837.51/354

The Minister in Cuba ( Long ) to the Secretary of State

No. 449

Sir: Referring to recent telegrams in regard to the Moratorium Decreed by the President on the 10th Instant, I have the honor to transmit, herewith, copies of the Extraordinary Edition (No. 43) of the Official Gazette of October 10, 1920, in which this decree (No. 1583) is published. A translation of the decree published in the Havana Post today is also enclosed herewith.

I have [etc.]

Boaz W. Long
[Enclosure—Translation56]

Executive Decree No. 1583, October 10, 1920, Establishing a Bank Moratorium

Whereas, important institutions of credit of the capital represented by their directors and managers have appealed to the President, [Page 45] setting forth the extraordinary and critical situation in which they find themselves with current account deposits amounting to more than four hundred million dollars and with assets represented by cash, bonds, stocks, securities, sugars, real estate and credits amounting to more than a thousand million dollars, even estimating sugar at its present value, the which demonstrates the solvency of these institutions and their financial capacity to satisfy their depositors;

Whereas, in these last days there has arisen a state of disquietude and alarm brought about by exaggerated ideas of the situation of the banks, manifestly based in great part, on the volume of business created in times of the country’s prosperity and the tightness of foreign markets in the movement of money and the decline in the price of sugar;

Whereas, it is a well known fact that depositors and current account creditors have demanded their deposits, moved by exaggerated rumors, in the belief that their interests are in danger, thus creating a situation that can not be resisted by any institution of credit and that is sufficient reason in any country to cause banking operations temporarily to be suspended.

Whereas, notwithstanding the decline in the price of sugar it is a fact that nine-tenths of the crop disposed of at high prices, and the activity in exportation of all the products of the country, portend an era of considerable prosperity, the present difficulties being transitory and only fleeting without consequence to the vitality of the country, by reason whereof the affairs of the banks have been taken into consideration;

Whereas, a measure so exceptional relating to the progress of the public welfare is only justified when social interests of a superior order (as are the organization and functions of public and private credit in the Republic) are considered to be in danger, for a panic of this nature would entail a great business crisis, the very thing that will come to pass if the Government fail to take rapid and energetic measures to safeguard all interests;

Whereas, the prosperous state of our agriculture, of our industries and of our commerce, is a matter of common knowledge and is shown by the fact that Cuba appears first in the list of countries exporting to the United States, with the enormous figure of six hundred and forty five million pesos, and occupies third place in imports from the same great Republic, by reason whereof the measure which this Government proposes and accepts will not place in danger any legitimate interest;

Upon advice of the Council of Secretaries in extraordinary session,

[Page 46]

I Decree:

1.
Bills of exchange, drafts, notes, domestic drafts, I.O.U.s, and other credit documents, whether due or to become due before the first of next December, will not be collectible until that date.
2.
Credits secured by mortgages, pledges, or simple notarial document claims, due or to become due within the period mentioned in the preceding paragraph, will not be collectible and will be extended until the first of next December.
3.
The auction proceedings provided for in judicial and administrative procedure are suspended and dates therefor may be fixed after the first of December next, and until after the said period neither auctions nor forced sales of any kind shall be held.
4.
Within the said period, and beginning from the date of this decree, current account depositors of banks or banking institutions of the Republic may only demand payment of ten per cent of their deposits, and in respect of savings accounts of less than two thousand dollars, twelve per cent thereof, unless the commission constituted in paragraph six of the decretal part of this decree allows a greater per cent than that above mentioned, according to the state of the account.
5.
This moratorium shall not affect obligations of the National Bank of Cuba as a fiscal agent and depositary of the funds of the State, under contract, nor the current account of lottery revenues.
6.
A commission composed of the Secretaries of the Interior, Finance, and Agriculture, Commerce and Labor will have charge of the inspection and examination of the banks for the purposes of execution of this decree, taking to this end all opportune steps, providing for the examination of their “carteras” the checking of the cash and the liquidation of assets.
7.
Current account creditors may draw against their accounts the sums necessary for the payment of customs duties, taxes, fiscal dues, and other taxes of the State, of the province or of the municipality in favor of the respective customs officers, zone fiscal officers or other authorities concerned.
These checks will be collected by public officers within twenty-four hours after issuance thereof.
8.
The Government reserves the right to revoke this privilege if the public interests should make it advisable to do so.

M. G. Menocal
,
President

E. Sanchez Agramonte,
Secretary of Agriculture, Commerce and Labor

  1. File translation revised.