@ HD 3100.4 vee Cornell University Library HD 9100.4.A51C gar market, January- Wii i The American SugarRefining Company Conditions in the Sugar Market January-October 1917 Conditions in the Sugar Market January-October 1917 DIRECTORS CHARLES HH, ALLEN wscausiaa vcore utiawled ineetieaans Lowell EDWIN E ATKINS 3iev20s2xsans cow moaonaiinawd mies Boston BART: 1). BABS os. 204. 5d deena aan ieee See New York SAUMIUB IG CAR Ric tera ss sasha tps heracsentte Ge ilies ghana euamneeesares Boston JAMES H. DOUGLAS........ cece cece ene eens Chicago GEORGE H. FRAZIER.............. cece eee eee Philadelphia BOWEN S. MARS TON iaecs cisions nee matuer ores New York SAMUEL McROBERTS......... 0000 :c ec eeeee eens New York NATHAN C. KINGSBURY .......... 0.0.0 cee cease New York PHILIP: STOCKTON sw decctecieceaiaiereseeenaees Boston WASHINGTON B. THOMAG............. 000: eeee Boston AL BERD cH WIGGIN scceanrcnevare sectarian eae < New York EXECUTIVE COMMITTEE EARL D. BABST SAMUEL McROBERTS GEORGE H. FRAZIER WASHINGTON B. THOMAS EDWIN S. MARSTON ALBERT H. WIGGIN EXECUTIVE OFFICERS BARE: 1: BABSE. | gakusiuiinc ie eles ena a eeeaee President WASHINGTON B. THOMAS..............--- Vice-President GEORGE H. FRAZIER..........cc cece eee e eens Vice-President ROBERT M. PARKER....... 0.0.00: cece ee eees Vice-President W. EDWARD FOSTER cscs awicaiexsns carseat Treasurer JG@SErH B PREEMAN « oc iisxnnenqunwaeeneewseaks Secretary ARTHUR B. WOLLAM.........-..-0 000 cece eens Comptroller GENERAL OFFICES 117 Wall Street, New York City The following pages, prepared by Joseph E. Freeman, Esq., Secretary of The American Sugar Refining Company, contain an outline of the factors which have contributed to the present conditions in the sugar market both at home and abroad. They also contain a brief history of the efforts made by The American Sugar Refining Company to meet the extraordinary conditions which have existed in the domestic market during the present year. In view of the importance of all questions relating to food at the present time and particularly to sugar, one of the great preservatives of food, it is believed that these facts will be of general interest. A portion of the data presented is taken from a memo- randum which accompanied a letter of June 26th, 1917, from the Company to the United States Senate Finance Committee protesting against the recommendation of the Committee that the drawback on sugar be repealed. Certain charts and diagrams are also reprinted from the last Annual Report of the Company. New York City October 31, 1917 CONTENTS The World’s Sugar Supply Table of World’s Production—Cane and Beet...........cccceececeeceececeecenes es Showing Production of Europe........ccccecceececcceeceneeenecteceenees ee , Sonsumption of Europe and Surplus Available for Effect of the War Frgland’s. Sugar Supplyscccacc sca ate ote cies dine dan de eels vasa weenie ae Exports from Cuba...........: cece ee ceeee tenet ene e tree eee tee eee enn n ene e en ees Conditions Affecting the Market First Half 10917 Strikes at Eastern Refineries...........c0cceccecc cece eee neta eee eee eenteennees “Sugar Famine” Stories in Newspapers..........eccececcecsece cece eeseeesennees United States: Beet Sugar Supply: sisceans ce sw aioe te cesaged eens Seawiex g bento ee Cuban: Insurrection ses ss caces ss. s cence 5 4 RUNES 8 SENS Yea SORE Se alge EE Efforts of The American Sugar Refining Company to Meet the Situation Advertising Campaign and Public Statements..............0seeeseseee eee eee eee Prices, Deliveries and SaleSiccicsaccuece sae peeeaes oes owed es Besa EEE Nees wee Ee Ee Increased Consumption in the United States. .....ccccccccccccccceeceaceneneneessaees Action of the Senate Finance Committee........ccccceceececceeeevetnenceneenseneans Government Supervision... ccccccccccccccccncevecnenecnecesesenee eset eeenaceaceesees SS WTI GLY estas tacia o, etivoinehtet ae. Rxedasarelevere.4 Gee Aci ack Suennsalahied Hib Dibinraia, No B Tasets REDS A ROARS ES Chronology of “Sugar Famine” Stories..........0005 SS eecGN Sia Waiile eco Re Sad Advertisement in Boston and Other Papers........ccceveueeues eae tore Advertisement in New York City and Other Papers.........ccccccenveeceeneneeenees Statement to: the Press. isso sisscteiis's se siecle v6 s4ea G0 TR en Ee eM ees Proposed Drawback Repeal Letter of Refiners to Senate Finance Committee, June 6, 1917............00ceeeees Letter of Refiners to the Congress of the United States, August 21, 1917.......... Articles from The American Sugar Bulletin............ 0... cc eeeceeeeeeceneneees Statements in Regard to Plans of the United States Food Administration Statement of Mr. Babst of September 28, 1917.......... ccc cceccc cence eeeetereeee Statements of the United States Food Administration September 30; 1917 siccasie< sccajectances 444 evs 6 44SRSSMT ER YSERA eb eeaO eee OCtobet- LO) TOI 2 aes. sass rests ok ars Syandonce ale ooas (orwots ayer ace hao us uacbuseas Oe eonisietaie: C'aGobuenmiasene dipecs Agreement with Food Administration Letter from Food Administrator to A. S. R. Cow... ec. cece cece cece ce eeecnneeees Charts and Maps Map Showing Location of European Beet Sugar Factories...............00eee0: Movement of Sugar from U. S. to Europe..........cccceccs cence ceeceeevescers Prices of The A. S. R. Co. and its Competitors............ccsceseeeeenn eee e eens Increases in Prices of Raw and Refined Sugar.............seeeeseeeeeeceeneenes Proportion of Annual Sugar Consumption in U. S. Supplied by The A. S. R. Co. and:. Other’ Sources. cecisicedc sanaaccc 02 SANS sac 2: cae areeagi.s ores etre tiee-a bs deediracatees see Comparison of U. S. Sugar Prices with Foreign Countries..................0005 Market Quotations—Raw_ and Refined—1916..........--.sseeeeeeeeeeeeeeeeeneens Market Quotations for Years 1913-1916........ 