GOVERNMENT CONTROL OF THE SUGAR INDUSTRY IN THE UNITED STATES THE MACMILLAN COMPANY NEW YORK BOSTON CHICAGO DALLAS ATLANTA SAN FRANCISCO MACMILLAN & CO., LIMITED LONDON BOMBAY CALCUTTA MELBOURNE THE MACMILLAN CO. OF CANADA, LTD. TORONTO GOVERNMENT CONTROL OF THE SUGAR INDUSTRY IN THE UNITED STATES AN ACCOUNT OF THE WORK OF THE UNITED STATES FOOD ADMINISTRATION AND THE UNITED STATES SUGAR EQUALIZATION BOARD, INC BY JOSHUA BERNHARDT SUGAR STATISTICIAN UNITED STATES FOOD ADMINISTRATION AND CHIEF, STATISTICAL DEPARTMENT, UNITED STATES SUGAR EQUALIZATION BOARD, INC. Neto gorfc THE MACMILLAN COMPANY 1920 AU rights rtttrvtd INTRODUCTION THE distortions in the world's sugar industry and trade, 1 consequent upon the upheaval of the Great War, affected the United States almost as seriously as it did the European belligerents. The problem of procuring adequate sugar supplies for the United States and stabilizing the price of this peculiarly indispensable commodity, which "has grown during the last one hundred years into our culinary and dietetic life to act as a sort of binding material on which our cuisine so largely revolves, " 2 became acute shortly after the United States entered the world conflict. The formation of a public commission to attempt solution of this problem was foreshadowed by Herbert C. Hoover a year before the severe logic of sheer economic pressure compelled the actual creation of such a body. Appearing before the Senate Committee on Agriculture and Forestry on June 19, 1917, to testify in behalf of the then pending Food Control Bill (S. 2463), Mr. Hoover made the following statement : "At the present moment our sugar refiners are competing with the allied sugar commission for the purchase of Cuban sugar. It must be patent that if we create a sugar commission and if that sugar commission cooperates with the Allies and the Cuban producers to take over the Cuban crop at the fixed price, that we can effect a considerable saving on the present inflated price of raw sugar, and we can stabilize the price of sugar throughout the whole of next year, because the sugar commission should be able to impose upon the refiners the necessity to pass 1 See Appendix, Exhibits 27, 28, and 29, for statistics of world production, imports and exports of sugar. 2 From Mr. Hoover's statement in the Hearing before the Subcommittee of the Committee on Manufactures, U. S. Senate, Jan. 2, 1918 (p. 577). viii INTRODUCTION the savings made on raw sugar through to the consumers. As there would be a dominating amount of imported raw sugar, it should be possible to maintain a stable price throughout the next year ; there would thus be no incentive to speculation, and the savings to the public on its sugar should reasonably amount to 20 to 25 per cent. "There can be no loss in such an operation, because one half of the American sugar supply would be in the hands of the Sugar Commission, and the Sugar Commission should be able to make a price to cover the whole of its outlay. In this matter, like that of wheat, we require a certain margin of cash with which to pro- vide for bank credits. . . . "In order to carry out such operation as this we must have the operation of section 3 in the bill for voluntary agreements; we must have section 5, by which we can impose a license on refiners and elevators in such a manner that they play their part in this teamwork ; we must have the use of section 9, giving the power to buy and sell, and section 19, to finance the trade." Congress did not see fit, however, to comply with all of Mr. Hoover's recommendations and the Food Con- trol Act, as finally enacted, did not give the Food Ad- ministration the authority to fix sugar prices directly or to make purchases of raw sugar, as had been done abroad. Consequently it was necessary to depend on the voluntary cooperation of the various branches of the sugar trade. A Sugar Division, under the efficient direction of Mr. George M. Rolph, was created within the Food Administration, and the entire sugar industry was mobilized to meet the impending war exigencies. Agreements were effected with the domestic beet-sugar producers, the Louisiana cane-sugar producers, and the cane-sugar refiners, relative to the prices and distribution of 1917-18 crops, and the entire Cuban crop of that year was purchased by the International Sugar Committee, which acted in behalf of the United States and the Allied Governments. This first period of Government control of the industry continued to July i, 1918. Early in 1918, it became apparent that the problems relating to sugar could no longer be effectively solved through these separate voluntary agreements with the INTRODUCTION EC different branches of the trade and through the existing executive machinery of the Food Administration. For there were two sets of problems facing the Food Adminis- tration hi 1918, the first concerned with the proper prices for the 1918-19 crops in the various sources of supply, the second concerned with supply and distribu- tion. In its attempt to solve these problems, the