1 Where Are All the Yankees?
Ownership and Entrepreneurship in Cuban Sugar, 1898-1921
Alan Dye
Barnard College, Columbia University
September 2012
Very preliminary draft.
Please do not cite without author’s permission.
When the United States intervened in Cuba in 1898, many expected a flood of investment
from the United States to enter the island. Despite the uncertainty over the shape that the United
States’ policy toward Cuba would take after its military intervention in 1898, contemporaries
expected to see a rapid infusion of capital flowing from the United States to Cuba as soon as
some of the political uncertainty was settled. The island, suffering widespread destruction of its
rural properties during the war, was in desperate need of these external funds to rebuild.
Contemporaries in Cuba of all nationalities called for the United States’ occupational
government to adopt better policies to encourage Americans to invest in the reconstruction of the
Cuban economy, and especially to reactivate its principal export industry, the sugar industry, to
stimulate recovery in employment and other business activity. Many considered the provision of
funds, encouragement of private investment, and lowering of the tariff on sugar to be the most
important acts the occupational government could make to stimulate the island’s recovery.
Leland Jenks, remarks: “Whatever the American Occupation was doing, it was not enabling
2 sugar crops to grow at remunerative prices.” The policies of the US occupation were, instead, he
finds, an obstacle that held back the anticipated movement of external finance and held back the
economic recovery, as political conditions remained unsettled.1
More recent portrayals of foreign investment after the war of independence (1895-1898)
seem to overlook Jenks’ less-than-enthusiastic assessment of foreign capital flows into Cuba in
the early republic. Most accounts, by contrast, commonly cast American capitalists as only too
eager to seize upon opportunities to invest in Cuba, which followed with a swift response,
indeed, an invasion, of foreign capital that “overwhelmed the local economy.” Louis Pérez, for
example, cites an estimate in Jenks’s study that: “By 1911, the total US capital stake in Cuba
passed over the $200 million mark,” from which he concludes that, soon after the intervention,
“the Cuban economy was all but totally dominated by foreign capital.”2
Furthermore, critics of North American capitalism in Cuba tend to reject or dismiss any
positive macroeconomic effect to Cuba’s benefit, arguing, to the contrary, that the entry of
foreign capital, despite the acute scarcity of capital after the war, was indisputably harmful to the
economic development of the new republic. On what grounds? The question centers on who
were the beneficiaries of the infusions of foreign capital. Critics doubt whether the local
bourgeoisie, weakened by war, was able to obtain any access to foreign credit at all. North
American capitalists, according to this view, were buyers, not lenders. If they were willing to
supply funds at a time of acute capital scarcity, it was only in response to the opportunities of
acquiring property, which they did opportunistically by buying up sugar estates and other
properties at cheap prices when a capital-starved local elite had few alternatives. The local elite,
unable to obtain credit on their own account, found it difficult to resist the infusion of foreign
capital, or the invasion of North American capitalists. It was an elite “capital-starved and without
access to credit.” If these were the conditions they faced, how could the local elite withstand the
1
Jenks, Leland, Our Cuban Colony (New York, Vangard, 1928), pp. 161-62
Pérez, Cuba Under the Platt Amendment, p. 74. The figures of North American investment in Cuba most
frequently cited are from Leland Jenks’ influential 1928 institutional and economic study, Our Cuban Colony. They
remain to date the most widely accepted set of quantitative estimates of foreign investment in Cuba of the time.
Jenks, however, unlike Pérez, presents these figures not as evidence of American domination but, instead, to show
that movement of American capital into Cuba was slow to arrive, discouraged by political disturbances in 1906 and
1912 and financial panic in the United States in 1907 (Jenks, Our Cuban Colony, pp. 161-63).
2
3 entry of powerful North American capitalists who used their wealth and access to credit to take
over the best resources of the island.3
But what does it mean to say that the entry of North American capital or the acquisition
of Cuban productive assets was overwhelming? It must mean that the movement of capital from
the United States was large relative to domestic investment, or even dominated it, as some claim.
The evidence presented to demonstrate such claims is sketchy and incomplete. One major
problem for the researcher is that the data on domestic investment, comparable to the estimates
of US-owned assets cited from Jenks and others, are nonexistent. The absence of such data
makes it impossible to assess quantitatively the relative importance of foreign to domestic capital
using data on assets or investment. It may come as a surprise, then, given the tenor of some of
the claims, that so little systematic empirical work has been conducted to verify the relative
magnitude of foreign to domestic investment. The paucity of data has not prevented scholars
from making bold statements about the dominance of foreign investment, but it has made it
difficult to test or validate claims, to reconcile competing views, or resolve the most salient
questions under debate.
The absence of comparable data on the value of domestic assets remains a serious
obstacle and calls for an alternative approach to establish a better empirical basis from which to
examine the relative importance of foreign and domestic investment. As an attempt to address
this problem, this paper presents an alternative physical measure of investment for the island’s
dominant industry, the sugar industry. The new measure uses annual additions to the grinding
capacity of sugar mills, which are observable at the establishment level using production and
capacity data assembled from a number of sources, including reports of the US Secretary of War
during the occupation, the Secretaría de Hacienda, Cuba Review, a publication of the Munson
Steamship Co., and the Secretaría de Agricultura, Comercio y Trabajo for each active mill.
The mill-level data are then aggregated to show additions to the production capacity at
the industry level, and broken down into nationality groups. The nationality data are from a
database, that I have assembled over many years from a large variety of sources of information
on the individuals and nationalities of the firms that owned each mill for each year from
3
Pérez, Ibid.
4 independence throughout the republican period. The evidence from this physical measure of
investment at each mill, matched to these new data on the firms that owned the mills and their
nationalities, casts new light on this longstanding debate.
The paper addresses a number of basic questions about the role of domestic and North
American investors and entrepreneurs in the Cuban economy from the early republic to 1929.
How important and what role did North American capital play after its intervention and
termination of Cuba’s war of independence? In certain respects, directly trying to address the
points of debate in the literature may be premature given the limited empirical understanding of
domestic investment of the period. Therefore, before addressing the literature, it is useful to ask
some basic questions about the timing and direction of foreign and domestic investment in Cuba.
What were the principal sectors into which foreign investment flowed? Was it focused on a few
sectors or uniform across sectors? Did its composition change when the focus shifted from
reconstruction in the aftermath of the war to longer-term objectives? With the limitations in the
data, what can we say about domestic investment?
The physical measure of investment in the sugar industry developed and presented in the
paper, when classified by nationality, may be interpreted as saying as much about the national
origins of entrepreneurial inputs into the expansion of the sugar industry as about investment.
For the purposes of the paper, we consider the entrepreneur to be the individual or organization
that undertakes the development of a new mill or the significant expansion of an existing mill.
This, of course, required raising finance to purchase additional equipment, build additional
railroads to haul cane or sugar, develop cane plantations, and contract with independent growers
to supply the cane. Expansion of grinding capacity typically was associated with improvements
in the mill, including adoption in modular fashion of the latest vintages of sugar manufacturing
machinery. In this way, the investments we observe also ordinarily imply technical
improvements, too.
Quantitatively, investment and entrepreneurial inputs were certainly related.
Nevertheless, my measure, when differentiated by nationality, identifies which national groups
contributed more to the additions to production capacity in the sugar industry. It directly informs
us about the users than the suppliers of capital. It reveals something also about the role of equity
finance as entrepreneurs invested in new capacity, but it tells little about how much
5 entrepreneurs relied on debt finance or whether they obtained it from foreign or domestic
sources.
Many authors, who discuss the foreign ownership of properties in the principal export
sectors of sugar, tobacco and mining, write about how the ownership by North Americans at one
time or another dominated the major export industries. César Ayala, for example, describes the
massive transfer of valuable properties into foreign hands as occurring in all major agricultural
sectors, yet “among all the sectors, sugar was the most important”—Cuba’s sugar economy
thereby “came under control of a few gigantic concerns interlocked among themselves. with the
sugar refining industry of the United States, and with the biggest banks.”4 In a similar vein, Jorge
Ibarra casts the massive transfers of property as a movement launched by North American capital
to denationalize the country’s wealth and industry. It occurred, he explains, as “[a]t the end of
the war of 1895 and in the first two decades of republican life, financial corporations [from the
United States] rushed in to buy up dozens of Cuban- and Spanish-owned sugar mills and
plantations that had been seriously damaged during the war.”5
Eventually, a large share of the sugar industry did come under the control of large North
American corporations. By 1928, almost 60 percent of the production capacity in the sugar
industry was owned by North Americans, 55 percent by large North American corporations. By
many accounts, big business fueled political corruption. By all accounts, it had enormous
political consequences.6 Most accounts in the literature trace its origins to the US intervention in
1898, when some say North American capital began its domination of the industry and others say
it set off on a path toward domination. In the abstract, the tight connection with the intervention
may seem compelling, but the details raise many questions about the size and the timing along
the way of foreign acquisitions of Cuban productive assets, especially sugar estates, compared
with domestic holdings of similar assets. Before we can understand the motives that led to the
large share of North American ownership of the sugar industry, before we can understand the
4
Ayala, César, American Sugar Kingdom: The Plantation Economy of the Spanish Caribbean, 1898-1934 (Chapel
Hill: University of North Carolina Press, 1999), p. 78.
5
Ibarra, Jorge, Prologue to Revolution: Cuba, 18989-1959 (Boulder, Lynne Reinner, 1998), p. 14.
6
“More than half of our most productive land is in the hands of foreigners. In Oriente, the largest province, the lands
of the United Fruit Company and the West Indies Company link the northern and southern coasts.” Fidel Castro,
“History Will Absolve Me,” http://www.marxists.org/history/cuba/archive/castro/1953/10/16.htm, accessed
8/18/2012. Online Version: 1997, Castro Internet Archive, 2001, from Editorial de Ciencias Sociales, La Habana,
Cuba, 1975. Trans. Pedro Álvarez Tabío & Andrew Paul Booth.
6 connections between 1898 and North American investments in Cuba, we need to establish when
it entered. When it entered sometimes tells us about why it occurred.
Common in many portrayals is the notion of a large inflow of foreign capital from the
United States coming in two waves of investment. The first wave, which began during the
occupation and immediately after it, was stimulated by the acute demand for capital to rebuild
the economy in the aftermath of the war. The second wave, which peaked during the First World
War, is typically associated with the sugar boom, stimulated by high wartime prices for sugar.
Opposing views differ less about the timing of the movement of capital than its effects. By one
view, it fueled the postwar recovery and then led the country into one of the most prosperous
periods of its history. By another, it resulted in massive transfers of valuable properties into
foreign hands “in a great feast of division of the colonial bounty” in the immediate aftermath of
the war.9 North Americans, in the first wave quickly dominated most of the major sectors of the
economy, including sugar industry. The second wave simply deepened their control. Proponents
of either view tend to see both waves as driven by foreign capital.
But the notion that North American investors were eager to seize opportunities in Cuba
and moved quickly to dominate the island in the first wave may be doubted on a closer
examination of the evidence. The initial enthusiasm among Americans over the possibilities of
investing in Cuba, according to Jenks, was dampened by the uncertainty over Cuba’s political
future, including its uncertain trade relations with the United States. “It needs to be pointed out,”
he explains, “that the unsettlement of the political status of Cuba, of which the American
occupation was a symptom, discouraged most forms of enterprise and capital investment in
Cuba.”10 Businessmen, like Edwin Atkins, who in 1899 had called for annexation, were
uncertain what to make of the status created by the Platt Amendment and the disappointing 20percent discount in the treaty of reciprocity. The second intervention from 1906 to 1909, and
political unrest in 1912, for Jenks, were further setbacks in an unsettled, potentially unstable,
political situation. Electoral fraud and repeated calls for the US government to intervene, he
reasoned, changed investors’ perceptions about the risk of investing in Cuba, and may explain
9
Ayala, p. 78.
Jenks, pp. 161-62.
10
7 why the movement of capital from the United States to Cuba faltered after 1906 and did not
recover until the political crisis was resolved.
Contemporaries concur with Jenks that capital did not rush in immediately. Perfecto
Lacoste, who had served as Mayor of Havana, then as Secretary of Agriculture, Commerce and
Industry under the US occupational government, wrote a scathing critique in the spring of 1901
that attacked the US government for raising barriers and refusing to assist the Cuban planters to
restore activity at their mills. Not a single credit institution, he declared, had been set up to meet
the credit needs to replant and rebuild. “[T]hough it is true that something has been accomplished
in the way of reconstruction, it is due exclusively to the personal efforts of the planters.”11
Manuel Rionda in a self-congratulatory moment recalled how, credit did not flow generously
from U.S. institutions after 1898 as Cuba recovered from the ruins of war. His New York sugar
brokerage, Czarnikow, MacDougall & Co., was able to advance money for the sugar crop in
those years due only to connections in London to its parent company, C. Czarnikow, Ltd., and
Schroeders bank; but many unfortunate sugar producers, he thought, did it on their own with
only their earnings to plow back into their estates, to try to rebuild, expand and make
improvements to their factories.12
The competing views in the literature are difficult to reconcile. They do, however, raise
some basic questions about the magnitude and timing of the movement of foreign capital into
Cuba after 1898. When hostilities ended, is there any evidence of local capital reappearing or
capital from Spain returning? Or had it dried up as historians have proposed? Were foreign
capital inflows truly large enough to dominate the economy or overwhelm the local elite? When
opportunities in the island opened up to North American investors, did it only matter how
foreigners responded; were the Cuban and Spanish elite too weak to offer their own response, as
some have argued?
