American Sugar Kingdom: The Plantation Economy of the Spanish Caribbean, 1898-1934

8. Economic Collapse and Revolution

II Economic Collapse and Revolution World War I increased the demand for Caribbean sugar in Europe and drove up its international price. Before the war, the European allies ofthe United States were either self-sufficient in sugar or had drawn their supplies from continental Europe. The outbreak of war with Germany cut off the United Kingdom's sources ofsugar in central Europe. The beetgrowing areas ofFrance were overrun by the invading German army. The principal alternative sources of sugar were Java and Cuba. The scarcity of shipping during the war impeded the importation ofJavanese sugar, forcing the allies to turn for their supply to Cuba, whose sugar had been sent mostly to the United States since 1902. The Sugar Division of the United States Food Administration undertook the organization of sugar supply during the war through several committees : the Louisiana Sugar Committee, the (Beet) Sugar Distributing Committee , and the International Sugar Committee, which arranged for the purchase of foreign sugars in cooperation with England, France, and Italy. A government corporation known as the United States Sugar Equalization Board was created to buy the 1918-19 Cuban crop. At its meeting on November I, 1917, the board decided that all purchases ofsugar from Cuba, Santo Domingo, Puerto Rico, and St. Croix would be handled by the International Sugar Committee, and all purchases from Mauritius and the British West Indies would be handled by the British 232 ECONOMIC COLLAPSE AND REVOLUTION Royal Commission on the Sugar Supply. The sugars of Brazil, Peru and Java continued to sell on the open market. Louisiana, Hawaii, and US. domestic beet sugars were sold exclusively in the United States through an arrangement between the US. Food Administration, the sugar growers, and the US. sugar refiners. Philippine sugars sold on the open market with the understanding that British and Canadian purchases from that source would be deducted from their allotment elsewhere.1 The Sugar Equalization Board organized what was in effect a purchaser's cartel to keep down the price of Cuban sugar. Herbert Hoover, United States food administrator, considered that the increasing price of sugar was not the result of increased demand but rather of collusion among Cuban producers: "Certain Cuban sugar producers (who are out ofour reach), have combined to force up the price of the remaining 1917 Cuban crop, prior to the new crop in December and have lifted the price of raw sugar in New York from 5.9 cents inJune to 7.5 cents, duty paid, on August 16th, and this against a 3year pre-war average of4.2 cents."2 But keeping the price of Cuban sugar down required a combination of buyers, which could be in violation of the Sherman Antitrust Act. Hoover therefore sought the approval of President Woodrow Wilson to set up the buyers' cartel. Wilson replied: "Personally, I entirely approve of a 'combination' such as the one here proposed, for it is no/in restraint oftrade."3 The International Sugar Committee consisted ofSir White-Todd andJohn Ramsey Drake, both ofLondon, Earl D. Babst, president of the American Sugar Refining Company, William A. Jameson of Arbuckle Brothers, and George M. Rolph of the Sugar Division of the Food Administration. Shipping of sugar was also subjected to controls. Alfred Gilbert of the New York and Cuba Mail Steamship Company served as chair of the Joint Committee on West Indies Transportation, which was charged with coordinating the transportation of sugar at regulated prices. Frank C. Munson of the Munson Steamship Line, B. R. Stoddard, president of the West India Steamship Company, Ernest M. Bull of Bull Insular Line, and Franklyn D. Mooney of the New York and Porto Rico Steamship Company were the other members of the transportation committee. The steamship barons were charged with coordinating the shipment of Cuban sugars with the Cuban Producers Committee, composed of Hannibal J. DeMesa, Ernesto Longo, Miguel Mendoza, Coronel Tarafa, and the Cuban minister to the United States, Carlos Manuel de Cespedes. A second committee composed of Robert B. Hawley, president of the Cuban American Sugar Company, and Manuel Rionda, president of the Cuba Cane Sugar Corporation, was appointed by the Cuban government. A committee of U.S. refiners was also created. Its members were Claus A. Spreckels, of New York, president of the ECONOMIC COLLAPSE AND REVOLUTION 233 Federal Sugar Refining Company, James H. Post, of New York, president of the National Sugar Refining Company, Charles M. Warner, ofNew York...