Banking activity in the Republican era . Activities and processes that take place in a bank or financial entity for the purposes of managing and lending money .
Summary
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- 1 Banking activity
- 1 Period republished
- 2 Introduction of the dollar
- 3 Mortgage credits
- 2 Source
Banking activity
The Cuban economy had more or less adequate instruments for its capital needs, the truth is that there was a financial organization, the overcoming of which began without lasting success around 1850 , but which always satisfied economic needs. The banking rose to the rhythm of economic development. In 1898 , in addition to the Spanish Bank of the island of Cuba , whose stormy history summarized the post- 1878 financial crisis , there were a series of commercial institutions that carried out banking business on this local scale. The first banking institution that appeared was the North American Trust Company, in the year 1898, which became the National Bank of Cuba in 1901 , chaired by Francisco Gamboa and with a predominance of North American shareholders and managers; was designated as Depositary of the Interventor Government and Fiscal Agent. After this, the Havana branch of Royal Bank of Canada was established (1902) whose embryo was the Merchant Bank, founded in 1899 with the incorporation of the former Banco de Comercio.
Period republished
The foundation of the Trust Company of Cuba was created (1905), Morgan’s agent and it remained inactive for many years until it passed into Cuban hands recently. Zaldo’s old banking house transformed into Banco de La Habana since 1905 was since then closely linked to the Nacional City Bank of New Cork, which was only established with its name in 1915 . During the years 1915 to 1920]], the boom of banking institutions began according to Arredondo publications. Some thirty-seven banks of which only the Candian Bank of Comerce represented any major foreign organization saw the light of day during those years. The one that showed greater financial activity was the Banco Internacional de Cuba founded in 1917whose liberality constituted the initial spark of its ruin and of the banking panic that dragged the Spanish Bank and the National Bank. The foreign bank that had shared in the form of an English group and a North American group the financial activities of the national market, backed by the expansion of credits in the United States, launched a furious sugar financing campaign. The supply of credits far exceeded the needs of the country. Most of the banks and banking houses created since 1915 were drastically eliminated, with the large foreign institutions remaining. The banking crisis of 1920 – 1921 did not completely liquidate Cuban or Spanish-Cuban capital banks, although it reduced it to a minimum. Companies such as Pedro Gómez Mena, Banco Núñez, Banco Pedro,
Dollar introduction
Cuba did not lack means of financing, but there was a reason why the economic link with the United States was of such a nature that the smallest changes in the neighbor’s economy were felt in Cuba: the currency in circulation in Cuba.it was the American. When the Spanish domination ceased, the monetary chaos reached its maximum expression by the circulation of French, Spanish, and Mexican coins of different denominations and values. One of the first acts of the American government of occupation was the introduction of the dollar as a basic monetary standard, by arranging that the collection of customs duties and taxes be carried out in that currency, according to the exchange rates set by the intervening government itself. . The dollar tended to dominate more and more in the country’s circulation, causing the disappearance of the remaining currencies, a fact that was enshrined as a result of the Economic Defense Law of 1914, by which the first Cuban currency was created. Cuba’s dependence on the US currency was considered very dangerous. During these years, the first projects of the National Issuance Bank emerged. Coinciding with the Organization of the Federal Reserve System Law (1914), the Economic Defense Law was drafted in Cuba, approved on October 29, 1914 , which established the minting of national currency. The monetary system established in that text was based on a gold standard with a unit –the gold peso- of weight and grade equal to that of the dollar. The minted coins would be gold, silver and nickel, the first in unlimited quantity with full liberating force and under the following dominations: 20 pesos, 10, 5, 4, 2 and 1; the second in amounts up to 12 million pesos and under the denominations of 1 peso, 40, 20 and 10 cents; those of nickel in amounts that the Executive could set and with three denominations (5, 2 and 1 cts). The minting carried out under the Economic Defense Law amounted to 23 million pesos gold, in 1915-1916]], 6 million silver coin in 1916 and 755 thousand pesos in nickel currency in 1916. The following minting – only silver and nickel – it was verified in the year 1920 and no more were produced until the year 1932-1933.
Mortgage credits
Both banks and individual capitalists, in addition to the preference for sugar businesses, have a great predilection for mortgage loans, especially on urban farms. Thus, the immobilization of deposits, produced by the high interest on loans, is combined with the immobilization of capital in mortgage businesses. The experience of what happened in 1920-1921 and until 1934, years in which more than 6,000 summary-mortgage lawsuits are verified, shows the importance of these credit operations only in the capital of the Republic. By excluding the mortgage from bank management, banks adopted the procedure for pledging mortgage bonds. Thus, a loan of 100 or 200 thousand pesos had a collateral equivalent to the approximate value of the factory or plant. When the obligation was breached, the bank was constituted as a mortgagee for almost all the value of the industry, that is, it acquired control of the factory for a part that was sometimes very low in value. This type of operation explains why the country’s basic industry passed so easily to the banks during the crisis of 1920-1921.