Food Administration was ultimately forced to create the United States Sugar Equalization Board, a commission such as Mr. Hoover had described before the Senate Committee on Agriculture and Forestry, hi June, 1917. The entire plan of control by the Sugar Board had been predicated upon the continuance of the war with the Central Powers. In regard to its probable duration, the attitude of the American people at the time when the Sugar Board began to function fully, that is in the fall of 1918, is perhaps best expressed in the following quotation from Mr. Hoover's statement of Sept. 20, 1918. "There is no prospect of a proper ending of the war before the campaign of the summer of 1919. To attain victory we must place in France three-and-a-half million fighting men, with the greatest mechanical equipment that has ever been given to any army. While we expect the position of the Western front may be improved, from a military point of view, between now and then, there can be no hope for a consummation of the end that we must secure, until another year has gone by. "If we are to accomplish this end in 1919 we will save a million American lives that will be expended if we have to continue until 1920." If in the summer of 1918 or in the early fall, there had been any evidence that the collapse of the Central Powers was imminent, the Sugar Board would perhaps never have been created or would probably have been dissolved shortly after creation; but with the pro- longation of the war for at least another year generally assumed, the Board entered into various contracts both with domestic and foreign producers to insure adequate X INTRODUCTION supplies for the year 1919 and assumed control of the intricate scheme of "certificate" distribution, which had been organized by the Food Administration previ- ously. Consequently, the abrupt termination of the war found the United States Sugar Equalization Board bound by several contracts, for the execution of which a continuance of the corporation was essential during ' Convenient alike to the writer seeking facility of arrangement and to the reader desiring clarity of ex- position, the Board's labors can best be described in two divisions, the war work and the reconstruction work. Inasmuch, however, as its activities were pyramided on the rather substantial base erected previously by the Sugar Division of the Food Administration, a brief account of this earlier period of Government control of the sugar industry must of necessity be prefixed to a history of the United States Sugar Equalization Board. Such a resume is presented in the first chapter. Chapters two and four originally appeared in sub- stantially the present form in the August, 1919, number of the Quarterly Journal of Economics, published by Harvard University. The author is indebted to the editor, F. W. Taussig, for permission to reprint this material in this volume. Acknowledgment is made of the constructive criticism and suggestions of the Direc- tors of the Board and the careful proofreading and checking of the manuscript by Mr. Howard M. Ballou of the Statistical Department. JOSHUA BERNHARDT. UNITED STATES SUGAR EQUALIZATION BOARD, INC. NEW YORK CITY. June, 1920. PART I THE WAR PERIOD CHAPTER I THE "MOBILIZATION" OF THE SUGAR INDUSTRY BY THE SUGAR DIVISION OF THE FOOD ADMINISTRATION IN reviewing the activities of the Food Adminis- tration in its control of the sugar industry, it is im- portant to bear in mind that the primary problem was not one of sugar but of shipping tonnage. There would have been in all probability a sufficient supply of sugar for all the Allies throughout the war, had ships been available to bring sugar from distant sources of supply. To what extent the sugar requirements of three of the Allies, the United States, Canada, and the United King- dom, had been met by imports in prewar years is demon- strated in the following table : IMPORTS AND CONSUMPTION OF THE UNITED STATES, THE UNITED KINGDOM, AND CANADA 1 (Quantities in Short Tons) COUNTRY PREWAR AVERAGE ANNUAL CONSUMPTION PREWAR AVERAGE ANNUAL NET IMPORTS PREWAR AVERAGE ANNUAL DOMESTIC PRODUCTION United Kingdom . . United States . . . Canada 2,057,000 3,798,000 289,000 6,144,000 2,031,000 2,916,000 276,000 5,223,000 Negligible 875,000 13,000 888,000 Total .... 1 Since the figures given in this book are nearly all taken from the files of the Food Administration and the Sugar Board, no references will be given for individual tables. 