Cuban Sugar in the Age of Mass Production: Technology and the Economics of the Sugar Central, 1899-1929

Published by EH.NET (September 1999)

Alan B. Dye, Cuban Sugar in the Age of Mass Production: Technology and the

Economics of the Sugar Central, 1899-1929. Palo Alto, CA: Stanford

University Press, 1998. xi ii + 343, $55 (cloth), ISBN: 0-8047-2819-4

Reviewed for EH.NET by Richard Salvucci, Department of Economics, Trinity

University, San Antonio, Texas.

The history of Cuba is the history of sugar or so it might seem to a reasonable

observer. Indeed, so much has been written about sugar, about Cuba, and about

sugar in Cuba that you might wonder what remains to be said. The answer, after

reading Alan Dye’s study of Cuban sugar in the age of mass production, is

“plenty.” The period of Dye’s focus, 1899 through 1929, is commonly called

Cuba’s “second” sugar revolution as opposed to the

“first” revolution that occurred between about 1825 and 1845 or so. Dye brings

the elegant simplicity of mainstream economic analysis to bear on a subject

that has rarely been treated so dispassionately. If you do not know much about

Cuban history, you may find it odd to learn that simply thinking about Cuba (or

much of the rest of Latin America) in neoclassical terms is in itself a big

deal. But that it is. There was a time, not so long ago, I might add, that to

question whether all Cuba’s ills were really the result of capitalism,

imperialism and racism was to question the basis and legitimacy of the

Revolution itself. Dye knows this and picks his way

carefully through the minefield (and politics) of Cuban historiography. The

result is an impressive economic history, with as much stress on history as on

economics.

The first three chapters of the book give an accurate and informed account of

the Cuban

sugar industry between 1763 and 1898, when the lines of Cuba’s subsequent

economic development were set. This was the age of the sugar plantation, of

African slavery, of the rapid spread of sugar into the island’s fertile central

plains, and of the ingenio, which Dye defines as

“a self-contained plantation/mill complex, vertically integrated and centrally

managed.” The production of sugar grew by leaps and bounds,

coming to dominate the island’s economy, or at least it did in the west, if not

in the back ward, peasant-dominated east. Anyone unfamiliar with the history of

Cuban sugar before 1898 can read these chapters with profit. My only criticism

is that the discussion seems heavily in the thrall of Manuel Moreno Fraginals,

Ramiro Guerra y Sanchez, Fe Iglesias, and Leland Jenks. There has subsequently

been more than a little empirical work on Cuba (and quite relevantly, on

Puerto Rico as well) that would nicely buttress Dye’s conclusions but which

escapes his attention. Still, this is not a major failing. Dye’s principal

contribution begins with Chapter Four and it is on this basis that his work

should be judged.

The first thing to recognize is that Cuba faced a problem that had bedeviled

the sugar industry everywhere, namely, a long term decline in the price of

sugar. In an effort to remain competitive, producers in Cuba discarded the

model of the plantation complex that had been the bulwark of the industry

everywhere since the sixteenth century. They turned, instead,

to the continuous-process technology that yielded important economies of

scale, namely, the large, modernized, heavily mechanized central with its

attendant corps of cane farmers or colonos. The technology came to Cuba after

the conclusion of the Spanish-American-Cuban War and was disproportionately

deployed by investors from the United States who had taken over the Cuban

protectorate from Spain. Logically, the new centrales embodied the best

technology available and in so doing gained a reputation for imposing

efficiency on Cuban rivals

who would not or simply could not compete. Dye argues that this reflected not

so much capital market imperfections or credit rationing as it did the desire

of the Cubans to continue producing sugar from plants that may have been

obsolescent, but which, in view of the high price of sugar down to 1920, were

not yet obsolete. When prices suffered their inevitable fall, the Cubans found

themselves squeezed out by the Yanquis, whose success the Cubans attributed to

political clout and economic endogamy. This

makes for a good story and Dye tells it very well.

