THE CUBA REVIEW 23 



fallen still lower, and as the portion of the crop which had been disposed of up to August 5 

 was sold at the average price of 3.65 cents per pound f. o. b., which is below the average 

 cost of production (3.75 cents), it is unquestionable that the Cuban producers are suf- 

 fering this year heavy losses on their sales. 



Crop Still Largely in the Hands of the Producers. — The loss due to the low 

 price prevailing is aggravated by the large stocks of sugars still unsold. In normal 

 times practically all the crop is disposed of by the producers and exported during the 

 first months of the year. But during the past twelve months buying has taken place 

 only under the pressure of immediate needs and the large quantity of sugar existing 

 in Cuba has moved very slowly from the producers to the refiners. We thus have 

 at present (31st October) about 1,450,000 long tons unsold, out of a crop of about 3,900,- 

 000 long tons, or 37.2% of the total. Of this amount it is estimated that there Tvill still 

 be unsold, when the next crop comes on the market, at least 1,000,000 tons, or 25.6% 

 of this year's production. The effect of this remnant will be to keep the price down, 

 to hinder very greatly the sale of the next crop and to embarrass the producers in many 

 other ways. 



Indebtedness -■ind Inability to Obtain Loans. — It may be estimated that the 

 sugar producers of Cuba, including planters and manufacturers, are now in debt to the 

 amount of about .$400,000,000. The industry has been developed in the last few years 

 by the establishment of new mills, the purchase of lands, the renewal of machinery 

 and other improvements, representing about 350 million dollars, a part of which was 

 still due when the present crisis arose about the month of October, 1920. To those 

 debts on mills and lands must be added the loans made by the banks for mo\'ing this 

 year's crop, loans which the great majority of the mill owners and planters have as yet 

 been unable to repay because the sugar remains unsold in such a large proportion, 

 most of that sold so far being from American mills which were not financed to any great 

 extent by the local banks. 



It is well known that Cuba has suffered a very severe banking crisis which has 

 brought about the closure of a number of banks and the almost complete restriction of 

 credit by those which continue in business. Of the banks which are now in liquidation, 

 the three largest held between them, according to their balance sheets of June 30, 1920, 

 $343,000,000 (United States dollars) of deposits in saving and current accounts, and main- 

 tained 310 branches throughout the Repubhc. Besides these three large banks, about 

 fifteen small institutions, with considerable total deposits, are also at present in liqui- 

 dation. On account of the failure of so many banks, the heavy loans outstanding which 

 cannot at present be repaid, the great deflation in all values, and the critical situation 

 of the sugar industry, there has been an almost complete restriction of banking credit 

 in Cuba. The mill owners and planters are, therefore, confronted, on the one hand, 

 with the difficulty of repaying their loans, and, on the other, of obtaining the much- 

 needed funds which the banks have always furnished them for the purpose of mo\ans 

 their crop. As a consequence of the situation just described, many sugar mills and 

 cane fields are now in the hands of the foreign banks established in Cuba, and it is esti- 

 mated that fully 80% of next year's crop will be either owned or controlled by American 

 capital. 



From the salient facts above referred to, it can readilj^ be appreciated that the sugar 

 producers of Cuba are at present passing through a most difficult process of readjust- 

 ment, which is really a struggle to save themselves from total ruin. Under such circum- 

 stances, the increase in the duty on sugar obviouslj^ works great hardship to Cuba and 

 contributes to make her crisis more intense and prolonged. 



The duty on sugar was increased by the Emergency tariff and by the Fordney 

 Bill as a protection to the domestic industry and that of the non-contiguous territories 

 of the United States, and was largelj^ directed against Cuba. A member of the House 

 of Representatives, in the debate on the Fordney Bill, on the Uth of June, 1921, stated: 

 "Let it be remembered that in normal times 99J^% of our importations of [foreign] 

 sugar comes from Cuba and that Cuba by treaty has a differential of 20% in its favor. 



