Bacardi and the Long Fight for Cuba

by Gjelten, Tom

  “Well, consider our resources,” he said, in his soft, high-pitched voice. “We have iron, we have nickel, we have manganese, we have cobalt, and we have the Hanabanilla,” a large hydroelectric plant then under construction in Las Villas province. Bosch had long been a proponent of hydroelectric power in Cuba, and he had worked hard in the previous years to promote the dam-building project on the Hanabanilla River. “So we could certainly make steel, and we could even become a high quality producer.”

  It was clearly an idea that appealed to Castro, who had argued often in favor of ending Cuba’s dependence on sugar production. His eyes widened. “Do you think we can produce more than the United States?” he asked.

  Bosch was stunned by the question, for its obvious naïveté and for what it revealed about Castro’s U.S. obsession. “Of course not, Fidel!” he said. “Whatever are you talking about?”

  But Castro was not finished. “Why don’t you help me?” he said. As Cuba’s most respected businessman, Bosch had enormous influence with his fellow industrialists. Labor leaders saw him as an employer who treated his workers fairly and negotiated in good faith with the unions who represented them. Castro was anxious to establish a business-labor coalition in support of his revolutionary project. After taking power, he had mandated wage increases for workers in many industries, but he had also prohibited strikes and work slowdowns, saying that labor and management needed to work together on behalf of his revolution. “You could help me,” he said again to Bosch.

  In the coming years, Bosch related many times the story of his exchange with Castro on the flight to Washington, always recalling that he told Castro he could not help him. “We capitalists are not afraid of labor,” he quoted himself as saying, “but we are afraid of the combination of labor and government. With your system, you are dominating labor, like Batista did. You want to control labor, and you want to control private enterprise. You can’t get help that way. If you want me to help you, you’ll have to allow elections and give the workers their freedom. Then you’ll see how the country can develop.” Bosch claimed that when he uttered the word “freedom,” Castro took off “like an arrow,” and that they spoke no more during the remainder of the trip. Ernesto Betancourt, who was seated next to Bosch and overheard the entire conversation, recalled it later as Bosch described it.

  In a breach of protocol, Castro had not consulted the State Department before applying for his visa to the United States. President Eisenhower snubbed him, leaving town to play golf. Acting Secretary of State Christian Herter, however, hosted a luncheon for Castro and a few dozen invited guests. In remarks at the luncheon, Castro declared that he favored democracy, not Communism, that he would hold free elections, and that he was open to U.S. investment. Pepín Bosch sat in the audience, doubting Castro’s honesty. After his unpleasant conversation on the plane, he decided he did not want to continue on the Castro trip and told other delegation members he was ill and wanted to return to Cuba. First, however, he went to New York to visit the offices of Bacardi Imports, where according to Bosch’s subsequent accounts he advised his old friend Bartolo Estrada, the company president, that he foresaw problems for Cuba and for Bacardi as long as Castro was in charge.

  The tall, bearded rebel leader in rumpled fatigues made a mostly favorable impression wherever he went on his U.S. tour, particularly among the college students he met in New York, Harvard, and Princeton. Passionate and untamed, Fidel electrified his audiences with his eloquence in describing the changes in store for Cuba. The country would not settle for “theoretical democracy,” he said, but was determined instead to establish “real democracy,” with the right to work, to read, and to write, as well as the right to speak and organize. For those who feared Cuba was turning toward radicalism, he said that private property would be protected and that the only nationalizations he foresaw were those of public utility companies. In what appeared to be a criticism of Communism and capitalism alike, Castro advocated a sociopolitical model “that does not forget the rights of man, [that wants] no bread without freedom, no freedom without bread, no dictatorship of one man, one class, one caste.”