The only qualification I might add is that, while economically enticing,

Cuba offered investors from the United States other advantages. Before 1910,

most direct investment from the United States in Latin America went to Mexico

but that investment rested on the political stability imposed by the

gerontocracy of the regime of Porfirio Diaz. When the lid blew off Mexico in

1910 and Diaz decamped to Paris, the gringos jumped ship as well,

but they got off in Cuba. I believe Cleona Lewis’s work on “American”

investment overseas substantiates this. Cuba, with its complaisant political

system (the United States was given the right to intervene in the island’s

affairs in 1901 by the infamous Platt amendment to

the Cuban constitution), was a lot better than revolutionary Mexico and even

better than, say, the Philippines, which were as willing to fight the United

States as they were to fight Spain. Cuba offered diversions and the quiet life

that Mexico no longer

did. Dye’s book is also interesting on other grounds. Observing, as did Leland

Jenks, that sugar mills in Cuba continued to expand in the 1920s even as the

war-induced spike in prices (known in Cuba as the “dance of the millions”)

collapsed thereafter, Dye proposes, in Chapter Five, that adjustment costs

rather than “irrational exuberance” are the explanation. Many of the newer

mills that entered the market when prices were high were unable to expand

rapidly enough to avail themselves of economies of scale before prices fell.

Skilled supervision, social overhead capital, even well-organized domestic cane

supplies were not readily available to new entrants into the industry at

anything less than prohibitive cost. So, as is sometimes said in Latin America,

the new mills

“made haste slowly,” expanding production to optimal levels even after the

initial stimulus to entry would seem to have dissipated. Rational exuberance,

in other words. Dye cautions his readers that they might wish to skip over his

estimation of adjustment costs. I can see where my colleagues in Latin

American history might not want to go where Dye leads,

but I was repeatedly struck by the clarity and cleverness of his exposition.

In Chapter Six, Dye tackles the issue of regional specialization.

Historically, the sugar industry had spread from west to east and for most of

the nineteenth century; the western half of the island was the most

“modern.” The pattern changed dramatically in the twentieth century when the

bulk of new investment flowed to eastern provinces like Camaguey and Oriente.

Dye’s explanation for this phenomenon makes sense. Western Cuba was least

malleable in institutional terms, since prospective investors faced independent

cane farmers and a railway network adapted to pat terns of production dating

back to the 1830s. The east was relatively virgin territory. There the new

industry could have railways shaped to its own requirements and could control

cane farming by reserving large tracts of land for its own use. Eastern Cub a

thus offered advantages to the latecomer that were unavailable in the west. For

the modern-minded, this analysis is formally specified and tested using a

fixed-effects regression model in Chapter Seven, wherein Dye draws the

inevitable conclusion that history matters: “The difference of the relative

costs of cane in the east and the west was truly a consequence of the different

histories of the two parts of the island” (p. 238). Chapter Eight reflects on

the importance of factor endowments for choice of

technique.

It would be difficult for me to overstate the value of this book but even so,

there are some blemishes. The text repeats itself in more than a few places and

the repetition sometimes occurs within the compass of a couple of pages. This

is just poor copy-editing. There are also places where I thought Dye was

making things unnecessarily difficult, particularly for non-specialist readers.

Why does degree of difficulty matter? Well, here is a book that should be

required reading for all Latin American historians and not just for economic

historians or the Methodologically and Theoretically Correct. It may well be

that the Revolution in 1959 was not the result of some Big Dialectic working

its way through Cuban history, but Dye explains, in measured tones, how one

historical option after another was foreclosed to Cuba and why its problems

have consequently seemed so intractable. This may be an enlightening example of

“path dependence” but to Latin American historians of a certain age, it

recalls

the discussions of “colonial heritage” that generated so much excitement

thirty years ago.

The fact that Dye ends up where he does strongly suggests that there is no

right or wrong way to do history, just more or less fruitful and relevant ways

of doing it.

Good history is good history, and Alan Dye’s book is good history indeed.

Richard Salvucci teaches at Trinity University in San Antonio, Texas. He is

writing a book on Mexico’s “London Debt” in the nineteenth century and recently

has written a paper with his wife Linda Salvucci on the Latin American terms

of trade in the nineteenth century.