The International Journal of Cuban Studies

(Online) ISSN 1756-347X

British economic presence 1900-1930

Michael Cobiellas looks at how UK and Canadian capital investments into the Cuban urban economy also contributed to strengthening the prevailing dependent and underdeveloped structure of the economic system.

Summary

The purpose of this article is to delve into the historical records concerning some of the fundamental aspects of British and Anglo-Canadian economic presence in Cuba during the first thirty years of the Cuban Republic from 1900 to 1930. The focus here is on the economic and commercial spheres in which most British capital investments were concentrated, as part of the economic infrastructure of the capital, Havana. The study analyses the main features of the progressive penetration of British and Canadian capitalist investment in three specific sectors of the urban economy: steam and electric locomotives, which received the largest British investment; port warehouses and piers, linked to British railway transportation companies; and finally private insurance. Britain's economic presence and invested capital, which surpassed domestic capital generation capacity at the turn of the century, was responsible, in no small way, for building a physical infrastructure critical for various service and agricultural export sectors. Nevertheless, these capital investments also contributed to strengthening, or at least maintaining, the dependent and underdeveloped structure of the economic system that prevailed in Cuba.

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The study of the British presence in Cuba, as a monographic theme, has been practically ignored by the broad social science disciplines of Cuban academia. I refer specifically to history, sociology, economics and much more recently, cultural anthropology with its diverse branches. This contrasts with the historiographic and anthropological tracking of other ethnic groups that have migrated to Cuba and have settled temporarily or permanently in the country throughout its colonial and republican past. It is unusual that almost nothing has been produced academically about the republican and colonial period, from a discipline within Cuban social sciences as pragmatic as historiography, considering the economic influence Britain had on Cuba from the end of the 18th century through the first half of the 20th. These economic interactions included commercial trade, the introduction of technology, capital investment, and general business activity.

In the national historiography there are only four major works published in book form that address Britain and Cuba's relationship in the distinct colonial and republican periods. The titles are: Influencia de Inglaterra en la historia de Cuba (reconstruida), published by José Russinyol Carballo in 1925; Toma de Havana por los ingleses y sus antecedentes, published in 2002 by César García del Pino; El tratado anglo-cubano de 1905, published in 2006 by Jorge Renato Ibarra Guitart and Inglaterra y La Habana: 1762, published in 2007 by Gustavo Placer Cervera. As evidenced by their titles and the era they encompass, the central theme of these books is the junction of political-military or economic-commercial relations between Cuba and Britain. Only the first title touches on some aspects of the British influence on the Cuban artistic, literary and scientific culture. Nevertheless, there is still a vast gap in knowledge regarding the economic-commercial presence and participation of Britain in Cuba, not to mention the knowledge gap, from an historiographical and ethnological point of view, regarding seasonal or permanent immigration of British citizens -including Anglo-Canadians - and their contribution to Cuba's material and spiritual culture throughout the 19th and 20th century. To clarify, the ethnic term 'British' used here only refers to and includes those immigrants originating from the British Isles, that is to say, from England, Wales, Scotland, Ireland, and the Dominion of Canada -which was part of the British colony in Cuba - and not to the subjects of the British crown coming from the Anglo-Antillean parts of the Caribbean under colonial rule.

The aim of this article is to make a preliminary attempt at delving into the historical knowledge about the core aspects of the British economic presence in Cuba, by looking at the principal capital investments into domestic economic infrastructure. Moreover, the analysis of this topic will span a concrete time period, the first thirty years of the republic, and will be limited to a specific geographical area, the city of Havana as it was drawn at that time. Nevertheless, this study also touches on information about other areas of the country due to their relationship with the capital city.