0. cece eee e cece eee e eect eee ences CONDITIONS IN THE SUGAR MARKET No understanding of the present situation in the sugar market can be obtained without reference to the conditions prevailing through- out the world and the factors which have affected the world’s sugar supply due to the outbreak of the European war. Much of this information is contained in the published report of the President of this Company for the year 1916. Since January 1, 1917, other factors have had an influence on the sugar market, and particularly the labor troubles in many of the Eastern refineries, the insurrection in Cuba, the shortage in the domestic beet crop, the stories of “sugar shortage” and “sugar famine” which have been published in many of the newspapers of the country, the increased consumption in the United States, the recom- mendation of the Senate Finance Committee that the drawback on sugar be repealed and the plans of the United States Food Admin- istration for supervision of the sugar industry. The American Sugar Refining Company believes that in this crisis it has fulfilled its obligations to the consumers of America as well as to our allies and has rendered a national service. For the purpose of stating the subject clearly the following mat- ters will be discussed: I—The world’s sugar supply I1—The effect of the War II1I—Conditions affecting the market the first half of the year (a) Strikes in Eastern refineries (b) “Sugar famine” stories (c) U.S. Beet Sugar Supply (d) Cuban insurrection 6 CONDITIONS IN THE SUGAR MARKET IV—Efforts of The American Sugar Refining Company to meet the situation (a) Advertising campaign advising the public that there were then ample supplies of raw and refined sugar on hand and in transit (b) Public statements of the Company’s President as to the supply of sugar and advising against hoarding (c) Selling of its product at from one-half to one cent per pound less than various competitors. (d) Deliveries by the Company, in spite of strikes, car shortage and other difficulties, of its normal supply from January to September (e) Sale of its capacity daily to the trade which it has dis- tributed widely throughout the year among purchasers to prevent speculation and hoarding V—Increased Consumption in the United States VI—Action of the Senate Finance Committee in recommending the repeal of the drawback VII—The passage of the Food Control Bill and the plans of the Food Administration for supervision of the sugar industry. I The World’s Sugar Supply With the exception of very small quantities of maple sugar, the world’s sugar supply is obtained from two sources, the sugar cane and the sugar beet. Sugar cane is the product of warm climates and is grown almost entirely in the tropics, the principal sources of supply for the United States being Cuba, Porto Rico, Hawaii, the Philippine CONDITIONS IN THE SUGAR MARKET 7 Islands, St. Croix, and Louisiana. Beet sugar, on the other hand, is produced in temperate climates, and, with the exception of the produc- tion in the United States and Canada is made on the Continent of Europe. In the pages following there is printed a table taken from the Weekly Statistical Sugar Trade Journal of Willett & Gray, giving the sugar crops of the world. It will be noted that while there has been a serious loss in the European beet sugar produc- tion, the cane production of the Western Hemisphere has increased considerably in the last two years, and the increase would have been much larger for 1916-17 had not the crop in Argentine shown a very large decline and the Cuban insurrection cut down that island’s production. The following table gives the world’s production during the past five years, showing the proportionate production of beet and cane. The long ton of 2,240 pounds is used in all Tables and unless other- wise stated the figures used are those of Willett & Gray. Year Cane Beet Total VOI21S 3 ike hee nes 9,232,543 8,976,271 18,208,814 1913-143 wnccwaseieces x 9,892,057 8,846,269 18,738,326 1914-15.. nowisoweeeanuds 10,288,656 8,243,451 18,532,107 1915-16 ese ote eee ees 10,675,557 5,875,157 16,550,714 WQIGH cols cs ees 11,233,294 5,302,484 16,535,778 est.) It will be seen that whereas prior to the war the world’s supply was divided almost equally between beet and cane, the beet production has declined since the outbreak of the war approxi- mately 3,500,000 tons, or 3714%. Although the production of cane sugar has increased about 1,300,000 tons, or 12%, the world’s total production has decreased over 2,000,000 tons, or 11%. The serious reduction in beet sugar will be best understood from a brief outline of the production and sources of supply of the various countries now at war. ‘The following table shows the production of beet sugar in European countries during the past four years: 8 CONDITIONS IN THE SUGAR MARKET (latest estimate) 1913-14 1914-16 1915-16 1916-17 Germany ........... 2,720,000 2,500,000 1,400,000 1,350,000 Austria-Hungary .... 1,703,000 1,602,315 1,011,400 900,000 France ..........00. 805,000 302,961 135,899 181,385 Belgium ............ 229,049 204,697 113,097 133,210 Holland ............ 230,000 302,458 242,753 260,000 RuS8ta. iechvncss stances 1,687,799 1,992,776 1,467,096 1,158,920 Others: case e eg 804,165 678,008 707,515 571,892 8,179,013 7,583,215 5,077,760 4,555,407 (The countries under “others” include Sweden, Italy, Spain, Switzerland, Roumania, Bulgaria and Denmark, some of which are now included among the belligerents. ) While the figures for 1916-17 are estimates the only available reports indicate that Germany and Austria are now producing slightly more than one-half, France about one-fifth and Belgium somewhat more than one-half of their production of four years ago. The following table shows the estimated consumption in each of the principal belligerent countries and its surplus available for export under normal conditions before the war: Surplus Available Consumption for Export Gérinany .acisawiiviwwerebiiwe sens 1,500,000 tons 1,200,000 tons AUistita sind Sesadattinanonescereae Ne 675,000 “ 1,200,000 “ France: ascend eke dee ke eter 725,000 “ 200,000 “ Belt Gin ose ss! secs ess ene ectacse Gog erase ngs 105,000 “ 150,000 “ RUSS ass Arete orca ton 1,400,000 “ 200,000 “ 4,405,000 tons 2,950,000 tons II The Effect of the War It is apparent from this last table that the countries named would under normal conditions produce annually nearly 3,000,000 tons —the equivalent of the entire Cuban crop—in excess of their requirements, which would be available for export to foreign markets. Before the war the largest consumer of this surplus was the United Kingdom, with an annual consumption of 1,900,000 tons. In SINT] F1LLIVG NIHLIM qaonaoud Sv UVM SHL 3x0438 NOLLINGOY S,01WOM 40 GYIH{-3NQ LWHL G3LWWILSy Q|6| 40 S019 Ly SANIT] FULbg OSTYy-SSIwOL9V-4 YVING 134qQ NwadOsNy 40 NOLLWIO7 SNIMOHS dvw 10 CONDITIONS IN THE SUGAR MARKET the last pre-war year England imported over 1,250,000 tons from Ger- many and Austria, about half of which was refined, as the British refineries do not average more than 800,000 tons out-turn annually. The United States buys practically no sugar from Europe. Its sources of supply for the years 1915 and 1916 are shown by the follow- ing recapitulation, giving the figures in long tons. IQT5 1916 (Ciba Seats ey Rese Bd Ae ease Stine ely i eae ee ross Ga 1,841,602 1,666,548 HaWwall | cntvesveter Met eav Geena eowar eeaeeeues ta 509,263 533,969 Porto Rico! es. acs wise VES ees EAA ORES 300,310 392,733 Louisiana, Texas and Arizona...............000005 224,768 224,978 Philippine Islands ........ 