Few historians have looked at the question in a similar way. But those who have find the
contributions of the Cuban mill owner to be underappreciated. It is well known that it was Cuban
and Spanish entrepreneurship and capital that built the nineteenth-century Cuban sugar industry
11
Healy, pp. 93, 190. Report of the Department of Agriculture, Commerce and Industry, March 15, 1901, in the
Annual Reports of the War Department for the Fiscal Year Ended June 30, 1900, I, Part II, Part 4, pp. 4-9.
12
McAvoy, pp. 128-29.
8 into a technological leader globally. But conventional views of a swift takeover by North
Americans after 1898 imply a weak and ineffective bourgeoisie. Oscar Zanetti finds, to the
contrary, that the same domestic initiative that built the nineteenth-century industry continued to
thrive into the twentieth. Mary Speck finds that turn-of-the-century Cuba was home to “an
ambitious, sophisticated class of entrepreneurs,” who were up to the challenge of both competing
with and collaborating with North Americans entrants. It was this class of “homegrown
capitalists” and entrepreneurs, she declares, that established Cuba’s national identity as a “highly
successful and economically progressive exporting nation.”13
Movement of Foreign Capital into Cuba Estimates of the value of the assets owned in Cuba by US citizens during the early
republic were produced and reported from time to time by diplomatic officials in Cuba,
bureaucrats in the US Department of Commerce and others. Many of the estimates were
collected and compiled by Jenks, Our Cuban Colony. A contemporary of Jenks, Maxwell
Winkler, provides his own estimates for 1928. Cleona Lewis subsequently reviewed and revised
some of these estimates.14 Table 3.1 provides a summary and revision of the existing estimates of
US-owned assets in Cuba from 1895 to 1928, drawing from these compilations and from the
original sources with which these authors worked. As a measure of foreign investment in Cuba,
it should be noted that these figures do not include short-term assets, most notably advances for
sugar and tobacco crops, which are believed to have been substantial. Revisions have been made
to correct certain implausible magnitudes in the original estimates. These corrections are
discussed in the footnote to the table.
For the range of plausible estimates, a similar set of qualitative conclusions about the
pattern of investment flows appears to be robust. North American investments were small before
the war of independence; they grew substantially in its aftermath; and they were volatile from the
start, sensitive to financial and political uncertainties and crises, reflected in especially a
13
Speck, “Prosperity, Progress, and Wealth: Cuban Enterprise during the Early Republic,” Cuban Studies (Jan
2006): 50-86, pp. 52, 57. Zanetti, Oscar, Las manos en el dulce (Havana: Editorial de Ciencias Sociales, 2004), pp.
16-17.
14
Footnote citing these compilations as well as the original sources from which they worked.
9 slowdown that occurred sometime between 1906 and 1911. Similar fluctuations between 1911
and 1925 must have occurred but are simply not visible owing to the large gap between
estimates. Unfortunately, no contemporary estimates have yet been discovered to fill this gap.
Finally, in regards to the direction or sectoral composition of US investments in Cuba, between
1898 and 1906, they were relatively diversified and not particularly focused on sugar, tobacco, or
other major exports.
Looking first at total US assets in Table 3.1, two things stand out regarding the size and
timing of total investment in the table. First is the high rate of foreign investment from the
United States in the period from 1895 to 1906, estimated at an annual average rate of growth rate
of 16 percent. But, then, foreign capital infusions appear to cease after 1906, as the estimates
show no significant growth in the value of US assets in Cuba between 1906 and 1911. They
recover afterward, however, and proceed at a high average rate of 10.6 percent between 1911 to
1925.
British foreign investment, shown in Table 3.2, was almost as voluminous as North
American until sometime after 1911. Table 3.2 shows that the value of British foreign assets may
have exceeded US foreign assets at the turn of the century. In 1900, we only have an estimate
for railroads, but it is probable that there were a few British investments in other sectors, such as
sugar or tobacco. Characteristically, British investors targeted railroad assets, which amounted
to three to four times the value of US assets in railroads in Cuba. The peak in British assets in
Cuba in 1913, followed by the ascendance in importance of the US share of foreign assets
thereafter, parallels broader trends in the relative position of US and UK assets international
capital markets, especially in the western hemisphere, as a consequence of international
monetary conditions created by the First World War.18 It is also estimated that in 1909, French
assets in Cuba amounted to $1.8 million (in 1926 dollars), and German assets were $0.7 million.
Although little can be said with certainty, these and other European investments in Cuba after
1913 probably grew at a significantly slower pace than US investments after 1913.
The changes in the total value of US-owned assets thus appear to support the notion of
two waves of foreign investment. The first wave was driven as much by British and US
18
See Fishlow, Obstfeld and Taylor, Kindleberger, Eichengreen.
10 movements of capital. The disappointing 14-year gap between benchmark years from 1911 to
1925 is too long to provide much information about when the post-1911 wave began. The gap
further obscures several broad fluctuations in investment behavior with the occurrences of the
First World War, during which there was a boom in the sugar industry and an explosive
expansion of the domestic banking sector, its collapse in the financial crisis in Cuba of 19201921 following the speculative bubble known as “Dance of the Millions,” and a recovery
between 1922 and 1925 that was strong although fraught with uncertainty.
The estimates in Table 3.1 suffer from other gaps and imperfections. First, as noted
above, they do not account for short-term credit, such as crop advances for sugarcane and
tobacco. Fidel y Pierra estimated crop advances from US creditors at the eve of the war of
independence to be between $10 and $15 million. One would expect this number to have
increased with the size of the sugar crop, although in greater proportion because the share of
short-term credit provided by North American merchants, refiners and banks increased from the
beginning of the century through the 1920s. The table assembles estimates of foreign direct
investment, mortgages and other long-term debt, and government securities.
Second, there were many wealthy Cubans who invested abroad. Jenks cites estimates of
Antonio S. de Bustamante that placed Cuban holdings of foreign securities in 1903 at $42
million, $30 million in US bonds and other securities, and $12 million in French, British, and
German securities. Jenks believed that wealthy Cubans after 1903 were becoming “emboldened”
to invest more at home. To the extent that they invested in the securities of North American
corporations operating in Cuba, these investments would mistakenly appear as foreign
investments.19 Third, a significant number of Cuban residents, especially in business and the
professions, had naturalized US citizenship. These were people who, in all other respects, would
not be considered foreigners in Cuba.20 It is unknown how the various estimates decided to
19
In some cases, companies that were incorporated in the United States by American founders came subsequently to
be majority owned and controlled by Cuban shareholders. Jenks cites as examples the Banco Nacional de Cuba,
which was founded in 1901 by Samuel Jarvis and R.R. Conklin of New York City but came to be controlled by an
immigrant from Galicia, Spain, José (“Pote”) López Rodríguez, and the Havana Electric Railway, which was seized
in 1907 on behalf of its Cuban shareholders’ interests, who selected Frank Steinhart, at that time the Americanconsul-general in Havana. These two immigrants to Cuba were among the most prominent businessmen in Cuba in
these years. Jenks, pp. 165-66.
20
Jenks, p. 132.
11 classify the properties of naturalized US citizens who resided in Cuba permanently, but this may
potentially inflate the estimates.
Investment in the Sugar Industry Yet the absence of corresponding data on domestic investment remains an important
obstacle. Jenks’ figures or those presented in Table 3.1 permit observation of changes in the level
and composition of North American investment, but without corresponding data on domestic
investment it is impossible to say with much certainty how large foreign, or North American,
investment was in the Cuban economy relative to domestic, or when it became important.
In this section, an alternative physical measure of investment is presented, calculated
using the additions to the production capacity at each mill computed from available
establishment-level data on the grinding capacities of mills that are, then, aggregated into
nationality groups using data that identify the nationality of each mill. The underlying data are
reliable and offer other advantages over the data assembled in Table 3.1. The Secretaría de
Agricultura, Comercio y Trabajo collected annual reports from each mills that included grinding
capacities beginning in 1916. Prior to that date, production records from the Secretaría de
Hacienda, supplemented in the early years by data from Cuba Review, are used to construct fiveyear historical production maxima as an estimate for grinding capacity.21 Grinding capacities and
production, which were reported to the Secretaría de Hacienda and the Secretaría de Agricultura,
Comercio y Trabajo, annually, were subject to less measurement error because measurement was
more straightforward and used standard weights. Also their disclosure was less sensitive to
private entities than balance sheet information. At least as important, they are available in
frequent and regular annual observations, which better track fluctuations, trends and cyclical
behavior.
Historically, especially after the 1880s, mill owners frequently made additions to their
mills’ grinding capacities which caused a steady and pronounced upward trend in grinding
21
Similar estimates are constructed after 1917 to compare results from the estimation procedure to the independent
rated capacity data available after 1917. Also four- and six-year historical maxima were calculated and compared for
robustness. These robustness tests were favorable. They do, however, overstate the levels since maximum
production levels sometimes exceeded rated capacities. An level adjustment was performed on estimates to make
their levels consistent with rated capacites.
12 capacities throughout the first quarter of the twentieth century. After 1901, the number of active
mills remained fairly constant, but the average production capacity of mills in the industry rose
3.5 times between 1904 and 1920 as technical improvements introduced increasing economies of
scale and as demand for exports of Cuban sugar grew steadily. No surviving mill escaped
repeated expansions in grinding capacity. The Central Narcisa, one of the earliest mills to
convert to centralized milling, is a typical case. A Caibarién merchant, Mariano Artís acquired in
1889 the old Ingenio Belencito in Yaguajay, founded around 1845. He invested in state-of-theart equipment and converted the mill into Central Narcisa, one of the leading central factories of
the 1890s. The 1889 conversion expanded the mill’s capacity from about 500 tons to over 4000
tons in the 1890 crop. It was expanded again, doubling its capacity, in 1894.22 By 1919, it had
been expanded to 30,000, and again by 1925 to almost 50,000 tons.
The histories of most surviving mills after the war for independence exhibit patterns of
repeated investments to expand capacity. Since the 1880s, a greater proportion of the new
capacity in the industry came from the expansion of existing mills than from new mills. Between
1902 and 1913, the mills founded in the nineteenth century that survived the war of
independence together added more than 1.5 million tons to the annual productive capacity of the
sugar industry. Of 177 mills that had reappeared during the recovery, 90 invested in equipment
that at least doubled their grinding capacity by 1913; 36 tripled it; and 16 quadrupled it. A
complete examination of additions to productive capacity at the industry level, therefore, must
account for both the construction of new mills and expansions at existing mills.
The physical measure of investment exploits the first differences of the grinding capacity
at each mill. They are not directly comparable to the asset data given in Table 3.1. The units of
measurement in Figure 3.1 are in bags of sugar per day. Differences between consecutive years
give the addition to the daily grinding capacity in bags per day as a consequence of investment
and installation of additional physical plant and equipment. It is a measure of physical or “real”
investment in the sugar industry, which, in the absence of more directly observed data on
investment, offers the next best alternative, useful especially for examining competing narratives
about the timing and importance of foreign investment in the sugar industry during the early
republic.
22
Venegas Delgado; Porter; Jiménez, p. 462.
13 In order to make the series correspond as closely as possible to the effects of investment
expenditures, only positive year-to-year net increases in daily grinding capacity at each mill are
taken in account in the figure. There were occasions when capacities were reduced. Often this
may have reflected retirement of equipment. The investment in equipment that was retired,
however, represented a sunk cost that could not be recovered; equipment retirements, therefore,
did not have the effect of offsetting any current expenditures on new equipment and are not
accounted for in Figure 3.1.23 More specifically, the calculation are as follows: if kit is the
capacity of mill i in year t, define kit  kit  ki ,t 1 , if kit  ki ,t 1  0 ; otherwise, kit  0 .24 The
series presented in Figure 3.4 gives net additions to grinding capacity contributed by each
national group, n, computed as Knt   knit .25
i
Before analyzing the results, a few caveats about the estimates are warranted. First, since
they are derived solely from increments to grinding capacity, replacement investment is not
visible in the series. This will not have a great effect if replacement of machinery occurred
roughly at a constant rate. Second, to result in an effective increase in capacity, investment in the
grinding capacity must be accompanied by a large number of complementary investments in
cane plantations, railroads, and other fixed investments required to complete each stage of the
production process. The estimates do not account for possible cost heterogeneities in
complementary investments. Some new mills, for example, were built in virgin forest, which
required less acreage but the forest had to be cleared, cane fields had to be developed, and
railroad lines extended to the fields. Other new mills, built on the sites of former ingenios, may
have been able to save on startup investment costs, such as clearing land, and may have been
able to haul to the mill over existing public railroad lines to haul the cane to the mill, obviating
23
Negative changes in capacities could also occur from retirement of equipment or may have resulted persistent
shortages of cane; although in the period of steady expansion from 1899 to 1929 negative changes in capacity were
less common and typically temporary, except in cases when a mill was shut down.
