Cuba's  national economy is a boom-and-bust economy. It is, in a way, a war-and-peace economy and Cuba's best years are always war years. Since the island produces but one important commodity, sugar, and since sugar and its byproducts, such as alcohol, are vital war materials, the country enjoys high prosperity during wartime. But once the world returns to peacetime levels, the bottom falls out of the sugar market and Cuba finds herself involved in unwanted sugar surpluses and economic depressions. The greatest years in Cuba's history, from an economic standpoint, were the World War I years. Sugar prices jumped to unprecedented
dented high levels and the nation went on a spending spree. Millionaires were made overnight and almost everyone in Cuba joined in the hilarious orgy which Cubans now refer to as the "Dance of the Millions." The fun lasted but a few years and it was not until the inevitable depression set in that the people realized that they had mistaken a war economy for a normal economy. A second "Dance of the Millions" was averted when World War II broke out because Batista, then President of the Republic, put a ceiling on sugar prices as an aid to the Allied cause and as a means of preventing inflation. His action held the nation's economy to a reasonably
normal level.

Perhaps the greatest challenge to any Cuban president is the problem of sugar. Almost everything in Cuba is affected by sugar. When sugar prices drop on the world market or when consumption is down, Cuba runs into trouble. At some time or another during every president's administration, he finds himself faced with a sugar situation. And if he fails to solve it satisfactorily his reputation as a governor may be jeopardized. He may even have difficulty remaining in office. There is nothing more conducive to national unrest than a sugar depression, and Cubans traditionally look to their governments for solutions of these vital problems.

When Fulgencio Batista came into power in March, 1952, he inherited one of the most perilous sugar problems any president ever faced. His predecessor, Carlos Prio, had allowed the nation's sugar mills to produce a 1952 crop of over seven million tons, in spite of the fact that there appeared to be no market for more than five million tons. It costs money to produce sugar, and a crop of seven million tons represents an investment of many millions of dollars. The raising, grinding, and marketing of Cuba's sugar crop is financed to a great extent by the banks of Cuba. So the nation's financial structure was jeopardized by the huge surplus, which no
one seemed to want. Mills were in debt, thousands of sugar workers had not been paid for their five months of labor, new machinery had to be installed and mill repairs made out of a profit that never materialized. Furthermore, the 1953 harvest was getting closer and the sugar producers were prepared to bring in another seven-million-ton crop. The specter of double surpluses kept many a sugar man awake during the spring and summer of 1952, and it was up to Batista and his government to find a quick and satisfactory solution. His political enemies, including those who created the problem in the first place, were delighted with the situation. Batista, they were sure, could never solve the problem, and they were just as certain that if he failed to solve it his political days would be numbered.

After weeks of conferences with sugar men, bankers, and economic aides, Batista took the first step toward a solution of the problem. He announced that the banks of Cuba had agreed to underwrite the 1952 surplus and that new efforts would be made to dispose of it, little by little, if necessary, in the markets of the world at a satisfactory price. What the banks did, in effect, was to advance the sugar operators sufficient funds to finance the 1953 crop, holding the 1952 surplus as a sort of collateral.

At the same time, Batista ordered the 1953 crop limited to five million tons. His action in getting the banks to underwrite the 1952 surplus was applauded by the sugar people, but some sections of the industry were not pleased with the restrictions put on the 1953 crop. But this opposition was short-lived, perhaps because the objectors were never able to explain the logic of creating another burdensome surplus. On the other hand, the World Sugar Conference, meeting in London, called Batista's action in limiting the 1953 crop "heroic."

The first two steps by Batista-the underwriting of the 1952 surplus and the limiting of the 1953 crop-eased the tension somewhat, but there was still the problem of getting rid of the surplus of more than two million tons. In April, 1953, Batista found the answer. He personally negotiated a deal with Great Britain in which the British bought a million tons of Cuban sugar over and above the regular quotas. It was sold at a satisfactory price and the money derived from the sale removed all danger of another sugar depression. It also re-established the nation's economy on a solid basis. Meanwhile, the Batista government had disposed of most of the remaining surplus in smaller sales to a half-dozen other nations.

The handling of the 1952-1953 sugar problem did more to solidify Batista's position in the Presidency  than did any single act. It was an astute action, which, in addition to its economic benefits to Cuba, enhanced the confidence of the people in the government of Fulgencio Batista. And it was a good deal for the British. They bought the sugar at a fair price and, in doing so, overcame a national sugar shortage in their own country.

In negotiating the sugar transaction with Great Britain, Batista knew that for years the British had not had enough sugar for their eight or ten cups of tea a day. Furthermore, they are the world's greatest "Sweet tooths," and are very strong in the chocolate, candy, and cakes department. With the making available of this million tons of sugar, Batista knew that sugar rationing would terminate in the United Kingdom. Once the restrictions had been removed, it would be extremely difficult for any government to reimpose rationing, except in case of war or some other extreme international emergency.

The unstable situation in Cuba's sugar industry is not entirely the fault of Cubans. One of the reasons the industry is frequently upset is the custom of the United States government, which calls on Cuba for large sugar crops in times of international unrest and then suddenly cuts back to peacetime demands when the world uneasiness disappears. Sugar cane is a difficult crop to control. If a mill owner plants sufficient cane to produce a half-million tons this year, he will most certainly have that much again next year. Sugar cane keeps coming up, year after year, for as long as eight or ten years. So when. the United States suddenly cuts back its demands because of an international political development, Cuban sugar cane keeps right on growing and the nation is plagued by another sugar surplus. Perhaps the solution to the problem would be to negotiate a long-term contract with the United States, a contract which would guarantee the purchase of a fixed amount of sugar tonnage over a ten-year period. Cuba could then adjust her economy to the demands of the United States and avoid surpluses.