We Jet 1d Ol Ws 1 AL TR VV IE 8) WY 25 
ers, but in most cases they seemed to be of the same opinion as the sugar holders, 
that is, that the lowering prices were merely the result of a temporary weakness and 
recovery would soon be seen. That they were all mistaken has since become evident. 
Thus had been laid the groundwork for a period of extreme financial embarrass- 
ment beginning last October. Growing difficulty in securing credit and higher money 
rates contributed toward the feeling that all was not well with our banking institu-_ 
tions. Little by little this feeling became extended and strengthened, until in the 
week beginning October 3rd, when, especially during the latter part of the week, 
runs were commenced on the local banks, that is, the Spanish Bank of the Island of 
Cuba, the National Bank of Cuba and the International Bank, these runs developed 
full strength on Saturday morning, October 8th. Luckily for the banks Saturday was 
only a half day, so that funds were disbursed only during the morning hours, but 
during this period very large sums had been distributed to depositors. Saturday 
afternoon and Sunday conferences were held between the principal bankers of the 
city, President Menocal and other Government officials, and the decision was reached 
to declare a moratorium to be effective till November ist, by the terms of which 
the payment of all mercantile debts contracted previous to October 10th or that would 
fall due before November 1st would not be enforceable till this date. Congress should 
have opened its sessions on November ist, but due to political dissension this did 
not take place during the entire month of November, resulting in a further extension 
of the moratorium to January ist, President Menocal stating toward the end of 
December that if Congress did not meet before January ist, no further extension 
of the moratorium would be decreed. This woke the legislative bodies up, with the 
result that the House of Representatives held its first session on December 30th, 
petitioning President Menocal, through a committee appointed for that purpose, to 
grant a further extension of the moratorium, thus giving Congress time to act. This 
resulted in a further extension till January 31st. During this interval the Torriente 
Law was passed, by which the payment of debts to the banks by debtors thereof must 
be made according to a schedule granting 105 days from January 31st, in which the 
complete debt must be settled, and granting the banks 135 days from January 31st 
it which to settle the accounts due by them to their creditors. The schedule of pay- 
ment by the banks’ debtors is as follows: 15% within fifteen days after January 
olst, 25% within the next thirty days, 25% within the next thirty days, and 30% within 
the next thirty days. Failure to pay any one of these installments or to have paid the 
full amount within the period of 105 days mentioned gives the creditor the privilege 
te enforce the payment by law. The schedule of payments by the banks to their 
creditors is as follows: 15% after the first fifteen days, 15% after the next thirty 
days, 20% after the next thirty days, 25% after the next thirty days, and 25% at the 
end of the next thirty days. The failure by a bank to pay any one of these install- 
ments gives the bank’s creditors the privilege of proceeding according to law. 
During this period in which the enforcement of the payment of debts was prac- 
tically impossible, financial quiet, of course, prevailed. Yet under the surface much 
true liquidation was going on. Many of our retailers paid up in part their debts to 
wholesalers, who in turn applied these funds on the payment of debts to the banks, 
which in turn used the funds thus secured to give amounts to their most needy de- 
positors exceeding the 10% of funds on current deposit as of October 9th, and the 12% 
of savings deposits, payment of which was required by the original moratorium decree. 
Also, at least one of our local banks began to reduce its branches and its staff, and 
commenced a propaganda among those who had been favored by it in an endeavor 
to secure such co-operation from them as would enable the bank to continue in 
operation. After the passage of the Torriente Law, both the Spanish Bank of Cuba 
and the National Bank of Cuba proposed plans by which their creditors should accept, 
in lieu of the amounts the bank owed them, certificates of deposit or bonds drawing 
interest at the rate of 5% and 6% respectively, the former due one year from March 
1st and the latter subject to call. 