24
Prior to 1917 only production data are available, rather than mill capacity, so before 1917, mill capacities are
estimated using local five-year historical maximum levels of production, which is consistent with the estimation
procedure.
25
An alternative approach which accounts for the No allowance for depreciation is made, since the objective is to
provide an estimate of the act or effect of investment. An allowance for depreciation or the retirement of equipment
would be needed if the data were to keep track of the effectively available physical capital.
14 the necessity of a private railroad system.26 Finally, variation across time of the series in Figure
3.1 reflects the contribution of investment to the production capacity of the industry, not the
investment cost or value these assets. The cost of building a sugar mill in Cuba rose from the
turn of the century through the First World War; this is not reflected in the series.
Figure 3.1 gives the results from this calculation for 1903 to 1930, aggregated for the
industry as a whole and for the principal nationality groups, using annual data on the grinding
capacities of each active mill from 1917 to 1930, and estimates of grinding capacity, explained in
the Data Appendix for 1903 to 1916.27
In one respect, the pattern in Figure 3.1 corroborates the usual characterization of two
investment waves—a small, brief wave that peaked before 1904 and a second larger wave, of
longer duration, that peaked during the First World War. But two results in the Figure are
contrary to the conventional narrative about these investment waves. First, additions to
production capacity do not show North American investors rushing in to build or buy up sugar
estates en masse. They reveal, instead, a recovery of the sugar industry driven almost entirely by
domestically owned, Cuban and Spanish, mills. This finding is consistent with the estimated
value of US-owned assets in the sugar industry shown in Table 3.1. A rough estimate of the
capital stock invested in sugar properties suggests that the value of US-owned assets in sugar
reported in the table for 1906 could account for around 12-15 percent of the industry’s
production capacity. Allowing for a considerable margin of error, this is nonetheless consistent
with the share of sugar production capacity owned by North Americans, around 16.5 percent in
1906.28
26
Mills built in areas near other mills or where cane was already being cultivated may have been able to procure
most of their cane by contracting with colonos from existing estates. The cane plantations may possibly have already
been developed. If so, the value of any additional colono land incorporated by the construction of a new mill or
additional capacity to an existing mill is included in the aggregate measure in the same way that land owned and
developed by the mill is incorporated.
27
The data for the period 1899-1913 are from Cuba, Secretaría de Hacienda, La industria azucarera y sus derivados,
annal beginning in 1903/04. Prior years are from Cuba Bulletin, 1904; and [U.S. War Department, Report of
Secretary of War, 1901]. Grinding capacities based on engineers’ or managers’ ratings were reported by the Sec. de
Agriculture, Comercio y Trabajo, Memoria de la zafra, from [1916 on]. Prior to that year, grinding capacities are
estimated using historical local maxima. For more complete description, see Data Appendix.
28
Jenks believed Brownell’s the estimate for investment in sugar for 1906 was low. With a small correction, the
estimated US direct assets in sugar shown Table 3.1 are roughly consistent with the share of grinding capacity in the
sugar industry owned by North Americans in 1906.
15 Second, the second wave of expansion could not have been caused strictly by the sugar
price boom of the First World War. Pronounced fluctuations make it difficult to discern trends
with precision, but the acceleration into the second wave of investment was certainly under way
by 1913. That year preceded the sharp rise in prices in early August 1914, shortly after Russia,
Germany, France and the UK declared war.29 The surge in prices is shown in Figure 3.2. This
second result makes it necessary to reconsider the causes of the second wave, which
conventionally is attributed to the stimulus of the war. Certainly the high prices during war
contributed to it, but they cannot have initiated it.
The First Investment Wave During the recovery years, capital from the United States was attracted to sectors that in
the aftermath of the war were most in need of capital to rehabilitate the economy, to finance the
new independent government, and to build or restore badly needed infrastructure. From Table
3.1 one observes that North American investment from 1898 to 1906 multiplied six times from
1898 to 1906, but it was diversified and not particularly focused on sugar. Only 6.4 percent of
the investment between 1898 and 1906 went to the sugar industry. In the meantime, from Figure
3.1, we see that the recovery of the sugar industry was being driven mostly by investment of
domestic mills.
An immediate demand, one can discern from Table 3.1, was the restocking of cattle,
which had been almost completely annihilated during the war. The chief demand was for draft
animals, oxen, for overland transportation and especially for restoring sugar production. Mills
required hundreds of yoke each to haul sugarcane to the mills for grinding. General James
Wilson, commander of the Department of Matanzas (which included Santa Clara), and Perfecto
Lacoste, as Cuban Secretary of Agriculture, had criticized the government during the occupation
for blocking external support to import cattle for breeding. Eventually, support arrived. Eighteen
percent of the increase in US assets during the recovery were in cattle. It was nonetheless, a
29
The rise in the sugar price occurred when the UK declared war on Germany. As a major importer of Germany beet
sugar, anticipating shortages of sugar from an interruption of its trade with German, British authorities immediately
organized and moved defensively to buy up sugar stocks from other sugar suppliers. Bernhardt, Joshua, Government
Control of the Sugar Industry in the United States (New York: Macmillan, 1920); and UK Report of the Sugar
Commission, [1919]
16 temporary need. After the immediate crisis, maintenance and continued increase of the livestock
would be owned and financed, as before the war, from local sources.30
Some 11 percent of North American assets in 1906 went into unimproved land, fruit and
fruit farms, much of it acquired by land and real estate companies to promote colonies of
immigrants from the United States to develop fruit and vegetable farms. Some targeted cattleraising, mining, or were acquired in speculation of rising land values.31 Brownell estimated that
by 1906 some 13,000 immigrants had arrived, but failure was common, and most apparently
returned to the north years later. Brownell estimated in 1906 that about 16 percent of the acreage
acquired by North Americans went into fruit and vegetable farms; about 15 percent for sugarcane
plantations (significant but not overwhelming); and 5 percent in tobacco, the remainder
unimproved, some of it acquired for the mining rights.32
Twenty-six percent of US investment between 1898 and 1906 went into the development
of Cuba’s transportation and communications infrastructure. Most of this was in railroad
development. Spanish and Cuban entrepreneurs had built one of the best railroad systems in
Latin America during the previous century, but it only served the western half of the island. A
movement to consolidate competing lines in the west rose in the 1880s, financed principally by
Spanish investors, who incorporated United Railways of Havana and Regla Warehouse, Ltd.,
into which to merge the existing lines. Schroeder’s bank of London, acquired equity in this
combination. By 1898, British investors had obtained control of United Railways, and had
merged all the principal railroad lines western part of the island. The company had to incur
considerable investment after the war to restore operations as large sections of the track and
much of the rolling stock was damaged during the war.33
30
Healy, David F. The United States in Cuba ( Madison: University of Wisconsin Press, 1963; On prewar credit
institutions in Cuba, see Susan J. Fernández, Encumbered Cuba: Capital Markets and Revolt, 1878-1895
(Gainesville, University of Florida Press, 2002).
31
Brownell, Atherton, “The Commercial Annexation of Cuba,” Appleton’s Magazine (Oct. 1906): 406-11. It was
believed apparently that importation of the American method of smaller homestead farms would transform the fruit
and vegetable industry. It appears that most of the farmer immigrants returned to the north; although, it is unknown
how many. Carmen Diana Deere Deere, “Here Come the Yankees! The Rise and Decline of United States Colonies
in Cuba,” Hispanic American Historical Review 78.4 (1998):729-65, pp. 738-39.
32
Brownell, pp. 410-11.
33
Zanetti, Oscar, and Alejandro García, Sugar and Railroads: A Cuban History, 1837-1959 (Chapel Hill: University
of North Carolina Press, 1987), pp. 175, 184-85, 235-55; Jenks, Leland, Our Cuban Colony (New York, Vanguard,
1928), p. 63.
17 The eastern part of the island had no railway system prior to the war. A few disconnected
railroads served various eastern ports, but no line, indeed no satisfactory overland route of any
kind, connected the eastern half of the island to the more populated west. In 1900, Sir William
Van Horne, builder of the Canadian-Pacific Railway, incorporated the Cuba Railroad Co., to
build a central railway to connect the two major cities, Havana, in the west, and Santiago de
Cuba, at the eastern extreme of the island, and to build feeder lines to the important cities and
towns. Before the Cuba Railroad, a vast interior was commercially undeveloped, stretching
between Oriente and the city of Santa Clara, including almost the entire province of Puerto
Príncipe (Camagüey).34 High overland transportation costs limited activity mostly to subsistence
farming, cattle-raising and forestry. Much of it had been uninhabitable jungle, too inaccessible to
be of any commercial value. Railroad development in the east, beginning with the Cuba railroad
opened vast interior lands in Oriente and Camagüey. Other railroad development followed. Most
significant was the Ferrocarril del Norte de Cuba, founded by Cuban entrepreneur and politician,
Colonel José M. Tarafa, which began construction in1916 as the Cuba Northern Railroad Co.,
backed by US, Canadian and Cuban finance.35
The idea for the central railroad was not new. Even preliminary plans had been drawn up,
but thirty years of insurgency and political unrest had delayed its development. The construction
of the Cuba railroad was controversial because, to authorize the venture in1900, Governor Wood
invoked a loophole of questionable validity that allowed Van Horne’s company to circumvent
the Foraker Amendment, a law the US Congress had passed in 1899 that prohibited the granting
of concessions to halt a rush of carpetbaggers to the island. Despite its dubious origins, probably
no single project had a greater effect on the economic development of the island in the first of
independence than the Cuba Railroad.36 Van Horne thought it would open up possibilities for
diversified agriculture in the island, supporting settlements of fruit and vegetable farmers for
export to the United States in addition to the traditional exports of sugar, tobacco and coffee. As
fruit farming proved to be less profitable that anticipated, lands opened up by the Cuba Railroad
and Cuba Northern Railroad became one of the most attractive targets for the development of
new sugar plantations. There were further significant investments in transportation, in urban rail
34
Jenks, pp. 150-52; Zanetti and García, pp. 211-34.
Zanetti and García, , 265-69.
36
Give quotes from Jenks and Martinez Ortiz of contemporaries who believed this.
35
18 construction and port improvements. In addition, the greater part of British investment—as high
as 90 percent in 1909—was in railroads.
Overall, then, during the recovery years, neither sugar nor tobacco, the other traditional
major export, was so important as a destination for long-term US investment. Instead, most
foreign investment was relatively diversified and went into sectors that needed external finance
temporarily to recover, such as cattle imports, or to sectors presenting other opportunities opened
up by the intervention and restoration of political stability, including land for fruit, sugar, mining
and speculation, and railroad and other transportation investments.37 Contemporary observers
noticed this. Perfecto Lacoste observed that “Previous to the late war [American] capital was
absorbed almost entirely by the vast sugar plantations, but the trend of investment to-day is
toward more diversified interests, such as copper mines, tobacco, fruit and vegetables and the
cattle industry.”38
The Second Investment Wave After 1906, the movement of foreign capital slackened, discouraged possibly by the
insurrection of August 1906 and by the Panic of 1907, as Jenks suggests.39 Figure 3.1 appears to
corroborate the influence of the Panic of 1907, which would appear with a lag since projects to
expand or build a new mill took several months to plan and complete, hence the sharp dip in the
figure in 1908, but it does not appear to corroborate the influence of the August insurrection.
Another sharp dip occurred in 1911 in the sugar industry due to the confluence of a severe
hurricane and a severe drought during the growing season for the 1910-1911 crop, one of the
worst combinations of bad weather on record.40 This was followed, however, by a sharp recovery
in 1912 and a sharp increase in investment to expand the industry in 1913. Average annual
37
Unlike cattle and fruit, North American investment in the transportation and communications sectors was
sustained at between 20 and 30 percent of North American investment over the next three decades. The Havana
Electric Co., the urban rail company, however, was taken over in [1907?] by group of Cuban investors. Americans
also invested in Cuban government bonds, the first issue was in 1904. (Jenks, pp. ??)
38
Lacoste, “Opportunities in Cuba,” p. 268, in Leonard Wood, et al., Opportunities in the Colonies and Cuba, New
York: Lewis, Scribner & Co., 1902.
39
Jenks, PAGES; Zanetti and García, p. 243.
40
FN ---
19 additions to grinding capacity remained high thereafter. Expansions before 1912 and never
surpassed 16,000 bags, but from 1913 to 1929 they averaged 23,000 bags.
As investment picked up after the crisis, the prevailing winds changed. North American
investments became less diversified, more focused on sugar and sectors that supported sugar.
Sometime after 1911, especially, as may be observed in Table 3.1, North American investment in
Cuba began to target the sugar industry and transportation and communications. The focus was
probably greater than the table reveals since crop advances and other short-term credits, not
visible in the table, went overwhelmingly to finance sugarcane cultivation, wages, and other
seasonal expenditures in the sugar industry. Indirectly growth in the sugar industry fueled
investments in railroads, built especially for marketing sugar exports and importing capital
goods; a significant portion of the telephone infrastructure, which connected mill headquarters to
Havana; and mortgages, many of which probably went toward improvements and expansion in
the rapidly growing sugar sector.