A number of important written sources, mostly secondary, were consulted in preparing this article, such as bibliographies on diverse topics including the socio-economic history of the country written in the era of the bourgeois republic and in the revolutionary period. These sources could be divided into the following categories: theoretical-conceptual critical analysis, specialized scientific-technical information, or simply informative-promotional (for example, commercial, industrial and social directories or guides of the era). Also consulted were traditional books on political, diplomatic, and socio-cultural history published in the republican and revolutionary period. However I must affirm that the present work is fundamentally based on Cuban bibliographic sources along with a few British or foreign sources that could be found in Cuban libraries and archives. Thus the study is limited in scope. Without a doubt a much richer discussion would result from including the numerous written sources that are available in libraries and archives of British institutions. Nevertheless, despite the limitations, I consider the present attempt to address and analyze the topic of Britain's economic presence in Havana, from 1900 to 1930 is avaluable addition to historiographical and anthropological research at national level.

British investments in Havana

To date, there is very little data or other concrete information regarding the approximate sum of British investments in the country during the 19th century. It can be determined that around 1890, British capital invested in Cuba was upwards of £2,396,000, of which £1,846,000 had been invested in the rail system (Ibarra Guitart, 2006: 36). As for the 20th century, there is little more information available. In fact, the first concrete figures that appear in the national historiographic bibliography date from the period 1909-1913, during the government of José Miguel Gómez. In those three years, the amount of foreign capital investments made in Cuba reached 112,491,190 pesos - equivalent to the same amount in USD of that time. Of this amount 60,419,190 pesos - some £12,083,838 - was British capital (Libro de Cuba, 1925: 207). This money was mostly concentrated in public services, transportation, industry and government stocks.and makes up just over half of all foreign capital invested during that period.

From 1913-1914 the total British capital investments in the country rose to approximately 216 million USD or £44.4 million (Pinos Santos, 1973: 39). In those years the British led the pack in foreign capital investment in Cuba, even surpassing, although only slightly, the 215 million USD invested by US capitalists who enjoyed a privileged position in the Cuban import-export business due to the Cuban authorities' political and economic dependence on the Washington's imperialist plans. However, US sources estimate British capital invested in Cuba to be around 161 million USD toward 1912 (Pardeiro, 1966: 27). By the end of the first quarter of the century, the amount of British investment became virtually static with figures holding at around £45 million or 225 million USD. Four years later British investments diminished by £3 million bringing the total figure to approximately £42 million or 210 million USD (Gutiérrez, 1952: 88-89 and 231). The evolution of British investments during this period, according to the few sources and quantitative data available, show a gradual stagnation and decrease in the period from WWI to 1930.

At the beginning of the 20 century, investments of British capital were concentrated in the following sectors of economic activity: railways; warehouses and piers; insurance; banks, with mostly Canadian capital closely tied to Britain; and cablegraphic communications. During the first 14 years of the century, British imperialism continued to increase investments in the same and also new areas. These were the golden years of British capital investments made in the country. However, it is important to note that in the years immediately following Cuba's national bank crash of 1920-1921, the Canadian bank, closely linked to and representative of British bank interests in the country, made important investments in the sugar industry taking control of ten sugar complexes in the provinces of Las Villas, Camagüey and Oriente. The advent of WWI nearly paralyzed British investment activity throughout the country, especially by large corporations and private companies. The war also caused a strong contraction of some British investments in certain sectors of the capital's economy, such as banks, telephones and locomotives - those not owned by the British. In the years following the war and until 1930, the British made some capital investments in new sectors of the economy, but overall investments remained nearly static in comparison to the 1913 to 1914 period.

Britain maintained important investments - a good part of them rapidly liquidated or notably diminished, due to the imposition of US capital - in the agricultural sector (in tobacco and sugar) and contributed to the later industrialized production of these commodities. However, the main British focus was to be found in the secondary and tertiary sectors of the economy.. Three of the most important investment areas merit individual analysis to provide a more complete view of British economic involvement, other than commercial trade, in the city of Havana in this period of the bourgeois republic.

