New York Times

January 8, 1958.  p. 49.


Cuba is Thriving on Dearer Sugar

Economic Expansion Goes on Despite Uprising


By R. Hart Phillips

Special to The New York Times

            HAVANA—Cuba, after a highly prosperous year, entered 1958 with excellent prospects marred only by the possibility of continued political violence.

            The expanding economy in 1957 was not seriously affected by the struggle that has put the island in the tight grip of the armed forces. However, the threat of enemies of President Fulgencio Batista to burn the sugar crop and the possibility that outbreaks of violence will continue are highly unfavorable factors.

            The rise in the world price of sugar, Cuba’s principal crop and export, gave the Island in 1957 an income of $680,000,000 from sugar, or about $200,000,000 more than in 1956. The United States bought 2,556,000 long tons (of 2,240 pounds) last year under the quota system. Japan, the largest buyer, obtained 429,000 long tons, Britain 295,000, West Germany 370,000 and the Soviet Union, which increased its purchases over 1956, 350,000 tons.

            Cuba is harvesting cane now for the 1958 sugar quota fixed at 5,500,000 long tons, This is 350,000 tons more than the figure decreed for the 1956 crop. There is sufficient cane to grind more than 6,000,000 tons, according to producers, but since the island had 700,000 tons on had as of Jan. 1, 1956, it was decided to limit the crop to 5,500,000 long tons.

            The price of sugar has declined in recent months but producers expect to obtain around 4 cents on the average for the 1958 crop compared with 5.27 cents during 1957.

Balance Favorable

            In view of the high price of sugar in 1957, Cuba’s world trade balance was favorable. However, the trade balance with the United States, from which Cuba buys 75 per cent of her imports, was unfavorable. The only figures available are for seven months of 1957 and show that Cuba imported $347,404,000 from the United States and sold that country $304,024,000. It is estimated that imports into Cuba increased in 1957 by 12 per cent to 13 per cent over the previous year.

            Government revenue rose 11 per cent for the first nine months of 1957 over 1956. The budget for the fiscal year of 1956-57 closed June 30, last, with a $13,000,000 surplus. Havana bank clearings were up 16 per cent for the first six months compared with the same period in 1956 and deposits were up 16 per cent.

            Salaries and wages of workers in commerce and industry rose almost 10 per cent in the first eight months compared with the 1956 period. Early in December, last, President Batista ordered between $16,000,000 and $17,000,000 distributed among sugar workers as a bonus. The wages of sugar workers have long been pegged to the price of sugar.

National Debt Rises

            Cuba improved her traditionally adverse balance of payments position. The unfavorable balance of $70,000,00 in 1956 was reduced to some $50,000,000 according to officials of the National Bank of Cuba.

            However, the national debt rose from $695,000,000 in June, 1956, to $703,800,000 in June, 1957, according to the National Bank of Cuba. At the same time Congress approved legislation to permit the Government to issue $30,000,000 worth of bonds to be used largely to finish public work projects now being carried out. These bonds will be issued in 1958.

            Loans against national reserves pledged to banks in the United States were reduced from $168,000,000 in 1956 to $157,200,000 as of Oct. 25, 1957, officials of the National Bank said.

            Meanwhile, national reserves dropped from $500,000,000 in Nov. 22, 1950, to $466,517,000 on Nov. 22, 1957. Officials of the National Bank pointed out that deducting the amount of the reserves pledged against loans in the united States, Cuba had an actual reserve of $309,317,000, one of the highest in Latin America and twice the amount required by Cuban law.

Tobacco Exports Grow

            Exports of tobacco, regarded as the second crop of the island, increased 12.7 per cent according to the National Tobacco Commission. The burning of tobacco barns in Pinar del Rio, home of Cuba’s finest tobacco, in the last few months failed to reduce production appreciably. The greater part of leaf tobacco was sold to the United States. Spain is the largest buyer of cigars.

            The rice crop of Cuba was the largest in history, up 20 per cent. It was produced by plantations in Oriente, Las villas and Pinar del Rio Provinces. Some threats were made by the insurgent forces of Fidel Castro, rebel leader, operating in Oriente Province, to burn rice fields. However, little damage was done. The Ministry of Agriculture estimated that Cuba produced in 1957 4,000,000 quitals (100 pounds each) of rice. This is more than half of the national consumption.

            The production of coffee, which Cuba began exporting in 1953 after a lapse of ten years, was about the same as in 1956. This year’s crop will bring the island an income of $40,500,000, according to the Coffee Stabilization Institute, which controls the industry. Coffee retails in Cuba for 75 cents to $1.25 a pound.

            Building continues at a tremendous rate in Havana and to a lesser degree throughout the island. In Havana huge apartment houses, the majority cooperatives, continue to be constructed. Also, big subdivisions with modest and luxurious homes are being built. The major part of this construction is being financed by Cuban banks, pension funds and private corporations with the guarantee of the government housing agency, a counterpart of the Federal Housing Administration in the United States.

            Copper exports rose slightly in the first six months of 1957 compared with the period in 1956. Iron exports dropped almost to half, chrome sales were four times greater, manganese shipments dropped two-thirds. Nickel exports increased to 10,009 tons compared with 8,336 tons. This production was almost exclusively from the Nicaro plant in Oriente Province owned by the United States Government, which has announced its intention of selling it.

            Cuba plans to modernize and in some instances increase her present customs tariffs this year. The island has been authorized to do so by the General Agreement on Tariffs and Trade.

            Negotiations will begin immediately with the United States to revise the commercial treaty between the two countries. During this process quotas will be placed on imports of the items under negotiation in order to prevent speculation.

            An increase in trade is one of the main objectives of the Cuban Government. According to Dr. Joaquin Martinez Saenz, president of the National Bank of Cuba, talks are going on concerning an agreement with France for the sale of 80 per cent of the sugar imported yearly by that country.