The observation that the second wave preceded the wartime rise in the sugar price is
confirmed by the timing of a boom in the construction of new mills that became visible first in
1914. Between 1899 and 1913, only 16 new mills were built, an average of slightly more than
one per year; but from 1914 to 1921, 47 new mills were erected, almost 6 per year. The first 9 of
the new mills which appear in 1914 or 1915, could not have been stimulated by wartime prices
because all these investment projects had been announced and were under construction before
August 1914.41 Given the time required for installation, the rise in the rate expansion of the
production capacity in the industry from 1909 through to about 1915 requires another
explanation, and it suggests a more diverse set of causal factors than is often highlighted in the
literature.
What factors best explain the rise in investment activity in this period of level but
fluctuating prices that preceded the sugar price boom of 1914-1920? Despite, the volatility of
the rate of expansion, discussions in the trade press reveal that, while they paid close attention to
short-term fluctuations and forecasts, the experienced sugar producers and traders in Cuba
41
Reports in the Louisiana Planter, which followed all new mill projects, and even reported rumors of projects,
confirm that surveys and plans for all 9 were initiated in 1913 or before, and they were under construction when the
war broke out.
20 displayed a sophisticated but cool understanding of short-term risks—the potential for major
shocks in weather or market conditions that could affect short-run outcomes and profitability.
Short-term shocks had to be managed, but investment was based on long-run outlooks.42 Events
with short-term consequences affected mostly the timing, and may have resulted in delays, but
typically not cancellations, of construction projects. The second wave of expansion began to
surge no later than 1913. The trends in the investment in new capacity shown in the Figure 3.1
reflect strategic decisions that mill owners or entrepreneurs undertook in response to long-run
market expectations.
One observes a growing optimism about the future competitiveness of the Cuban sugar
industry, especially for those mill owners who could finance the construction or renovation of a
mill using the latest technology. The contemporary outlook was considerably more bullish as the
country left behind the tragedies of the war of independence and took advantage of its new
preferential access to the market for sugar in the United States. Several factors came together to
stir such optimism.
First was the rapid growth of consumption in the US market combined with the slow
expansion and perceived limitations of potential competitors. A sugar engineer writing for Cuba
Magazine in 1911 paints a picture of a rosy outlook for future sugar market conditions.
Consumption data from Willett & Gray’s Weekly Statistical Sugar Trade Journal showed that
the rate of increase in sugar consumption in the United States averaged 5 percent per year, total
consumption doubling every 14 years at this rate. The fear of competition from the growth in
production of duty-free beet sugar from the US mainland or cane sugar from Hawaii and Puerto
Rico, which had been expressed by Edwin Atkins and others in the deliberation over the treaty,
had not materialized. The author explains the slow growth of beet sugar as a consequence of
being “an artificial production, never having been able to meet the competition of cane sugar in
any market except when protected by high tariffs.” And cane sugar production in Puerto Rico
and Hawaii, he predicted “have almost reached their possible limit of production.”43 The US
mainland and its recent colonial acquisitions to date supplied only half of the sugar its population
consumed. Cuba had both cost competitiveness and other advantages over other suppliers.
42
Footnote Louisiana Planter and Mundo Azucarero.
An Engineer, “A New Sugar Estate in Cuba,” Cuba Magazine 3.4 (Dec. 1911): 218-19. See also “El horizonte
azucarero mundial,” Mundo Azucarero 1.12 (July 1914): 355-56.
43
21 Growing as fast as it was, the opportunities for Cuba to supply in the US market seemed limited
only by the availability of “good lands suitable for cane” that were “well located as to freight
rates.” The Philippines might enter the market, he suggested, “but they have not, as yet, a
population accustomed to this cultivation and manufacture.” And Cuba had an advantage in the
US market in both shipping costs and a 20-percent discount on the tariff, compared with
potential competition from Asian suppliers, such as Java.
Second was a reduction in the costs of manufacturing and marketing sugar in Cuba. A
revolution in the sugar manufacturing technology in Cuba had emerged in the late 1880s and
1890s, which introduced major changes in size and sophistication of the processes and
equipment employed at the state-of-the-art mills and had reduced the cost of production per unit
substantially. The new technology was highly capital-intensive, compared with the technology
used in sugar estates in Cuba before the 1880s, so not all hacendados had been able to finance
the conversion to modern facilities. But the entrepreneurs who did finance the installation of
modern facilities tended to displace those who could not. The new modern mills operated on a
much larger scale than the old ingenios had so that, when a single new central factory was
installed in a district, it tended to absorb the cane zones of the surrounding former sugar estates.
As the new technology diffused throughout the island, then, many old, obsolete ingenios were
retired and dismantled. These revolutionary technological and social changes were in the
process of geographical diffusion throughout the island when war broke out in 1895. The war
thus interrupted the diffusion of new the technology, but when the hostilities ended and sugar
production was revived after the war, the process of geographical diffusion was also revived and
continued to sweep across the island. As the economy recovered after the war, then, there were
many opportunities either to convert existing mills or build new ones adopting the latest
technology.44
A third factor, which was at least as important for the lowering of costs at certain sites,
was the substantial amount of railroad construction undertaken after the war, which opened up to
sugar production vast extensions of land in many parts of the island that previously had not been
44
A factory with two set or trains of mill as described, if it depends on its own lands for cane should not start
without owning at least 1000 caballerías (33,000 acres) of good cane land. “There are locations in Cuba where good
virgin soils suitable for cane can still be bought in large tracts at about $300 per caballería, although such locations
are becoming scarce, so we shall estimate $300,000 as needed for purchase of land.” (Cuba Magazine, 3.4, Dec.
1911: p. 218) [Include also ref to the art on Camagüey in Mundo Azucarero, ca. 1913.]
22 “well located as to freight rates.” The most important was the construction of the Cuba Railroad,
which began in 1900, which was augmented by continued development of the railroad network
in the eastern and western parts of the island. Many interior lands had remained undeveloped
because, prior the arrival of the railroad, high transport costs had made commercial agriculture of
any kind unprofitable. The arrival of the railroad greatly lowered the cost of carrying produce to
the ports, so that nearby lands became suddenly potentially profitable for commercialized
agriculture, and anywhere the new rail lines crossed districts with good cane soils, they opened
up new opportunities for building sugar mills.
Between 1905 and 1914, two-thirds of the mills built de novo were on lands that had been
recently opened for development by new railroad construction. Two were built and operated by
the Cuba Co., parent of the Cuba Railroad Co.45 Three others were North American or partially
North American-owned mills, built on branches of the Cuba Railroad, Palmarito (1911), built A.
Link, Swedish-American; the Río Cauto (1913), built by the McLaughlin Brothers; and Central
Stewart (1908), financed in New York, but built and operated by a well-known sugar machinery
manufacturer of Glasgow, Duncan Stewart & Co., founded obviously to demonstrate a state-ofthe-art facility using this manufacturer’s machinery.46 Five other factories were built by domestic
interests, most organized in investors syndicates, consisting typically of a combination of local
wealth holders and residents of Havana. One of the most prominent figures involved was
Colonel José M. Tarafa, who founded Central Jagüeyal in 1908, and Central Morón, founded in
1912, although not completed until the end of 1914. This mill was located at the intersection of
the Júcaro-Morón Railway and the Cuba Northern Railroad, two railroad ventures built owned
principally by Tarafa.47 Others include Central Camagüey (1914), developed by a syndicate of
Cuban and American capital; Central Ciego de Ávila (1914), developed by a syndicate of local
and Havana investors; Central América (1914), built by Federico Fernández Rosillo, Spanish;
and Central La Vega (1915) of J.M. Gómez, Cuban.48
45
These were Centrales Jatibonico (1907) and the Jobabo (1912).
Louisiana Planter, “Central Stewart Sold to Cuba Cane Sugar Corporation,” 57.3 (Jul. 15, 1916): 42.
47
On Tarafa’s railroad ventures, see Zanetti and García, pp. 263-68, and Louisiana Planter 51.17 (Oct. 25, 1913):
286.
48
Ciego de Avila Sug. Co. “is composed of prominent citizens of Havana, including Orestes Ferrara, Pelayo García,
Isidro Fontainais, H. J. de Mesa, Eustachio Balanzaltegui [sic], Jose Miguel Tarafa, prominent citizens of Ciego de
Avila, incl. Vicente Pérez. Louisiana Planter, 55.7 (Aug. 14, 1915): 104; 50.13 (Mar. 29, 1913): 205.
46
23 After August 1914, the wartime sugar price boom gave added stimulus to the
construction of new mills. Even so, most mills built between 1915 and 1920 followed a similar
pattern—three-quarters, in fact, were situated in lands opened up by recent railroad construction.
Twenty were built along various branches of the Cuba Railroad; five in Pinar del Río, along the
Western Railways of Havana line, extended from Pinar del Río to the southwestern tip of the
island; and four along Tarafa’s Cuba Northern Railroad between Morón and Nuevitas.49
Several other factors, which we simply mention, contributed to further reduction in costs
of sugar production in Cuba and its marketing in the United States. These included significant
improvements in the transportation and distribution infrastructure that lowered the cost of
shipping and, in particular, reduced the cost and uncertainty of delivery of sugar machinery
imports. There was also a shift in the politics of the sugar tariff in the United States that became
manifest in the deliberations in Congress over the Payne-Aldrich tariff of 1909, which ultimately
resulted in 1913 in a reduction of the sugar tariff with the passage of the Underwood-Simmons
tariff, which went into effect on March 1, 1914. Besides lowering the tariff in 1914, the
Underwood-Simons law scheduled sugar to be placed on the free list in 1916.50
New Mill Construction and Acquisition It may be that the entrepreneurial inputs needed to build a new mill in virgin or
undeveloped land may require greater prior knowledge of local conditions than those to improve
and expand an existing mill, which would give domestic entrepreneurs with more local
knowledge and possibly better social connections in the district to be developed than a foreign
firm might have. When acquiring a going concern, even if the new owners intended to invest in
improvements or expansion, there were fewer unknowns—the fertility of the local soil types,
local growers had experience with cane supply contracts and with hiring field labor and
49
Cf. Zanetti & García, on Central Hershey and the developments in the plains of Camagüey.
One might expect the future placement of sugar on the free list to have caused a frenzy of excitement in Cuba over
the possibility of selling sugar free of duty in the United States. Instead, it produced a (1) controversy over the
possible consequences. Competitive advantage relative to Louisiana, western beets, the rest of the world.(2)
Speculation about the ending of the tariff differential between raw and refined sugar, which opened up an
opportunity to develop high-grade white sugar that did not need refining to gain offset the bargaining power exerted
on sugar prices by the oligopolistic sugar industry. (3) Doubts that it would actually happen. An outcome of
partisan politics which still faced significant opposition from sugar protectionists in the United States that would
find more support from the Republics whenever control of Congress returned to them.
50
24 supervising the harvest during the grinding season. The new buyers could hire local field
managers or foremen who knew the local growers to maintain continuity. In a completely new
operation, besides building a new factory and railroads to carry cane to the factory, entrepreneurs
had in addition to identify the best soils and recruit new growers to supply the cane.
Conventional views often discredit the role of local entrepreneurship in the development
of the sugar industry. Oscar Pino-Santos, in an influential study, challenges the conventional
view, arguing that most new mills developed between 1898 and 1913 were founded by Cuban
entrepreneurs, and that most of the mills acquired by North Americans in between 1898 and
1913 were not built de novo but rather purchased from domestic owners. After 1913 the pattern
continues, he observes, except that a significant number of bankrupt mills were acquired after the
financial crisis of 1921 in auction or foreclosure. From this, he concludes that the economic
prosperity of the early republic cannot be attributed, as is often done, to North American capital
or entrepreneurship. It must be the founders of the mills, he argues, who were responsible for the
net additions to the production capacity of the industry; hence, the economic prosperity of the
period is traced to domestic entrepreneurship.52
Pino-Santos’ study raises an interesting question about the relationship between domestic
or foreign entrepreneurship and the construction of new mills. We have seen above that his
assumption, which traces additions to the capacity in the mills to the founder, is not necessarily
correct. Looking more closely, it may be observed that most additions to capacity were at
existing mills rather than new mill construction. If we classify any mill in its first three years of
activity as a new mill (a new mill often ramped up its capacity or capacity utilization over its first
few years), less the one-quarter of total additions to capacity came from the installation of new
mills from 1901 to 1929; three-quarters was installed at existing mills, that is, mills that had been
active for at least four years.
Yet despite his having overlooked the expansion at existing mills, Pino-Santos’
characterization that North American companies tended to acquire existing mills from domestic
owners rather than build them de novo holds true. Table 3.3 displays the number of mills built de
novo and existing mills acquired by each major nationality group for three-year intervals from
1899 to 1928. The table shows that North Americans acquired more mills than they built de
52
Pino-Santos, Asalto a Cuba por la oligarchía financiera yanquí (Casa de las Américas, 1973), pp. 42-49, 93-95.
