Along with the social disparity we talked about in Havana 1958: The Economy Nears Collapse, problems associated with government spending continued to surface. Deficit spending depleted the reserves accumulated during the 1940s.
By 1958, Cuba had amassed a 400-million-peso deficit with the United States and monetary reserves had dwindled to 100 million pesos from 571 million in 1952.
Public works expenditures alone added up to more than 1 billion pesos. Less than 50 percent of projects covered their actual costs; the rest went for commissions and profit margins. Nevertheless, the issue of corruption was not addressed.
The new development banks granted Batista supporters generous loans and declined modest requests from nonpartisans. Hacendados and colonos who condemned the new levels of corruption suffered reduced quotas and fewer business opportunities. As one observer notes, “the military regime subordinated the incipient development infrastructure to the logic of corruption.”
Opportunism was visible in the most mundane activities of daily life and permeated all strata of the society.
Most officers in the national police (regardless of level) had become involved in a system of corruption known as the forrajeo. This was an instrument of extortion that was managed by police officers throughout the country. It was especially predominant in the municipal zones of Greater Havana–Regla, Guanabacoa, and Marianao–where most small stores and medium and large business centers were located. Through the forrajeo every business, regardless of its size, had to contribute daily to the police precinct in each locality. Thus, payoffs permeated every corner of Havana’s daily economy and were easily observed since all transactions were carried out openly.
Citizens witnessed corruption as they went about their everyday household chores.
For example, approximately 3,400 bodegas (small grocery stores usually owned by a single family) were located in Greater Havana, and each bodega had to pay a “tax” of one to two pesos daily, in addition to whatever consumer goods the police demanded from the owner. This “tax” was collected by the local patrol car every afternoon.
Havana’s 180 bakeries and all snack bars supplied the police with their products, plus paying three pesos daily to the foot patrol.
Nearly 400 service stations paid one peso daily, and serviced free of charge all police officers’ private cars.
Some 940 butcher shops had to contribute two to three pounds of meat every day, plus one peso to the local patrol officer.
Beer trucks were “taxed” for two pesos daily.
Two hundred cigar delivery trucks paid one peso daily, plus products on demand.
Milkmen were assigned a quota of two liters per day, or two pesos in cash.
Even street vendors were required to make a contribution.
Activities that were offensive to all decent citizens–prostitution and drug trafficking–were also common. However, gambling was the most profitable business for the police and many habaneros were themselves addicted.
Six banks controlled gambling, each contributing an estimated $400 a day to various high-ranking police officers. (One bank–owned by a consortium of government officials– was exempt. Another bank paid $1,000 per day in order to be permitted to expand into new areas of the city.) In total, the banks’ share to the forrajeo system and other “taxes” amounted to approximately $1 million a year paid to high-ranking officers.
Around 2,000 small vidrieras ( gambling booths) were scattered throughout the capital where numbers were played every hour on the hour. The vidrieras were taxed on a daily basis and income was distributed to the bureau of investigation, the district police commander, and the captain of the local precinct. Also, the vidrieras had to allow each local police officer $2 daily for his personal gambling. All told, the vidrieras represented an income to the police of about $3.8 million a year, which was divided up from the rank of majors, through captains, to regular patrolmen.
Prostitution was also an important income opportunity for the police. Each of Havana’s approximately 2,000 houses of prostitution paid an amount calculated by local patrolmen who figured out the number of clients per night and the fees charged each one. Very humble casas would pay from $50 to $70 per night, while the richest contributed from $3,000 to $5,000 nightly. The transaction occurred in front of any clients who happened to be present. Moreover, police officers sometimes served as pimps with prostitutes often peddling drugs supplied by the police.
Drug traffic mostly supplied the rich and American tourists. However, not all police officers, even those with high rank, participated in the drug trade. This business was controlled by organized crime from the United States. Nevertheless, a substantial percentage of the profits reached the highest governmental circles.
