.'

The United States Senate, on Sept. 27, ratified the Havana Pact without reservation. The work of implementing the Conference's resolutions goes on slowly. The agreement regarding European possessions has been criticized as 'legalizing United States intervention,' but such misuse of the Act of Havana would destroy the continental solidarity to which Secretary Hull aspires. Whether the program of economic and financial cooperation outlined will defend the Americas against German economic penetration depends, in part, upon the ways in which it is given concrete application. Germany has manifested eagerness for the surpluses accumulated because of the loss of European markets, and has already solicited orders from various South American countries in exchange (see BRAZIL), promising deliveries of manufactured goods at prices far below those quoted by North American exporters. In the years just preceding the European War, Latin America sold about 60 per cent of its exports outside the Western Hemisphere, and most of this went to Europe: thus the importance of either the cartel plan for joint marketing of important staple exports or an intensive program to increase United States consumption of existing Latin American products and to develop new commodities for the United States market.

The Inter-American Financial and Economic Advisory Committee, to which specific economic problems were assigned, is an outgrowth of the Panama Conference. Its principal work has been the drafting of plans for an Inter-American Bank, the convention for which was signed by nine nations, including the United States, in May, whose subscription of more than the minimum number of shares of stock (145 shares worth $100,000 each) makes it possible for the Bank to start operations; the appointment of a committee to put into effect the 'Davila plan' for promoting non-competitive economic activities with joint United States and Latin American capital; the elaboration of a coffee quota agreement (see EL SALVADOR); and the instigation of studies by its subcommittees of the raw materials situation, the balance of international payments and the problem of complementary production.

Elections.

Presidential elections, twice postponed and finally held July 14, resulted in a 3-to-2 victory for Col. Fulgencio Batista over Dr. Ramón Grau San Martín. Batista was supported by a coalition of seven groups, including the Communist Party, which he had legalized two years ago, at the one extreme and the very conservative Democratic Republican Party of ex-President Menocal at the other. (The Batista bloc is known as the Socialistic Democratic coalition.) Dr. Grau's supporters ranged from his own party, the Autéticos, the largest political group in the country at large, and the ABC, to the Acción Republicana, the party of Miguel Mariano Gómez. Such widely varied support on both sides, and the agreement of both candidates on such important questions as close collaboration with the United States and maximum guarantees to foreign capital, made it clearly a campaign fought on personalities alone. In spite of the usual charges of intimidation and electoral abuses, the election was reasonably calm and decisive, and was characterized by a large turn-out of voters, including many women. The opposition was subsequently divided on obstructing Batista's inauguration — bickering over the election results did delay the installation of the new Congress — but the new government took office on Oct. 10. The Cabinet selections were clearly in the nature of rewards for support in the campaign, although the Communists received no appointment, and acceptance of their support seems to have been merely a matter of political expediency.

New Constitution.

The political difficulties of the new administration are numerous, since its support was drawn from so many mutually antagonistic groups. It operates under a new Constitution, moreover, which was finally approved June 8. The Constituent Assembly, which formally opened its sessions Feb. 9, was dominated by the opposition until the Menocal group lent Batista its support in March, thus providing the Batista forces with fifty votes to the opposition's twenty-five. The Communists had six delegates in the Constituent Assembly. The new Constitution, an unwieldy document of hundreds of items, provides for a semi-parliamentary system, with a prime minister responsible to the Chamber, a reduction in the size of the Lower House and an increase in the Senate, compulsory balloting, and a mortgage moratorium. This last was the center of very bitter debate and denunciation by the conservatives, who call its provisions, drastically cutting interest rates and providing amortization periods of from twenty to thirty years in some instances, as unfair to business interests as the law vetoed last year by President Laredo Bru. The Constitution provides, too, for the exclusive use on government buildings of the traditional Cuban flag, ruling out the Fourth of September flag, which commemorates the sergeants' revolt of 1933 that brought Batista into power. This item reflects a feeling that the army should be subordinated to the state and the dualism between the government and army abolished. A maximum working week of 44 hours, with a month's paid vacation each year, is provided. The government is empowered to fix minimum wages; the immigration of common laborers is prohibited; the land area that may be owned by any individual or corporation is limited in accordance with use, and restrictions are imposed on alien land ownership. Similar specific items have given point to the criticism that the new Constitution is a code of laws designed for specific cases rather than an organic charter. On the whole, it reveals a tendency towards a controlled economy, with economic enterprises submitted to the 'economic-social interest of the nation.'