  Pepín Bosch by then had concluded that Castro would say anything that suited his immediate political purposes, though he was careful not to make that charge in public. In comments to Cuban reporters following his meetings in Washington, Bosch said he remained confident that U.S. investors would come to Cuba, and he gave Castro credit for inspiring them. “In all candor,” he told the Diario de la Marina newspaper, “it can be said that Dr. Fidel Castro has known how to capture the imagination and the sympathy of the people and the authorities in this capital. His public presentations have been well received, and we should be satisfied and convinced that this visit will serve to tighten the ties of friendship between the two nations.” Fidel Castro’s public works minister, Manolo Ray, had asked Bosch to serve as the unpaid director of the Hanabanilla hydroelectric project, and shortly after his return from Washington he accompanied Ray on an inspection tour. To Bosch’s delight, Castro’s government had increased the budget for the three-year-old project by 50 percent, making its completion a top priority, and Bosch’s review of the dam operation generated considerable press attention.

  Castro’s reform program for Cuba, meanwhile, remained broadly popular. In March the government mandated rent and utility rate reductions, providing an immediate benefit to the urban proletariat. Racial discrimination was abolished, and dozens of hotels, restaurants, nightclubs, and beach resorts were opened for the first time to black Cubans. In May the government announced a new agrarian reform law, under which no person or corporation would be allowed to own more than 995 acres (though exceptions were made for the best cattle ranches and most efficient sugar and rice plantations). Landholdings in excess of that figure were to be expropriated and turned over to landless families, with the former owners compensated in state bonds. A few wealthy Cubans and right-wing commentators grumbled that the new law appeared to be a step in the direction of socialism, but the consensus in favor of the reform was remarkable. The leading conservative newspaper in Cuba, the Diario de la Marina in Havana, endorsed the land redistribution scheme and published a series of articles, complete with photographs, highlighting the wretched conditions under which many farmworkers were living. The Bacardi Rum Company showed its support for the program by donating five tractors to the agrarian reform institute, acting jointly with the Bacardi unions.

  At the Ministry of Finance, Rufo López-Fresquet and his team of young, idealistic economists were crafting a new tax code. The law that emerged from their deliberations in the spring of 1959 favored Cuban firms over foreign companies, manufacturing industries over sugar, and small businesses over large ones. The code was progressive, with the heaviest taxes imposed on old landowning families and inheritances. In the interests of more balanced economic development, the provinces were advantaged over Havana. Personal income tax rates were increased (though they remained moderate by U.S. standards), with heavier penalties for tax evasion. López-Fresquet said the tax code was written both to redistribute existing wealth and to provide incentives for the creation of new wealth, a philosophical approach consistent with what Pepín Bosch himself advocated when he was finance minister a decade earlier.

  By the summer of 1959, Cuba was showing that a major social and economic transformation could be achieved in a country without destroying private enterprise. The change was not painless for the moneyed class; in the first six months after Castro took power, a significant shift of wealth took place in Cuba, with real wages rising by about 15 percent and the incomes of landlords and businessmen declining by a similar amount. Progressive firms like the Bacardi Rum Company cooperated nevertheless. Antonio Jorge, the chief economist under López-Fresquet, would later recall those months as a time of great potential for Cuba. “You had entrepreneurs willing to divest themselves of a sizable portion of their assets and donate them to a revolutionary government in order to promote the economic development
of the nation and cultivate solidarity,” he said in an interview in 2004 in Miami, where he was a Cuban exile teaching economic history. “All the classes were ready to cooperate and make a success of the Cuban revolution. What a historic opportunity for the country! And it was wasted.”

  In the dramatic period after Fidel Castro’s triumphant rise to power, the new governing authorities repeatedly singled out Compañía Ron Bacardi, S.A., as a Cuban firm that could serve as an example of what it meant for a capitalist enterprise to be a revolutionary partner. One of the company’s most important assignments was to be a corporate sponsor of the new government’s propaganda operation. On February 13, the vice president of the CMQ radio and television network, Arturo Chabau, informed the Bacardi marketing team that Fidel Castro wanted CMQ to broadcast a new daily dramatic series called Pathways of Freedom, which would relate the detailed story of the Cuban revolution, from its origins in the Sierra Maestra to the collapse of the Batista regime. Chabau said Bacardi would be the “ideal” commercial sponsor for the TV series “precisely because of the theme and because of how much the company was affected by the overthrown regime. Indeed, it would be hard to find another company in Cuba with more right to sponsor the program.”

