OF Cuba’s 28,000,000 acres, about 2,000,000 are devoted to the raising of her sugar crop, which in amount is a little less than half of the entire cane-sugar product of the world. Historians differ as to when the cultivation of sugar began in Cuba, but in 1523 Philip I., King of Spain, allowed a loan of 4000 pesetas to each person who would undertake to establish a sugar plantation; and although it appears that the people of San Domingo began cane farming about this time, it is not positively known that the industry had secured much of a hold in Cuba until sixty years later. Indeed, some writers assert that the first cane farm was established in Cuba in 1595. In any event, three hundred years—or, to be exact, two hundred and ninety-nine years—later, that is, in 1894, the year before the last rebellion, during which the sugar industry was almost wiped out, 1,054,214 tons of sugar were produced, the greatest quantity ever raised in any one year in the Island.

Although it made so early a start in the history of American agriculture, the sugar industry in Cuba languished for two hundred years, the annual output during that time being only about 28,000 tons. A quarter of a century later it reached 75,000 tons; the middle of the nineteenth century saw it at 250,000 tons, and in 1894 it passed the million mark, with an impetus that would have sent it on the first quarter in the second million by the end of the century, if the wretched mismanagement and criminal culpability of Spain had not brought on the rebellion.

With millions of acres of the richest and best cane land on the globe, yet untouched by the plough, with a climate unsurpassed for the growth and development of sugar cane, and with a prestige for Cuban sugar second to none in the markets of the world, the future of Cuba’s sugar presents a possibility of wealth surpassing the richness of the gold and silver which came to Columbus in the marvellous tales of the interior of the magnificent Island which he had discovered.

Recurring to the effect of the rebellion of 1895-1898 on the sugar industry, it is appalling to contemplate the dreadful decrease in a country’s chief source of wealth and income to the government, as well as to the individual. In 1894, the output was 1,054,214 tons, and the following year, under the first touch of war and its alarms, the crop dropped off 50,000 tons, though it remained still above the million. This was the second year in Cuban sugar history that the million mark was passed. In 1896, the war was raging all over the Island, and with the Spaniards on one side, taking men and cattle, and the insurgents on the other, burning cane and buildings and stealing stock, the sugar planter was utterly obliterated in some sections, and so badly crippled in others that the output reached only 225,221 tons, the lowest figure known in fifty years. Nor was this astounding decrease a matter of gradual accomplishment, permitting the country, the business, and the people to accommodate themselves to the changed conditions, but it happened almost in a night, and an income from sugar of $80,000,000 a year dwindled on the instant to $16,000,000, a loss of $64,000,000 at once as the result of Spanish mismanagement.

CANE FIELDS.
CANE FIELDS.

As a cane-sugar-producing country, nature has made Cuba superior to any competitor which may appear; but all sugar does not come from cane, and since 1840, when the first record of beet sugar appeared, with 50,000 tons for the year’s output for the world, as against 1,100,000 tons of cane sugar, about 200,000 tons of which was raised in Cuba, the sugar growers of the Island have had their only dangerous rival. Beginning with the small production of 50,000 tons in 1840, principally grown in France, the beet-sugar production increased rapidly in Europe, reaching 200,000 tons in 1850; 400,000 tons in 1860; 900,000 tons in 1870; 1,860,000 tons in 1880; and in 1894 going to 3,841,000 tons. Cane sugar in the meantime only increased from 1,100,000 to 2,960,000 metric tons. Cuba in 1895 produced only 100,000 tons less than the world’s entire output of all kinds of sugar in 1840. The total output of beet and cane sugars in 1893-1894 was 6,801,000 metric tons. The United States in 1894 produced 272,838 tons of cane sugar, 20,219 tons of beet sugar, 394 tons of sorghum sugar, and 3408 tons of maple sugar.

