The Sugar King of Havana
AUGUST 3, 2010
A Master of Sweet Deals
In 1934, with the world in the throes of the Depression, an enterprising trader brought the New York sugar market to its knees, orchestrating what he later described as "the only perfect squeeze that was ever pulled."
Julio Lobo, the Venezuela-born Cuban citizen who engineered the coup from his Wall Street office, had already gained notice in trading circles after closing the largest single sale of sugar in the previous decade. The New York squeeze placed him in a different league. Lobo rightly estimated that a new U.S. quota capping imports of Cuban sugar would keep the American domestic supply in check and support rising prices. His gambit paid off, forcing investors who bet that prices would drop to buy into a fast-rising market to cover their positions.
When Lobo was done, the magnitude of the paper losses incurred—in the billions in today's dollars—by major investors of the era, including a consortium led by John D. Rockefeller, prompted the U.S. government to take action. Trading was suspended, and the president of the New York exchange resigned. Senate hearings followed. In the end, U.S. investors were allowed to purchase sugar at a fixed price that protected their interests. Still, the squeeze showed that Cuban traders could play the market as well as any sophisticated investor.
Lobo was in his mid-30s at the time and well on his way to earning the title Sugar King. For the next three decades he more than lived up to the nickname, becoming one of the most vivid characters in Cuba during an over-the-top era. This great and forgotten business figure has at last been rescued by John Paul Rathbone in "The Sugar King of Havana," an entertaining biography that is also a portrait of Cuba between the island's independence in the late 19th century and Fidel Castro's march into Havana in January 1959.
At the height of his reign, Lobo controlled about half of Cuba's sugar sales to the U.S., half of Puerto Rico's and about 60% of the sugar sold by the Philippines. By the 1950s he was the richest man in Cuba, a position he held until Castro nationalized his holdings in 1960, forcing him into exile.
Lobo's activities were not confined to the world of business. He was a philanthropist who improved the living conditions of the workers at his mills. He found time to become a collector of Napoleonic artifacts. And then there were his brushes with death—in 1933, during a period of political unrest, he was spared from a firing squad, and in 1944 he survived an assassination attempt.
As his fortune and reputation grew, movie stars such as Joan Fontaine and Bette Davis found their way to his side, inspiring tales in keeping with the anything-goes, gilded-age atmosphere of pre-Castro Cuba. When Lobo was expecting a visit at one of his estates from Esther Williams—the star of MGM's aquatic-themed movies—he had the swimming pool filled with perfume.
The years of Lobo's rise roughly parallels the brief, but critical period when Cuba experienced its birth pangs as a nation. The period is often cast along narrow ideological lines. For those who believe that Castro's revolution brought the island a sense of national dignity and independence, the era of the republic is defined by savage capitalism and the abuse of power. Critics of Castro's regime, by contrast, note that during the republic many Cubans enjoyed the best living standards in the region. Mr. Rathbone shows us a Cuba that is developing its contradictions, so to speak—a place with a vibrant business class and cultural life and a tumultuous political class that fails to develop the institutions of a strong civil society. ("A tumultuous political class"? You mean a corrupt degenerate political class?? ... kinda like has evolved in America's today? LM)
Most of all, of course, "The Sugar King of Havana" is the portrait of a remarkable man and outsize tycoon. Mr. Rathbone, the Latin American editor for the Financial Times, dives into Lobo's life through letters, documents and interviews with family members, business associates and friends. He also brings his own family's history into the story—Mr. Rathbone is the son of a Cuban exile who, back home, had moved in the haute bourgeois circles frequented by the Lobo family.
Cuba's fate was mainly dependent on sugar at the time of Lobo's birth in 1898, and sugar continued to dominate the island's economy well after his exile. Though not an heir to a sugar fortune, Lobo was born into privilege, the son of a Venezuelan banker of Sephardic Jewish roots. He was sent to the best schools in Cuba and at age 16 enrolled at Columbia University in New York. A career in law seemed in the cards, but a year later he transferred to Louisiana State University to become what he called "a sugar expert." Twenty years later a Havana newspaper dubbed him "The New Sugar Magus."
As one of the leading figures in the sugar industry, Lobo came into contact with almost every major player in Cuban politics and finance. He also crossed paths with the revolutionaries who would eventually take over his business and demonize his class. He somehow managed to thrive with people of different classes and political orientations. As Mr. Rathbone shows, he had a direct personal manner, a strong work ethic and of course a shrewd business sense. He belonged to a commercial class that believed they could make Cuba great through wealth-creation. Even during labor conflicts, union leaders would acknowledge that Lobo had created the best working conditions in the country.
Even the new revolutionary regime, when it finally arrived, recognized Lobo's skills. Mr. Rathbone describes a meeting between Lobo and Ernesto "Che" Guevara, then president of Cuba's central bank. Guevara praises the transparency of Lobo's accounts and asks him to stay in Cuba to run the country's sugar operations. Lobo declines and goes into exile soon after Castro nationalized the sugar industry.
Lobo moved to Spain with very little money, thinking, as many exiles did, that Castro would not last long. He spent the rest of his life in Madrid, living off the sale of some of the Napoleonic artifacts his family was able to get out of Cuba and contributions from his daughters. He died in 1983.
Mr. Kaplan is an editor at Dow Jones
Newswires.