0... ccc cece cece eee eees 120,202 111,182 United. States. Beet s.cccci hse s ese aaess eae e sd 769,257 700,256 Various Sugars, Including Foreign Refined, U. S. Maple). €t@. 20... cecnaxce pongo seas bwtne eel 36,129 28,941 Total Consumption in United States ....... 3,801,531 3,658,607 From this it will be seen that Cuba supplied about one-half of the sugar for this country. The immediate effect of the declaration of war was to cut off from the world’s market the sugar supply of the Central Powers. More than one-third of the world’s total production formerly came from within the present battle lines of Europe, and the Western battle line now passes through the sugar producing territory of France and Belgium. The most serious effect of this interruption to the supply was first felt in England. The British Isles produce practically no sugar. More than two-thirds of their supply came from Germany and Austria and ceased on declaration of the war and any possible supplies from Russia, France and Belgium were unavailable. With her customary sources of supply withdrawn, England was confronted with a serious condition and was forced to turn to other markets for her supply. Raw sugar was secured in any country having it to offer. Refined sugar was purchased in large quantities from the United States. In order to meet this extraordinary condition, the British Government in September, 1914, created the Royal Com- mission on Sugar Supply, in whose hands has since been placed 11 916|—ad0any AGNV SALVLS GALIN(FQ) AHL OL VEND WOU ANY ad0uny OL SALVLS GALINA) AHL WOYS YVONS AO LNAWSAAOW ONIMOHS LYVHD 12 CONDITIONS IN THE SUGAR MARKET the entire purchase of sugar for Great Britain, France and Italy. The following table from the “International Sugar Journal” shows in long tons the quantities of sugar imported into the United Kingdom from the principal cane sugar producing countries for several years prior to the war and since its commencement: Country 1911 1912 1918 1914 1915 1916 Cuba scseesesevawees 3,848 86,643 224,227 261,867 359,746 553,565 Java. sseeesis eee 166,866 182,544 99 405,216 398,713 383,743 Philippines .......... 3,645 4,487 ...... 2,720 6,038 68,198 POT sears aaa 27,176 62,194 27,487 46,543 31,440 50,602 Mauritius ........... 55,548 28,865 20,075 69,620 191,785 108,798 U.S. A. (Refined)... ......00 0. een caw eens 107,039 188,746 267,681 Dotal.’ ccimweess 257,083 364,733 271,888 893,005 1,176,468 1,432,587 It will be seen that in five years previous to January 1, 1917, the imports into Great Britain from Cuba increased approximately 550,000 tons. From other statistics it appears that last year Cuba exported to Europe 730,000 tons, or approximately one-fourth of her entire crop. As appears in the chart showing the movement of sugar from the United States to Europe, the United States last year ex- ported to Europe 703,880 tons of refined sugar. So far this year Cuba has exported to Europe close to 925,000 tons of raw sugar, or approximately 200,000 tons more than during all of 1916. Canada in the same period has exported 75,000 tons of refined, or three times as much as she exported during all of last year. On the other hand the exports of refined from the United States have very substantially decreased. This country has exported since January Ist 367,792 tons, or 300,000 tons less than for a similar period last year. The effect of the European war in increasing the demand for Cuban raw sugars is shown by the following table of exports from Cuba to various countries of the world. While the exports to the United States have increased but slightly, those to Europe have in- creased nearly three-fold during the past four years. CONDITIONS IN THE SUGAR MARKET I3 To 1912-18 1913-14 1914-15 1915-16 U. S. Atlantic Ports......... 1,722,447 1,808,206 1,864,502 1,868,773 New Orleans .............. 278,502 301,414 205,712 258,305 Galveston ..............00. 24,830 31,497 32,474 40,213 ANAC ay “korea? dew aie cada veneer 30,457 5,986 BUSS) exper sees Vancouver, B. C............ 27,954 5,457 13,000 —............ Japatiins cuss said Seiad Greaaes TO316> nacuerest citeloeal United Kingdom and Cont. Europe ...........000- 259,195 304,565 375,879 730,993 South America............. 28: Gyaadtetn, Chania 4,057 MECXICO: cxtecaswneeaeesy GaSe, RESET | Skee 143 TOR; pps ioresatarns 2,343,413 2,476,441 2,496,300 2,902,484 In the first of the four years tabulated eleven per cent. of Cuba’s exports went to the United Kingdom and the Continent and eighty-five per cent. to the United States, but by 1916 the situation had so changed that in that year twenty-six per cent. of the Island’s exports of sugar went to the United Kingdom and the Continent and only seventy per cent. came to the United States. Of the 2,127,078 tons sent to Atlantic ports and New Orleans in 1916, over 700,000 tons were refined and exported to England and other foreign countries. Another result of the war, which has had a very marked effect on the available sugar supply, has been the noticeable reduction in the exports from Java to the United States. Previous to the war this country obtained large quantities of raw sugar from the Dutch East Indies and in certain pre-war years had imported as much as 400,000 tons from that source. The United States has imported practically no raw sugar from there since August, 1914. While the Java crop has shown a substantial increase this year, it has not been available for us. In addition to the facts which have been noted, affecting the avail- able supply, the sugar industry since the declaration of war has had to meet, in common with other lines of business, increasing costs of all kinds. ‘The prices paid for labor, supplies and materials of every character have increased tremendously. Jute bags, which are very generally used as containers for raw sugar, have been especially 14 CONDITIONS IN