Industrial Cuba Part 33

In strong and hopeful contrast with this compulsory commerce is the amended American tariff of Cuba, which makes no discrimination whatever against the Cuban purchaser; and now and hereafter, so long as the United States Government controls the affairs of Cuba, the Cuban producer may sell his sugar, tobacco, fruit, iron ore, hard woods, and all that he produces to whomsoever he will; and he may buy what he wants from whomsoever he thinks sells cheapest and best. He is in no way bound to the United States and its markets, but is perfectly free to buy his goods in England, or France, or Germany, or Kamschatka, or even in Spain herself, if he can there find the best return for his money. We of the United States shall not so much as expect that the Cuban may, from a sense of grat.i.tude to us for services we have rendered, give his trade to us; but we shall teach him, by the invincible example of the very best goods at the very lowest prices, that the markets of the United States present to the buyer attractions possessed by no other markets of the world, and he will learn early that having been his benefactor in war, we are not less so in peace; and as we have made him free, we have no fear that he will use that freedom to his own disadvantage.

Under the reciprocity of the McKinley Tariff law, Cuba and the United States were brought more closely together in commercial union than ever before in their history. No more competent testimony on this point can be adduced than the following extract from the report for 1892 of the British Consul-General at Havana:

"It will be seen from the above article" [on the lack of reliable statistics] "that the difficulty--especially to a new-comer--of forming anything like a clear and accurate view of the commercial movement of the district is next door to impossible. But, unfortunately, there is one feature of a very unsatisfactory nature which stands out prominently and did not take long to discover, namely, that British trade with Cuba has almost become a thing of the past; and under the recent reciprocity treaty the United States of America practically supplies all the wants of the Island and receives all its produce....

"Machinery, which formerly was largely supplied by England, Germany, France, and Belgium, now nearly all comes from the United States; and the machinery required for the vast amount of sugar manufactured in Cuba is immense and of great value....

"The reciprocity treaty between Spain and the United States would appear to be mainly beneficial to the latter nation. Articles such as machinery, iron, steel, coal, etc., which formerly came princ.i.p.ally from Europe and continue to pay duty when imported from those countries, are admitted free of duty when coming from America, so that the former trade is fast disappearing, although some articles of English manufacture and of superior quality are still able to compete, notwithstanding the duty. The free admission of flour makes bread cheaper, but this is the only article which seems reduced in price. The free admission of Cuban sugar into the large markets of the United States is, of course, the great inducement for Spain to enter into an arrangement by which she sacrificed a considerable portion of her customs revenue....

"The effect of the recent reciprocity treaty between the United States and Spain in regard to her West Indian colonies has been to throw nearly the entire Cuban trade into the hands of the United States traders, with whom importers of goods from less favoured nations cannot compete, having to pay, by the terms of such a treaty, higher import duties."

As a further indication of the benefit of reciprocity between Cuba and the United States, and as a working suggestion of the commercial possibilities presented to the business interests of this country, the following extract from an article on the "Commercial Relations between Cuba and the United States," by Mr. E. Sherman Gould, in the _Engineering Magazine_ for July, 1894, is given:

"The value of the sugar exported to the United States has no doubt frequently reached, if not surpa.s.sed, the sum of $60,000,000 in a single year. At any rate, it will surely be safe to estimate the total yearly value of all exports from Cuba to this country at that figure. This large sum must be paid back to Cuba either in money or in exchange of commodities. In regard to this alternative we must recall the fact that Cuba has no manufactures of any account except cigars; that all the implements and machinery used in sugar-making and all the textile fabrics used for clothing, and even many articles of food, such as breadstuffs, b.u.t.ter, salt meats, and 'canned goods' must come from abroad. That is to say, $60,000,000 worth of exports are sent by a country without manufactures to the greatest manufacturing country in the world, and one in which the danger of 'over-production' is supposed to be a standing menace.

Under these circ.u.mstances the mere statement of the question, 'How should these imports be paid for?' carries its answer with it.

"In this connection the following table, compiled from the records of the United States Treasury at Washington, and showing the total value of exports from the United States to Cuba for two different years will be of great interest, especially as it gives an idea of the varied character of American products which already find a market in the latter country.

"This table shows that the balance of trade is largely against us, a.s.suming our imports from Cuba to reach $60,000,000. There is evidently room in the Island for at least thirty millions more of American goods. The table shows also that about one-half of the value of our exports in 1893 consisted of breadstuffs, provisions, etc., while wood and woodwork amounted to about one-eighth, and coal, iron, hardware, and machinery entered the list for about a quarter of the total amount.