Steam and electric locomotives

British capitalism concentrated most of its capital investments in the locomotive sector and the financial influx from 1879 to 1899 resulted in Britain gaining control of four large train companies: The Western Railway of Havana Ltd.; United Railways of Habana and Regla Warehouses Co. Ltd. - the biggest of the four; The Havana Marianao Railway Company Ltd. and The Cuban Central Railways Ltd. Thus Britain owned nearly the entire railway system of the central-western zone of the country - from the territorial boundaries between the provinces of Las Villas and Camagüey, on the east, to western Pinar del Río province, on the west. Nevertheless, during the first decade of the century the British fervently attempted to consolidate their monopolistic interests in the railways of Havana province. The most powerful of the companies, United Railways of Habana also known by its Spanish name Ferrocarriles Unidos, which was controlled by the London financial institution J. Henry. Schröder & Co., expanded both materially and financially.

In 1905 United Railways of Havana obtained the lease, and later absolute control of The Havana Marianao Railway Company Ltd., thus making it their western division. In 1907, after a brutal conflict with US railway interests in the city of Havana, United Railways took over the US electric locomotive company Havana Central Railroad Co. In addition, the British assumed control of the train depot located at Egido and Zulueta streets and of the coach and boxcar repair station located in Luyanó (El libro de Cuba, 1925: 697; Lloyd, 1913: 342, 344, 350-351, 354). United Railways continued its push during the second decade of the century. In July 1910, the Havana Terminal Railroad Co. was established in the US state of Maine. Although owned by the US, it was administrated by United Railways and backed by 5 million USD of British capital. The Havana Terminal or Central Station, inaugurated on November 1912, was located in Arsenal. It became the new United Railways of Havana headquarters. Between 1911 and 1920, a reorganization of British rail interests took place. As a result United Railways of Havana took over control of The Western Railway of Havana Ltd. and The Cuban Central Railways Ltd., emerging the leader of the British corporations and the country's principle railway company at the time (Zanetti and García, 1987: 243-244, 246).

The far-reaching participation of British railway companies in the development of the public transportation system that connected the capital with the entire western part of the country had an undeniable impact, especially during the first two decades of the 20th century when locomotives were the most important, and nearly only, means of land transportation. For this reason the services offered by these rail companies were closely linked to the principal economic activities based in Havana city: industrial agriculture, business, and public services (Ibídem: 254; Abad, 1944: 51). They achieved this not only through the indisputable power of their invested capital, but also their financial management, the technical and administrative capacity of their company directors along with the connivance of a host of private and domestic government interests that generally assisted and supported their economic activities in Havana as well as in other areas of the country where they operated. (Abad, 1940: 650-657).

The rail companies dominated by British capital were able to earn obtain huge amounts for their services, due to the over-capitalization of their railways, the skilful financial speculation of their owners (especially the Schröder bank), lack of competition from alternative forms of land transportation as well as the concessions and privileges they repeatedly enjoyed thanks to the favorable demeanor of the National Train Commission, the state regulating body for the entire country. To this was added the rapid development of other important sectors of the Cuban economy notably the sugar and tobacco industries;, the rapid growth in trade between the young republic and numerous foreign countries; and the emergence of additional light industries.

The golden technological-administrative years and the greatest economic bonanza for the British railways in Havana were during the first quarter of the 20 century. After that time, and especially toward the end of the 1920s, the British rail companies began to suffer an intense contraction of earnings to the point of negative profits. In addition, the trains and rail infrastructure were aging and in disrepair. The growing competition of automotive transportation- trucks and buses mostly - strongly affected the British train system particularly in Havana province and especially in the city. The construction of the central highway that connects the country from east to west was another strong blow to the British railways in the early 1930s.

Warehouses and docks

The second investment area of interest here is closely related to the British controlled railway companies. It can be argued that the dock-warehouse-rail transport system led to the monopolistic and financial capitalism - characterized by efficiency, speed and profits as the final goal - emerging as the management paradigm for all types of commercial activity around the end of the 19th century. In this case the port warehouses and docks controlled or administered in co-ownership by British capital were integrally linked the British railway companies established in Havana city. In 1892, when the British train company The Western Railway of Havana Ltd. was formed, British financial capital took control of the Cristina warehouses located at the Cristina train depot. In 1898, British financial capital took possession of the warehouses and docks of Regla, located near the coastal town of the same name, to form a new British company named United Railways of Havana and Regla Warehouses Co. Ltd. (Lloyd, 1913: 342, 344, 348, 350-351; Jiménez, 2004: 305-306).

