16 



THE CUBA REVIEW 



BANKING IN CUBA 



.\t a metting of the Chattanooga Manu- 

 facturers' Association, held Februarj' 16th, 

 after their return from Cuba, where some 

 120 of them had gone on a trade and 

 pleasure trip, JMr. W. A. Sadd, president 

 of the Chattanooga Savings Bank, gave 

 an interesting address on the subject of 

 Cuba's banking methods. 



His address in part, as found in the 

 CJiattanooga Times, is as follows: 



"Before the beginning of the independ- 

 ence of Cuba, after the Spanish-American 

 war of 1S98, the banking business of Cuba 

 was handled almost entirely by foreign 

 banks, there being the Bank of Spain and 

 a branch of the Royal Bank of Canada 

 and of the Bank of Nova Scotia. The 

 main banking business of the city was done 

 by the English banks, as there was a feeling 

 of distrust against any Spanish institution. 



"After the beginning of their independ- 

 ence the installation of an American bank 

 was conceived by Mr. Jarvis, of New York, 

 who formed a company called the National 

 Bank of Cuba, with an original capital of 

 $500,000. Ele brought all of his money 

 in gold to Havana in boxes and barrels, 

 and, as soon as he arrived, rented a small 

 place on the main business street, and, for 

 about a year's time, did his business with 

 his money in this way. 



"After that time he was able to interest 

 local parties and started a bank with 

 $1,000,000 capital, buying the location where 

 their bank is located at the present time. 



"At that time also they obtained the bank- 

 ing business of the republic of Cuba, which 

 gave them prestige and considerable stand- 

 ing. Their history since that time has 

 been one of progress, and at the present 

 time they have branches in nearly every 

 important city in the island, with a deposit 

 line of practically $30,000,000. The bank 

 is controlled by American capital and its 

 executive heads are Americans. 



"In the island of Cuba you have entirely 

 two bases of currency — the American and 

 Spanish bases. Your deposits, however, in 

 the banks there are made entirely on the 

 Spanish eciuivalent. In other words, an 

 American dollar is worth about 1.09% in 

 Spanish money, so when a teller takes a 

 deposit made to him in American money 

 or English money, the deposit is made as 

 Spanish money. The teller has to figure 

 out the value of the same on a basis of the 

 exchange that day. This exchange varies 

 each day. 



"Tellers in banks in Cuba have to have 

 more qualifications than in this country. 

 He has to be able to speak Spanish, English 

 and French. In fact, it was told to me 

 while visiting the National Bank of Cuba 



that there was probably more English 

 spoken that day than there would be in a 

 year. 



"On account of this difference in the 

 two monies, all of the deposits and also 

 all of the exchanges made each day have 

 to be figured out, and it is done and checked 

 by machines. They have two machines, 

 one of which is made by a Swiss, which 

 is the most expensive, and by setting down 

 the rate of exchange and also the amount 

 of money which is deposited by pressing 

 keys similar to our adding machines, the 

 total amount in Spanish exchange is given 

 on the machines. The same process can 

 be used in figuring the other way. 



"The use of checks has come into more 

 prevalent use of late, although even at the 

 present time I was told by the president 

 of the Trust Company of Cuba, if a man 

 purchased a piece of property, say, for 

 $10,000, he would go to the bank, draw 

 the money out, turn it over to his attorney 

 who was preparing the papers, and after 

 they were prepared the actual money would 

 pass. Very possibly the seller would be 

 a depositor in the same bank and he would 

 bring it back and deposit it to his account. 



"Loans in Cuba are made almost en- 

 tirely on the discounting of drafts or ac- 

 ceptances for goods shipped out of the 

 country. There is very little, if any, actual 

 loaning on commercial paper, as is known 

 in the States. Loans are made on col- 

 lateral security with bonds or stocks, and 

 also loans are made on property. The 

 average rate on money at the present time, 

 which they consider quite low, is 9 per cent. 

 This is practically half of what it was about 

 ten years ago. The rate of interest seems 

 high to us, but I presume on account of 

 the instability of the government the rate 

 was necessarily higher. 



"Loans on real estate are quite prevalent 

 at the present time, and with the growth 

 of the city and of the country will probably 

 increase. The titles of the property are 

 in very good shape, as they come primarily 

 from the main government. 



"The banks in Havana have no institution 

 known as a clearing house and they collect 

 checks on each other. If they have large 

 amounts, the same is done daily between 

 them. As a rule, the banks carry inter- 

 changeable accounts and the same are 

 charged against these accounts, and every 

 two or three days settlements are made 

 lietween them. 



"On account of the different nationalities 

 in the banking business, and rather the 

 suspicion of each other, it seems rather 

 impossible to establish a clearing house at 

 the present time, but that will come. 