  A few months later, the Bacardi Rum Company was asked to support an even more ambitious project. Fidel Castro asked the country’s poor farmers and farmworkers—the guajiro population—to come to Havana on July 26 for a massive rally in support of the revolution and its agrarian reform plans. Housing for the visitors would need to be arranged, and the rally organizing committee asked Bacardi executives to use their print, radio, and television advertising slots to encourage Havana citizens to accommodate people who needed a place to stay. The organizers even enclosed a script they wanted the company to use in its radio and television announcements, and they made clear they anticipated the company’s compliance with their request. “Given the extraordinary cooperation you have given to all the [26th of July] Movement initiatives,” the organizers wrote, “and given the singular importance of this first July 26th [celebration] in liberated Cuba, we expect your rapid, thorough, and decisive collaboration.”

  The decision whether to support Fidel Castro’s revolutionary program or resist it carried huge and inescapable consequences. There could be no case-by-case collaboration; the revolution demanded total loyalty. The practical significance of that reality for Bacardi business operations had gradually become apparent, beginning just a few weeks after Castro’s triumph. The Bacardi unions immediately presented the company management with a new list of demands, asking for a reduction of the work week from forty-eight to forty hours with no cut in pay. In the past, the management could have negotiated with the union leadership on issues like that, but now it would have to consider what the “revolutionary” position would be.

  The all-or-nothing mentality put Cuban liberals in a precarious position. One of the first to complain was a courageous man named Luis Aguilar who wrote a political column in Havana’s Prensa Libre newspaper. As early as March 1959, Aguilar fretted about the “excessive facility with which the term ‘counterrevolutionary’ is flung in every direction, as if it were not quite possible to make a distinction between a poisonous censure and a criticism or dissent which is honest and sincere.” Writing three months later, he described the dilemma facing liberal dissidents in more anguished terms.

  On one side, like a torrent of energy, the Revolution displays its accomplishments and its programs, its dream of justice and its will to heal, and this invigorating force makes the soul thrill with love for Cuba and gives rise to a loyal devotion to duty.

  On the other side, there appear the inevitable negative aspects of every movement, the excesses, ... and one feels the temptation to raise his voice humbly and serenely to warn, advise, or dissent. Ah! But one is immediately reminded that to point out a mistake of the Revolution means to cooperate with the somber legion of enemies who inside and outside of Cuba are planning a sinister revenge.

  Aguilar, a Santiago native close to the Bacardi family, was expressing publicly what many Bacardis were feeling privately. Despite their concerns about Fidel Castro and his dictatorial governing style, despite their displeasure over the summary executions and the increasingly harsh anti-American rhetoric, the Bacardis for the most part kept quiet, not wanting to be portrayed as enemies of the revolution. In July the company agreed to use its advertising to promote the guajiro rally in Havana, precisely as it had been asked to do. “Embrace for history,” read one newspaper ad taken out by the company:On this July 26th of freedom and happiness, the Cubans of the capital open their arms in a fraternal embrace of their brothers from the countryside. Hatuey and Bacardi enthusiastically support this embrace of our history by our present. May this bringing together of our people assure a future of happiness for the nation.

  Fidel Castro played a cynical game with many Cuban employers, tacitly encouraging them to believe that a collaborative attitude on their part would make it less likely that the revolutionary government would move toward socialism. He once joked with an interviewer about all the bankers and businessmen who had come to see him in the first days after his triumph, eager to show they were ready to cooperate with the revolution. “I said to myself, ‘Let them think as they please. The more they believe they can count on us, the more they will be surprised,’” Castro recalled.