During 1905-1906 the British company United Railways of Havana built a series of warehouses near the coastal port of the rocky Tallapiedra region of Havana bay. The 1907 purchase of the electric train company Havana Central Railroad Co., allowed the company Ferrocarriles Unidos to obtain the strategic docks of Paula and La Luz, located in an important area of growing port activity within the Havana bay. In addition, with this purchase British investors claimed ownership of new warehouses and repair and maintenance shops located in the Luyanó area (Zanetti and García, 1987: 238-239, 242-243; Lloyd, 1913: 350-351, 354). British capital was also invested in the construction of a series of docks and modern warehouses, in accordance with the demands of contemporary capitalism of those years. In 1911, the formation Havana Terminal Railroad Co., as the new parent of Ferrocarriles Unidos, led British capitalists to build five new docks and various warehouses on the port shores of Arsenal. These piers became part of the future Commercial Dock Company, which was administered by the British, but profits were shared with US proprietors (Zanetti and García, 1987: 243).

It could be said that British capital investments in the construction, administration and exploitation of ports and warehouses were the most lucrative, in terms of liquid profits, during the period spanning 1900 to 1930. This was due to the visionary steps taken by various British railway companies to integrate rail transport into the commercial and industrial activities taking place in the Havana bay and its environs. British investors in this sector enjoyed a growing economic bonanza as foreign and domestic trade, principally based in Havana, increased in the first decades of the bourgeois republic. The period known as the "fat cows era" between approximately 1916 and 1920 was especially lucrative for the British stockholders and investors involved in rail transport and port activities. Nevertheless, they suffered setbacks and hard times during the banking crash of 1920-1921 and the great global capitalist crisis beginning in 1929. In addition, the intense development of automotive transportation and the roadway system in western Cuba created strong competition for British capital.

Private insurance

The beginning of the 20th century, and especially the rise of the bourgeois republic, offered new opportunities to expand this traditional mainstay of British financial activity. In fact, in the last three decades of the 19th century, investment in the insurance sector was the primary manifestation of the massive onslaught of British capital investment in Cuba, and specifically in Havana city. In the beginning of the following century the multiple British insurance companies, with the addition of Canadian companies, had a solid, almost singular, position in that sector. They were known for a prestige and efficiency that laid the foundations for their involvement in various financial and commercial operations in the capital city.

The British-financed insurance sector in Havana, between 1900 and 1930, was represented by a significant number of firms. Outstanding among these, originating from vital British financial centres such as London and Liverpool, were: Alliance Association Co. Ltd.; Atlas Assurance Co. Ltd. of London; British "Lloyds"; Guardian Assurance Co. Ltd. of London; Law Union and Rock Insurance Co. Ltd.; London Assurance Co.; North British and Mercantile Insurance Co. of London and Edinburgh; Norwich Union Fire Insurance Society Ltd.; Phoenix Assurance Co. Ltd. of London; Sun Insurance Office of London; The Liverpool & London & Globe Insurance Co. Ltd.; The London and Lancashire Insurance Co.; The Northern Assurance Co. Ltd. of London; Royal Exchange Assurance Co. of London; Royal Insurance Co. Ltd. of Liverpool and Union Assurance Society Ltd.. A number of Canadian insurance companies were established in the capital also: Confederation Life Association of Toronto; The Crown Life Insurance Co.; The Imperial of Canada; The Manufactures Life Insurance Co. and The Sun Life Assurance Co. of Montreal (del Toro, 2003: 286-287; Directorio de Información General de la República de Cuba, 1918; Guía Directorio de la República de Cuba, 1920; Guía Comercial e Industrial de Cuba, 1926; Directorio de Cuba 1927, 1927).