THE SUGAR MARKET difficult to procure, and at steadily advancing prices. Also, as pointed out in the last annual report of the Company, three-fourths of the sugar supply in the United States is transported in ships, and the great increase in the cost of tonnage has necessarily been reflected in a higher cost of our raw supply. Ill Conditions Affecting The Market First Half 1917 The foregoing statement, together with the Annual Report of the Company for 1916, will give full information in regard to the condi- tions in the world’s sugar markets from the outbreak of the war to the end of last year. Since the first of the current year other matters of great im- portance have affected the sugar market. In the attempt to set them forth in their proper relation, these matters will be discussed in two periods, the first from January to June, when the action of the Senate Finance Committee in suggesting the repeal of the drawback upset the World’s markets, and the second from June to October, bringing the statement down to the time when the United States Food Admin- istration entered into voluntary agreements with American refiners for the importation of raw sugar and the refining of the same on a fixed maximum margin. The immediate effect of all matters discussed is reflected in the current market prices for both raw and refined sugars and accordingly a chart is submitted showing the price since January 1, 1917, for refined sugar of the American Sugar Refining Company and other domestic refiners, the price for beet granulated and that for imported raw sugar. The four important matters affecting the price of sugar from January to June were (a) Strikes at Eastern Refineries (b) Sugar Famine Stories in Newspapers (c) United States Beet Sugar Supply (d) Cuban Insurrection. CONDITIONS IN THE SUGAR MARKET 15 Strikes at Eastern Refineries During the months of January and February there were severe strikes in a number of the largest refineries in the East. The strikes in the three units of this corporation which were affected occurred on the following dates Brooklyn Refinery—January 23, 1917 Philadelphia Refinery—February 1, 1917 Jersey City Refinery—February 15, 1917 Similar conditions developed in the refineries of other companies, involving the McCahan and Pennsylvania Refineries in Philadelphia, the National Refinery, Long Island City, and the Arbuckle Refinery in Brooklyn. These strikes lasted during practically the whole of the months of February and March. They made the problem of the refiners a difficult one, but The American Sugar Refining Company was able to deliver daily during this period a supply equal to its normal output. The principal effect upon the market came from the rumors appearing in the newspapers as to the interruption of the supply by reason of these strikes and the Cuban insurrection which created an unusual demand for sugar on the part of the public. Sugar Famine Stories in Newspapers The strikes in the refineries at first attracted very little notice in the newspapers, excepting “Solidarity,” the news organ of the I. W. W., which was urging the support of its members to tie up the refin- ing industry. On February 8th however, the “Philadelphia Ledger”’ carried a sensational story with a double column headline “Sugar Fam- ine Grips City asa Strike Sequel”. This was followed by similar stories in various newspapers predicting a “sugar famine” or “‘sugar shortage” in the United States. These reports were spread at the time of the so-called food riots in New York City, and when the public mind was extremely nervous over the food situation. Submitted herewith is a Chronology of “Sugar Famine” Stories, appearing in various newspapers of the country, together with a list of newspapers in which such stories appeared. 16 CONDITIONS IN THE SUGAR MARKET The demand for sugar increased enormously as the public began to buy sugar in large quantities, fearing a famine. In some communities the stocks on hand were rapidly exhausted and the prices of retailers increased, despite the efforts of this Company to keep the supply well distributed and to allay the public mind. United States Beet Sugar Supply The beet sugar crop in the United States for 1916-1917 amounted to 734,577 tons, about 45,000 tons less than the crop for 1915-1916, which amounted to 779,756 tons. ‘The most severe reduction in the crop occurred in Michigan and Ohio. The Michigan crop alone fell off in 1916-1917 from the previous year approximately 53,000 tons and Ohio about 13,000 tons, representing nearly 50% of the produc- tion in these two states. This crop is usually marketed in the Middle West. The decrease in the beet crop, coupled as it was with difficulty on the part of the beet companies in obtaining necessary cars to move their product east of the Rocky Mountain territory, added to the acuteness of the situation. Cuban Insurrection On February 13, the first serious reports were received in New York of an uprising in Cuba by the Liberal Party on the eve of new elections which had been ordered in the Provinces of Santa Clara, Oriente and Camaguey. ‘These reports were quickly followed by alarming rumors. It was stated that Camaguey City and Santiago City had been captured by the rebels and the Provinces of Santa Clara, Camaguey and Oriente were under control of rebel leaders. For a period of approximately two months rumors of extensive destruction of cane by fire in the island were circulated, although sub- sequent reports indicated that many of the earlier statements had been exaggerated. Owing to interruption of communication, reliable infor- mation about the revolution was difficult to obtain. It is certain, how- ever, that conditions in the Eastern end of the island continued very unsettled for some time and there was considerable loss of property, ro 6 rd r? ‘ ) r-4 t rd ' sseeesx5 art? e-4 we—-5 Z i u pst d in n I ' tons meg el ef | ul be, ) r ' \ s . LJ == rar a) ' ri ' 5 wore ty ‘acme -d ka —— — — = — + et r a ace ' ! 