VALUE OF EXPORTS FROM THE UNITED STATES TO CUBA IN 1889 AND 1893

DESCRIPTION. IN 1889. IN 1893.

Agricultural implements $74,135 $130,341 Animals 14,264 39,401 Books 46,617 39,075 Bra.s.s manufactures 32,420 44,150 Breadstuffs 1,336,147 3,511,617 Bricks 4,922 95,489 Builders' hardware 80,285 395,464 Carriages 67,282 316,045 Car-wheels 1,908 18,073 Chemicals 223,784 386,562 Clocks and watches 17,399 26,551 Coal 581,094 931,571 Copper manufactures 13,692 48,656 Cotton manufactures 126,180 148,178 Cutlery 10,347 21,094 Fire-arms 3,030 3,055 Flax, hemp, and jute 301,290 86,478 Fruit 30,971 126,954 Gla.s.s 55,178 117,870 India-rubber goods 27,804 42,879 Iron manufactures, not otherwise specified 241,122 1,343,551 Lamp goods 28,326 51,389 Leather manufactures 166,334 181,476 Lime and cement 16,500 71,570 Machinery 965,242 2,792,050 Marble and stone 14,243 77,003 Nails and spikes 58,112 127,583 Oils 430,203 548,092 Paper 198,461 159,895 Provisions 3,267,883 5,611,076 Railway bars 20,240 327,411 Railway cars 127,533 271,571 Saws and tools 115,232 243,544 Scales and balances 35,406 62,561 Sewing-machines 42,571 95,630 Steam-engines 10,493 130,652 Sugar and candy 19,941 35,911 Tobacco, manufactured 59,658 61,494 Vegetables 380,802 978,261 Wire 118,214 321,120 Wood, and manufactures of 1,110,946 2,881,095 All other 820,987 701,656 ----------- ----------- Total $11,297,198 $23,604,094

[Ill.u.s.tration: SUGAR-CANE SCALES.]

"The Western Railway of Havana, now in English hands, and recently extended from Havana to Pinar del Rio, in the heart of the finest tobacco region of the Island, has called largely upon the United States for its new work. Many hundred feet of iron bridging were furnished and erected by the Union Bridge Company of New York, the railway company being satisfied with the price, and their engineer, as well as the government inspectors, satisfied with the work. The cement used was also wholly or largely American, the American being adopted rather than the English, somewhat reluctantly, by their engineer, on account of the greatly reduced cost. The stone used for bridge-seats was American granite, and highly praised to me by the engineer, who, being a Scotchman, was naturally a good judge of the material. The fact merits attention, in estimating the value of the Cuban market, that the people are heavy buyers. There is very little saving practised. I do not think there is a single savings bank on the Island.... As a rule, all the money received is freely spent, particularly by the poorer and middle cla.s.ses, who, of course, form the bulk of the population. Probably the pernicious system of government lotteries has something to do with the absence of saving, as the practice of purchasing tickets is as widespread among the poor as it is destructive and demoralising. Probably, too, the character of the climate and the consequent ease of living prevent people from devoting much forethought to a future that they do not dread, for there is really very little of that pinching want ever felt in Cuba which recent hard times have brought to notice in our own country. Be the cause what it may, the fact remains that all the Cubans are prodigal in their expenditures, which goes far to account for the immense quant.i.ties of goods consumed and paid for by a comparatively small population.

"Enough has been said, I think, to show that Cuba offers a most inviting field for American enterprise. Her prosperity and even her very existence may be said to depend upon her commercial relations with the United States; the two are bound together by the strong ties of mutual interest, and everything points to the fact that, commercially, Cuba should be ours....

"I believe that if the trade, not only of Cuba, but also of the South American countries, were first poured into the United States as a receiving reservoir, it would be naturally distributed, directly or indirectly, over the world to better advantage than if distant and various nations were carrying on desultory and independent business relations with them. The purchasing power that would be gathered into and concentrated in the United States by such trade would be largely expended in procuring those requirements of an ever-advancing refinement and civilisation which Europe can, at present at least, furnish better than we can ourselves. We appreciate and want these things--none more so--and the wealth which a practical monopoly of the South American trade would give us would make us Europe's best customer for those things of which she is the best producer. But this is a digression.

"The Cuban market, like all others, is governed largely by fashion.