25 novo; although, the difference was not great until after 1914. Before 1914, Table 3.3 shows that
the ratio of acquisitions to de novo was 11:14 only slightly in favor of acquisitions. Afterward,
between 1914 and 1922, it was almost 4 to 1, and it remained similarly high in the 1920s until
the Cuban government prohibited any further new mill construction in 1926.
During the 1914-1921 construction boom, most of the increase was in new mill
construction led by domestically owned firms, about 75 percent.53 This can be seen in Table 3.4,
which gives the additions to capacity contributed by de novo and existing mills by nationality.
The rate of de novo construction by domestic entrepreneurs slowed after the war, but remained
high relative to previous periods.
As in Figure 3.3, differences before and after 1914 are noteworthy. Before 1914, the
North American entrepreneurs built about the same number of mills as domestic owners, but the
North American de novo mills were much larger mills. The average capacity of foreign de novo
mills was about double that of domestically build de novo mills before 1914. After 1914, the
average capacity of new mills built by North Americans remained larger, but the size gap
between mills built by North American and the largest domestic mills became comparable to the
largest foreign mills.
Equally noteworthy, however, is the active market for existing mills demonstrated by the
large number of domestic acquisitions. There is little research on the market for sugar properties
in republican Cuba. Studies in the historiography that address transfers of mills focus only on
foreign, particularly North American, acquisitions. They tend to portray the Cubans who sold
their estates as disadvantaged, in financial distress, and forced to sell.54 And they often give the
impression that foreigners were the only buyers—the only ones able to finance the purchase of a
mill, implying that Cuban entrepreneurs were unable to finance acquisitions or compete against
foreign firms with access to finance at better terms.55 Our data show, as displayed in Table 3.5,
to the contrary, that there was an active market for sugar properties in which the majority of
transactions were between domestic parties. The volume of both domestic acquisitions and new
mill construction raises doubts about interpretations in the literature that emphasize the inability
53
Some of the projects were financed by syndicates composed of more than one nationality. In such cases,
nationality is assigned according to the principal organizers as identified by the trade press or other historical
records.
54
Ayala, American Sugar Kingdom, pp. 78-79.
55
Ibid.
26 of Cubans to compete in this market. North American buyers, especially corporate buyers,
however, became significantly more important participants in this market after 1914.
It is noteworthy that more than half of all de novo mill construction from 1899 to 1922
was undertaken by Cuban entrepreneurs in the brief period between 1914 and 1922. But this was
also the period of peak North American acquisition; most of the mills built by Cuban
entrepreneurs during this period were acquired by North American companies. What does this
say about the relationship between the domestic entrepreneur and North American corporate
investments?
The Foreign Corporate Buyers Oscar Zanetti observes that, “even though North American capital was not yet in the
majority in the industry,” it nonetheless, “introduced new and important features into the
physiognomy of the sugar sector.” One of the main features, he says, was the rise of corporate
finance in the sugar industry. More important than this, he says, was the rise of the use of the
corporate form of organization to finance the consolidation of multiple mills into horizontally
and vertically integrated enterprises under a single ownership and management.56
The introduction of corporate finance itself did not originate with the entry of North
American companies. The corporate form had been used by Spanish entrepreneurs as early as the
1830s to finance railroads, and from the mid-nineteenth century to consolidate sugar estates to
pool capital and risk. The Spanish commercial code in force in Cuba permitted foreign
corporations to operate in the island.57 Like the pioneers of British textile mills in an earlier era,
nineteenth-century Cuban sugar entrepreneurs financed most of their accumulation of fixed
capital in the mills gradually out of retained earnings. Many of elite hacendado families owned
multiple mills, but they had typically been acquired one at a time as the family’s wealth
expanded. Most domestic estates were organized as sole proprietorships, partnerships, or
sucesiones heriditarias. But the use of the corporate form was on the rise since before the war of
independence. By 1907, at least 41 sugar companies were incorporated; half of these were
56
Zanetti, Oscar, Las manos en el dulce (Havana: Editorial de Ciencias Sociales, 2004), pp. 17-18
Bergad, Laird, Cuban Rural Society in the Nineteenth Century: the social and economic history of monoculture in
Matanzas (Princeton University Press, 1990); Lacoste, Perfecto, “Opportunities in Cuba,” p. 268, in Leonard Wood,
et al., Opportunities in the Colonies and Cuba, New York: Lewis, Scribner & Co., 1902.
57
27 principally domestically owned; although, nine domestic owned corporations were incorporated
in the United States.58
A few North American financier-entrepreneurs, however, demonstrated the possibilities
of using equity finance to raise the large sums of money to build a state-of-the-art mill de novo or
to finance a consolidation of several mills to bring them under a single management. In 1899, in
the aftermath of the war of independence, Robert B. Hawley and associates raised the finance to
build the Central Chaparra, which in a few short years became the largest mill in the world. In
its first few years, it was not much larger than the largest domestic mills. Andrew Preston,
founder of the United Fruit Co., made a similar investment in 1899 in the Central Boston. By
1907, these model mills achieved the largest scales in the island. The daily capacity of the
Chaparra and Boston exceeded 2000 bags per day. This is not to say that the leading domestic
entrepreneurs were completely outmatched by deep-pocketed Wall Street investors. Several
domestic factories were close rivals; for example, in 1907, four centrales recognized has having
state-of-the-art facilities had capacities of 1600 bags or more, including the Terry family’s
Central Caracas, the Baró family’s Central Conchita, and the Zulueta y Gámiz family’s, Álava,
and the Fowler Brothers’ Narcisa.59 These entrepreneurs were able to finance rival modern
facilities.
A major difference with regard to the finance, though, was that Hawley and the United
Fruit Co. built factories with state-of-the-machinery and engineering designs that, as a start-up,
achieved the largest known economies of scale to date all at once. (Capacities of new mills were
typically ramped up in the first few years.) The leading domestic entrepreneurs more often had
expanded their centrales over the course of a decade or more. Domestic start-ups were typically
more modest at least initially, until after 1914, after which the leading domestic de novo mills
were not so different than foreign-financed de novo ventures.
58
Secretaría de Hacienda, Industria azucarera y sus derivados, 1905/06, 1906/07, (Havana, P. Fernández y Cía,
1908), p. 21. Primary sources vary as to whether they classify a company owned principally by Cuban residents but
incorporated in the United States “American,” “Cuban,” “Spanish,” or a hybrid of these.
59
The Narcisa was owned by the North American Sugar Co., founded by the Fowler Brothers, who were British
citizens, Cuban-born sons of a merchant family whose patriarch had migrated to Cuba in the mid-nineteenth century
from Canada to build a leading merchant house in Cienfuegos. The Fowlers were the principal owners of the
corporation and managed the estate. Other shareholders included English and Cuban-born residents of New York
City.
28 A second difference was the introduction of the consolidation movement into the Cuban
sugar industry. Cuba’s independence in 1898 coincided with the great merger movement of
1897-1903 in the United States, when large numbers of companies were consolidated in a few
short years into large industrial concentrations, which in some cases completely dominated their
respective markets.60 In many industries in the United States the movement resulted in a
consolidation into a single trust or holding company 50 to 75 percent of the industry’s market
share. Figure 3.4 shows the acquisitions of mills by major North American corporations, defined
as vertically integrated corporations and combinations of three or more mills.
Its transfer to Cuba in those years was more modest. In Cuba, by 1907 there were two
foreign consolidations with three or more mills. By 1906, Hawley and members of the New York
sugar brokerage, B. H. Howell & Son, founded a holding company, the Cuban-American Sugar
Company, which was organized to acquire the stock of five mills that the various members of the
investor syndicate had acquired between 1899 and 1906. This company by 1910 acquired two
additional sugar properties and built a new de novo mill, in the vicinity of and comparable to the
Chaparra. The eight properties were consolidated into six large-scale mills spread across four
provinces. The stock in the company was traded over the counter in its early years; by 1914 its
stock was trading publically on the New York Stock Exchange; it was the first Cuban sugar
company to be listed. The second was the Guantánamo Sugar Company, founded in 1905 to
consolidate three of the four estates owned by Ernesto and Teodoro Brooks Brothers, the Cubanborn sons of an English-immigrant merchant of Santiago and Guantánamo who dated back to the
mid-nineteenth century and began to acquire sugar properties in the 1870s. The president of the
new company was James H. Post, a principal of B.H. Howell & Son, and President of the
National Sugar Refining Co. [of Brooklyn]. Teodoro was Vice President and General Manager in
its first few years, but after 1912, he resigned; and Ernesto was no longer on the Board of
Directors.
Also significant, the principal business of a number of the North American corporations
acquiring properties in Cuba were in vertically related industries—in sugar refining, brokering,
shipping and finance. Both the Cuban-American and the Guantánamo were linked to the New
60
Nelson, Ralph Lowell, “The Merger Movement in Manufacturing and Mining, 1895-1907,” Ph.D. diss. Columbia
University, 1955; Lamoreaux, Naomi, The Great Merger Movement in American Business, 1895-1904 (Cambridge
University Press, 1988).
29 York refining company, the National Sugar Refining Company, through the Post and Howell
connections. In practice, they were vertically integrated in the sense that National Sugar became
the usual outlet, or buyer, of their product. Other vertically integrated operations were the mills
built or acquired by the Rionda family and the Cuba Company. Manuel Rionda, whose New
York brokerage house, Czarnikow-Rionda, toward the end of the decade became the leading
agent for Cuban producers selling sugar to eastern seaboard refiners. The Rionda family, which
had found the Central Tuinucú in 1889, founded two additional mills in 1901 and 1913, and
acquired three others in 1908, 1911 and 1919, one in partnership with Cuban mill owner and
railroad entrepreneur, Colonel José M. Tarafa. The Cuba Company, parent company of the Cuba
Railroad Company, built and operated two mills in what initially were remote areas along the
central railroad, intended to give generate traffic and to demonstrate profitability and attract other
entrepreneurs to build mills in the interior along the railroad line. One might also mention the
Central Stewart, also in the interior along the Cuba Railroad, built de novo in 1908 and operated
by Duncan Stewart & Co., of Glasgow, a leading manufacturer of sugar machinery, to
demonstrate the performance capabilities of a factory built using the latest design and machinery.
It is often argued that the entry of these companies represent initial steps toward
monopolization of the Cuban sugar industry by North American corporate interests. The
interpretation, however, must be corrected to account for the small market share and
heterogeneity of interests and incentives that these early corporate investments introduced. The
refiner-linked Cuban-American and Guantánamo sugar companies never accounted for more
than 7-8 percent of the production capacity in the industry. If we add the two mills acquired
before the war of independence that had links to the American Sugar Refining Company, the
principal holding company of the sugar trust, the refiner-linked companies still accounted for less
than 10 percent of the industry.61 Meanwhile, the Riondas, Cuba Company and other vertically
integrated enterprises did not share the interests of the refiners. Theirs were aligned with the
interests of the sellers, or with the general prosperity of the island. They had no incentive to
collude with the refiners in restraint of trade. Therefore, by 1913 a small share of the industry
was vertically integrated with refiners; but most of the remaining 170 mills competed to sell to
an oligopsony of refiners in the United States.
61
These were the two mills owned by Edwin Atkins, one in partnership with Henry O. Havemeyer.
30 The industrial and corporate landscape changed unmistakably after August 1914. The
biggest change came with the organization of the Cuba Cane Sugar Corporation. Incorporated on
December 31, 1915, in a few short months it acquired 17 sugar estates in Cuba in the winter of
1916 and two more before the end of 1920. Capitalized at $50 million, by the end of its first
active crop season in 1916 it represented 14 percent of the grinding capacity of the island. The
next largest company, which was the Cuban-American, had 7 percent. The main promoter of
Cuba Cane was Manuel Rionda, who for several years had contemplated the idea of a great
consolidation in Cuban sugar.
Rionda’s interest was to build a company that could stand up to the bargaining power of
the sugar trust, which had become an oligopsony of three major buyers of raw sugar in the Cuban
open market, American Sugar Refining, Federal, and Arbuckles. The smaller National Sugar
Refining Company was not a major buyer since it could procure most of its needs from its
vertically-linked properties in Cuba. The criticisms of sellers in Cuba had to do with the
seasonality of supplies against the continuity of refiners’ demands. During the peak grinding
season in Cuba between January and May, there tended to be a glut on the market, which drove
prices down during the winter season. In the summer months, when stocks diminished refiners
tended to bid up the price of sugar in the US. During the winter months, refiners were criticized
for driving the price of sugar received in Cuba below the so-called “Hamburg parity,” the
London price of Hamburg unrefined-grade beet sugar, which marketers of the time considered to
be the best benchmark for the world market price of sugar. Contemporary critics argued that
refiners colluded in order to drive the price of Cuban sugar seasonally below the market price.62
Rionda and other sophisticated sellers in the market for Cuban sugar were more than
happy to blame refiners for the low seasonal prices during winter months. They were,
62
The Hamburg parity was the London price of unrefined beet sugar purchased from Germany. Experts claimed at
the time that the price of German sugar in London determined the global price, since London was the principal free
market for sugar, and Germany was its largest supplier. In the first few years after independence, Cuba received a
premium above the global price because the equilibrium price of sugar in the United States was the global price plus
the full duty. Since Cuba received a 20 percent discount, its producers were able to pocket the difference between
the discounted duty and the full duty. Consequently, producers in Cuba preferred to export all their sugar to the
United States. By 1909, production of sugar in Cuba had expanded to the point that it crowded out virtually all fullduty paying imports of sugar into the US market. At that time the equilibrium price in the US became the London
price plus 80 percent of the tariff, since the tariff on Cuban sugars became the effective tariff in the United States.
