CUBA

Army Before Creditors

With few friends and little cash, Cuba's President Ramon Grau considered it more important to pay his Army last week than to send to the U. S. $3,950,000 due in interest and arrears on public works loans contracted by deposed Dictator Machado. Bluntly Cuban Secretary of the Treasury Colonel Manuel Despaigne announced that Cuba would default on these obligations “until such time as the whole situation can be thoroughly discussed . . . to determine which part if any [of the obligations] is legal.” He declared that the $62,000,000 principal of the loans was secured by special taxes from which the regime of ousted Tyrant Machado collected $120,000,000. From this Secretary Despaigne drew the conclusion: "Figures don't lie and therefore the Cuban people have paid their debt over & over again!"

Hit by this Grau chiseling were Manhattan's Chase National Bank for $1,750,000 and Boston's First National for $2,200,000. Pained they were but scarcely surprised, for they well knew in what a precarious spot President Grau was.

In accordance with the International Sugar Agreement of 1930, President Grau last week set Cuba's sugar production quota for 1934 and allotted the picayune total of 1,500,000 tons for export to the U. S. There is no way of negotiating for an increase in that allotment until President Roosevelt recognizes the Grau Government. Thus the present allotment effectually sentences Cuba to economic bankruptcy. Everything depended last week on what President Roosevelt's new personal representative, Jefferson Caffery, would do.

At a private dinner in Havana Mr. Caffery saw President Grau's inquisitive, narrow face, Generalissimo Fulgencio Batista's flat, boisterous visage. Warily the three drew together. Next night Mr. Caffery went to the Palace for dinner. He told newshawks afterward that neither he nor President Grau had mentioned U. S. recognition. When President Roosevelt's non‑intervention speech was published several days later (see p. I3), Generalissimo Batista tried his hand at a little fulsome diplomacy: "I always knew Roosevelt's policy was based on the solid, ample force of the great, free American people, which respects the rights of other free nations. President Roosevelt's words were gratifying, as they sustained my opinion."