4 GOVERNMENT CONTROL OF SUGAR Thus out of a total annual requirement for these three countries combined of 6,144,000 tons, 5,223,000 tons, or 85 per cent, were transported in ships. In face of the scarcity of shipping brought about by the war, the utiliza- tion of this much tonnage for a purpose not directly for military ends was, in itself, a problem of considerable magnitude. Although sugar was recognized as an essential food and the curtailment of its use in the house- hold deemed undesirable, 1 there were so-called non- essential uses of the commodity which, under pressure of war conditions, could be dispensed with, particularly in countries like the United States and the United Kingdom, where the per capita consumptions, 83 pounds and 91 pounds per annum respectively, were far beyond the usages of most other countries of the civilized world. It is evident, therefore, that had there been no other problem than the mere ocean transportation of this five and a quarter millions of tons of sugar per annum, the necessity would have been obvious for diverting to military ends as large a portion of this tonnage as could be dispensed with without detriment to the physical welfare of the population. The problem was intensi- fied, however, through the position of the United King- dom, which country had obtained the largest proportion of its supplies before the -war from the countries with which she was then in a death grapple. The following table shows to what degree the United Kingdom was de- pendent upon the Central Powers for her sugar supply. It can be seen that 54 per cent of the prewar sugar supply of the United Kingdom came from the Cen- tral Powers, and furthermore, that Belgium and France, whose beet fields were soon devastated by the Ger- man armies, furnished together about 6 per cent of the total. Thus 60 per cent of the total became inaccessible to the United Kingdom immediately upon 1 See Appendix, Exhibit 18, for memorandum regarding importance of sugar as a food (page 230). MOBILIZATION BY THE SUGAR DIVISION 5 PREWAR SUGAR SUPPLY OF THE UNITED KINGDOM SOURCE OF SUPPLY PREWAR AVERAGE ANNUAL AMOUNT OBTAINED FROM EACH SOURCE (SHORT TONS) PER CENT OF TOTAL SUPPLIED BY EACH SOURCE Germany 78-?, 171 38. q<; Austria-Hungary 3IQ,67I 1^.73 Netherlands 101,67^ 0-43 Java Cuba Brazil Peru British West Indies 123,400 142,329 29,205 45,404 3Q,2<3 6.07 7.01 i-44 2.24 1.03 British Guiana 2A,I3Q 1. 10 Mauritius 37.O34. 1.82 Haiti and Dominican Republic . Belgium France United States 40,464 77,936 43,642 23,l67 1.99 3-84 2.15 1. 14 All other countries in, 1^6 15.47 Total 2,031,624 100.00 the outbreak of the war. To make matters worse, the Netherlands, which had provided 9.4 per cent of the total prewar aggregate, was soon out of the question as a source. Accordingly, practically 70 per cent of the normal sugar supply of the United Kingdom was thus completely wiped out of existence and there was no recourse except to far-away markets such as Java and Cuba, the only countries that had an exportable surplus approaching the large requirements of the United King- dom. The utilization of Java as a source of supply was found to be a great drain on tonnage. It took approximately 150 days for a cargo ship proceeding at a speed of 200 miles a day to go from England to Java and return, inclusive of loading and discharging time at both terminals, while on the other hand, the trip from England to New York or Cuba consumed only about fifty days. It was inevitable that as the period 6 GOVERNMENT CONTROL OF SUGAR of the war lengthened, the United Kingdom should turn in an increasing degree to Cuba for raw sugar and to the United States for refining capacity. A condition, different in primary causes, but identical in effect, developed in the case of France and Italy. That part of France which was devastated by the Ger- mans and bitterly fought over many times during the war, was the center of the French beet sugar industry. The sugar production of France dropped from a prewar average of 752,542 short tons to 202,415 short tons in the crop year of 1916-17, a decrease of over one-half a million tons. The withdrawal of labor from the fields and factories owing to the exigencies of Italy's military problems brought about a decline there from a prewar average production of 211,050 tons to 156,800 tons in the crop year of 1916-17. Both France and Italy could turn mainly to but two sources of supply, the United States and Cuba, since ships were not available to be sent to more distant sources. In direct response to this increasing demand, the com- bined production of Cuba and the United States mounted from a prewar annual average of 4,441,581 short tons to 5,587,476 short tons in the crop year of 1916-17. The following table shows the changes in sugar production for Cuba and the United States, including the non-contigu- ous territories, Porto Rico and Hawaii : AVERAGE ANNUAL PREWAR PRODUCTION 1915-16 1916-17 United States Louisiana cane . . . Beet sugar .... Hawaii ..... 302,647 607,672 ^60,424 (Short tons) 137,500 874,220 646,000 303,900 820,657 t;g2,763 Porto Rico .... Cuba 365,838 2,596,000 346,490 2,967,427 483,590 3,386,566 Total I.'MT.'