With the growth of sugar production in Cuba have come newer and better methods; and whereas in 1825 the largest plantations rarely exceeded 1500 acres in extent, producing only 350 tons per year, with a total value of land, buildings, machinery, stock, and slaves, of, say, $500,000, with aggregate revenue of, say, $60,000, and expenses of $30,000, leaving a profit of $30,000,—in these later times there are plantations of 25,000 acres, representing an investment of $2,000,000 with an annual revenue of $1,000,000, expenses, say, of $800,000, leaving a profit of $200,000 per year. Contrasting the earlier figures with these later estimates, a profit of ten per cent. is shown in 1894 as against six per cent. in 1825.

In 1840, it is estimated there were 1710 sugar plantations in Cuba; while in 1894 there were 1100. Sugar farms are upland soils, the cane requires to be planted only once in seven years, and no fertilizers are required. Many of the planters in later years are very enterprising, and the machinery they use is the best in the world. The outfitting of one central, or grinding plant, with a capacity of 1000 tons a day, costs $500,000. Houses and stores for the accommodation of the employes are provided; there are locomotives and cars for the miles of railway for bringing the cane to the mill from all parts of the plantations; as many as 2000 labourers are employed; 1000 cattle for work and beef are to be found on this place; and the colonia is conducted upon the most economic, advantageous, and improved lines. This is a model colonia; but all Cuban colonias are not models.

To give the reader a somewhat more definite idea of a sugar farm, a statement by Mr. P. M. Beal, of Beal & Co., lessees of the Colonia Guabairo, owned by Messrs. E. Atkins & Co., of Boston, possibly the largest American proprietors in Cuba, is herewith appended. Mr. Beal says:

The concluding passage of Mr. Beal’s statement indicates to some extent the effect of the war upon his plantation, which escaped happily as compared with hundreds of others. He says:

Contrasting opinions as to the matter of profit in the production of sugar in Cuba, we present herewith two statements. The first is by Mr. William J. Clark, in his work, Commercial Cuba, and is as follows:

The expert who furnished the above, adds:

The second statement, which is at considerably greater length, is by Mr. E. F. Atkins, who prepared the following especially for this volume:

The total output of sugar in the world was for some years in excess of the requirements for consumption. This over-production and consequent accumulation of stocks brought prices down to a point which in all probability was considerably below the average cost of production.

Germany, as the largest sugar-producing country, naturally fixes the market prices of the world. The refiner in New York will pay no more for sugars to be shipped from Havana than the equivalent of the price at which he can buy at Hamburg; difference of freight, duties, bounties, and quality, of course, considered.

The present average cost of production of German raw sugar is said to be about 9s. per 112 pounds. At this figure the existing bounty upon exports would allow sales for shipment to England, where no duty is paid, as low as 8s.= $1.71 per pound for 88 analysis beets; this, allowing for difference in values of the two grades, would be equivalent to $1.89 United States currency for 96 test Cuba centrifugals, under like conditions, viz.: f.o.b. at port of shipment, for any country such as England where the two grades enter upon equal terms.

The effect of our countervailing duty assessed upon bounty-fed sugars under the Dingley Act of 1897, has been to raise the comparative value of cane sugar in producing countries, as against beet sugar, and to place Germany and other European sugar countries in exactly the same condition, so far as the United States market is concerned, as if no bounties were paid by them; thus in considering Germany’s competition with Cuba in the United States markets, we may eliminate both bounties and countervailing duties as factors, and say that when Germany can sell to England at 8s. she must obtain 9s. from the United States to give her shippers an equal price; 9s. is equivalent to about $2.18 United States currency, for Cuba centrifugals, 96 test, f.o.b. Cuba.

The export price of German sugar at Hamburg from January 1 to June 1, 1898 (a period covering the Cuban sugar crop season), ranged from 9s. to 9s. 9d. with an average of about 9s. 4½d.

Last crop prices gave the Cuban manufacturers an average of about 4½ reals per arroba, say 2¼ cents Spanish gold, a price at which they could be laid down in New York slightly under the parity of European beets, duty paid.