[See Vogt, Paul, The sugar refining industry in the United States. Its development and present condition
(Publications for the University of Pennsylvania, 1908). Wright, Philip G. Sugar in Relation to the Tariff (New
York: McGraw-Hill, 1924); and [US Tariff Commission, Effects of Cuban Reciprocity Treaty.]
31 nonetheless, aware that other factors combined to create the situation. In the US market, the price
of Cuban sugar would not be driven down if mill owners in Cuba would store their produce to
sell in the summer months when prices were higher. Indeed, those who had sufficient credit did
just that—they built warehouses at their mill sites or at the ports where they stored the sugar until
prices were more favorable. There were three reasons this strategy was not being implemented
more regularly. First, a large number of Cuban producers, badly in debt with limited access to
credit, were obliged to sell their sugar as soon as it was produced at whatever price was available
to meet obligations. Second, others had few options but to sell as it came off the line because
storage facilities in Cuba were insufficient to accommodate holding adequate stocks of sugar off
the market until the summer after the grinding season ended and prices improved. In previous
years, some producers called for a national association, export bank or other Cuban government
intervention to coordinate sales among producers, which never amounted to anything. Rionda
believed a large combination of mills, represented by his brokerage, Czarnikow-Rionda, would
be able to raise the finance to make the necessary investments and establish bargaining power
vis-à-vis the big three refiners.63
The sharp rise in the price of sugar in the first week of August 1914 presented the
opportunity to move forward with his plan. Rionda and his associates were well aware that the
high prices could last only as long as the war lasted, yet while as long as it did last, prices could
be expected to remain high. The war thus created a potential in the short run for windfall profits
and abnormally high returns to the shareholders who invested in the combination.64 This came at
a time when the stock market was undergoing a structural change in favor of industrial stocks.
Industrials were becoming a more common high-risk but high-return alternative to railway and
public utilities securities. The initial public offering of Cuba Cane preferred and common stock
was underwritten by an investment banker syndicate led by Eugene Meyer Jr. and Company,
which included Guaranty Trust and J.P. Morgan & Co.65 In its first few years, both common and
preferred stock of the company were traded on the New York Curb market, which, as Larry Neal
and Lance Davis have shown, had become specialized as a market for securities that did not meet
the listing requirements of the New York Stock Exchange and for securities that were in an
63
McAvoy, Muriel, Sugar Baron: Manuel Rionda and the Fortunes of Pre-Castro Cuba (Gainesville, University of
Florida Press, 2003), pp. 81-103.
64
McAvoy, Ibid., pp. 81-82.
65
McAvoy, Ibid. p. 85; Wall Street Journal, Mar. 17, 1916; Apr. 3, 1916; New York Times Mar. 16, 1916.
32 earlier stage of their evolution, comparable today to later stage venture capital or “mezzanine”
finance.66
The abnormal post-1914 wartime prices, therefore, help to explain the timing but not
necessarily the principal motives behind Cuba Cane. His rivalry with the big three refiners
motivated the principal commission agent for Cuban producers to convert an oligopsony into a
bilateral oligopoly. At its peak in 1920, Cuba Cane and the Rionda group together owned about
20 percent of the industrial capacity in the island, and Czarnikow-Rionda handled about 60
percent of the sales of Cuban raw sugar in the United States.
Although Cuba Cane was by far the largest, there were a few other North American
acquisitions of significance during the war. Edwin Atkins, who had resigned as president of
American Sugar Refining Company, brought together a syndicate to found the Punta Alegre
Sugar Company in 1915, intended primarily to take advantage of opportunities created by recent
railroad construction in the east. The new company built a large state-of-the-art factory in a
remote area near the southern coast of Camagüey along the recently built Tunas de Zaza-Sancti
Spiritus railroad line, and acquired the Central Florida in the Camagüey interior on the Cuba
Railroad. Alkins and the Havemeyer family decided also to merge the former Atkins-Havemeyer
partnership, the Central Trinidad, into the new company.
The Warner Sugar Refining Company also entered Cuba in 1915 by purchasing a small
mill, the Central Palmarito, as well as some adjacent land on which in 1918 built a more up-todate mill, the Central Miranda, which was eventually expanded to absorb the cane zone of the
Palmarito (which was retired in 1926). In 1920, it acquired the Centrales Amistad and Gómez
Mena from Andrés Gómez Mena, two of the most technically advanced mills, owned and
managed by one of the leading Cuban sugar entrepreneurs on the island. Milton Hershey,
founder of the chocolate company, acquired the small Ingenio San Juan Bautista, where he, in
1918, built a large mill, Central Hershey, which he later converted into a refinery to furnish sugar
for his chocolate operations in Hershey, PA. The American Sugar Refining Company acquired
66
Neal and Davis, “Why Did Finance Capitalism and the Second Industrial Revolution Arise in the 1890s?” in
Naomi Lamoreaux and Kenneth Sokoloff, eds., Financing Innovation in the United States, 1870 to the Present (MIT
Press, 2007), pp. 139-42. See also O’Sullivan, Mary, “Expansion of the US Stock Market, 1885-1930: Historical
Facts and Theoretical Fashions,” Enterprise and Society, 8.3 (2007): 489-542; Davis, Lance, “Capital Markets and
Industrial Concentration: The US and UK, a Comparative Study,” Economic History Review19.2 (1966): 255-72.
33 its first mill in Cuba in 1919, the Central Cunagua, which at the time of the purchase was the
fourth largest mill in Cuba, built in 1917 by one of the leading Cuban sugar engineering
companies, Victor G. Mendoza y Cía.
These were the acquisitions of major foreign corporations prior to 1921. By 1910 North
American corporations owned about 20 percent of the grinding capacity. By 1920, they had
about 38 percent. These companies are sometimes portrayed as in league with each other to
monopolize the Cuban sugar industry, yet upon closer inspection, one observes multiple motives
and incentives that varied with each company’s relationship to the buyers or sellers in the market
for raw sugar and led some to prefer high prices and others to prefer low prices for raw sugar.
Furthermore, the differences in the timing of entry suggest differences in their motives or
strategy for acquiring sugar properties in Cuba, since the market conditions differed
significantly. Most notably, the acquisitions in 1919 and 1920 by Warner Sugar Refining and
American Sugar Refining cannot be explained by the attraction of high wartime prices, since the
war had ended. In fact, at this time the price controls on sugar, which had been in effect since
1917 were scheduled to be lifted in 1919. Forecasts in 1919 predicted shortages and a sharp rise
in the price of sugar once the ceiling was lifted. It appears that these two refiners, uncertain about
the future cost of raw sugar, wanted to acquire additional suppliers to hedge against a possible
sharp rise in costs. Who Were the Sellers? Studies in the literature often portray the Cuban sugar estate owners as inferior
participants in an industry that had been taken over by powerful North American corporations.
As the foreigners entered, domestic owners in financial distress or unable to compete were
forced to sell.67 Historians focused on the aftermath of the war of 1895-98 characterize the
Cuban sugar elite as capital-starved and vulnerable to opportunist North Americans. Others who
have observed that Cuban entrepreneurs not only recovered but then founded many of the mills
ultimately acquired by North Americans, still describe them as being overpowered by the power
of financial capital later, after 1914. Is either of these the best way to characterize the domestic
owners who sold their sugar estates to North American corporations?
67
Ayala, pp. 78-79.
34 In this section, when possible, I trace whether the sellers to the North American
corporations discussed in the previous section continued to invest or work in the sugar industry.
Undoubtedly their experiences were quite varied; however, I find several patterns of outcomes
that indicate continued roles in the sugar industry for owners who sold the properties to North
American corporation, which are inconsistent with the stereotype of vulnerability or
displacement. I highlight three types of roles, not necessarily mutually exclusive, which may be
described as collaborative, competitive, and entrepreneurial.68
Historians have particularly characterized the entry of North American corporations in
the aftermath of the war of 1895-98 as a displacement and exclusion of the old elite from the
postwar industry. If the domestic sugar elite were overwhelmed, displaced and excluded by their
foreign rivals, then they should not reappear as collaborators, directors or shareholders in the
foreign companies. If we examine the fates of the owners of acquired firms from 1899 to 1911,
there was no mass displacement of Cuban owners. Indeed, collaboration of North American
financier-entrepreneurs and domestic entrepreneurs, with local experience, was not uncommon.
Take first the Cuban-American Sugar Company. This company originated with several
initial investments in 1899, including the Central Chaparra. When Hawley founded the Central
Chaparra in 1899, he did so in collaboration with a General Mario García Menocal, a Cuban
Cornell-trained engineer, who while serving in the Liberation Army discovered a stretch of
undeveloped land at Puerto Padre, which later became the site of the Chaparra (1901) and the
Delicias (1910). Menocal designed and supervised the installation of both mills; he became their
General Manager and served on the Board of Directors of the Cuban-American Sugar company
until he was elected President of Cuba in 1912. Ernesto A. Longa, former owner of the Central
Mercedita, which was part of the original 1906 consolidation, continued as General Manager of
his former property. Similarly, when the Cuban-American acquired the Central Unidad from
Juan McCulloch, a Cuban-born son of an American immigrant, he continued as General
Manager of the Unidad. Both Longa and McCulloch served as well on the Board of Directors.
Andrew Preston, founder of the United Fruit Company, similarly worked closely with
Simón and Hipólito Dumois, sons of a French immigrant, who owned a banana plantation and
distribution company in the area of Banes and Nipe bays. Initially, they helped Preston purchase
68
Thomas, Huge, Cuba: The Pursuit of Freedom (New York: Harper & Row, 1971); Gillian McGillivray, Blazing
Cane: Sugar Communities, Class, and State Formation in Cuba, 1868-1959 (Duke University Press, 2009).
35 and secure titles to the land where Centrales Boston and Preston were built. (This was an area
where property rights to land were insecure due to a legacy of poor titling institutions under
Spanish rule.) The United Fruit Company was organized in 1899 to merge Preston’s Boston Fruit
Company with the Dumois’ Samá and Banes fruit companies, and several other operations in the
Caribbean. Hipólito was originally an officer in the new company; although, after a few years,
there was a falling out between the Dumois and Preston. The Dumois family returned to the
banana business in the Nipe Bay area, and reappear as founders of a de novo factory in the
Camagüey interior in 1916.
The Guantánamo Sugar Company similarly originated as a collaboration between the
Brooks brothers and the principals of B.H. Howell & Son to finance the postwar restoration of
three of the four Brooks’ estates. Teodoro Brooks became the General Manager until he resigned
at the end of 1912, after which the Brooks brothers no longer appeared as officers or directors in
the company. The family did, nevertheless, survive as owners of their fourth estate, Central
Romelie, which remained in the family until the late 1920s, eventually taken over by its General
Manager, Francisco de Pando.
It is impossible to say how many Cuban residents bought shares in the North American
companies; although, it is known that Cuban equity participation in these companies was not at
all insignificant. Several companies, when they were founded, tried to enlist as many Cuban
subscribers as possible. Two noteworthy cases are the Manatí Sugar Company and the Punta
Alegre Sugar Company. Central Manatí was nominally founded in 1913 by the Spaniard, the
Marqués de Ulzurrún, who owned the land on which it was to be developed. But it was to be
financed by raising equity from diversified sources in Cuba and New York. Manuel Rionda
became its principal who attempted to attract as much Cuban equity capital as possible in the
initial offering. The Punta Alegre Sugar Company merged in 1916 with the Compañía
Azucarera Vertientes, which owned Central Florida. This company was founded a year or so
earlier by a Cuban investor syndicate to develop a mill on a site opened up by recent railroad
development in Camagüey. When the opportunity arose to merge their venture with the new
Atkins venture, they chose to join, which meant exchanging their shares in the Compañía
Azucarera Vertientes for share in the Punta Alegre Sugar Company.
36 Another common discrediting characterization in the literature is that the domestic sellers
of sugar estates were financially destitute and had no choice but to sell. Yet if sellers were in
irreparable financial distress, one would not expect to see them again soon afterward founding or
acquiring another sugar mill. We have already observed that the Dumois family reappeared as
founder of a sugar mill after leaving United Fruit. Indeed, it was not uncommon for sellers to
found, own or acquire another mill after selling a former one. For example, in the case of Cuba
Cane Sugar’s original 17 mill acquisitions in 1916, acquired from 14 persons or entities, only
five do not reemerge in the mill owners’ rosters as owner of another mill. A few of the mills
acquired by Cuba Cane were purchased from highly successful Cuban entrepreneurs, including
Colonel Tarafa, Victor and Antonio Mendoza, Miguel Arango, and José López Rodríguez, who
continued to own, acquire or found mills after their transactions with Cuba Cane. Others were
clients of Manuel Rionda who used the proceeds from their sales to acquire another mill,
including Pedro Laborde, Pedro Arenal, and Domingo Nazábal.
