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Cuba Co. - Railroad, Sugar and other Subsidiaries - Stock Certificate

Inv# FS2159   Stock
Cuba Co. - Railroad, Sugar and other Subsidiaries - Stock Certificate
Country: Cuba
Years: 1900's-1945

Stock printed by American Bank Note Company, New York. Most have papers attached and revenue stamps on back.

In 1898, the development of Cuba was basically in the western portion of the island in the provinces of Matanzas, Havana and Pinar del Rio.  The then existing railroads, the majority of which were British owned, extended eastward only to Santa Clara, less than half the length of the island, about 180 miles east of Havana.  East of Santa Clara laid approximately 70% of the total area of the island.  The Cuba Company was incorporated to participate in the post-war reconstruction effort by building a 350 mile central railroad from Santa Clara to Santiago de Cuba at the easternmost tip of the island.

Sir William Cornelius Van Horne claims the idea of the Cuba Company for himself, although acknowledging that there were several groups and individuals interested in building a central railroad through Cuba.  Some sources indicate that the idea and formation of the Cuba Company emerged in the fall of 1899 at a banquet in New York City given in honor of Van Horne.  Present at the banquet were all the leading financial, manufacturing, and railroad barons of the times, many of whom represented the wealthiest and most powerful men and families in the United States at the turn of the century, most of whom became incorporators and original stockholders in the Cuba Company.

The Cuba Company was incorporated in New Jersey on April 25, 1900.   It issued only 160 shares which were mainly held by US railroad interests.  Major stockholders read like a Who’s Who directory of that era and included William Cornelius Van Horne (1843-1915), former president of the Canadian Pacific Railroad; Levi P. Morton, president of Morton Trust Co. and former governor of NY; Maj. Gen. Greenville M. Dodge & E. H. Herman, of the Union Pacific Railroad; William Rufus Day, US Secretary of State & Supreme Court Justice; Henry M. Flagler, Standard Oil president and Florida railroad builder; John William McKay, president of Commercial Cable Co.; James Jerome Hill, CEO of Great Northern Railway; Edward Henry Harriman, Chairman of the Union Pacific Railroad; Henry G. & William C. Whitney, Thomas F. Ryan, P. A. B. Widener & W. L. Elkins of the American Tobacco Co.; Edward Julius Berwind, coal magnate; Henry Walters, chairman of Atlantic Coast Railroad; Charles D. Barney, founder of the Smith Barney investment firm; Thomas Fortune Ryan, of the Seaboard Air Line Railroad; T. Sanford Beatty and Harry Terry.

The Cuba Company was the largest single foreign investment in Cuba during the first two decades of the twentieth century and remained one of the island's largest corporations.  The Cuba Company's operating subsidiaries always maintained an important number of Cuban executives and stockholders.  Van Horne believed that native Cuban management could best operate the company in the context of the nationalist Cuban culture and economy.  He also believed that Cuban stock ownership of subsidiary companies was an important element in the company's success.  In the early 1920s, this Cuban management and stockholder participation resulted in the merging of the Cuba Company's railroads with Jose Tarafa's Cuban-owned Cuba Northern Railroad, the exclusion of the British-owned United Railways of Havana from the merger, and an extremely favorable law for Cuban railroads.  

The Cuba Company first interest in acquiring a sugar mill was Manuel Rionda's Tiunucú, however, this did not happen.  It then issued $4 million in bonds to finance the construction of two new sugar mills of its own;

  • Jatibonico in Camagüey which began production in 1906
  • Jobado in the Oriente Province built in 1909

Both mills were built with the latest sugar production machinery and engineering innovations.  Combined they had total sugar production capacity of 1 million bags or 164,000 mt of sugar annualy.  At their inception, both were among the largest and most profitable mills in Cuba.  The success of the two help promote the sugar industry in Eastern Cuba and thus Cuba Company's railroad.  The company's promotional efforts of its railroad and the development of the sugar industry in Eastern Cuba was successfull with sixteen new sugar mills built in Eastern Cuba between 1902 and 1910.

The Great Depression and the financial struggles of the sugar industry during the early 1930s resulted in the Cuba Company's gradual demise. The Cuba Company only source of income was dividends from its subsidiary railroad and sugar operations.  The subsidiary railroad operations were in turn completely dependent on the sugar industry for revenues.  The sugar subsidiary was dependent on world sugar prices.  The Cuba Company’s financial well being, therefore, completely depended on the eastern Cuba sugar industry.  The depression caused major losses in  the sugar industry which resulted in the failure of everything that depended on it.

The February 12, 1938 edition of the New York Times published an article which stated that on February 11, 1938 the Cuba Company had filed for reorganization protection under Section 77b of the Bankruptcy Act.  In the filing, the company listed assets of $18.9 million with direct liabilities of $7 million and contingent liabilities of $7 million.  Assets included investment in stock of the Consolidated Railroads of Cuba which in turn owned all of the capital stock of the Cuba Railroad Co. and the Cuba Northern Railways Co.  It also owned the Compañia Cubana which owned and operated the Jatibonico and Jobado sugar mills. (From jaimemontilla.com)

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Condition: Good

A stock certificate is issued by businesses, usually companies. A stock is part of the permanent finance of a business. Normally, they are never repaid, and the investor can recover his/her money only by selling to another investor. Most stocks, or also called shares, earn dividends, at the business's discretion, depending on how well it has traded. A stockholder or shareholder is a part-owner of the business that issued the stock certificates.

Item ordered may not be exact piece shown. All original and authentic.
Price: $50.00