The imports of beet sugar from Europe into the United States, from January 1 to June 1, 1898, were 22,000 tons against 496,000 tons for same period of previous year; while imports of cane sugars showed an increase of some 60,000 tons; this change in source of supply being brought about by the countervailing duty.

It is not possible to give any figures of the average cost of production in Cuba. In my opinion it is undoubtedly higher than the average of Germany. Of the 2¼ cents net obtained by the Cuban manufacturers, the cane (which is generally purchased upon a sliding scale based upon the current value of sugar) costs them from 1 cent to 1¼ cents per pound of sugar according to yield at the various factories. This would leave them but little over 1 cent per pound, average margin, to cover manufacturing expenses, salaries, maintenance and repairs, office expenses, interest, insurance, and freight to seaboard, and while some factories, thoroughly equipped as regards machinery, skilfully conducted as to business management, favourably located regarding inland transportation, and not dependent upon borrowed capital, have shown fair interest returns upon capital invested, very many have been operated at a loss (aside from such losses as arose from the war), and the margin of profit, both past and prospective, is not such as to invite any large investment of new capital in sugar manufacturing.

The future values of sugar in Cuba are dependent, not upon cost of production in the Island, but rather upon the cost in Germany; and upon the extent to which free sugars are to be admitted into the United States from the Sandwich Islands, Porto Rico, and the Philippines. With new capital and skill the average cost of production in Cuba can be reduced, and with either free sugars or a uniform rate of duty in the United States, assessed upon all sugars (a countervailing duty to offset foreign bounties always maintained), she can hold her own and recover her prestige as a sugar-producing country, but the margin of profit in sugar manufacturing is so small, and the world’s capacity for production so great, that Cuba cannot recover her prosperity in the face of any advantage to be given to sugars from other countries entering the United States. At current prices in Cuba cane is worth to the planter the equivalent of $2 to $2.50 per net ton, out of which price he must pay for his planting and cultivation, cutting, and delivery to factory or nearest railroad point. As the cost of cane production consists almost entirely of labour, and wages in Cuba, for some years previous to the insurrection, ranged about the same in Spanish gold as similar work commanded in the United States, the profits in this branch of the industry have not been great, and have been dependent upon skill in management, quality of lands, and proximity to the factories.

The supply of labour and rates of wages in the future are now most serious questions to the sugar producer in Cuba, and present the greatest obstacle to reducing cost. For supplies of cane the manufacturer must depend either upon his own resources or upon large planters. Factories to be operated at a profit should be kept running day and night, and cane, owing to its nature, must be ground immediately it is cut. The grinding season in Cuba is limited to about one hundred and twenty working days, and small farmers, while they can generally find a market for their cane, cannot be depended upon for a constant regular supply. Had Cuba the power to dictate her own prices, she could maintain sufficient margin to overcome local difficulties, but that power has long since passed and future profits must be dependent upon her economies. The price of cane to her planters is dependent upon the price at which her manufacturers can sell their sugar, and this price in turn is dependent upon the price at which other sugar-producing countries (principally Germany, the great factor in the world’s sugar trade) can place their goods, duty paid, in New York. If Cuba in the future should have to compete to any extent, in the United States, with free sugar from other countries, while a duty was exacted upon Cuban sugars, her case would seem to be hopeless.

UNLOADING CANE AT A BATEY.
UNLOADING CANE AT A BATEY.

Another interesting and valuable statement was prepared for the author by Mr. Wm. Bonnet, of Havana, under date of October 8, 1898, and gives an array of statistical information which is as follows:

The loss to Spain’s dominion of the Mexican Territory (1821-1825) deprived the Island of a yearly allowance of about $1,000,000, which amount was drawn out of the Mexican budget for the needs of the Cuban administration. The Island, up to those days, was considered more as a penitentiary than as a productive colony; convicts were sent to Havana with the principal object of building good ships for the Spanish Armada.

