14 THE CUBA REVIEW 



Public Finance 



The chief problem which has confronted the Cuban treasury has been the necessity 

 of cutting down the high expenditures in the budgets of recent years to such a point that 

 they may be measured by an income which until recently has been steadily decreasing 

 with the falling off of import trade and the slackening of business throughout the 

 island. 



To meet this situation, the proposed expenditures for the coming year have already 

 been greatly reduced. The budget of 1918-19, which was readopted for the current fiscal 

 year, amounted, with the changes later introduced, to $77,888,043. The revision accom- 

 plished in January, 1922, reduced the expenditure to $59,887,797. Unless the national 

 income is increased through improvement of the customs collections or new fiscal 

 legislation, the liscal year ending June 30, 1922, will close (even after this reduction 

 of expenditures) with a deficit of several million dollars. It is proposed that the budget 

 for the next fiscal year shall not exceed $55,000,000. 



New internal taxes are under consideration and two committees, one appointed 

 by the President and the other representing the two houses of Congress, are studying 

 projects for a new customs tariff designed to increase the yield from imports. 



Meanwhile the actual income from sources other than customs has remained prac- 

 tically stationary and the customs income has begun to improve, even under the rates 

 now in force. From $3,009,624, which represents the collections during July, 1921 

 (the first month of the fiscal year), the returns declined to $1,958,022 in December, 

 when they reached their lowest point. These low collections brought the customs 

 income for the calendar year 1921 dowTi to $48,920,004, compared to $69,028,609 in 

 1920. Since December, 1921, the returns from customs have recovered and for the 

 month of February, 1922, totaled $2,355,064. This improvement has occurred in the 

 face of a heavy local supply in a large number of lines, which were overbought during 

 the boom period. 



In view of the improved outlook, increasing attention is being given to the pos- 

 sibility of avoiding the making of new foreign loans. 



Banking Readjustment 



The banking liquidation, provided for by the legislation of January 31, 1921, and its 

 supplements, has progressed under the charge of the "Comision Temporal de Liqui- 

 dacion Bancaria." Of the 17 banks which came under its supervision, 10 are in process 

 of liquidation, 4 have been reorganized and are now functioning, and in the case of 3 

 it is not yet decided whether plans of liquidation or reorganization will be adopted. 

 The creditors, depositors, and stockholders of two of the banks in liquidation — The 

 Banco Nacional and the Banco Espafiol de la Isla de Cuba — have formed protective 

 associations to watch over and expedite the settlement of the accounts of these institu- 

 tions. Some sentiment has developed in favor of further efforts for the reorganization 

 of these two banks. The developments in the affairs of the Banco Nacional de Cuba 

 are of special interest to the Government, although the bank is not, as its name 

 might indicate, a national institution. The degree to which this is true is indicated by 

 the fact that when the present administration took charge of the Government, on May 

 19, 1921, an item of the treasury balance was $12,032,327 in the Banco Nacional de 

 Cuba. This credit has been under the same limitations as others in the hands of the 

 bank. Whether the State will attempt to establish its position as a preferred creditor 

 is still under discussion. 



The actual liquidation of the affairs of the banks which are to be closed perma- 

 nently proceeds slowly because of the general hard times prevailing throughout the 

 island. Properties of any sort are hard to dispose of at present on advantageous terms. 



The banks representing foreign capital have, on the whole, fared better than 

 the local companies, in some cases due to more conservative policies followed in the 

 making of loans and in other cases because they have to a greater degree been able to 