^T 4,071,637 5,587,476 MOBILIZATION BY THE SUGAR DIVISION 7 Cuba's production, it will be noted, increased almost phenomenally in the period under consideration, while significant increases were attained by the other localities, with the exception of Louisiana. Unfortunately this increased production was offset by higher consumption hi the United States 1 which attained a level in 1917 that exceeded the prewar average by about 300,000 tons, so that the net surplus available for Europe was only 800,000 tons above the prewar average. But England in the prewar period had obtained annually about 1,100,000 tons from the Central Powers alone, apart from the 300,000 tons from Belgium, France, and the Netherlands, so that the increased production of the United States and Cuba was only partially compensatory for the deficit of the United Kingdom alone. In addition, it must not be forgotten that France and Italy also required sugar from the Western Hemisphere. Thus the Allies were confronted with this dilemma, either to use valuable shipping tonnage to bring sugar from far-away places such as Java or further to reduce consumption in all allied countries through drastic rationing of both the sugar-using industries and the housewives. Up to the time when the United States entered the World War, the efforts of the Allied Governments to meet the above problems had not been sufficiently successful to prevent a demand upon the Western Hemisphere in excess of the supply. As a normal sequence of the competitive bidding for the inadequate Cuban supplies by the re- fineries of the United States and the British Royal Com- mission on the Sugar Supply, which body was acting 1 The figures by years are as follows : YEAR U. S. CONSUMPTION (Short tons) Prewar average for 1000-13 3,798,000 1914 4,212,000 1915 4,258,000 1916 4,098,000 1917 4,122,000 8 GOVERNMENT CONTROL OF SUGAR on behalf of Great Britain, France, and Italy, the price for Cuban centrifugals was bound to advance rapidly. There were two important circumstances in 1917 which materially hastened this rise in price; the first was the insurrection in Cuba, which caused a material reduction in the crop and reduced the anticipated supplies for the United States in proportion ; the second was the agitation in Congress for the repeal of the "drawback" on sugar, which caused foreign buyers to purchase more heavily in Cuba, in anticipation of a probable price in- crease. Thus the duty-paid, net cash price for 96 raw centrifugal sugar at New York increased steadily, with hardly a drop, from $5.89 per hundred pounds on June i, 1917 to $7.52 per hundred pounds on August 7, 1917. A comparison with other years shows the relative rapidity of this increase for these few months of 1917: TABLE SHOWING CHANGES IN PRICE OF RAW SUGAR FOR THE YEARS 1913 THROUGH 1917, FROM JUNE i TO AUGUST 7 (Prices in cents per pound, duty-paid at New York) 1913 1914 1915 1916 1917 June i .... 3-33 3.38 4-95 6-33 5.89 July i .... 348 3-32 4-95 6.40 6.52 Aug. i .... 3.65 3-45 4.64 6.21 7-02 Aug. 7 .... 3-73 4.26 4-39 5-75 7-52 The impact of the above noted factors upon the re- lation between supplies and requirements for the year was no less striking than the effect on prices. The de- mand was artificially augmented during the first half of the year, so that the deliveries for consumption from the refineries, beet-sugar factories, and Louisiana planta- tions were greater than any previous half year, being (according to Willett & Gray's figures) 2,366,542 long MOBILIZATION BY THE SUGAR DIVISION 9 tons as against 2,137,733 tons i n the first half of 1916, an increase of 10.7 per cent. By the middle of the year it became obvious that unless there was to be a distinct slackening in the demand, a severe shortage was impend- ing, particularly in the Eastern States, where no new crop sugars could be available before the end of the year. From the foregoing, it becomes evident that there were six distinct problems relative to sugar facing the United States Food Administrator upon his assuming office on August 10, 1917. First of all, it was impera- tive to reduce the quickly mounting price of an es- sential food commodity in order, to prevent hardships on those sections of the community not able to bear them. Secondly, there was the immediate problem of alleviating the temporary sugar shortage, which, ac- cording to all statistical evidence, was bound to take place in the Eastern States in the last quarter of the year. Thirdly, some form of cooperation with the Allies was imperative so that there would be no further compe- tition among them in securing sugar supplies. The soaring prices which must of necessity rule if the law of supply and demand were to be allowed full play would thus be eliminated. Such cooperation was also requi- site, for the duration of the war, to conserve tonnage. Fourthly, it was essential to obtain the cooperation of the various branches of the sugar trade in building up centralized machinery for sugar distribution and to create a general mobilization of the industry for war purposes. Fifthly, there was the problem of stimulating production so that the progressively increasing demands of the Allies and the United States could be met. Finally, pending the successful outcome of action taken, aiming at "in- creased production, consumption had to be curtailed somehow. A review of the manner in which the Food Administrator attacked these problems will be in- structive. 