It was only after the loss to Spain of Mexico that Cuba began to improve her general production, and the efforts of the country in growing sugar and coffee were so successful that a few years later, with the help of the slaves that were again freely brought from Africa, and with the co-operation of immigrants that had come from Hayti, etc., the Island, besides covering all her expenses, was able to send large amounts of money to the mother country.

From 1840 to 1850, the production of sugar increased gradually from 200,000 to about 300,000 tons. Prices of coffee began to decline owing to excess of production and competition of Brazil, and all the attention was given to cane growing, so much so that from 1853 up to 1868, the production was rapidly increased to the following figures:

This period of sixteen years was really the so-called Golden Age of Cuba. The Cuban budgets, although heavy at that time, were easily covered, and on this account extra taxes were imposed upon the Cuban people in excess of what the budgets called for and remitted to the mother country; such extra sums reaching as high as $5,000,000 per annum,—an erroneous and fatal system, the consequence of a mistaken policy, which then, as ever, led Spain to consider her colony as a source of income, forgetting that such excessive calls, constantly resulting in a deficit, clearly indicate bad administration.

Cuba was overtaxed and nothing was done to help the growing of our fertile Island. In vain did the Cubans lay their claims for better administration. The mother country was deaf. Commissioners went to Madrid to represent, but they had to return, bringing back only many promises that were never fulfilled. No hope was left to the Cubans, and all these obstinate errors brought on the outbreak of October 10, 1868, which resulted in a civil war that lasted ten years, ending in 1878 with the so-called agreement of Zanjon.

The war at first was not a drawback to sugar production, and the crops gathered during the Ten Years’ War were:

It is to be noticed that during the period of war the sugar production continued to increase at first, say from 1869 to 1875. Highly remunerative prices were then obtained for sugar; besides, from 1869 to 1870, $70,000,000 in paper money were issued, and money was easy.

From 1876 to 1878, the production rapidly decreased. Mismanagement, enormous taxes to attend war expenses, and depreciation of paper money brought on national distrust and financial troubles. And with all this, the emancipation of slaves was carried through at that time, moreover, without any compensation of any kind to owners.

Prices of sugar, up to the year 1880, were still remunerative (4 to 4½ cents per pound, centrifugals 96 test); but the competition of beet sugars in Europe began to be felt more and more every day, causing a lower tendency towards the crisis in prices of the article which finally reached a value of only fifty per cent. of its former quotation.

Under such difficulties Cuba struggled hard. The Cuban army was disbanded after the war, and many persons who had come to towns for safety went back to work their fields and became a new contingent of cane growers. The system of cane colonias was started all over with marked success. Canes were sold to the mills at remunerative prices and fresh impulse was imparted to the country.

In spite of all these efforts, Spain persisted in considering her colony a source of income. Our deputies to the Cortes went full of faith, but they came back fruitlessly as always. The same mistaken policy that ruled Cuba before was continued as ever, and the outbreak of February 24, 1895, was the inevitable result.

The crops gathered from 1879 to 1898 were:

Notice the decrease of production of the year 1896. We could have ground that year more than 1,100,000 tons of sugar, had it not been for the war.

The amount of the coming crop will depend entirely on the greater celerity that is to be given to the so-wished for political change. Any delay will be of disadvantage to all our productions. The proper season for cleaning cane fields has already vanished, and besides cattle are badly wanted and very scarce. Training for working purposes requires time.

If peace becomes a fact and all the available cane is ground, I would say that 500,000 tons might be reached.

Now I will call your attention to the distribution of our crops these few years back.

CYLINDERS FOR GRINDING SUGAR CANE.
CYLINDERS FOR GRINDING SUGAR CANE.

The stock of sugar left in store on December 1, 1897, was 1888 tons, the smallest stock held at an equal date since several years. The returns and distribution of this year’s crop are not completed yet.

Notice the proportion of exports to Spain in 1897 as compared with exports to the United States.