Hitherto all supplies, except perhaps locomotives and steam-boilers, which have for a long time been chiefly furnished by the United States, have come, for the greater part, from Europe. I think that both in Spain and in South America, French goods, as well as French manners and customs have the preference. Just as there is a certain tendency in the United States to admire and imitate that which is derived from English sources, so everything French is apt to 'go' in these countries. It naturally takes time to overcome such preoccupations, particularly as in many cases they are well founded. I have taken occasion elsewhere to call attention to the fact that American houses shipping goods to Cuba put themselves under quite unnecessary disadvantage by careless packing. In the case of many fancy articles the mere appearance of the package goes a great way, and in the case of all goods careless packing entails great loss from breakage. This loss is a twofold one for the American dealer. Not only does he have to make good the damage at his own cost, but he creates a prejudice against his goods and his ways of doing business. This brings up another important point. It is a great mistake to suppose that 'anything is good enough for Cuba.' On the contrary, the people there not only want the best, but they also know it when they see it, and, once deceived, they never have any further transactions with the deceiver. The market is perhaps a capricious one, but it is one that fully recognises and appreciates fair dealing, and there is no better or more paying advertis.e.m.e.nt than to enter it 'on the square.'

"The market being such as it is, and, moreover, being for many cla.s.ses of goods a new one, the agents employed in it should be carefully selected. Here, again, Americans are at a disadvantage.

Very few of the commercial travellers who are sent out from the United States speak Spanish, whereas nearly all those representing foreign concerns do. The Americans are therefore obliged to put themselves entirely into the hands of agents and interpreters, which is always an unsatisfactory way of doing business. In view of the growing relations between the United States and the South American countries, it would seem as if Spanish should occupy a preferential place, in our educational inst.i.tutions, over French or German. Our business is to invade the Spanish-speaking territories, whereas we are ourselves invaded by the European nations, and this fact necessitates a more perfect equipment on the part of our business agents entering the foreign field.

"As regards the cla.s.ses of goods most needed in Cuba it would be impossible and wholly unnecessary to particularise more fully in this paper. We may broadly say that everything needed in this country is needed in Cuba, within the limits imposed by the difference of climate. They want or can be led to want everything we can furnish that is good and cheap.

"I may perhaps be here permitted another digression. We have heard a great deal in times past, and more particularly of late, of 'overproduction,' and it is supposed to account for many of our business troubles. Now overproduction is a strictly relative condition, and its remedy is either to produce less or to dispose of more. Political economists tell us that true material progress lies in commonising the good things of life, so that what to-day are the luxuries of the rich shall become to-morrow the ordinary possessions of the middle cla.s.ses, who will, in their turn, relegate their previous simple comforts to the poor, thus establishing an ever-ascending scale of prosperity, and raising, as it were, the standard of poverty. It is impossible, I think, to deny the truth of this proposition, which dictates a _levelling up_, instead of the socialistic plan of _levelling down_. In this view it is plainly to be seen that we are not, and cannot be, in any danger from _overproduction_. What we and all the world are suffering from is _underdistribution_. The remedy, as far as the United States are concerned, is not to limit production, but rather to increase it even to its utmost possibilities and then launch out in quest of new markets. It is this policy which has given England her vast commercial supremacy in the past. She has never attempted to restrict the production of her manufactures, but her efforts have always been to open up new markets, until she has forced her way to the remotest regions of the earth. It is said that the sun never sets on the British flag; it certainly never sets on British manufactures.

"In carrying out such a policy for the United States it is evident that the Spanish-American countries offer themselves to us as our natural field for enterprise. As already pointed out, our labours in this field would be of mutual advantage to them and to us, and in more ways than one. While receiving from us our labour-saving machinery and wonderful mechanical appliances of all kinds, they would also imbibe a portion of the spirit which led to their invention and use. We, on our part, would not only receive from them the rich products of their fertile soil, but might also catch, by contact with men of another race, something of that natural grace and refinement in which our national character is said to be deficient."

Referring to the fact that the railways in Cuba under English control have had their machinery from the United States, the manager of the English railways in Cuba only so recently as October, 1898, informed the author that they had not only purchased of the United States in the past, but that they intended getting all their railway supplies for the future from the same source. Surely no higher tribute could be paid to the manufacturers of our country than this from an Englishman, whose people for hundreds of years have led all compet.i.tors in the industrial manufacturing of the world.

And this is but a step in the giant strides of commercial progress the United States will make in Cuba, under the encouraging influence of a reasonable tariff, the abolition of all discrimination, the a.s.surances of a stable government, and that proximity which makes Cuba one with us in temper, in trade, and in territory.

CHAPTER XX

SUGAR--HISTORY AND FUTURE OUTLOOK

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 a.s.sert 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 quant.i.ty 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 pa.s.sed 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 unsurpa.s.sed 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 surpa.s.sing 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 pa.s.sed. 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.

[Ill.u.s.tration: CANE FIELDS.]