A few domestic entrepreneurs appear either by intention or accident as serial
entrepreneurs. In many industries, it is common to find entrepreneurs who specialize in building
start-ups, which they then sell to companies better capable of managing them, once established,
or financing their growth. There are several examples that might be explained by this kind of
serial entrepreneurship. The earliest possible case is Cirilo González, who acquired the Central
Tinguaro during the war of independence from well-known nineteenth-century Matanzas
hacendado Carlos de la Rosa, but sold it to the Cuban-American Sugar Company in 1899. In the
same year, González, who had acquired the small Ingenio San José, reorganized it into the
Central Washington, which he developed into a leading central factory and sold it in 1911 to the
Rionda family.
After the Mendoza family sold the family estate, Central Santa Gertrudis, to the Cuba
Cane Sugar Corporation, in 1916, Victor and Antonio Mendoza founded the Central Cunagua.
Victor G. Mendoza & Co., one of the leading Havana engineering consulting firms that
specialized in the design and installation, built the factory. When it began operation in 1918, it
was one of the leading mills in performance, the fourth largest mill in the island, behind the
Cuban-owned España, and American-ownd Stewart and Delicias. In 1920, this was the mill
acquired by the American Sugar Refining Company. In 1921, when American Sugar Refining
decided to build a second mill, they hired Victor Mendoza to design and install it, equally
37 impressive as an engineering achievement, it had become the largest mill in the island by the end
of the decade. Similarly in pattern, after selling his Central Mercedes to Cuba Cane in 1916,
Miguel Arango, founded another mill, Central Violeta, which he sold in 1919 to Cuba Cane.
Finally, no one exhibited the qualities of serial entrepreneurship more than Mario García
Menocal, who was the “moving spirit”, as the contemporary press noted, behind the founding of
the Central Chaparra. He was the one who had discovered the uniquely advantageous site on
which it was built, and designed and supervised the factory, which was considered at the time to
be an extraordinary engineering feat, superior to anything to date anywhere in the world. He then
went on to lead the development of the Central Delicias while he served as General Manager of
the Central Chaparra Sugar Company. During his term as President of Cuba, he founded the
Central Palma in 1917, which he lost in the financial crisis of 1921. Then in 1925, he founded
the Central Santa Marta in Camagüey. Completed in 1927, it was the last de novo mill to be built
before the Cuban government prohibited the construction of new mills in 1926.
Prices and Exit Strategies Another common view in much of the literature is the notion that North American
corporations were able to take advantage of low prices when they bought up Cuban sugar
properties. A few scholars have noted how the timing and record of sales does not necessarily
support the notion. The conventional view—that North American companies entered en masse
before the island had recovered from the destitution of the war of independence—has been
dispelled. Furthermore, foreign entrants in the early years tended to collaborate with locals. In
any case, most North American acquisitions took place after 1914, after the economy had fully
recovered and was experiencing a boom in the price of sugar. Mary Speck observes that extant
records of sales of mills after 1914 indicate that the prices North American companies paid for
mills at that time were high.69
Luís V. de Abad, in an article for Cuba Review in 1921, observed how the cost of
building a new sugar factory rose from just before to the end of the First World War. Previous
estimates for 1901 and 1911 placed the estimate for building a mill with the latest machinery,
69
Speck, “Prosperity,” pp. 68-69; McAvoy, pp. 81-85; Louisiana Planter 56.6 (Feb. 5, 1916), 88; [Jimenez.,
Guillermo, Las empresas de Cuba, 1958 (Miami: Ediciones Universales, 2000).]
38 sugarcane plantations, railroads, etc., at about $5 to $6 per bag of annual capacity.70 In 1914, de
Abad observed that by 1914 the approximate cost had risen to $9.50 per bag of annual capacity
for a “modern” mill, an increase in cost of about 50 percent. For anyone seeking to acquire a
mill, acquisition of an existing mill and de novo construction were substitutes; therefore, one
would expect the cost of existing mills to move with the cost of mill construction.71
There are many reasons why owners of existing mills may have wanted to sell. One may
very well have been that, with the value of sugar mills having appreciated 50 percent or more,
the time was ripe. Whether or not they saw their sugar properties as temporary or permanent
investments, owners and entrepreneurs may have taken advantage of what they perceived as
good exit strategies to capitalize on theirs or their family’s investments.
Manuel Rionda’s swift entry in the market for sugar properties in early 1916 seems to
have been instrumental in bidding up prices in the market for sugar properties. Key to Cuba
Cane’s strategy, in his mind, was to acquire as many existing mills as possible as quickly as
possible to take advantage of the wartime price of sugar. He could not afford the time it would
take to develop new mills. There was no telling how long the abnormal wartime prices would
last. Therefore, he was only interested in acquiring existing mills, and word got around quickly
that he was willing to pay top dollar for them. The purchase en masse of so many properties
within a few short months must itself have driven the market price for sugar properties up
significantly.72 One notorious example were the Centrales Conchita and Asunción, which had
been sold in 1915 by Juan Pedro Baró to José López Rodríguez for $3.5 million. López
Rodríguez turned around the following year and sold them to Cuba Cane reportedly for $6.3
million. On average the prices received by sellers for the 18 mills sold to Cuba Cane in 1916
averaged $14.5 per bag of annual capacity. Only one seller received less than $10 per bag of
capacity, and the highest price received was $18 per bag, which Colonel Tarafa received for his
Central Morón. This price, for one of Cuba Cane’s best performing mills, may have been worth;
70
Hugh Kelly, a mill owner and longtime agent for one of the main sugar machinery manufacturers in the island, in
1901 estimated the cost of a mill equipped with modern machinery at about $5 to $6 per bag. An engineer writing
for Cuba Magazine in 1911 gave a similar estimate for that year.
71
De Abad, Luis V., Capital Invested in the Cuban Sugar Industry." Cuba Review 20.1 (Dec. 1921): 26-27; An
Engineer, ""A New Sugar Estate in Cuba," Cuba Magazine 3.4 (Dec. 1911): 218-19; Kelly, Hugh, "The Case of
Cuba Before the People of the United States”: Extracts from an address of Hugh Kelly at the complementary dinner
tendered to the Cuban Economic Commission at the University Club, New York, Nov. 20, 1901. New York:
Andreini, 1901.
72
McAvoy, pp. 81-103.
39 nevertheless, Rionda was accused by some of the shareholders of Cuba Cane for overpaying for
some of the properties.
Even so the price of sugar properties continued to rise. De Abad observes that as the war
progressed the cost of erecting a well-equipped mill was driven even higher, to $22.50 per bag
by 1920. So were the purchases of existing mills. In 1919, Miguel Arango sold a second mill to
Cuba Cane, and in 1920 the Mendozas sold their Central Cunagua to the American Sugar
Refining Company. Both went for hefty prices that amounted to $23.30 per bag. The Centrales
Amistad and Gómez Mena, which the Gómez Mena brothers sold to Warner Sugar Refining
Company in May 1920 while the price of sugar was soaring and before any hint of the “crac”,
the 1921 crisis, must have gone for a similar price. As far as exit strategies go, having liquidated
their investment just a few months before the crash, Arango, the Mendozas and the Gómez
Menas timed it well. After the crisis of 1921, de Abad observes that the cost of erecting a new
mill fell to about $15 per bag. The cost of acquiring a new mill could have been much lower,
since there was a widespread failure of mills that followed the crash.
Conclusion We find the conventional story to be significantly revised by the estimates of comparative
domestic and foreign investment in the sugar industry in a way that elevates the role of the local
entrepreneur in the sugar industry. The recovery following the war of independence was led not
by foreign but by domestic entrepreneurship. Similarly, the second wave of investment was
stimulated initially by real long-term local opportunities created by new technology and the
opening up of new lands by railroad construction. The boom in construction led mostly by
domestic entrepreneurs may, in part, have been stimulated by the rise of the price of sugar during
the First World War, but certainly the price boom explains only part of it. The price boom,
nevertheless, was particularly important to encourage significantly greater entry of North
American corporations, for a variety of strategic reasons. Domestic entrepreneurs who built new
mills or developed existing ones in many cases found it advantageous to sell their sugar
properties to entering North American corporations, which were more likely to acquire and build
de novo. The enthusiasm for entry drove up the price of sugar properties and presented attractive
“exit strategy” opportunities for many. A few timed it almost perfectly before the financial crisis
40 of 1921.
When the United States entered the war in 1917, the US and UK cooperated to impose
price controls on major commodities, including sugar to prevent uncontrolled increases in prices.
Sugar prices were kept artificially low from 1917 through 1919; although by historical standards,
they remained high. Nonetheless, after the First World War, when the lifting of wartime sugar
price controls was anticipated at the end of the 1919 crop season, there were forecasts of
expected shortages and a possible sharp increase in prices when the ceiling was removed. When
controls were lifted suddenly in 1920, the market entered a speculative bubble, which peaked at a
record price of 23.6 cents per lb. in May 1920, and then plummeted beginning in August to 4.5
cents on February 3, 1921. (As shown in Figure 3.4, from January 1, 1917 to December 31,
1919, the sugar price had never exceeded 13.6 cents per lb.) When the bubble burst, a large share
of the current Cuban crop was left unsold; and its holders, who had produced or purchased it at
high prices, lost everything.73
A sudden shift in the foreign ownership of sugar mills came about as a consequence of
the fallout from the financial crisis of 1921. The fallout of the 1921 crisis caused a massive
failure of mills and eighteen banks, including the two largest Cuban or Spanish owned.74 North
American banks, which owned about 0.5 percent of the Cuban sugar sector before 1920,
suddenly found themselves possessing 7 percent of Cuban sugar milling capacity, from bad debt,
which grew to almost 12 percent by 1929.75 Nonetheless, major North American corporations,
which controlled about 35 percent of the sugar manufacturing capacity at the end of the war,
acquired 55 percent by the mid-1920s, distributed among banking, sugar refining, sugar
brokerage and other big-business interests. The top four firms, all American corporations, owned
49 percent of the industry’s capacity by 1929.
Noteworthy in the 1921 fallout was the entry of North American banks through
foreclosure becoming direct operators in the sugar industry. National City Bank and the Royal
Bank of Canada acquired 11 sugar estates each and made a fateful decision to retain ownership
of these companies. The mills they acquired represented over $80 million in sugar 73
Collazo, Pelea.
74
Cuba, Comisión Temporal de Liquidación Bancaria, Compendio.
75
Jenks, Our Cuban Colony; Wallich, Monetary Problems, pp. 66-67.
41 manufacturing assets in Cuba.76
The motivations of the entry of North American banks into direct ownership of Cuban
sugar enterprises is a subject of debate. National City Bank’s decision to keep the properties is
well-documented because it later became the subject of a congressional investigation of lobbying
activity in 1929. Gordon Rentschler, who had worked for sugar machinery manufacturer, hired in
1921 by National City as an adviser to assess the value of their recently acquired sugar
properties, testified that he and his team had concluded the properties were fundamentally sound
but needed to be “rehabilitated” and, in any case, could not be sold for what they were worth in
the current depressed market conditions. National City, therefore, set up an operating company,
the General Sugar Corporation, to “rehabilitate” its distressed sugar properties and await a
recovery in the sugar market before selling them, hoping to minimize the losses from bad debt.
The Royal Bank came to an independent but similar decision.77
Pino-Santos and others argue that the American banks took advantage of their creditors’
positions, and other American corporations took advantage of privileged access to credit, to take
control of some of Cuba’s most profitable properties, particularly in sugar and banking, at
bargain-basement prices. The bank officials claimed they never intended to go into the sugar
business. Rather, the decision to operate rather than sell the properties was a strategic one
prompted by the depressed market conditions and the large share of the country’s sugar
properties in their hands. It would be impossible to sell them off in the short run all at once for
anything near what they would be worth if the market were to recover—which they expected to
occure. An expectation of a prolonged postwar shortage European beet sugar led to rosy
forecasts of a rapid return of high sugar prices. Since Cuba continued to be well-positioned to
take advantage of anticipated postwar market conditions, it certainly led to expectations of a
recovery in the market for sugar properties in Cuba. Rosy forecasts may also have encouraged
bankers to speculate over large potential profits from short-term holdings.
In all, 22 mills were acquired by North American banks, and another 10 mills were
acquired by Hershey, Punta Alegre and the Rionda group. Also important was a large increase in
76
Authors’ estimates based upon ownership and capacity in 1924, as reported in the Cuba, Secretaría de Agricultura,
Comercio y Trabajo, Memoria de la Zafra.
77
Cleveland and Huertas, Citibank; McDowall, Quick to the Frontier; U.S. Senate Committee on the Judiciary,
Lobby Investigation; U.S. Senate Committee on Banking, Stock Exchange Practices.
42 the milling capacity owned by North American corporations that was due partly to acquisition
and partly to an increase in the size and capital intensity of mills as companies adopted the latest
sugar manufacturing technology. For example, after 1921, banks acquired 32,600 tons of daily
grinding capacity from existing mills and expanded them by 1928 to 51,000 tons.78 The industry
became considerably more concentrated. The four-firm concentration ratio, for example,
measuring firm size using the grinding capacities of the firms’ sugar mills, was 11 percent in
1914 (with one of the four companies Cuban-owned), but after 1919, the top four were all
American-owned, or transnationally owned, large combinations of multiple mills, which by 1929
together owned 50 percent of Cuba’s milling capacity. The financial crisis of 1921 altered the
landscape of the Cuban sugar industry.