Mr. Adolfo MuÑoz del Monte, writing in the Revista de Agricultura, says:

“During the thirty years before 1884 the following classes of sugar were made:

“First. White sugar nearly refined, manufactured with the aid of vacuum pans, filtered through bone-black, and purified in centrifugal turbines; and the inferior products of this manufacture.

“Second. White and brown sugar, manufactured and purified in forms. Some estates use vacuum pans for these sugars.

“Third. Muscovado sugars manufactured directly from the cane juice.

“The best sugars of these three classes were exported in boxes, and the inferior in hogsheads.

“Fourth. Raw sugar, made in vacuum pans and crystallised immediately in centrifugal turbines, there being two varieties of this class of sugar, that extracted directly from the juice and the one extracted from the molasses resulting in the purification of the first product.

“In the year 1857 there was a universal crisis and after that time planters considered that the first class mentioned was the most profitable, and machinery was improved at great expense for the purpose of manufacturing this grade of sugar. A plantation with this machinery could be improved only at great cost, and it would have been impossible to do so to any advantage had it not been for the reduced cost of labour owing to slavery, carried on at the time.

“In the meanwhile, the beetroot-sugar industry was progressing both in its agriculture and manufacture. No one in Cuba foresaw the terrible revolution that this industry was to suffer in consequence. It first became apparent in the crisis in 1884, which may be considered the most important event in the history of the sugar industry. This crisis, which came in a most sudden and unexpected manner, caused the reduction in the price of sugar which, though a benefit to the poorer classes of the world, was the ruin of Cuba, as at the same time slavery was abolished without any compensation whatever, direct or indirect, at the time when the losses of a sanguinary civil war were being overcome.

“It may be stated that absolutely no one could foresee, either in the present or in the past generation, the revolution that since 1884 has shaken the industry; though the French colonists, fearing the competition from the start, solicited the protection of their Government.

“The French colonists feared this competition so much that fifty years ago they solicited from the French Chamber of Deputies a law prohibiting the cultivation of beetroot in French territories, offering to indemnify those who had commenced it. Experience has proved how just their fears were at that early date; but the French Government did not grant their petition, because it was adverse to favouring monopolies, and besides, because Germany, having no colonies, could promote that industry without fear of the rivalry which has proved of material benefit to all Europe, including France itself.

“In the course of human events, time alone will cause considerable changes; just as before 1884 all planters firmly believed that greater profit was obtainable by the manufacture of white sugars than lower grades. They then realised that the unexpected improvements in the manufacturing and refining processes in Europe indicated the necessity of changing their system. Those countries which had, up to that time, imported fine grades of sugar from Cuba have been able since then not only to manufacture better sugar at lower cost for their own consumption, but also to export immense quantities of this article both raw and refined to the principal markets of the world. The production is to-day considerably greater than that of Cuba.

“The change is so marked that there are no longer any estates in Cuba where the white sugar is manufactured which was so desirable from 1856 to 1884.

“Instead of this high-grade sugar, planters are manufacturing the fourth of the above mentioned classes. The founding of these estates or centrales requires investing considerable capital for the erection and running expenses of the works. These centrales require excellent machines and apparatus, furnaces to burn the green bagasse, transportation facilities, usually narrow-gauge railroads, and fuel—without counting the necessity of having well-paid superintendents, aided by competent workmen.

“Many will accuse planters of hasty action and imprudence for having invested so heavily in the sugar business, but this would be an unjust charge, since their object was to keep up an industry which was threatened with destruction, and which is the main source of wealth of the country.

“The consequence is that since 1884 the general condition of planters, considering the circumstances, is remarkably better than it otherwise would have been, and had it not been for the numerous obstacles which have always prevented the growth and increase of Cuban wealth there is no reason why their work should not have been crowned with success. It is the obstacles that have been put in their way at the time when these changes were being carried out that made their work so much more difficult, but upon it depends the fortunes of the present generations.

