PIG TG (CAI AL Fe IR VTE IG IU 9 
predicted that this institution would not be able to withstand the strain and, while 
the failure was a large one, involving several million dollars, it had practically no effect 
upon business. The merchants had anticipated for a long while such a happening and 
were prepared for the outcome which they had from the first regarded as inevitable. 
Strenuous efforts, however, have been made for some months to raise funds, both in 
the United States and abroad, but seemingly without results. This institution expanded 
greatly during the war period, its numerous branches throughout the Island being probably 
second to those of the Banco Nacional, which was compelled to close its doors several 
months ago. The Banco Espafiol was reputed to have had the largest amount of savings 
deposits of any bank on the Island and the closing of its doors has been a severe blow to 
those persons least able to bear the losses. We feel, and our view is borne out by those 
best in position to know, that the liquidation of the Spanish Bank will be the “turning 
point” and that this will be the last banking institution forced to liquidate. 
One of the largest contributing factors to the present financial stringency which is 
causing so much suffering throughout the Island has been the unstability of the financial 
institutions, causing many millions of dollars to be withdrawn and hoarded in the homes 
of the former depositors. It is estimated by reliable authorities that approximately 
$100,000,000 has been withdrawn from circulation since the advent of the moratorium 
last fall. While this is a natural result of the weakening of the faith of the people in the 
banking institutions, nevertheless, a strong effort will necessarily have to be made to 
re-establish the faith of the public in the banks so that this money may again get into 
circulation. The matter is recelving thoughtful consideration on the part of financial 
experts and when the problem is solved it will be a great aid in helping to bring the 
country back to normal. 
The new administration is giving thoughtful consideration to the financial problem 
and while no tangible solution has as yet been recommended, it is felt that some measure 
of relief from the chaotic conditions at present prevailing will be drawn up and submitted 
to congress. There has been a strong rumor in circulation of late that a Cuban branch 
of the Federal Reserve Bank will be established in Havana. While no confirmation of 
this report is obtainable at the present writing, the subject is causing favorable comment 
among the banking interests, as it is felt that the establishment of such an institution 
would be of unestimable assistance in stabilizing the money situation. The work of the 
clearing house which was established a short time ago is progressing very nicely, ful- 
filling a long needed requirement for the expeditious handling of commercial paper. 
PouticaL Matters: The new administration with President Alfredo Zayas at 
the helm is making a remarkably fine start and is inspiring the confidence of all who realize 
that many reforms are vitally necessary before the Republic emerges from the depression 
under which it has been laboring for the past several months. Quite a number of 
measures of relief have been advocated by the new administration, chief of which has 
been the cutting down of the annual budget for government operation from approxi- 
mately $130,000,000 to about $60,000,000. It is realized that before Cuba can 
again get back on her feet solidly, she must cut down the tremendous overhead expenses 
which are causing too heavy a burden, in the form of taxation, for the people to bear. 
Another reform advocated by the new President which has received much favorable 
comment, is the abolition of the ‘‘botellas”’ or bogus office holders who are on the govern- 
ment payrolls but who do no work, not even going to the trouble of drawing their pay, 
but in the majority of cases, selling their pay vouchers to outsiders who draw the money 
in their stead. 
Legislation has been introduced in congress, the object of which is to reduce the 
present high living expenses by placing higher duties on such articles as jewelry, liquors 
and luxuries with a corresponding tariff decrease on the necessities. The President has 
sent a special message to congress on this subject and it is believed that this much needed 
legislation will be enacted very soon. 
Another important matter that is receiving attention from the new administration 
is the question of the proposed national highway connecting Havana with Santiago de 
Cuba, as well as the general improvement of highways throughout the Island. It is 
