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Cuba had a similar experience. England no longer wanted her Havana cigars but it wanted her sugar as never before. France and Belgium had once raised their own sugar beets, and England had bought considerable sugar from Germany in the pre-War period. To supply these markets, Cuban production jumped from 10% of the annual world supply to 25%. Havana blossomed out as a boom city, its real-estate prices spiraling dizzily. All through eastern Cuba woodcutters cleared thousands of acres of forest. Negroes from Haiti and coolies from China planted sugar cane between blackened tree stumps. To move the sugar crop, American banks opened subsidiaries in Havana, with the Chase National Bank and the National City Bank of New York taking the lead.
U. S. on the Sidelines. For the last 18 months of World War I the U. S. was a combatant and all the effects of the War on domestic economy are often traced to that fact. Actually almost as much economic history was made during the 32 months that the U. S. was a neutral.
Four months after the War broke out the New York stockmarket reopened. At their highs of 1915, machinery and machine equipment company stocks had appreciated 458% over their pre-War level. General Motors stock appreciated 452%. Stocks of steel and iron companies, exclusive of U. S. Steel, rose 293%; chemical concerns, 117%. At the other end of the table, gaining little, were the railroads and utilities, whose price structures were under the supervision of the Government. Tobacco and cigaret manufacturing stock appreciated only 4%.
Meantime in the U. S., as in every manufacturing country, unemployment was rapidly disappearing, for capital and labor flowed into war industries. Immigration dwindled, but U. S. cotton exports to continental Europe dropped from 4,600,000 bales a year to 1,400,000. In 1915 and 1916 thousands of Negroes quit the fields of the South to take jobs in New York City, Chicago, Detroit—and there were jobs for them in the booming war industries.
U. S. farmers outside the South were far from unemployed. Food prices rose even higher than the prices of industrial goods. As more and more wheat lands went out of production in Europe, wheat reached a dizzy $2.33 a bushel, and U. S. farmers borrowed heavily to increase their acreage; the total farm mortgage debt for the U. S. increased from $3,320,470,000 in 1910 to $7,857,700,000 in 1920. And during this same War decade the average value of farm land in the U. S. rose from $39.60 an acre to $69.38.
The war had hardly started when the Allies had to appeal to the House of Morgan for help in financing their huge purchases in the U. S. First, J. P. Morgan & Co. advanced credits of a few millions. Then, when the Wilson administration gave its consent, Allied loans were floated publicly to a total of about $2,500,000,000—mostly through Morgan auspices.