Printed in The Wall Street Journal
AUGUST 3, 2010
A Master of Sweet Deals
In 1934, with the world in the throes of the Depression, an enterprising trader brought the New York sugar market to its knees, orchestrating what he later described as "the only perfect squeeze that was ever pulled."
Julio Lobo, the Venezuela-born Cuban citizen who engineered the coup from his Wall Street office, had already gained notice in trading circles after closing the largest single sale of sugar in the previous decade. The New York squeeze placed him in a different league. Lobo rightly estimated that a new U.S. quota capping imports of Cuban sugar would keep the American domestic supply in check and support rising prices. His gambit paid off, forcing investors who bet that prices would drop to buy into a fast-rising market to cover their positions.
When Lobo was done, the magnitude of the paper losses incurred—in the billions in today's dollars—by major investors of the era, including a consortium led by John D. Rockefeller, prompted the U.S. government to take action. Trading was suspended, and the president of the New York exchange resigned. Senate hearings followed. In the end, U.S. investors were allowed to purchase sugar at a fixed price that protected their interests. Still, the squeeze showed that Cuban traders could play the market as well as any sophisticated investor.
Lobo was in his mid-30s at the time and well on his way to earning the title Sugar King. For the next three decades he more than lived up to the nickname, becoming one of the most vivid characters in Cuba during an over-the-top era. This great and forgotten business figure has at last been rescued by John Paul Rathbone in "The Sugar King of Havana," an entertaining biography that is also a portrait of Cuba between the island's independence in the late 19th century and Fidel Castro's march into Havana in January 1959.
At the height of his reign, Lobo controlled about half of Cuba's sugar sales to the U.S., half of Puerto Rico's and about 60% of the sugar sold by the Philippines. By the 1950s he was the richest man in Cuba, a position he held until Castro nationalized his holdings in 1960, forcing him into exile.
Lobo's activities were not confined to the world of business. He was a philanthropist who improved the living conditions of the workers at his mills. He found time to become a collector of Napoleonic artifacts. And then there were his brushes with death—in 1933, during a period of political unrest, he was spared from a firing squad, and in 1944 he survived an assassination attempt.
As his fortune and reputation grew, movie stars such as Joan Fontaine and Bette Davis found their way to his side, inspiring tales in keeping with the anything-goes, gilded-age atmosphere of pre-Castro Cuba. When Lobo was expecting a visit at one of his estates from Esther Williams—the star of MGM's aquatic-themed movies—he had the swimming pool filled with perfume.
The years of Lobo's rise roughly parallels the brief, but critical period when Cuba experienced its birth pangs as a nation. The period is often cast along narrow ideological lines. For those who believe that Castro's revolution brought the island a sense of national dignity and independence, the era of the republic is defined by savage capitalism and the abuse of power. Critics of Castro's regime, by contrast, note that during the republic many Cubans enjoyed the best living standards in the region. Mr. Rathbone shows us a Cuba that is developing its contradictions, so to speak—a place with a vibrant business class and cultural life and a tumultuous political class that fails to develop the institutions of a strong civil society. ("A tumultuous political class"? You mean a corrupt degenerate political class?? ... kinda like has evolved in America's today? LM)
Most of all, of course, "The Sugar King of Havana" is the portrait of a remarkable man and outsize tycoon. Mr. Rathbone, the Latin American editor for the Financial Times, dives into Lobo's life through letters, documents and interviews with family members, business associates and friends. He also brings his own family's history into the story—Mr. Rathbone is the son of a Cuban exile who, back home, had moved in the haute bourgeois circles frequented by the Lobo family.
Cuba's fate was mainly dependent on sugar at the time of Lobo's birth in 1898, and sugar continued to dominate the island's economy well after his exile. Though not an heir to a sugar fortune, Lobo was born into privilege, the son of a Venezuelan banker of Sephardic Jewish roots. He was sent to the best schools in Cuba and at age 16 enrolled at Columbia University in New York. A career in law seemed in the cards, but a year later he transferred to Louisiana State University to become what he called "a sugar expert." Twenty years later a Havana newspaper dubbed him "The New Sugar Magus."
As one of the leading figures in the sugar industry, Lobo came into contact with almost every major player in Cuban politics and finance. He also crossed paths with the revolutionaries who would eventually take over his business and demonize his class. He somehow managed to thrive with people of different classes and political orientations. As Mr. Rathbone shows, he had a direct personal manner, a strong work ethic and of course a shrewd business sense. He belonged to a commercial class that believed they could make Cuba great through wealth-creation. Even during labor conflicts, union leaders would acknowledge that Lobo had created the best working conditions in the country.
Even the new revolutionary regime, when it finally arrived, recognized Lobo's skills. Mr. Rathbone describes a meeting between Lobo and Ernesto "Che" Guevara, then president of Cuba's central bank. Guevara praises the transparency of Lobo's accounts and asks him to stay in Cuba to run the country's sugar operations. Lobo declines and goes into exile soon after Castro nationalized the sugar industry.
Lobo moved to Spain with very little money, thinking, as many exiles did, that Castro would not last long. He spent the rest of his life in Madrid, living off the sale of some of the Napoleonic artifacts his family was able to get out of Cuba and contributions from his daughters. He died in 1983.
Mr. Kaplan is an editor at Dow Jones
Newswires.
Printed in The Wall Street Journal