The British and Canadian insurance companies operating in Havana city offered a diverse range of protection including fire or accident insurance, health and life insurance, renters insurance, car insurance, and maritime and property insurance (Riccardi, 1966: 308-309). In addition, their financial participation extended to any economic-commercial activity happening in Havana within their reach. Throughout the first three decades of the 20th century, the many British and Canadian insurance companies located in Havana were considered among the most powerful and prestigious of all the foreign insurance companies present. Their administrative and financial structure and their mode of operation, which represented the most advanced of contemporary finance capitalism, set the standard, in no small way, for a host of Cuban insurance companies that began emerging around 1905. However, neither an objective understanding nor a complete analysis and evaluation of the private insurance companies controlled by the British and Canadians are possible at this time in large part due to the scarcity of documentation available to researchers. The impossibility, hopefully temporary, to consult the Commercial Registry located in the Cuban National Archive is particularly limiting.

Preliminary conclusions

In Havana from 1900 to 1930, Britain's economic presence was based on a broad range of investments in diverse economic sectors. During the first three decades of the 20th century, British and Canadian capital investments went mainly to four key sectors of the Havana economy: public services - steam and electric locomotives; business infrastructure -warehouses and ports, closely tied to the rail transportation system; finance - private insurance and banks; and non-cane agriculture. British investment, in terms of monetary sums, occupied the first place among all foreign capital invested in the capital from 1901 to around 1915. In the following period, from (1915 to 1930), British investments dropped to second place outdone only by the US - and third place among all the capital, foreign and domestic, invested in Havana.

However, these relatively high figures, especially between 1900 and 1915, do not imply that British capital investments had absolute control over the economic activity occurring in Havana. In fact the British and Canadian capital investments never achieved the preponderant and dominating position in potential sectors of Havana's economic activity that US investments achieved and maintained, due to its magnitude, in the history of national capital - or Hispanic-Cuban capital as it is also called in the revolutionary historiography. This is primarily explained by the fact that, during the period studied, the economic activity in Havana, as well as in the rest of the country, was already heavily influenced by the distorted political and economic-commercial relations imposed by US imperialism and codified in the Platt Amendment and the Reciprocal Trade Agreement of 1902. In this inter-imperialist struggle, US capitalism knew how to subjugate the most important sectors of the Havana bourgeoisie, or convert them into allies restricted by statues of blatant dependence, thus attenuating the influence of British capitalism.

Although British investments were dominant in such important sectors as rail transport and private insurance and had a strong banking presence, via Canadian banks, over the years the competence and strength of US capitalism gradually surpassed the British in control of warehouses, ports and the tobacco industry. This became very evident beginning with WWI, when British investments, and consequently British economic participation in Havana, became stagnant and even contracted significantly. In addition, according to the immediately available information, it appears that British capitalism was not able, or did not attempt, to control or even have a prominent role in other sectors of economic activity. A more in-depth study of British participation in other sectors is merited, in order to develop a more complete view of the scope of British investments.

Notwithstanding, at an early date, British capital investments marked the acceptance of finance and monopolistic capitalism - in this case the British capitalist model - as the paradigm for a developed and civilized contemporary society. Britain's economic presence and invested capital, which surpassed domestic capital generation capacity at the turn of the century, was responsible, in no small way, for building a physical infrastructure which was critical for various service and agricultural export sectors. Equally, those capital investments also contributed greatly to strengthening, or at least maintaining, the decidedly dependent and underdeveloped structure of the economic system that prevailed in Cuba at that time.

Michael Cobiellas García is a researcher in anthropology and Editor-in-Chief at the Fernando Ortiz Foundation in Havana, Cuba.

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Copyright

Copyright for this work is held jointly between Michael Cobiellas and the International Journal of Cuban Studies under a Creative Commons Attribution-NonCommercial-No Derivative 3.0 Licence http://creativecommons.org/licenses/by-nc-nd/3.0/

IJCS Volume 2 Issue 1 June 2009

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