  By the summer of 1959, while still emphatically denying he was a Communist, Castro had begun to attack those who were raising alarms about Communist influence in his government. When President Manuel Urrutia told a television interviewer in mid-July that “the Communists are inflicting terrible harm on Cuba,” Castro reacted furiously. In a carefully staged move, he announced he was resigning his position as prime minister, and he blasted Urrutia mercilessly in a four-hour televised speech, saying he was fabricating a Communist threat in Cuba in order to invite the United States to intervene against the revolution. Castro, who just six months earlier had promised to “surrender” his authority to Urrutia, now claimed that the president was frustrating genuine revolutionaries with his refusal to support their initiatives.

  The dramatic resignation speech was pure political theater; Castro had no intention of giving up power. Upon hearing his denunciation of Urrutia, thousands of angry Cubans descended on the presidential palace, just as Castro knew they would, demanding Urrutia’s ouster. Within hours, the president had submitted his resignation and taken refuge in a friend’s house, fearful of arrest or even execution. But Castro was not yet satisfied. Whether he would himself continue in power, he said, was a decision for the “Cuban people,” by which he meant those who would appear at the big rally on July 26. It was only then, to the crowd’s roaring approval, that Castro announced he would accept “the will of the people” and remain prime minister. “This is real democracy!” he shouted, waving his arms. As with the proexecution rally six months earlier, Castro had shown that he did not need elections to consolidate power; he could strengthen his position and destroy his enemies by mobilizing crowds. It was a practice Castro shared with dictators everywhere.

  To many observers, however, the mass demonstrations in Cuba were qualitatively different from the fascist rallies seen in Franco’s Spain, Mussolini’s Italy, or Hitler’s Germany. In Cuba, they were happy, partying affairs where mothers brought their babies and people laughed and sang, including a paean to Castro, “With Fidel, with Fidel, always with Fidel,” sung to the tune of “Jingle Bells.” Castro was unquestionably a tyrant, determined to eliminate all dissent and impose absolute rule, but he and his allies were also making efforts to curb corruption and improve the lives of ordinary people. The Havana municipal administration, for example, built thirty-eight new school complexes in 1959 for the same amount of money that had been paid out in bribes a year earlier.

  Even those Cubans who were upset by Castro’s authoritarianism and leftist ideas retained some faith that the trends would not last. An article on the “sputtering” Cuban econo
my published in the Wall Street Journal in July 1959 cited “a school of thought ... that maintains that if the economy gets into grave trouble, Mr. Castro will adopt more moderate economic policies in an effort to prevent total collapse.” Within the Bacardi family, no one saw any reason for panic. As worrisome as the political situation may have been, business prospects were bright. Pepín Bosch told a television interviewer that Hatuey beer was enjoying its best sales since 1952.

  In March 1959, a director of the Seagram liquor empire, Noah Torno, visited Bosch at the Bacardi offices in Havana, hoping to interest him in a business consolidation. As Bosch explained later in a letter to Daniel Bacardi in Santiago, Torno came with various ideas for a Bacardi-Seagram collaboration in the rum business, suggesting that Seagram purchase 30 percent of the Bacardi rum interests in Puerto Rico. When Bosch told him no portion of the Bacardi operation in Puerto Rico was for sale, Torno suggested the two companies jointly purchase the Merino rum company in Brazil, or the Serralles distillery in Puerto Rico. Each time, Bosch said no. “I told him we work exclusively for our Bacardi shareholders,” Bosch wrote Daniel. “We finished on friendly terms, though he kept repeating his desire for a merger with us that would give us control of three quarters of all rum sales in the world. But I explained that we didn’t want to join with any other company and that our shareholders didn’t want to sell any portion of their stock.” After their meeting, Bosch escorted his Seagram suitor to the nearby Floridita bar and treated him to a Hemingway daiquiri, prepared with white Bacardi rum. “He said our product was a wonder,” Bosch wrote Daniel. “I then gave him a glass of 73 [the Bacardi premium aged rum] to taste, and he told me it was the best rum he had ever tasted. We parted as good friends.”