“It is the principle of accumulation of capital produced by work and thrift, put into effect during one century, which has created the colossal fortune and solid civilisation of the United States; and this simple and natural procedure is the only one that can produce in Cuba results of any importance tending to alleviate the present necessities. To organise a sugar factory of any importance it is absolutely necessary to invest a capital of, at the very least, one half a million dollars, and if the work is to be of great importance the first expense must be increased to from one million to two million dollars. The annual expenditure of the sugar estates can be divided into the following groups.

“First. Cost of cane and its transportation to the mills, whether bought from outsiders or grown on the estate itself. This will absorb fifty per cent. of the gross receipts of each crop.

“Second. Salaries and wages, ordinary and extraordinary.

“Third. Interest, whether on mortgages, running expenses, or accounts current.

“Fourth. Management and running expenses, which are so considerable that a statement of them would seem exaggerated.

“Fifth. The redemption of loans invested therein, taking into account the wear and tear of the plant.

“Sixth. The loss of interest of the capital invested in the lands, factories, and other works of the plantation.

“The gross receipts of the crop are the source of the planter’s income, and naturally the six items specified have been deducted therefrom before the net profit can be estimated.

“In the above expenses no repair items have been included, since they are often virtually an increase in the value of the property and therefore merely constitute an additional amount of the capital invested. Although some companies insure parts of sugar estates, they only take limited risks; so many losses by fire, in addition to hurricanes, impair the value of the property. The fire insurance companies charge very high premiums for the insurance that they effect.

“The result of the crop depends naturally on two factors—first, the quantity of sugar made; and second, the price at which it is sold.

“Before the year 1884 the average price was eight rials the arroba (equal to one dollar for twenty-five pounds) of cane sugar, number twelve, Dutch standard; or centrifugal sugar, 96 degrees polarisation; and when sold under this price the planter could not cover expenses.

“Since 1884 the price of sugar has decreased so considerably that it has reached a ruinous figure. During the last ten years, as can be seen by official quotations, 96 degree centrifugal sugars have been quoted from four to five rials, and although from 1889 to 1893 the prices have several times exceeded eight rials, it has only been for a very short while.

“At the end of 1893 and during 1894, the average price has been five and one-half rials, which is simply ruinous for the planters.

“In Europe there are facilities for obtaining money; and besides, it happens that the beetroot only takes five months from its planting to the making of sugar, while sugar cane, besides having to struggle against many obstacles, requires fifteen months.

APPARATUS FOR PACKING SUGAR AT THE SAN JOSE CENTRAL.
APPARATUS FOR PACKING SUGAR AT THE SAN JOSE CENTRAL.

“The consequence is that the periods of high prices are always of short duration, since as soon as the prices commence to rise the sowings of beet increase, thereby causing an obstacle to the continuance of the rise.

“The lack of capital makes the problem insoluble to the Cuban planter, and whatever means he can use to overcome his difficulties, the final result will always be the same, as he cannot reduce the expenses of his plantation beyond a certain limit.

“There is no doubt that to-day (1894) the sugar estates do not cover expenses, and this fact is of immense importance, not only because it explains the present misfortunes, but because in it will be found latent the germs of many future misfortunes.

“The causes of the dangerous situation have been well studied; some will be found in history and in the economic management of the Island and others in the effect of beetroot industry on cane.

“Consequently, the unfortunate situation of the sugar industry in Cuba is due to three principal causes which by a strange coincidence have acted simultaneously, to wit: the economic rÉgime in the Island, the abolishment of slavery without indemnifying the owners, and the great reduction in the price of sugar since 1884.

“The efforts of the planters to save their industry have been interpreted by the Spanish Government as signs of prosperity, and that has based on this misunderstanding of facts the indefinite continuance of a disastrous economic system that is moulded on the old colonial system and is bound to ruin this Island, even if it were as rich and prosperous as the Government states that it is.

“This official optimism is deplorable for more than one reason. It is to be noticed that as Cuba’s poverty increases the pretensions of perpetual exactions are greater, and that the bulk is borne by the planters, who, together with the rest of the Cuban population, are possessors, judging by these exactions, of sources of unlimited wealth.”