THE CUBA REVIEW 21 



MONEY AND BANKING IN CUBA 



By WILLIAM H. MORALES, 



Assistant Cashier, National Bank of Cuba. 



A perusal of Cuban history shows that within a few years after the country was 

 settled, questions in regard to the exchange value of its moneys arose which were not 

 effectually resolved till the lapse of nearly four centuries later, upon the establish- 

 ment of the Cuban Republic. 



As with the other early Spanish colonies of the New World, the circulating 

 medium was at first solely metalic. A credit currency was not suited to a primitive 

 country, whose foreign trade was largely clandestine, open to piracy and other perils, 

 its lawful commerce being limited to the port of Cadiz, Spain, under the monopoly of 

 a board of trade known as the "Contratacion de las Indias", succeeded in 1740 by the 

 "Real Compahia de la Habana", till the English occupation in 1762. 



The position of Cuba, on the highroad between Europe and Latin America, made 

 its harbors the Mecca of the Spanish fleets of those days. The gold and silver mines 

 of Mexico and South America poured their millions into the Island after the year 

 1545, when the deposits of San Luis Potosi were opened to the world, the volume of 

 the output being brought to Havana before distribution to Europe and other parts. 



Instead of ships making the transatlantic journey alone as at present, large mer- 

 chant fleets, laden with immense treasure, were convoyed by war vessels at long 

 intervals, as a safeguard against filibusters and buccaneers as well as to preclude 

 possible competition. 



In 1550 a monetary crisis occurred in Havana, which five years later became the 

 capital, owing to the failure of the governor, Dr. Gonzalo Perez de Angulo, to enforce 

 the provision of the Spanish law, that the silver Real should be estimated at 34 mara- 

 vedis, instead of 40 to 44, the commercial rate prevailing at Vera Cruz, Santo 

 Domingo, Cartagena de las Indias and other points near the silver mines. The gov- 

 ernor, actuated by private interests, claimed that conditions in Cuba justified the 

 same rate as in these places, and that the legal rate of 34 to 1, if applied, would drain 

 the country of its silver stock. 



These views were also expressed by travellers going from Mexico to Spain, who 

 were obliged to make a long stoppage in Havana, where their money was exchanged, 

 insisting that they should receive the larger or commercial rate for their silver as in 

 other places. 



Not disposed to change his attitude in the matter, the Spanish king (known to 

 fame as Carlos V, emperor of the Holy Roman Empire) issued a royal circular (real 

 sobrecarta), reasserting the legal rate of 34 to 1 for Cuba, under a penalty of 100,000 

 maravedis, instead of 10,000 as fixed in his former order, for each violation. 



The sovereign mandate was complied with, as peace and policy required, but this 

 demand for a higher valuation of money in Cuba than in the mother country is taken 

 as the origin of the premium afterwards placed on Spanish coin, with which the 

 people of later times are familiar. 



When in the year 1779, during the reign of Carlos III, the Spanish gold Onza was 

 commenced to be coined, its par value was estimated at 16 pesos in Spain. But in 

 Cuba it was shortly afterwards taken to represent 17 pesos, or a premium of about 

 6%, which it continued to hold until the repatriation of Spanish money three years 

 ago. This premium, we are told by authorities, supported by Dr. Leopoldo Cancio, 

 Secretary of Finance and leading Cuban economist, was calculated to keep gold in the 

 country, at an excess valuation, along with the annual output of $800,000 in Silver 

 coming from Mexico, sugar and tobacco being exported from Cuba to North America 

 and Europe as an offset thereto. 