As a cane-sugar-producing country, nature has made Cuba superior to any compet.i.tor 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, princ.i.p.ally 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:

"In 1889, when preparations for cane farming were commenced, the _Guabairo_ was mostly impenetrable forest, and not a building of any kind existed; the working people slept under a cart until temporary palm-leaf huts could be constructed to shelter them. At this time the _Guabairo_ proper contained 1333 acres; later some 1100 acres were hired or bought, and the _colonia_ increased in area to about 2433 acres, of which in 1895, at the breaking out of the insurrection, 1100 acres were planted with cane and the rest was pasture, woods, and waste lands. In 1895, at the breaking out of the insurrection, the 1100 acres under cane cultivation produced about 2,500,000 _arrobas_ (an _arroba_ is twenty-five pounds), and aside from this, a sufficient quant.i.ty of corn and vegetables were grown for all the requirements of the _colonia_, so we never had to purchase. From the 1st of December to the 1st of June, an average of about 350 people were employed; of these ten per cent. were Canary Islanders or Spaniards, ten per cent. negro women and boys (white women do no field work); twenty per cent. native whites, and about sixty per cent. negroes and mulattoes. From the 1st of June to the 1st of December, an average of about 150 were employed.

Women do no field work during this period.

"For agricultural purposes this _colonia_ keeps nearly 300 oxen and about 20 horses and mules; also a few cows for milk, and a number of animals for beef, which in normal times varies from 30 to something over 100. In normal times this _colonia_ slaughters on an average, about 22 animals per month, with an average dressed weight of about 200 kilos (450 pounds) per head. The cost for preparing, breaking up, cross-ploughing, marking, furrowing, seed cane, planting, cultivating, wear and tear to implements, and weeding one _caballeria_ (33-1/3 acres) of cane to maturity, and do it well, is from $1400 to $1600, according to conditions of soil, wages, etc., and under normal conditions will here require from three to four years before the farmer can see any profits, and then only by intelligent management and good soil. Soil which requires planting every three to five years will ruin any man. The average yield of cane per _caballeria_ in Guabairo for 1895 was about 71,500 _arrobas_, and the cost per 100 _arrobas_ for weeding, cutting, carting, and delivering to the central amounted to about $1.84."

The concluding pa.s.sage 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:

"In 1896 we had some new plantings, and the crop was estimated at 2,700,000 _arrobas_; very nearly the whole of this was burned by the insurgents, some of the fields were burned twice and no crop was made. The horses were seized, cattle driven off, storehouses plundered repeatedly, and finally the manager had to flee for his life and seek safety in Cienfuegos; since then the fields have suffered repeated burnings and the crop has been reduced from 2,700,000 _arrobas_ to 1,400,000 _arrobas_, estimated. In 1897 and 1898 the crops were made under difficulties, the colonia employing a private armed force of sixteen men, and Colonel Luis Ramos Izquierdo kept a small garrison of his guerrillas in the _colonia_."

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:

"We have already seen that Mr. Gollan, the British Consul-General at Havana, estimates the factory cost of sugar in Cuba at the best managed centrals to be 2.50 cents per pound, although in exceptional cases it may be less. But during the month of October, 1898, the selling price of raw centrifugal sugar, 96 degrees test, in the New York market has ranged between 2.40 and 2.60 cents per pound, neglecting United States import duty, which is a fixed rate of 1.685 cents per pound. If we take this selling price at 2.50 cents per pound, and deduct .22 cents per pound freight, wharf.a.ge, and commission, we get 2.28 cents as the price paid for raw sugar free on board at Cuban ports. From this amount must be taken export charges of five cents per 100 kilos lighterage at the port of shipment, and the cost of transportation from the central to the seaboard. These together sum up not less than .10 of one cent, which would leave the net price at the central 2.18 cents. But we have already shown that the factory cost of the product has been as low as 1.99 in Trinidad, 1.94 in British Guiana, and 1.86 in Barbadoes. These three costs give an average of 1.93 cents.

Deducting from 2.18 cents which we have calculated as the present selling price at the central, 1.93 cents, the present possible minimum cost of production, we shall get .25 cents, equal to 12.95 per cent. as the margin of profit."

Mr. Clark takes New York prices in October, 1898. These prices were not under normal conditions, the current prices of the year being 2-3/8 to 2-1/2 cents for 96 centrifugals in bond. Mr. Clark gives cost of Muscovado sugars at the British islands of Trinidad and Barbadoes. These sugars test 89, and are worth seven cents less per pound in New York than 96 test centrifugals. He compares cost and values as if they were worth the same money. Properly compared, his profit changes into loss.

In this connection the following figures, especially prepared by an expert for this work, may be of interest:

THEORETICAL SUGAR CONTENTS OF 100 POUNDS CANE