also required the availability of sugar as a raw material. The other major traditional industry, tobacco, had declined considerably, with exports down from 256 million cigars per year in 1906 to only 21 million in 1949, whereas cigarette imports had risen from 1.7 million packs in 1935 to 15.6 million in 1949.14 The major utilities, telephones and electricity, were monopolies owned by U.S. capital. The large profits that these companies made in return for a poor service and how little of those profits were reinvested in Cuba had long been subject to criticism in the national press.15 There were small textile and shoe industries, but these could not even supply internal needs. The position of the textile industry was made worse by the 1954 commercial treaty with Japan that allowed the Japanese to export cheap clothing to Cuba in return for a guaranteed import of Cuban sugar.16 This deal provides another clear example of the dominant political influence of the sugar oligarchy. The non-sugar manufacturing bourgeoisie was organized in the Asociación Nacional de Industriales de Cuba (ANIC, National Association of Cuban Industrialists), but it did not have sufficient political weight to push the government toward protectionist tariffs and industrial development policies, which were opposed by the Asociación Nacional de Hacendados de Cuba (ANHC, National Association of Cuban Landowners) representing the interests of the sugar oligarchy. A further complication that reduced the ANIC’s ability to promote industrial development was the presence in its leadership of local representatives of U.S. business interests, most notably Colgate-Palmolive and Firestone tires, which had factories on the island. The parent companies of these U.S.-owned manufacturers had profitable links with the Cuban sugar industry. Nor was the Cuban non-sugar bourgeoisie itself independent of U.S. capital; however, they were linked more closely with U.S. finance capital, and the sugar oligarchy was linked to U.S. exporters of consumer goods. Although these factors meant that the manufacturing sector was unsuccessful in its attempts to pressure the government to adopt an effective industrial development policy, the ANIC and the ANHC were united in a belief that salary reductions were essential to make Cuban exports competitive.17 Another source of disagreement between the two associations was the corruption endemic in Cuban political and economic life. ANIC members were largely excluded from this source of income and therefore protested loudly.18
A significant proportion of Cubans whose employment was not directly or indirectly involved with sugar worked in the top-heavy state bureaucracy, the service sector, or tourism. All three sectors were riddled with corruption, particularly in the case of tourism, which Enrique Cirules’s El imperio de La Habana shows was heavily influenced by the U.S. Mafia.19 Nearly all the government intervention aimed at developing the economy was directed to unproductive capital products, mainly in Havana, that did little or nothing to aid diversification.
With this high level of dependence on sugar, any change in either the price received for the sugar crop or the amount that could be sold had a huge effect on the island’s economy. Therefore, when the political threat of a reduction in the amount purchased by the United States coincided with a heavy fall in the price on the world market, the Cuban economy as a whole faced a crisis.
The International Sugar Market
Although Cuba originally produced almost exclusively for U.S. consumption, the growth of internal production of both beet and cane sugar in the United States had caused the American government to increase import tariffs, thereby causing the Cuban share of the U.S. market to decline as the price of Cuban sugar rose for U.S. consumers.20 This in turn led Cuba to look elsewhere, and by the 1950s about half of the Cuban harvest was aimed at the rest of the world, so that the income from the “world market” developed a considerable significance in the island’s economic affairs.21 The heightened international tension at the time of the Korean War led to stockpiling of sugar, then considered an important strategic foodstuff, leading to considerable price inflation, so that from December 1951 when the world price of sugar was 4.84 cents a pound, it climbed to a brief high of 5.42 cents the following March.22 This high price encouraged a vast increase in worldwide production, with new areas being turned over to both cane and beet farming, but, as there was not a comparable increase in consumption, the resulting crisis of overproduction led, within a year, to a collapse in the price to a mere 3.55 cents a pound.23 At this time Cuba was producing 18 percent of the world total and thus the collapse in the market was disastrous for its economy. Cuban sugar farmers played their part in the general international scramble to grow more sugar and the 1952 zafra (sugar harvest) was the biggest in the island’s history at over 7 million tons, compared to the previous record of 5.5 million tons the year before. Unfortunately for the Cuban producers, however, of that 7 million tons they were only able to sell 4.8 million, producing a general economic crisis for the entire island.24
In an attempt to cope with the immediate problems of the sugar industry, the government purchased 1.75 million tons of the 1952 zafra to be kept in reserve and off the open market, thus hoping to use Cuba’s dominant position in the market to stabilize the price. Compensation was paid to the owners for this measure, which resulted in a budget deficit of $82.6 million.25 The Cuban unilateral cutback in production was implemented by decree number 78, which ruled that the 1953 harvest would be restricted to 5 million tons by shortening the length of time in which cane could be cut.26 The tactic of restricting the length of the sugar harvest was designed to increase profits for the owners of the sugar companies at the expense of their employees. The sugar workers were paid only during the actual cane-cutting period, and therefore if the harvest were of shorter duration the wage bill would be reduced. Should the restriction be successful in raising or at least stabilizing the price of sugar, this would maintain or increase the employers’ income, or at least mitigate the fall in profit. Critics of the strategy of restricting production were clear at the time that only the sugar bourgeoisie could benefit from the policy of restriction, and it was widely portrayed as being against the national interest.27 This illustrates the contradictions inherent in “economic nationalist” politics when the nation is divided into classes with divergent interests, and, in consequence, there is no single “national interest.”
As many of its critics predicted, this unilateral action was a complete failure, as other producing countries took advantage of Cuba’s voluntary restriction to increase their output, and the price continued to fall. The total national income from sugar fell from $655.5 million in 1952 to $404.9 million in 1953, and the total wage bill for the industry fell from $411.5 million to $253.9 million.28 Moreover, speculation, insider trading, and corruption were rampant, with those who ran the Instituto Cubano de Estabilización de Azúcar (ICEA, Cuban Institute of Sugar Stabilization) enriching themselves scandalously.29 The reduction in national sugar production was implemented by issuing production quotas to Cuban sugar companies, which were then able to trade these to their own immediate enrichment, while their employees faced being let go when their employer sold their quota. An example of this is the 1956 protest at the closure of central La Vizcaya in Matanzas when its quota went to La Chaparra in Oriente.30 The UK government also profited from the unusually low price of sugar to end sugar rationing at home and buy a million extra tons from Cuba at less than 3 cents a pound.
Following the failure of Cuba’s unilateral action to arrest the decline in the world price of sugar, an attempt was made to organize an international agreement to regulate the market. This approach had been tried before in the 1930s with the Chadbourne Plan, which had not been particularly successful because other countries, not members of the scheme, simply increased their production and undermined the scheme.31 In 1953, however, forty-four governments were present at the negotiations, and the Cuban government, one of the most enthusiastic backers of the approach, had greater hopes that the sugar price on the world market might be stabilized.
The chaotic situation in the world sugar market prompted the intervention of the United Nations. In April 1953, the UN invited seventy-eight countries to send representatives to an International Sugar Conference in London, to take place in July of that year, with the intention of negotiating an International Sugar Agreement. The idea behind the agreement was to stabilize the price of sugar by allocating quotas to the different producing
