By Daniel C . Munson

Legendary 20th-century Wall Street investor and author Philip Carret begins his wonderful 1930 book , The Art of Speculation , by arguing that all businesspeople are speculators to some degree , whether they wish to acknowledge it or not . He provides an example : In May 1920 world sugar prices reached 221/2 cents per pound , and by mid-year 1921 sugar had declined in price to two cents per pound . ( For context , the present-day price is around 20 cents per pound .) “ In 1920 it was literally impossible for any producer or refiner of sugar in the world to escape a fleeting prosperity ,” he wrote , whereas , “ in the debacle of 1921 … it was quite impossible for any sugar producer to make money .” Carret draws from this example the idea that all businesspeople must consider the factors underlying the current price of what they consume and

Postcard of a trainload of sugar cane in Cuba , early 20th century . produce , and act accordingly . In other words , they must think and act , to some extent , like a speculator .

Mr . Carret concedes that such a dramatic price run-up and quick collapse is unusual , but the broader point about businesspeople and speculation is made . The reader goes on to enjoy Mr . Carret ’ s discussion of the different ways to approach the buying and selling of securities and commodities — in a manner that his long and successful investing record suggests is profitable .

The financial historian can ’ t help but ponder this dramatic rise and fall in the price of such a prosaic item as sugar . Could such price movements have had interesting causes ? And could they have produced interesting and potentially deleterious longer-term effects ? They could — and they did . The world ’ s sugar is produced by extracting the sweet sucrose crystals ( that enter the bloodstream as glucose ) from one of two very different sources : sugar cane and sugar beets . Sugar cane is best grown in the tropics , sugar beets in the rich , black agricultural soil found in middle America

and central Europe . Demand for the tasty crystals is — to the consternation of most of the world ’ s nutritionists — brisk and dependable . The dramatic price action described above was therefore due to big changes in the supplies of sugar extracted from these two sources and brought to market , not to changes in demand .

The tropical region that had the most developed sugar cane producing industry was on the island of Cuba . It is in Cuba that we see the most interesting and devastating effects of this dramatic rise and fall in sugar prices , effects that reverberate even today .

Cubans say that “ without sugar there is no country ” ( Sin azucar no hay pais ), and certainly the economic development of the island in the 19th and early 20th centuries owes a good deal to the sugar industry .

Sugar production in Cuba began in the 16th century , but it grew slowly until production took off three centuries later . From about 50,000 tons per year in 1820 , sugar production grew to nearly one million tons by the end of the century . The Spanish-American War ended with the creation of a Cuban Republic in 1902 , a development that the American and

20 FINANCIAL HISTORY | Winter 2025 | www . MoAF . org