The Sugar King of Havana (13 page)

Heriberto’s concern shows in his correspondence, even though he had become managing director of the Banco de Venezuela three years younger. He asked Lobo to make Pepe Rodríguez, the office treasurer, joint manager in his absence. He wrote on August 2, disagreeing with his son’s view that the sugar price would reach three and a quarter cents (events subsequently proved Heriberto right). Heriberto also upbraided Lobo for failing to promptly forward the firm’s weekly trading positions. On September 14, Heriberto played golf with Bernabé Sanchez’s son-in-law, Julio Cadenas. I was surprised to find Bernabé’s name cropping up in Heriberto’s correspondence. But Bernabé, the Lion of Camagüey, had died the year before, aged eighty-six. His obituaries described a man of simple habits and “an Anglo-Saxon frame of mind,” who woke at five o’clock every morning and worked at his standing writing desk until the last. He left twelve children, thirty-two grandchildren, sixteen great-grandchildren, and a mill, worth some $8 million, that was inherited by the children of his second marriage. Soon after, most of my mother’s family, including Pedro, Senado’s manager, moved to Havana. Bernabé’s death also left the Senado account open; Heriberto suggested that Lobo pitch for it.

Perhaps Lobo did, although he was then at work on far bigger and more important matters. On October 12, he brokered the sale of 150,000 tons of surplus Cuban sugar to Britain’s Tate & Lyle for $6 million. At the time, it was the largest sugar deal in the world, and Lobo had stolen it from under Rionda’s nose by shaving a fraction of a cent off the expected selling price. The news came as a thunderclap to
El Viejo
, the old man, as the Lobos called Rionda. His office had lost a handsome commission, his prestige had been dented in the trade, and he felt personally betrayed. The deal meanwhile catapulted the firm of Galbán Lobo onto the international stage. It also gave Lobo the confidence that he might truly one day become the world’s Sugar King.

“The sale was solely due to your skill and hard work,” Heriberto congratulated Lobo from Paris. “The profits you have made take second place to the importance and prestige you bring both to the house and to yourself, inside and outside the country.” Galbán Lobo had long been a thorn in Rionda’s side; now El Viejo considered it an equal. “He sees advantage in getting down from his high horse and discussing matters with us,” Heriberto wrote Lobo the following year from New York.

Yet the sugar market remained in the doldrums, and not even the Lobos, mixing the sage caution of Heriberto with flashes of brilliance from his son, could escape that. “This is a very delicate time. . . . I’m losing sleep over it,” Heriberto wrote in late 1928. Heriberto was then in the United States, meeting with congressmen in Washington and sugar traders and financiers in New York. Notably, Heriberto had a confidential meeting in October with Colonel José Miguel Tarafa, who was in charge of determining Cuba’s sugar policy. Their conversation provides a window onto the corruption of Cuban political life at the time.

Tarafa was the most conspicuously successful businessman to rise out of the revolutionary
mambí
ranks. He had cherubic if puffy features, was a planter in his own right, was also the owner of Cuban Consolidated Railways, and had risen to prominence in large part thanks to his control of Cuba’s Congress, which he managed through a mix of nationalistic propaganda and large bribes. In one incident, while Tarafa was working to push through a bill that favored his railway interests, he had invited Havana’s most senior politicians on a private railway trip through eastern Cuba. A fellow U.S. investor asked to come along too. Tarafa refused, a colleague politely explaining to the North American that:

The meeting with Heriberto was held discreetly in Tarafa’s New York hotel suite, as all of Wall Street was on the lookout for the Cuban sugar minister—speculators could make or lose millions from his decisions. Tarafa spelled out to Heriberto why he thought it was a good idea to curb Cuban sugar production. He droned on and on. Heriberto finally butted in. Given the seriousness of the situation, Heriberto asked, wouldn’t it be better to leave sugar output unrestricted? Prices were already so low that it should be easy to sell off any surplus crop, and prices could hardly fall much further. Tarafa, unmoved, replied with a pointed question of his own. He had been trading sugar on the New York exchange, he explained, had already made a handsome profit, and still held a short position—a speculative bet that prices would fall further. But after he made public his proposed policies to cut Cuban output again, the sugar price would likely rise. When would be the best time to close his short position? Heriberto drily suggested that if Señor Tarafa already had a profit, he should get out while the going was good.

Such insider trading explains why Heriberto and Lobo were so against the government restrictions—a controversial position, as the measure was supposed to help Cuban planters. It fostered corruption and also went against market principles, “whose rules can be no more easily ignored than the laws of gravity,” as Lobo later wrote. Nor did Tarafa’s policies obviously help. When Cuba signed a restriction agreement in 1930, called the Chadbourne Plan, Lobo wrote a stinging counterblast, calling it a social cancer that unnecessarily robbed Cubans, both rich and poor, of work. “In civilized countries, they create occupation for the unemployed,” he wrote. “Here [by cutting production] we are doing the opposite, which is so absurd as to be incomprehensible, even criminal.” It was a battle that Lobo would fight many times again.