The Falange.

'Subversive activities' in Cuba have centered in the Falange Españols, an offshoot of the Consefo de Hispamcismo, which is the propagandist organ of the Franco government in Latin America, designed to restore Spain's prestige in the Western Hemisphere. The Falange, legalized in July as a 'social aid' society, has an estimated membership of 50,000. A motion demanding its dissolution and the recall of Genario Riestra, newly appointed Spanish Consul-General, has been presented to the Senate.

Financial Matters.

Negotiations for a $50,000,000 loan from the United States were temporarily discontinued when, in October, an Economic and Technical Commission, which had been in Washington for two months, disbanded. The bill authorizing the loan was signed by the President Sept. 18. Decrease in revenue, caused by the low price of sugar and the general economic crisis, accounts for the budgetary deficits and makes a loan necessary to meet government expenses. The 1940 budget, totalling 76,000,000 pesos, was extended for the first three months of 1941. President Batista, in November, recommended a budget of 83,986,959 pesos, but Congress failed to approve the increase.

Sugar Industry.

As a result of close economic ties with the United States, Cuban foreign trade is not so seriously affected by the European War as that of most American republics, although European markets normally account for over 30 per cent of Cuba's sugar shipments. The government has taken no action to fix this year's crop, although most mill owners favor limiting it to 2,000,000 tons. Last year's crop was restricted to 2,700,000 long tons. Cuba now has a million tons on hand. The 1941 sugar import quota for Cuba, established by the United States Department of Agriculture, has been fixed at 1,869.060 short tons. (The Sugar Act of 1937 has been extended for one year, until Dec. 31, 1941.) A recent decree excluded sugar mills from compliance with the 44-hour week.

Education.

President Batista has signed a decree transferring control of the army-directed rural schools, a favorite project, to the Minister of Education, indicative, possibly, of his desire to put his presidency on a thoroughly civilian basis. One-half of the 8,000,000 pesos increase in the proposed budget represented the increased appropriation to the Department of Education needed to place the military schools under its jurisdiction.

1939: Cuba

Political Situation.

A crisis in Cuba's political history developed as a result of the elections of a Constituent Assembly on Nov. 15. The result, giving 41 seats to the opposition coalition and 35 to the Batista factions, was a potential victory for the opponents of the Laredo Bru administration, which ends May 20, 1940, and represented the world defeat in the political carrier of Colonel Fulgencio Batista, the strong man of the administration. The opposition represents a strange alignment of forces, including the Cuban Revolutionary Party of the former radical president, Dr. Ramon Grau y San Martín, which polled eighteen votes, and the Democratic Republicans, led by the ultra-conservative ex-president Mario G. Menocal, who accounted for fifteen seats. The Republican Actionists of ex-president Miguel Mario Gómez and the revolutionary ABC party divided equally the remaining eight votes. This odd political mélange was united only by a desire to terminate the control of politics which the army has exercised since the Batista coup of 1933. The administration coalition includes the Liberals, Nationalists, National Democrats and Communists. Alleged irregularity in balloting has raised a legal problem for the Superior Electoral Tribunal to decide, which may alter the election results. The Assembly, which is to draw up a constitution before the general elections scheduled for Feb. 28, 1940, cannot convene until this is settled. The opposition has requested the postponement of the elections until the new constitution is drafted; the Batista coalition has refused to discuss this issue. Meanwhile, the exact status of the Assembly is uncertain, the administration maintaining that its only function is to prepare a constitution; the opposition insisting that it should exercise full sovereign power, with authority to install a provisional government until the general elections are held.