10 GOVERNMENT CONTROL OF SUGAR The Price Problem The Food Control Act went into effect on August 10, 1917, and Mr. Herbert Hoover was appointed Food Administrator on that date. He had already been working on various food problems since May 19, on which date he had been appointed by the President to act as temporary food administrator. On August 15, Mr. Hoover appointed Mr. George M. Rolph chief of the Sugar Division of the United States Food Administration. The first step in the campaign to reduce sugar prices was the suspension of all trading in sugar futures on the New York Coffee and Sugar Exchange. The second step was the extension of the export control of the War Trade Board to include sugar, so that the sugar export trade with all but allied countries was discontinued. The Food Control Bill contained no provision for price fixing of sugar and this fact, of course, made the price problem doubly difficult to solve. It was necessary to depend upon voluntary cooperation by way of patriotic appeal to the various branches of the trade ; the cane- sugar producers of Louisiana, the sugar-beet farmers, the beet-sugar manufacturers, the Hawaiian and the Porto Rican producers, the cane refiners, and the Cuban producers. The question then arose as to the legality of voluntary agreements with the various producers, which might be construed as "in restraint of trade." On August 22, 1917, Mr. Hoover wrote the following memorandum to the President, outlining the problem : We are squarely up against the determination of a matter of policy that I feel is of so much intrinsic importance that I have no right to act without your approval. I attach hereto an application to the Attorney General for an opinion, which needs your approval. In very bold terms, it is simply the creation by the Food Ad- ministration, representing yourself, of a combination in restraint of trade to reduce prices. The operations are of varying degree MOBILIZATION BY THE SUGAR DIVISION n of such combination, the clearest case being in the matter of beet sugar. Certain Cuban sugar producers (who are out of our reach) have combined to force up the price of the remaining 1917 Cuban crop, prior to the new crop in December, and have lifted the price of raw sugar in New York from 5.9 cents in June to 7.5 cents, duty paid, on August i6th, and this against a 3 -year prewar average of 4.2 cents. The recent advance of 1.6 cents alone would represent an added tax upon the American people of over $30,- 000,000 by the end of December. During the period of September-January, our beet crop of about 850,000 tons comes into the market. We have had a num- ber of conferences with representatives of the principal beet- sugar concerns and they are disposed to agree to fix a price compar- able with Cuban raws at New York of 6 cents. This would indi- cate a saving to the consumer of 1.15 cents, or over $23,000,000 before the new Cuban crop is available. We will need to take measures to control the latter, later in the year. Our power in the Food Bill, so far as sugar is concerned, ex- tends only to a control of exorbitant profits and wasteful practices. The beet-sugar industry, however, varies in its cost of production from 2.6 cents per pound to 4.5 cents per pound. If we simply limit the amount of profits, we will have produced a different price of sugar from every factory in the country, and have thrown utter confusion in the entire sugar trade. The consumer will have no benefit, because if a retail groceryman buys part of his sugar at one price and part at another, we can be assured that he will maintain the top price. The only hope is to get all of the beet sugar marketed at a given price, and for us to put restrictions on the wholesaler and to seek for restrictions on the retailer by virtue of publicity as to the real price of sugar. The alternative is to agree with the beet-sugar producers as to a price at which they will sell their sugar, and to ask them to pool the entire sugar and the cost of distribution among them- selves, so that factories situated advantageously, from a trans- port point of view, will not be making a different price from those at a longer distance. This requires an inter-agreement between the different factories, and is, in fact, a combination. The same situation will also apply to the cane-sugar refiners. We have given days of earnest discussion to various methods by which we could effect this by direct action from the Food Adminis- tration to each producer, and we are compelled to abandon it as hopeless from a commercial point of view. Therefore, the problem becomes one simply as to whether or not the Sherman Act is to be 12 GOVERNMENT CONTROL OF SUGAR construed as a restriction on combination with a view to a reduc- tion in price, and, furthermore, in considering this problem, we cannot lose sight of the possible effects on having created such combinations in their after- war complexion. We would have been able to solve this entire problem, had it not been that the Senate struck out of the Food Bill the right of the Government to buy and sell sugar, and limited the