3 ' : | -4 ‘rstnetgbele’ panel ets i 1 i 5 © sialic d ben p= ' : u 1 ' a | - reais aeaeeee | Missing Page CONDITIONS IN. THE SUGAR MARKET 17 notably the destruction of the Cuba railroad east of Zaza, including tracks, bridges and railroad equipment. The most serious trouble, however, arose by reason of the difficulties experienced in bringing cane to the factories. All this had an immediate effect on the sugar market. In the Province of Camaguey alone the crop was reduced by 150,000 tons by reason of the revolution. Beginning with the latter part of March, the situation gradually improved, and many centrales which had been temporarily forced to suspend operations, resumed grinding. The estimated production of the Island of Cuba for the 1916-17 campaign was first placed at 3,400,000 tons while the actual production was only a little over 3,000,000 tons. This decrease in Cuba’s anticipated sugar supply, together with the interruption in the Cuban railroad service, had a marked effect on the sugar market, notwithstanding the fact that the output of Cuba for the season 1916-17 is practically the same as for the preceding one. IV Efforts of The American Sugar Refining Company to Meet the Situation The attempt has been made in the foregoing recital to set forth the situation in the world’s sugar market since the outbreak of the war, and the unprecedented difficulties confronting the American refiners from January to June of the current year. : On December 29, 1916, The American Sugar Refining Company, through the Bulletin distributed by it, advised the trade, “The hand to mouth buying on the part of the domestic trade may result in there being a serious scarcity of sugar and an over-demand at a time when sugar seems to be most needed, and it would seem to be the part of wisdom for the domestic buyers to keep a fair line of sugar in stock to meet their require- ments.” This suggestion was repeated in subsequent issues of the Bulletin which went to the trade throughout the country. 18 CONDITIONS IN THE SUGAR MARKET In view of subsequent developments this advice was important. Unfortunately, however, the trade generally continued to carry light stocks, although from January 1 to February 13 the price of this Com- pany was 6.75 less 2% for cash f. o. b. refinery. As a result of the strikes, the sugar “famine” and “shortage” stories, the Cuban insurrection and other causes, there was an abnormal demand on the part of the buying public for the immediate delivery to it of refined sugar. Realizing that the situation was an unprecedented and serious one, the Company used its best efforts to allay the fears of the public in regard to the supply of sugar. Beginning on February 21, 1917, the Company undertook an advertising campaign in the newspapers advising the public that there were supplies of raw and refined sugar on hand at that time and in transit sufficient to supply the needs of the country. In fifty-eight of the leading newspapers in the larger cities of the United States the Company inserted advertisements stating that there was no sugar shortage and advising against hoarding. The President of the Company also made several public state- ments which went to the Associated Press, other Press Associations and to the leading dailies of the country to the effect that there was no reason for the housewife to hoard sugar as there were then ample available supplies. Copies of these advertisements and statements are submitted. The price chart also submitted shows that for a large portion of this period the Company has sold its product at a net cash price of one- half to one cent a pound less than several of its competitors. Further, and notwithstanding the difficulties of the situation, the Company has since the first of the year delivered as much sugar as it did last year in a corresponding period. The demand on the part of the buying public has been abnormal, but this Company has tried to prevent any hoarding or speculating by regularly selling its daily capacity and distributing it widely among buyers. Its large capacity for package sugars has been an effective means to this end. At times cempetitors of this Company withdrew entirely from the market, refusing to take any more orders for sugar. This Company CONDITIONS IN THE SUGAR MARKET | 19 at no time refused to accept business but always from day to day took orders for the daily capacity of its plants, limiting the amounts sold in accordance with the real requirements of the buyers. The efforts of the Company to allay public alarm, check hoard- ing, to accept a price less than that which it could easily secure and to distribute its product fairly and evenly among the trade, have met with much commendation in the Press, and from the trade and the public. In addition to the difficulties confronting the, Company the first half of the year, on June 13 a serious fire occurred at the refinery of the Company in Brooklyn, destroying its principal warehouse and packing plant. For six days-operations at this refinery practically ceased, but by prompt measures, the plant was rebuilt in the record- breaking time of nine weeks and in operation with increased facilities. V Increased Consumption in the United States While during the current year there has been no substantial in- crease in the world’s total production, this country has already used nearly 400,000 tons more sugar than during a corresponding period last year. In 1916 the people of the United States consumed on the average 10,000 tons a day, while this year the consumption has been at the rate of 11,000 tons. Expressed in terms of per capita consump- tion, for the first ten months of 1916 we used, according to the figures of Willett & Gray, 68 pounds, while this year the unit for the same period is 76 pounds. Sugar is the great conserver of fruit. Heated fruits become acid, and to preserve the flavor, color and appearance, sugar or syrup is essential. The Food Administration and the Department of Agricul- ture, in conformity with the advice of President Wilson to “secure the conservation of surpluses of perishable food products”, urged the necessity for preserving all fruits and berries and the canning of vegetables, and undertook an educational campaign for the conserving of our surplus stock through home and industrial canning and preserv- 20 CONDITIONS IN THE SUGAR MARKET ing. Newspapers, periodicals and publications widely read by the women of the country aided greatly in promoting the efforts of the Government. In full accord with the aims of the Government as pre- sented by the Food Administration and the Department of Agri- culture, this Company has done everything in its power to secure the support of the housewives for this movement. In the summer of 1916 this Company had instituted a “Save the Fruit Crop” advertising campaign. Since our entrance into the war, and to