The defeat of the Batista forces in the November elections has not discouraged the presidential aspirations of the Cuban dictator. On Nov. 28 the Congress passed the military retirement bill, providing for a reduction in the army, now the largest in the history of the Republic, and permitting Colonel Batista to retire from its command, thus making his candidacy possible. His retirement Dec. 6 was followed by his nomination, first by the Communist Party and, subsequently, by the other parties in the administration coalition, now to be known as the Socialist Democrats. It is not yet known who the opposition candidates will be.

Financial Problems.

The Constituent Assembly election results reflect a dissatisfaction with the policies of the present administration, growing out of the depressed economic condition of the country which is indicated in the depreciation of the peso. Normally pegged to the United States dollar, Cuban silver declined to as low as 84 cents in July, just prior to the passage of the Casabuena bill. This measure was designed to arrest further depreciation through the grant of price-fixing emergency powers to the President, the payment of dollars' accounts in pesos, placing Cuban currency on a par with the United States dollar for all transactions in the island, and the establishment of official control of exchange. An emergency tax bill was passed in December, authorizing an increase in the sales and gross receipts tax from 1½ to 2 per cent and a 20 per cent rise in the profits tax on banks and corporations. The issue of another $1,500,000 in silver certificates was also provided. It is hoped by this measure to provide sufficient revenue to cover expenditures in 1940. On Dec. 30 the President signed a decree fixing national expenditures for the coming year at $75,999,855, the same figure as provided in the 1939 budget. A deficit of $5,000,000 is reported this year. The economic crisis was aggravated, according to business and financial interests in Cuba, by discussion and passage over the president's veto of the Mortgage Moratorium Liquidation bill. The Batista measure for revalorization of mortgages, which would have drastically scaled down existing mortgages, benefitting some 180,000 small debtors, had the strong support of the revolutionary factions, the Communist Party and labor.

Sugar Industry.

The sugar industry, always the key to Cuban economy, was rendered uncertain by President Roosevelt's temporary suspension of the sugar quotas, following the outbreak of war in Europe. The removal of the quota automatically restored the $1.50 tariff rate on Cuban sugar, since the preferential rate of 90¢ a hundred pounds provided in the reciprocal trade agreement of 1934 applied only so long as the quota was in effect. Cuba was thus faced with a sharp cut in the returns from its chief industry. Cuban producers not only found themselves at a disadvantage in the North American market but faced with the loss of that market. A supplementary trade agreement with the United States was signed on Dec. 18, to take effect five days later, reverting to the status of 1934. The quotas were restored Dec. 26, President Roosevelt declaring the danger of hoarding and speculation was past. Three days later the 1940 quotas were established, allotting Cuba 1,923,680 short tons out of a total of 6,725,000 tons. According to the formula specified in the 1937 Sugar Control Act, providing for a percentage division of the market, Cuba's quota is 28.6 per cent, compared with 23.19 for Continental beet sugar and 6.29 per cent for mainland cane sugar producers. The Cuban National Sugar Institute has recommended that the 1940 crop be limited to 2,753,903 long tons, an increase of 57,386 tons over the 1939 crop.

Labor Conference.

In spite of the European War the second American regional labor conference of the International Labor Office met in Havana in November, with delegates and advisers from sixteen countries present. The leading topics under discussion were conditions of work for women and children, social insurance and immigration. Such a conference cannot make binding agreements but a Declaration of Havana, described as social complement to the declarations of political and juridical solidarity adopted at Lima and Panama, was unanimously proclaimed. Cuba is one of the most advanced of the Latin American countries in labor legislation, having so far ratified twenty-six of the sixty-three conventions adopted by the I.L.O., and passed legislation to make the majority of them effective. In the past six years the island has enacted an 8-hour law, a minimum wage, obligatory vacation and workmen's compensation laws. On the other hand, legal strikes may be called only on official permission and the labor syndicates and unions operate under Government supervision.

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.