control to profits and not prices. It would have been a comparatively simple operation for us to have bought the sugar from each in- dividual producer at a fair price, and to have undertaken the distribution ourselves by the use of the usual distributing ma- chinery in the sugar trade. Subsequently, in response to the above, the Attorney General gave the opinion that such contracts with the Government as mentioned above were not in contra- vention of the Sherman Act. Some preliminary nego- tiations were then entered into with beet-sugar producers representing 80 per cent of the whole industry. These negotiations were conducted during the week ending August 26, 1917, and a tentative agreement was reached to reduce the high price then prevailing by i-j cents. Later all the other producers joined in the arrangement, the basic price agreed upon being $7.25 per hundred pounds, cane basis, seaboard refining points. 1 An agree- ment was reached with the Louisiana producers, limiting the price for Louisiana plantation granulated sugars to $7.80 per hundred pounds and $7.25 for clarified sugar. A further measure, looking towards a decrease in price, was the request made of the refiners, that they refuse to pay more than $6.90 per hundred pounds for raw sugar, duty paid at New York. A refiners' margin of $1.30 per hundred pounds was agreed upon after investigation of prewar and war costs of refining. As a result of all these agreements and measures and other arrangements made in connection with the pur- chase of the Cuban 1917-18 crop, which are explained 1 This basic price was changed to $7.35 on December 12 and to $7.45 OB January 8, changes made essential by the agreement arranged with the Cuban producers. MOBILIZATION BY THE SUGAR DIVISION 13 below in another section, the price of raw sugar at New York decreased from $7.52 per hundred pounds on August 7 to $6.72 on November 30, 1917, and then dropped further to $6.005 on December 17, at which date the Cuban price was finally fixed by direct purchase of the whole 1917-18 crop by the International Sugar Committee. The weekly fluctuations in prices from August 7 to the end of the year were as follows : NET CASH DUTV-PAID PRICES DATE OF RAWS AT NEW YORK (Cents per Ib.) Aug. 7 7.52 Aug. 16 7.40 Aug. 22 7.46 Aug. 23 7.40 Aug. 29 7.02 Sept. 14 6.90 Sept. 24 7.02 Sept. 27 6.90 Nov. 30 6.72 Dec. 17 6.005 - In order that all the efforts of the Food Administra- tion in stabilizing the price of sugar might not be nullified by activity of the wholesale and retail trade in an oppo- site direction, regulations were issued limiting profits of wholesalers and dealers, and an intensified and widely diffused propaganda informed the general public what the maximum retail price for sugar should be. The retail price of refined sugar was reduced by activity in all these directions from i to 2 cents a pound in the territory north of the Ohio and west of the Mississippi, and about i cent a pound in the South and the Atlantic Seaboard States. Since the consumption of sugar in the United States in the four months September through December, 1917, amounted to about 990,000 short tons or 1,980,000,000 pounds, it is clear that a large amount was thus saved to the American people. For every 14 GOVERNMENT CONTROL OF SUGAR cant of increase in the price of sugar meant a loss to the consuming public of $19,800,000, and conversely, for every decrease of a cent, the consuming public saved a like amount. Alleviation of Conditions in the Eastern States in the Last Quarter of 1917 Statistical evidence had been accumulating for some time before the Food Administration was created, that a shortage in sugar was imminent before the end of the year. Accordingly, various measures were taken shortly after the Food Administration came into exist- ence, which would tend to improve matters, but there was not sufficient time ahead nor sufficient legal power to alleviate shortage conditions entirely. The first measure taken was the imposition of an embargo, on August 27, 1917, on sugar exports from the United States to all destinations except the allied nations. Furthermore, cooperation was secured of the Cuban Government, which placed an embargo on sugar exports from Cuba to all countries except the United States and the Allies, on October i, 1917. The second measure was an appeal to the American people to reduce their consumption of sugar both by decreasing its domestic use and by eating less candy and other articles in which sugar is used. A request was also made of the sugar-distributing trade on October 25, 1917, to supply the confectionery and sweet drink trade with but fifty per cent of their normal requirements. A cam- paign for increased fruit preserving, however, neutralized efforts to conserve sugar in these directions, but this was inevitable, since it was absolutely essential that as much perishable fruit be conserved as possible. The third measure was the attempt to move a maxi- mum amount of beet sugar, then being manufactured in large quantities, from producing centers to