Pay Day

The faith which U. S. investors have had in Cuba's $80,867,000 worth of defaulted Public Works bonds, a faith which has inched the bonds from a record low 19 3/4 in 1933 to 74 7/8 early this year, was climaxed politically in Havana last week. The bottom of 19! was hit soon after Dictator Gerardo Machado was forced to flee the island following the 1933 revolt. Eight years before he had embarked on an ambitious construction program which called for a 7O0-mile highway skewing the island; and streets, schools, public buildings for Havana. It was largely financed by $60,000,000 borrowed from New York's Chase National Bank and $20,000,000 in Treasury notes given U. S. and Cuban contractors. Ephemeral Cuban Governments which followed Machado would have nothing to do with the debts of the "Tyrant." Late in 1933 payments were suspended. Since then U.S. investors have been hopefully holding the bag.

Seven months ago Army Chief Colonel Fulgencio Batista launched a social, economic "New Deal." On the one hand he amnestied Tyrant Machado, on the other he decided to make payments on the defaulted bonds to bolster Cuba's credit so he could begin borrowing afresh. Last week he had his figurehead President, Federico Laredo Bru, rubber-stamp through congress a settlement which provides: 1) refunding of $40,000,000 5 1/2% bonds, largely held by the Chase interests, with a 4 1/2% issue; 2) payment of $20,000,000 short-term credit owed the Chase; and 3 ) appointment of a commission to haggle over the $20,000,000 owed the contractors, the report to be made in six months.

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