British governments wished to encourage . American politicians proposed a reduction in the tariff applied to Cuban sugar , but midwestern sugar beet interests opposed it . It was when the British lowered their tariff on Cuban sugar that Americans sensed a threat to their relations with Cuba and quickly approved a substantial reduction in the tariff .
These tariff reductions had the desired effect . Sugar production in Cuba more than doubled in the 10 years from 1904 – 1914 , to 2.6 million tons per year . The danger at this point was over-production , and prices averaged only 1.93 cents per pound in July 1914 . World War I began the following month , however , and the price of sugar began to take off : it almost doubled in August . Cuba ’ s potential problem of over-supplying the sugar market was solved by events elsewhere .
Sugar prices remained high as World War I dragged on . The sugar beet fields were in the eye of the storm along France ’ s eastern border with Belgium and Germany .
The elevated sugar prices that resulted from this reduction in beet production encouraged expansion of Cuban output .
From 2.6 million tons at the outset of the war , Cuban sugar production topped three million tons in 1915-16 , while prices increased to 4.4 cents per pound , then to 4.6 cents per pound . The 1916 – 17 harvest brought the country ’ s sugar producers $ 300 million — a huge increase from the levels of roughly $ 100 million before the war .
This simultaneous escalation of production and prices was perhaps a lesson lost on the Cuban sugar industry . Commodity producers often learn the hard way the effect that increasing production has on market prices . Such producers henceforth gauge their production increases very cautiously and do so while keeping a close eye on their fellow producers . The cataclysmic events occurring thousands of miles away from Cuba in Europe kept Cuban sugar producers from internalizing a lesson that probably cannot be learned from dry economic textbooks .
Cuban President Mario Garcia Menocal took a sanguine view of the situation . He was an engineer and a manager of one of the country ’ s larger sugar plantations , and he could find little in this increased production to cause concern . Government coffers swelled , and Menocal and his government found uses for the money that — to put it mildly — would later appear self-serving .
Wall Street sensed opportunity . A company calling itself Cuba Cane Sugar Corp . was capitalized in 1915 at roughly $ 50 million , and it began buying up the sugar mills that crush and extract the sugar-water mixture from the cane . Cuba Cane Sugar was a success and inspired imitation .
The United States entered the war in April 1917 , and its leaders sought to control the escalation in commodity prices often caused by war , sugar included . American control of the Cuban sugar industry was almost total , and its wartime leaders simply told the Cubans that the United States War Trade Board would henceforth buy
Heritage Auctions , HA . com
Cuba Cane Sugar Corporation specimen preferred stock certificate , circa 1910s .
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