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Rum and Socialism Don’t Mix


by John Martin and Chris Calton from Mises

In 1862, José Arechabala y Aldama arrived in Havana, Cuba at the age of fifteen. At thirty-one, he founded Arechabala Industries, a small distillery in Cárdenas, Cuba, which was then a small but rapidly growing seaport city with a bustling port and budding railroad industry.

In 1888, this city was devastated by a hurricane. Don José’s company suffered $50,000 in damages (roughly $1.3 million in 2015 dollars), but it survived and continued to grow. In 1921, Don José incorporated the company as José Arechabala, S.A., and two years later, he died. His family was driven back to Spain after a series of tragedies (one of his son-in-laws was murdered by kidnappers), and the company was taken over by Don José’s thirty-six-year-old godson Josechu.

Another hurricane hit Cárdenas on September 1, 1933. This time, more than thirty people were killed, and the company suffered $500,000 in damages ($9.25 million in 2015 dollars). As part of the recovery strategy from this massive loss, José Arechabala, S.A. introduced Havana Club Rum. In 1935, this brand of rum was registered with the US Patent & Trademark Office.

In the 1930s, 40s, and 50s, José Arechabala, S.A. was the primary reason Cárdenas remained competitive with Havana. By the 1950s, the company owned sugar refineries, candy manufacturing plants, Cuba’s oldest distillery, and various other plants for emerging technologies, including some that were attempting to replace gasoline with alcohol to power cars.

Then came Fidel Castro.

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