the other MOBILIZATION BY THE SUGAR DIVISION 15 parts of the country, particularly to the Northeastern States. Unusually severe weather and bad transporta- tion conditions balked the efforts of the Food Adminis- tration in this connection to a large extent. At one time 140 cars of beet sugar destined for the Northeast were held up owing to a transportation blockade. In spite of these discouragements, however, 393,475 tons, or 51.9 per cent of the total beet-sugar crop of 1917-18, were sold before January i, 1918, as against a prewar average of about 29 per cent. This rapid movement of the crop and its wide distribution was due in large measure to the efficiency of the Beet Sugar Distributing Committee at Chicago, which was the central organiza- tion created by the Food Administration under the terms of the agreement with the producers to distribute the 1917-18 crop. The Food Administration, as a further effort to obtain sugar for Northeastern States, released about 30,000 tons of sugar destined for shipment to France and Russia, for distribution in the section of the country where the shortage was worst. It is important to emphasize again that the problem in the last analysis was one of shipping. For there was at this time sufficient sugar in Java for all needs, and the Food Administration endeavored to obtain shipping to send there, but the Shipping Board could not allow ships for this purpose, nor could foreign shipping be secured. It was obviously detrimental to the war aims of the United States to send ships on such an errand when there was insufficient tonnage for more essential purposes. Cooperation with the Allies The efforts of the Food Administration to arrange some form of cooperation with the Allies, resulted finally in the creation of an International Sugar Com- mittee of five, of which two members, Sir Joseph White- Todd and John Ramsay Drake, represented the English, l6 GOVERNMENT CONTROL OF SUGAR French, and Italian governments ; two members, Earl D. Babst and Win. A. Jamison, represented the American Refiners, and one member, George M. Rolph, repre- sented the United States Food Administration. The duties of this committee were three-fold : (1) To determine the most economical sources of sugar supply from the standpoint of transport conditions. (2) To arrange for transport of sugar at uniform rates. (3) To allocate and distribute sugar between the United States and the Allies, subject to the approval of the respective governments. This committee began negotiations immediately with the Cuban producers, with the intention of purchasing the entire Cuban crop for the Allied Governments. The final agreement l was entered into on December 24, 1917, after both the Cuban and the American governments had participated in the negotiations. The price finally agreed upon was $4.60 per hundred pounds f. o. b. northern Cuban ports. Of the amount bought, one- third was to be sold to the Royal Commission on the Sugar Supply for export to Europe, the remaining two- thirds to go to the refineries of the United States. As it was finally worked out, 1,076,934 long tons went to Europe and 2,153,869 long tons to the United States, thus representing a transaction of 3,230,803 long tons, having a value of $330,000,000. Executive machinery was provided for the allocation of the sugar to the American refineries, for the shipment of this large amount of sugar to the different countries, and for handling all the necessary details involved in a transac- tion of such magnitude. Mobilization of the Various Branches of the Sugar Trade As noted above, Mr. Hoover appointed Mr. George M. Rolph chief of the Sugar Division of the Food Adminis- 1 See Appendix, Exhibit i, page 136, for this agreement printed in full. ' MOBILIZATION BY THE SUGAR DIVISION 17 tration on August 15, 1917, five days after the Food Control Act became effective. Mr. Rolph had been general manager of the California and Hawaiian Sugar Refining Company for the twelve years preceding. He had been surveying the field of possible war-time control of the sugar industry since the end of June, 1917, at which time he had been summoned to Washington by Mr. Hoover to discuss the matter. By the time the Food Control Act became law, an executive department to deal with sugar problems was already hi existence as a constituent entity of the Food Administration or- ganization, designated as the Sugar Division. The mobilization of the various branches of the sugar industry proceeded along with the activities relating to sugar price control. Following preliminary confer- ences with representatives of the beet-sugar producers in the last week of August and the first few weeks of September, the Food Administration announced on September 17, 1917, that plans had been formulated for the creation of a central distributing agency for all beet sugar produced in the United States. Such an agency, working under the direction of the Food Ad- ministration, was imperative during the war in order that the available supplies might be allotted equitably and with