assist in making effective the plans of the Government, this Company has carried on a very extensive advertising campaign of a similar character. Undoubtedly all this has tended toward an increase in the con- sumption of sugar. On the other hand, it has been of tremendous value in “Saving the Fruit Crop”, and in making available for winter use large quantities of all kinds of fruits, berries and grapes, and canned vegetables. While this is one of the factors which will neces- sitate economy for the balance of the year, the sugar which has been so used has served a splendid purpose in enabling us to consume later on, and at a time when they will be sorely needed, fruits and vegetables which would otherwise have been wasted. It will put us in a position to use substitutes for butter, fats and other foods which, in turn, must with the progress of the war become less plentiful. President Wilson in his appeal to the women of the country said, “Every bushel of potatoes properly stored, every pound of vegetables properly put by for future use, every jar of fruit preserved, adds that much to our insurance of victory, adds that much to hasten the end of this conflict. We can all aid by increasing our consumption of perish- able products. Such of them as we can efficiently utilize we must utilize, and, by so doing, relieve the strain on our store of staples.” The increased consumption of sugar has not been a waste, but has been a real factor in combatting the national tendency to squander the country’s resources. It has enabled the American housewife to add to the store of the nation’s foods at a time when fruits and veg- etables were cheap, and to save thetn from spoiling to be later con- CONDITIONS IN THE SUGAR MARKET 21 sumed when similar foods must of necessity be more expensive. The present supply of canned foods, preserves, jams and jellies is much greater than at any previous time in the history of the country; and it has only been obtained by the additional use of the great preservative of foods—sugar. VI Action of the Senate Finance Committee in Recommending the Repeal of the Drawback On June Ist of this year and without previous notice to the sugar industry, a majority of the Senate Finance Committee voted to incor- porate in the War Revenue Bill a provision for the repeal on sugar alone of the drawback privilege. The Committee also advocated an excise tax of 14 cent a pound on sugar for export as well as for domestic consumption. These recommendations if enacted into law would have meant an increase in the export price of refined sugar of over 1% cents per pound. The American Sugar Refining Company and other domestic refiners promptly represented to the Committee the serious effect upon the industry were the Committee’s recommendation to be concurred in by Congress. Notwithstanding their protest, however, a majority of the Committee voted not to rescind their action, and foreign countries having notice of a prospective increase in price of refined sugar for export from this country of over 114 cents per pound, sought to anticipate their requirements. The competition for Cuban raws became active and Cuban prices increased the entire 1% cents dif- ferential represented by the recommendations of the Senate Finance Committee. Subsequently on August 21, another letter of protest was sent to the Senate Finance Committee by this Company and eleven other refiners, pointing out the serious effect of its proposed action, and stating that “the threatened action of cutting off the United States refined from export has caused:such heavy and persistent buying of raws in Cuba and foreign countries as to create temporarily a new and troublesome situation for the United States”. In addition this 22 CONDITIONS IN THE SUGAR MARKET Company from time to time in its Trade Bulletin, called the attention of the trade to the action of the Senate Committee. Annexed hereto and printed in full are the letters and statements referred to. They consist of (a) Letter of June 6, 1917, from The American Sugar Refining Company and five other American refiners to the Senate Finance Committee (b) Letter of August 21, 1917, to the Senate Finance Committee from the Company and eleven other refiners, comprising nearly the entire United States refining industry (c) Extracts from American Sugar Bulletin pointing out the effect of the Senate action upon the sugar market in its issues of June 29, July 13 and 27, September 7, 21, 28 and October 12, 1917. In a public statement issued on September 30, 1917, and reprinted hereafter, the United States Food Administration gave the following . summary of the effect of the action of the Senate Finance Committee: “Foreign buyers, who up to that time had been making their purchases through American refineries, decided that as the Bills were introduced as War Measures, and would there- fore be enacted into law promptly, that it would be to their advantage to buy Cuban sugars direct at any price from the then Cuban market, not exceeding an advance of 1%c., which was the extent to which sugar would have been affected if the Bills had passed. “This started a violent speculation in Cuban sugars with the result that the price advanced from 5.77 in the last week in June to 7.77 the first week in August. While there was very little sugar left in Cuba it meant that if such a condition was permitted to continue the cost to the American public would be something in excess of $30,000,000 between then and the beginning of the new Cuban crop in December.” On September 10th, three months after a majority of the Senate Finance Committee had recommended the repeal of the drawback privi- lege, the Senate by an overwhelming vote of 69 to 11 rejected the Com- mittee’s plan. In the meantime, however, heavy buying by European countries having notice of the Finance Committee’s action CONDITIONS IN THE SUGAR MARKET Zs diverted from United States consumption raw sugars which would have otherwise been used to supply the American refiners. Prices for refined sugar, always based upon the price of imported raw sugar, naturally ‘followed in spite of the efforts of this Company and other refiners to stabilize conditions even to the extent of maintaining domestic prices for refined sugar far below the market. At the time the action of the Senate Finance Committee was taken the War Revenue Bill was pending in the Senate which, as passed by the House of