High Jinks in Cuba

Cuba is wallowing in cash. That startling fact was underscored last week when big Cuban American Sugar Co. declared a $53.50 cash dividend on its 7% preferred stock, thus erased all the dividend arrears piled up since 1929. Coming amid a wave of dividend cuts by U.S. corporations (TIME, May 25), this fat payment touched off a mild Wall Street boom in Cuban stocks & bonds.

Reason for this island prosperity is sugar, on which Cuba feasts in good times, fasts in bad. Before the war, Cuban sugar was selling for less than a cent a pound in the world market. Now the U.S. Government has contracted for almost the whole 1942 crop (which was harvested last winter) at 2.65-c- a lb. This is the highest price since 1926, and it gives Cuba a sugar income of more than $200,000,000 this year, almost two and a half times last year (see chart). Sugar accounts for 70 to 80% of Cuba's total national income.

This boom has meant one grande fiesta for some 4,250,000 life-loving Cubans. They are guzzling more sweet-tasting rum, screaming at more cock fights, buying more radios and automobiles (when they can get them), using more telephones. The party was pepped up last November when all salaries were boosted 10 to 25% by law (in April minimums were set at $45 a month in towns, $39 out-of-town). The lid almost blew off in January when some 400,000 sugar workers had their wages hiked 50%. Part of these fat raises have since been wiped out by a 40 to 50% jump in living costs (mostly food).

Rising wages and rising prices set off such a terrific demand for currency that U.S. banks recently shipped over $40,000,000 in U.S. money to Cuba, where it now giddily circulates on an even Stephen basis with Cuban pesos. To ease the cash shortage further, the Cuban Congress on April 30 approved a new $20,000,000 silver-certificate issue.

One big fly in Cuba's drink is that the U.S. refuses to say what it will do about next winter's crop. Cubans, however, see the rosy side, are pretty sure that the U.S. will not only buy most of the crop but will pay higher prices to boot. Another trouble is the shipping shortage, which makes it hard to import anything on which to spend the island's new wealth. The 2,500,000-plus tons of sugar now piled high in Cuba for lack of ships to carry it 200 miles to Florida are a sign in reverse of the difficulty of getting U.S. goods to Cuba. Unable to spend much cash offshore, Cuba is doing a good job of putting her own business and Government finances in tiptop shape. The Government has paid off $1,838,500 of its $118,555,000 external debt since Jan. 15 alone.

Even though Cuba is rolling in sugar money, the Good Neighbor Policy goes on pouring U.S. Government funds into Havana. Cuban diplomats are now dickering for the first chunk of a $25,000,000 Export-Import Bank loan granted over a year ago. Eventually Cuba will take up the whole loan, spend the cash for highways, port facilities, sanitation works. Predicted the newspaper Alerta: "A river of money will flow through Cuba."

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