Lobo showed early skill in trading and dealing during the 1920s, yet he was far from infallible. Lobo’s most spectacular mistake came in 1926, when he bought Agabama, a small mill in central Cuba, from a British bank that owned the mortgage. With sugar prices so low, it was the worst possible time to buy. His first
zafra
was also a disaster. Lobo brought in two new Boulager rollers to grind the cane, but they were mounted on a concrete base mixed with sea water. When the machines started to roll, their mounts collapsed, the heavy grinders fell over, and much of the harvest was lost. Lobo suffered what he called a “dark night of the soul,” sitting under a mango tree in the
batey
, pondering losses that subsequently ballooned to 600,000 pesos. Later harvests at Agabama were little better, although by then every planter in Cuba was losing money.

The sugar price continued to drop. It was reckoned that two and a half cents was enough to cover production costs. In 1932, during the world depression that followed the New York stock market crash, the price dropped to 0.7 cent a pound. Cuban cutbacks only made matters worse. That year, Cuba produced the same amount of sugar as it had in 1901, when the country had been emerging from the devastating war of independence. Mills closed. Unemployment grew. In April 1932, Lobo wrote to his father of “the disastrous results suffered by the house over the past four years, due solely and exclusively to me,” and asked formally to be relieved of his management duties. I would rather work “as a foot soldier,” he wrote. It was a gallant move, especially as Lobo had married a young Cuban aristocrat, María Esperanza Montalvo, only three months before and was starting a family. The comparison between this honorable gesture and Lobo’s early confidence is stark. Lobo had been humbled, for a moment. But by then all of Cuba had been turned upside down.

—RUBY HART PHILLIPS,
Cuba: Island of Paradox

 

 

C
ertain dates cut deep gashes into Cuba’s history, like blows from a machete. There is the moment when Fidel Castro first rose to Cuban prominence after he stormed the Moncada military barracks in Santiago in 1953; the day gives the name to Castro’s rebel front, the 26 July movement, and is now commemorated as “national rebelliousness day.” There is January 1, 1959, the moment from which Cuban time has been subsequently reset. (I was born, for example, in the sixth year of the Revolution and I write this in 2009, the “fifty-first year of the Revolution.”) Then there is Independence Day, although Cubans dispute when this is. Some celebrate when the U.S. governor general handed power over to Cuba’s first president on May 20, 1902. Havana, by contrast, insists the correct date is thirty-four years earlier, when Carlos Manuel de Céspedes freed his slaves and began the first war of independence against Spain.

All Cubans agree, however, on the portentousness of the revolt of September 4, 1933. It is a moment roughly halfway through the sixty-odd years of the Cuban Republic, a mathematically neat division because there was one kind of Cuba before it and another that followed after. It is also a negative date, a valley rather than a peak of Cuban history, because nobody celebrates what happened then. As Lobo put it in his old age from exile: “All our misfortunes in Cuba date from that fateful day in September 1933 when Batista being a sergeant took over in a coup d’état.”

 

 

GERARDO MACHADO WAS then the island’s president. He was also the country’s first dictator. A former butcher who had lost two fingers on his left hand to a meat cleaver as a young man, he had risen to the rank of brigadier general during the War of Independence. An astute-looking man, dapper in a dark suit, white shirt, and tie, with horn-rimmed spectacles and short silver hair, he had since become a successful sugar planter and businessman.

Although he is now painted in the darkest of tones, everyone applauded Machado when he took office in 1925. He promised strong rule, national regeneration, and an end to corruption. He built a central highway through the country, expanded the Malecón, and said he would “discipline these Cubans,” the “Italians of the Americas.” U.S. tourists flocked to Havana, escaping Prohibition, charmed by the island’s architecture, climate, music, and rum. Machado joined in the Havana high life and could be seen at nightclubs such as the Château Madrid.

Yet four years later Machado had become a tropical Mussolini. His fawning supporters called him El Supremo, and when the president asked what the time was, the reply came back, “any time you like.” In 1929 he changed the constitution to allow himself a second term. Student unrest grew. Then came the New York stock market crash and the onset of the Great Depression. In the United States and Europe, banks shut their doors, farm prices collapsed, and there was talk of an Apocalypse. Keynes told an audience in Chicago in mid-1930: “We are today in the middle of the greatest catastrophe—the greatest catastrophe due entirely to economic causes—of the modern world. I am told that the view is held in Moscow that this is the last, the culminating crisis of capitalism, and that our existing order will not survive it.” Cuba, so often apart from the currents that affected the rest of the world, was sucked into the maelstrom. Foreign tourists no longer came to Havana. The sugar price fell and unemployment grew. For those mill hands who still had jobs, wages collapsed to a third of their level in 1929—the lowest since the time of slaves. For the first time, phrases such as “class struggle” and “anti-Imperialism” rose from Cuban lips. Machado clamped down on the growing unrest with uncommon ferocity. By 1933, he was literally feeding his opponents to the sharks.

Ernest Hemingway captured the mood in his first Cuban novel,
To Have and Have Not
, begun that October. In a dramatic opening scene, Harry Morgan, a bootlegger and the book’s central character, meets secretly at the Pearl of San Francisco café with three anti-Machado revolutionaries,

They were members of the ABC, a secretive rebel movement, who wanted to buy safe passage out of Cuba to escape the clutches of Machado’s secret police, a goon squad known as La Porra, literally, The Bludgeon. Morgan refused their request.