Representatives, provided for the imposition of a ten per cent ad valorem duty on imported raw sugar. This provision was in the House Bill as reported by the Ways and Means Committee on May 9th, and while later the Senate Finance Committee struck this provision from the bill, it inserted a section providing for an excise tax of one-half cent a pound on refined sugar. Accordingly, buyers of sugar, both domestic and foreign, from May 9th to September 10th, were under notice that pending legislation might impose either an additional import duty or an excise tax upon sugar. The belief that it was important to secure supplies before this legislation became effective undoubtedly increased the demand at that time, and the action of the Senate Finance Committee in regard to the drawback only added to the difficulties of the market situation. As noted above, the action of the Senate Finance Committee was taken on June 1, 1917. The following table shows that from June 1 to September 30, 1917, the exports of Cuban raw sugar to Europe exceeded the exports for a similar period of the previous year by 190,158 tons, thus clearly demonstrating the manner in which our source of supply was then invaded by foreign buyers: 1916 IQI7 JUNG vessenemmmnoneancnnanns LLSS76 75,927 ILLS tcl ey cena acepats areeeonalenes 39,177 129,989 ATIBUSE: daeinderedncnnreniawapiepone ences 73,263 187,444 Septeinber nit cwcameeisese I Alo 42,893 246,095 436,253 The following diagram shows the course of prices for raw and refined sugars following the action of the Senate Finance Committee: 24+ CONDITIONS IN THE SUGAR MARKET CHART SHOWING INCREASES 1 PRICES of FAW and KEIVIVED SUGAR TUNE SULY AUGUST 6 202526272829 6 9 1819202350313 6 716 &23 a3 298 774 759 752 749 740 23S 7a7 702 696 677 66/ 640 633 627 614 G02 S96 FBS Vil The Passage of The Food Control Bill and Plans of The Food Administration for Supervision of The Sugar Industry On June 11th of this year the Food Control Bill was intro- duced in Congress and subsequently on August 10 Congress passed the bill as amended and the President appointed Mr. Herbert Hoover Food Administrator. While the bill does not give the Food Adminis- trator the power to fix prices for sugar, it does authorize the Presi- dent to license the importation, manufacture, or distribution of any necessaries, in which sugar is included, and further provides that the President may find what is a just and reasonable profit. It also pro- vides “that in carrying out the purposes of this Act the President is authorized to enter into any voluntary arrangements or agreements or to create and use any agency or agencies”. CONDITIONS IN THE SUGAR MARKET 25 Acting under the powers conferred, and shortly after his appointment, Mr. Hoover selected Mr. George M. Rolph as the Head of the Sugar Division of the United States Food Administration. In an effort to stabilize conditions and by co-operative buying to main- tain “a proper balance between the rights of producers and con- sumers”’, the Food Administration, in co-operation with the British Royal Commission on the Sugar Supply has appointed an Interna- tional Sugar Committee of five members to arrange for the purchase and distribution of available raw sugar to this country and its Allies. The American members of this Committee are Mr. George M. Rolph, the Head of the Sugar Division of the United States Food Administration; Mr. Earl D. Babst, the President of this Company, and Mr. William A. Jamison, of Arbuckle Brothers, and to them are to be referred all questions of a purely domestic nature. The mem- bers of the Committee appointed on behalf of the Allied Governments are Sir Joseph White-Todd and Mr. J. Ramsay Drake, both of Lon- don, England. The Food Administration has also appointed an Amer- ican Refiners Committee of five refiners and seven alternates to fix the basis of proportionate distribution of raw sugar provided by the Inter- national Sugar Committee. It has also promulgated rules and regula- - tions requiring the licensing of all persons engaged in the importation or manufacture of sugar, pursuant to which this Company has been duly licensed to import, manufacture and refine sugar, syrups and mo- lasses. The purposes of the Food Administrator and the various steps undertaken for the supervision of the sugar industry were fully out- lined in a public statement issued by him on September 30, 1917, which is printed on pages 67 to 73. From the first The American Sugar Refining Company has met the demands of the Government, and as a matter of fact on April 26, 1917, long previous to the passage of the Food Control Bill, Presi- dent Babst in a public statement, which is reprinted on pages 45 and 46, indorsed the Hoover “plan by which the Allies can consolidate under one head the whole purchasing of food staples.” For the purpose of carrying into effect the purposes of the Food Administration and following a month’s negotiations between the 26 3 CONDITIONS IN THE SUGAR MARKET Company and Mr. Hoover and Mr. Rolph, the United States Food Administration wrote a letter to this Company requesting the Com- pany to enter into a voluntary agreement with it for the purchase of imported raw sugar through the International Sugar Committee and the sale of refined at a maximum refining margin of 1.30c. net per pound for Fine Granulated Sugar in barrels f. o. b. refinery. (See letter of October 6, 1917, printed on pages 77 and 78.) The legality of the agreement had been approved by the Attorney- General of the United States, and at a meeting of the Board of Directors held on October 9, 1917, the President of this Company was duly authorized to execute it. The voluntary execution of this agree- ment at the urgent request of the Food Administrator and the efforts of the Company to make effective the plans and aims of the United States Food Administration attest to the sincere purpose of the Com- pany to meet the request of the Government in the present emergency. All other American refiners were also requested by the Food Administrator to execute similar voluntary agreements with him and one and all met his wishes in the matter. Previously and in August, as is recited in the statement of the Food Administration referred to, “representatives of 85% of the domestic beet sugar industry met with the Food Administration in Washington and pledged the interests which they represented to main- tain a price for their product of not to