78
Effective days grinding each harvest season in the 1920s ranged typically between 100 and 130.
43 Table 3.1. Real Assets in Cuba Owned by US Citizens (millions of constant $ US of 1926) U.S. Foreign Assets in Cuba (millions of constant US$ 1926) 1895
1906
Agroindustry and manufacturing Sugar 31
48
Tobacco 1
48
Other manufacturing ‐
‐
subtotal 33
97
Agriculture Fruit and fruit land ‐
10
Cattle 0.3
48
subtotal 0.3
58
Unimproved lands and other real ‐
19
estate Mining 21
5
Mercantile and financial mercantile 1
1
banking ‐
7
mortgages ‐
4
subtotal 1
12
Transportation, communications and public utilities
shipping ‐
2
railroads 3
39
elec. railroads (urban) ‐
24
telephones ‐
4
subtotal ‐
69
Hotels and tourism ‐
‐
Government debt ‐
60
Other ‐
‐
Total 54
319
1895‐06
Annual average growth rate 16.1
(percent of total assets) 1911
1925
77
31
‐
108
769
51
41
862
‐
‐
15
23
‐
‐
‐
108
6
36
2
8
31
40
31
21
‐
51
8
39
‐
31
77
‐
46
‐
316
‐
113
‐
103
215
‐
113
10
1385
1906‐11
‐0.2
1911‐25
10.6
1929 736 21 47 804 ‐ 26 26 105 53 32 26 ‐ 58 ‐ 126 ‐ 121 247 16 105 32 1413 1925‐29 8.5 Sources: [Sourcefile: Cuban Investment 2.xls & Ch3 Table 3‐1n2.docx, create footnote or appendix] Notes 1895. Estimates of North American investments around 1895 are debated in the literature. The contemporary estimate that is most cited is that of Secretary of State Richard Olney, whose estimates are found in his annual report to President Grover Cleveland in December of 1896. Olney estimates that total assets were “more likely to fall under than over the mark” of $50 million nominal ($104 in dollars of 1926 as reported in the table). Jenks reports Olney’s estimate, which had become the accepted figure (p. 32 ?GETPAGE); yet other contemporary estimates are much lower. Edwin F. Atkins attested to Congressman William F. Draper an estimate of total American assets before the war of $30 million; and Fidel y Pierra, chair of the Cuban Revolutionary Committee in 44 New York, claimed there were about $25 million in plantations and other enterprises and $10 to $15 million in crop advances (Weigle, p. 193 and n. 60). Richard Weigle criticizes all of these estimates as too large. Of the available contemporary estimates, only Olney’s memorandum itemizes the estimates, but it does not provide information about how the numbers were assembled, except that they were broken down by district, for estates and crops: Cienfuegos, $12 million; Matanzas, $8.75 million; Sagua La Grande $7.5 million; and Manzanillo, $3 million; plus $15 million in mining operations in Santiago, and acknowledgement of approximately $2.5 million, of “commercial and manufacturing, railway enterprises, and the like” in other interior districts for which “tabulated statements are wanting” (from Olney’s annual report and memorandum, as quoted in Weigle, p. 192). Olney’s estimates for “estates and crops” appears to include short‐term advances to finance sugarcane, which are not included in the other figures in the table. Subtracting $10‐15 million for advances, in accordance with Fidel y Pierra, puts Olney’s estimates for “estates” at $16‐21 million. Using evidence from corporate disclosure statements, Weigle finds that Olney’s estimate substantially overstates actual investments in sugar and mining companies. For example, the North American sugar company at Manzanillo, the Central Teresa Sugar Co., owned at the time by Hugh Kelly and Joe Rigney, is estimated in the records of the Spanish Treaty Claims Commission at $1.6 million. Olney’s estimate for Manzanillo was $3 million, yet there was no other North American‐owned sugar mill in the district of Manzanillo at that time. Using independent estimates of the other sugar companies and mining companies found in the records of the Spanish Treaty Claims Commission, testimony before the Senate Committee on Finance, Cuban Sugar Sales, and Miscellaneous Letters in the U.S. State Department archives, Weigle assembles a revised estimate totaling $20 million. His correction, however, results in an estimate that is too low because it undervalues some of the sugar and mining properties, and it overlooks smaller investments, such as minority shares in domestically controlled mills. For example of the latter, his estimate of investment in the district of Manzanillo of $1.6 million accounts only for the Central Teresa, but it overlooks a smaller investment by Henry Havemeyer in an estate at Tanámo Bay in the same district, where he was preparing construction of a new sugar mill in partnership with WHOM?. The project was abandoned after 1895, but Havemeyer continued to own a share of the property in 1900, when he testified before the commission. Weigle’s revised estimate of assets in sugar enterprises was $10 million, which includes mills owned by Cubans he identified as naturalized citizens of the United States. I conducted an independent assessment of the estimated values of sugar estates owned and controlled by North Americans, using an independent assessment of nationality identity, since Weigle appears to have relied in part on whether the owner’s last name was Hispanic, or not. Revising this estimate upward to account, admittedly imperfectly, for invisible minority investments by foreigners in domestically controlled enterprises, I arrive at approximately $15 million, close to the lower estimate from Olney when crop advances are netted out. Weigle’s estimate for mining of $8 million appears more reliable. I revise it upward to $10 million to account for omissions. Although most assets were in sugar and mining, there were small investments in other sectors, which Weigle’s estimate omits. I accept the $2.5 million which Olney estimated for “commercial and manufacturing, railway enterprises, and the like,” which I apportion between railroad, tobacco, other agriculture and mercantile enterprise based on inferences and best guesses taken from handwritten notes on Olney’s memorandum. My estimate adds up to $26 million, which is very close to Fidel y Pierra and not inconsistent with Atkins’ estimate, since he does not indicate whether or not he included crop advances in his estimate. The numbers shown in the table appear different because they are adjusted for inflation using the WPI from the United States Bureau of Labor Statistics, which is used in lieu of an adequate Cuban price index. 45 Table 3.2. British Foreign Assets in Cuba (millions of constant US$ 1926) 1900
1909
1913
Railroads 51.2
133.1
180.1
Other 14.8
129.8
Total 147.9
309.9
Notes. The estimate for 1900 is from Zanetti and García, p. 201. 1927
154.4
78.5
232.9
1929
249.9
46 Table 3.3. De Novo Construction and Acquisition of Sugar Mills by Nationality of Ownership Cuban Spanish US Canadian French de novo 1899-01
1902-04
1905-07
1908-10
1911-13
1914-16
1917-19
1920-22
1923-25
1926-28
1929-31
2 0 4 1 1 13 16 9 4 1 0 acquis
itions de novo 3 4 11 8 4 10 23 26 17 17 5 Source: See Data Appendix. 0 0 2 0 1 2 3 0 0 0 0 English Other Total Total acquis
itions de novo acquis
itions de novo acquis
itions de novo acquis
itions de novo acquis
itions de novo acquis
itions de novo Acquis
itions 6
12
10
10
7
5
6
6
0
0
3
0
4
2
2
3
4
6
3
1
0
0
0
2
6
2
4
24
11
14
19
4
10
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
3
3
2
1
0
0
0
0
0
1
0
0
0
0
0
0
1
1
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2
0
0
0
1
0
0
1
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
2
4
8
3
6
20
25
12
5
1
0
9
21
28
20
15
41
42
49
40
23
19
All 11 25 36 23 21 61 67 61 45 24 19 47 Table 3.4. Additions to Annual Grinding Capacity from De Novo and Existing Mills by Nationality
(all figures are percent, except last column)
Year
Cuban
de novo existing
Millions of bags
1902-04
0.7
16.3
1905-07
0.8
10.2
1908-10
0.8
10.0
1911-13
15.0
1914-16
14.3
4.2
1917-19
17.7
26.0
1920-22
10.5
13.6
1923-25
6.8
14.1
1926-28
3.0
18.9
Total
54.7
128.3
Source: See Data Appendix. Spanish
total de novo existing
17.0
11.0
10.8
15.0
18.5
43.8
24.1
20.9
21.9
183.0
0.5
2.8
5.3
8.6
10.2
7.8
6.9
14.9
10.0
8.9
8.3
3.3
1.8
72.0
US
total de novo existing
10.2
8.2
6.9
14.9
12.8
14.2
8.3
3.3
1.8
80.6
4.0
3.9
2.3
6.6
5.3
10.7
8.1
2.7
43.4
2.9
2.3
9.0
6.7
11.1
23.3
22.0
23.1
57.9
158.4
other
total de novo existing
6.9
6.2
11.3
13.3
16.3
34.0
30.1
25.7
57.9
201.8
0.3
0.2
0.5
3.3
2.3
1.1
3.5
0.7
3.1
2.4
3.4
3.4
23.2
Total
total de novo existing
Total
3.3
2.3
1.1
3.8
0.9
3.1
2.4
3.4
3.4
23.7
37.3
27.7
30.0
46.9
48.5
95.1
64.9
53.3
85.1
489.1
4.7
5.2
3.1
6.9
22.5
33.8
18.5
9.5
3.0
107.2
32.7
22.6
26.9
40.0
26.0
61.4
46.4
43.9
82.1
381.9
Chapter 3 48 Table 3. 5. Transfers of Mills Paired by Nationality Transfers 1905‐1915 To: Cuban From: Cuban Spanish French other Eur. English Canadian US Total 35 6 ‐ ‐ ‐ ‐ 2 43 Transfers 1916‐1921 To: Cuban From: Cuban Spanish French other Eur. English Canadian US Total 29 6 2 1 ‐ ‐ 5 43 Transfers 1922‐1929 To: Cuban From: Cuban Spanish French other Eur. English Canadian US Total 33 6 ‐ 1 ‐ ‐ 9 49 Spanish French 10 20 1 ‐ 1 ‐ 1 33 1 ‐ ‐ ‐ ‐ ‐ ‐ 1 Spanish French 9 5 ‐ ‐ ‐ ‐ ‐ 14 1 ‐ ‐ ‐ ‐ ‐ ‐ 1 Spanish French 2 1 ‐ ‐ ‐ ‐ ‐ 3 1 ‐ ‐ ‐ ‐ ‐ ‐ 1 other Eur. ‐ ‐ ‐ ‐ ‐ ‐ ‐ 0 other Eur. 1 ‐ ‐ ‐ ‐ ‐ ‐ 1 other Eur ‐ ‐ ‐ ‐ ‐ ‐ ‐ 0 English Canad
ian 2 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2 0 English Canad
ian ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 0 0 English Canad
ian ‐ 9 ‐ ‐ ‐ ‐ ‐ ‐ 1 ‐ ‐ ‐ ‐ 2 1 11 US Total 6 3 1 1 3 ‐ 4 18 US 54 29 2 1 4 0 7 97 Total 16 15 1 ‐ 1 ‐ 8 41 US 56 26 3 1 1 0 13 100 Total 16 6 ‐ ‐ ‐ ‐ 14 36 61 13 0 1 1 0 25 101 Chapter 3 49 Figure 3.1. Additions to Sugar Milling Capacity by Nationality Additions to Sugar Milling Capacity by Nationality
50000
45000
daily grinding capacity (bags of 325 lbs.)
40000
35000
30000
25000
20000
15000
10000
5000
0
Total
Cuban or Spanish
US
other
Chapter 3 50 Figure 3.2. Price of Raw and Refined Sugar, c&f New York, 1904‐1918 9
Cuban raw, c&f NY
refined granulated, NY
8
7
cents per lb.
6
5
4
3
2
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
Chapter 3 51 Figure 3.3. Acquisitions of Sugar Mills by North American Corporations 20
18
1915‐1917
CCSC (17)
Punta Alegre (1)
Hershey (1)
Warner (1)
16
1921‐1925
CDSC (7)
Gen Sugar (10)
SPOC (8)
Hershey (1)
Punta Alegre (4)
Rionda (1)
14
Atkins
Rionda
CASC
12
Guantanamo
CCSC
Punta Alegre
10
Hershey
ASRC
8
Warner
CDSC
6
Gen Sugar
1919‐1920
Rionda (1)
Warner (2)
ASRC (1)
1926‐1929
Gen Sugar (1)
SPOC (3)
Hershey (4)
4
SPOC
2
0
1901
1903
1905
1907
1909
1911
1913
1915
1917
1919
1921
1923
1925
1927
1929
Notes: CCSC = Cuba Cane Sugar Corp., ASRC = American Sugar Refining Co., CDSC = the Cuban Dominican Sugar Co., General Sugar is a subsidary of National City Bank, and SPOC = Sugar Plantations Operating Co., a subsidiary of the Royal Bank of Canada. Chapter 3 52 Figure 3.4. Price of Raw and Refined Sugar, NY c&f, 1914‐1922 25
Cuban raw, cif NY
refined granulated, NY
20
cents per lb.
15
10
5
0
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925