exceed 7.25 cane basis seaboard refining points from the beginning of the crop starting in October until same had been distributed.” The price for domestic beet sugar then agreed upon and later accepted by the entire domestic beet industry, is not one, however, that the Company can meet on the present price of raw cane sugar, or on any basis prevailing since last June. It should also be borne in mind that the Company has been under notice of Governmental supervision since the Food Control Bill was first introduced in Congress and has been compelled to shape its policy with such supervision in prospect. As early as July 27th this Com- pany in its Trade Bulletin reviewed the situation confronting the industry and made this very pertinent statement: “Tt should be recorded that the United States refiners are and have been under notice of Government control. The posi- CONDITIONS IN THE SUGAR MARKET ay tion of the United States refiners, therefore, so far as the risk of inventory is concerned, has been weakened by such notice and made uncertain. Under these circumstances the refiners have been largely relieved of the responsibility of safeguarding the United States supply. Of course there is plenty of sugar in Java, and naturally it will remain there as a reserve supply as long as tonnage is not provided to move it. Equally naturally the Royal Commission, upon being threatened with exclusion from the American market, has filled its needs in the much nearer and more con- venient markets of Cuba and Canada.” In the meantime the heavy buying by the Allies and foreign coun- tries—following the action of the Senate Finance Committee—had so depleted the stocks of raw sugar that supplies could not be obtained in sufficient quantities by American refiners to continue their meltings. As a result the following refineries were compelled to close down: Franklin, Philadelphia September 15, 1917 (Front Street Refinery) Arbuckle, Brooklyn - 19, 1917 Colonial; Gramercy, Louisiana October 4, 1917 Henderson, New Orleans ce 5, 1917 Franklin, Philadelphia . 6, 1917 (Reed Street Refinery) Federal, Yonkers * 8, 1917 American, Brooklyn - 9, 1917 Imperial, Sugarland, Texas “ 13, 1917 Warner, Edgewater, New Jersey . 18, 1917 American, Chalmette, Louisiana y 18, 1917 National, Yonkers - 19,. 1917 Savannah, Savannah . 20, 1917 American, Boston eS 24, 1917 With full knowledge of the effect of the Senate Finance Com- mittee’s action upon the domestic industry, this Company and the entire industry used every legitimate means to bring about its early reversal, but the three months’ delay, in conjunction with the other contributing elements, put the situation beyond power of correction. By September supplies of raw sugar which might otherwise have been bought had become no longer available, and refiners were unable to continue their meltings. 28 CONDITIONS IN THE SUGAR MARKET SUMMARY The foregoing review of conditions in the sugar market from January Ist to October 31st of the.current year is an attempt to state the many factors which have affected the sugar industry in the United States. In an effort to summarize the net result of the conditions which have been described, the following table has been compiled from sta- tistics given in the Weekly Statistical Sugar Trade Journal of Willett & Gray: ‘ . First 10 First 10 Increase Decrease Meltings of imported sugar months months in in at all Ports (Atlantic, 917 1916 oa 1047 Gulf and Pacific)....... 3,158,591 3,177,796 ee 19,205 Louisiana Sugar consumed 124,611 74,535 50,076 Paswauats *U. S. Beet consumed...... 470,715 410,536 60,179 Total: snes sweep ewacaecek 3,753,917 3,662,867 91,050 Ieee enacts Less exports from all Ports 367,792 668,521 seaseeees 300,729 Consumption ............. 3,386,125 2,994,346 391,779 *Figures for six months only available. It will be seen that the consumption of the United States for the first ten months of this year has been running at an average rate of 338,000 tons a month. By reason of the disappearance of the invis- ible domestic refined supply and the absence of stocks of raw sugars in sources usually available to this country and particularly in Cuba— due to the heavier shipments from the latter source to Europe—it is apparent, as there has been no increase in the World’s production, that there is not sufficient sugar to meet our domestic requirements. Accordingly it is evident at this writing (October 31, 1917) that for the balance of the year we are short nearly six weeks’ supply as com- pared with a year ago. This has resulted in a condition which, pend- ing the arrival of the Cuban crop, now grinding, can only be met by the prompt and wide distribution of the new crop of domestic beet sugar and the Louisiana crop of cane sugar, together with any Hawaiian or Philippine sugars that may come upon the market. The shortage will be acutely felt in the New England and Atlantic Coast states due to their geographical position. Zo SUGAR CROPS OF THE WORLD The following are the figures giving the sugar crops of the world as appearing in the “Weekly Statistical Sugar Trade Journal” of Wil- lett and Gray on October 25, 1917, and referred to as their “latest estimate’. For several countries the exports only are given as the amount consumed locally cannot be definitely stated. Harvesting 1917-18. 1916-17. 1915-16. Period. Tons. Tons. Tons. United States—Louisiana.......... Oct.-Jan. 275,000 271,339 122,768 PEXAS: a4 gota seueausnees Oct.-Jan. 2,000 6,250 1,000 Porto ‘RicOiis corse cnadseneks Jan.-June 475,000 448,567 431,335 Hawaiian Islands............. Nov.-July 525,000 579,302 529,895 West Indies—St. Croix....... Jan.-June 15,000 12,000 14,750 San Domingo............-...20008 Jan.-June 145,000 130,171 126,058 Cu bay saves cectins: edna hein we wea Dec.-June 3,200,000 3,000,000 3,007,915 British West Indies—Trinidad..... Jan.-June 70,000 70,891 64,231 Barbadoes, exports............ Jan.-June 55,000 55,000 65,000 , Jamaica, exports.............. Jan.-June 30,000 28,000 15,143 Other British West Indies..... Jan.-June 35,000 30,000 35,371 French West Indies— Martinique, exports ......... Jan.-July 40,000 40,000 39,925 Guadeloupe ................. Jan.-July 40,000 40,000 34,111 MeXICO: sqcaiasadess uae dheds stares Dec.-June 35,000 50,000 65,000 Central America................. Jan.-June 25,000 25,000 35,000 South America— Demerara, exports...Oct.-Dec. & May-June 120,000 120,000 116,224 Surinam.