the greatest geographical efficiency, thus al- lowing greater utilization of the railroad facilities for military purposes. On September 20, 1917, the Food Administration announced that the contract between the Government and the beet-sugar producers had been signed by all the producers. This contract * provided for a maximum price of $7.25 per zoo pounds (cane basis seaboard refining points) for all beet sugar of the 1917-18 crop, unless increased by order of the Food Administrator later in the crop year in order to adjust the beet price to the price of refined sugar made from 1 See Appendix, Exhibit 5, for text of this agreement (page 155). c l8 GOVERNMENT CONTROL OF SUGAR foreign cane. Further, every producer who signed the contract agreed to ship sugar only to such localities and in such amounts as the Food Administrator, acting through the Sugar Distributing Committee, might direct. The Food Administrator agreed to direct the distribu- tion of the crop in "the most economical and efficient method consistent with an equitable distribution." Provision was made for the pooling of all freight charges and distribution expenses so that each producer re- ceived an " average net proceeds" per pound of his sugar. The seven men 1 named in the contract to act as the Food Administration Sugar Distributing Committee met in New York City on September 21, 1917, and proceeded with their work of organization. Formal jurisdiction was assumed by this body on October i, when the proclamation of President Wilson, putting the beet-sugar industry under the licensing provisions of the Food Control Law, became effective. The executive offices of this committee throughout the period of its existence were located in Chicago. While these arrangements were being made with the beet-sugar producers, conferences were being held with the cane-sugar refiners. On September 5, 1917, the Food Administration announced that, at a conference with representatives of practically all sugar refiners of the United States, it had been voluntarily agreed to import all foreign sugars during the war through a committee to be appointed by the Food Administrator, such sugars to be distributed proportionately to all refineries operating in the United States. The details of these arrangements were of necessity elaborated concurrently with the plans for the creation of the inter- allied council which was to purchase foreign sugars for the United States and the Allies and also the negotia- 1 H. A. Douglas, E. C. Howe, W. H. Hannam, S H. Love, W. L. Petrikin, S. W. Sinsheimer, and W. P. Turner. MOBILIZATION BY THE SUGAR DIVISION 19 tions with the Cubans for the purchase of the entire 1917-18 crop. The contract 1 as finally drawn up between the re- finers and the Food Administrator, which was dated October i, 1917, provided for a committee of five re- finers, designated as the American Refiners' Com- mittee, to carry out the provisions of the contract, Each refiner agreed not to purchase after October i. 1917, any raw sugar from the West Indies and other available import sources except through the Inter- national Sugar Committee. The International Com- mittee was to "arrange, route, and distribute" its pur- chases of raw sugars for the refiners' accounts, acting as far as possible hi accordance with refiners' con- veniences and requirements. The American Refiners' Committee was to arrange for a fair proportional allot- ment of the supplies to individual refiners and in event of friction the decision of the Food Administrator was to be final. Expenses of both the American Refiners' Committee and the International Sugar Committee were to be met by a levy on the total tonnage handled by the Committees, and the maximum margin for re- fining was fixed at a differential of $1.30 per 100 Ibs. f. o. b. refinery over the cost of raw sugars, assuming a basic duty-paid delivered price of raws of from 5! to 6 cents per pound. The cargo export business of the refiners was placed under the supervision of the Food Administrator. The period of the effectiveness of the contract was stated as "until the existing state of war between the United States and Germany shall have terminated." Through the above contracts with the beet-sugar producers and the refiners, the Food Administrator had mobilized for war ends all of the domestic sugar industry except the Louisiana producers, who supplied only about 1 See Appendix, Exhibit 4, for text of this contract (page 149). 20 GOVERNMENT CONTROL OF SUGAR 6 per cent of the annual consumption of the United States. No contract, such as was in existence in the following year, was entered into between the Food Administration and the some 160 odd Louisiana pro- ducers, but they were all under the licensing provisions of the Food Control Act and voluntary maximum price agreements were established with them as already noted above. But at a conference held in Washington on October 24, 1917, a contract was arranged through the medium of the Food Administration, between the American Sugar Refining Company and the repre- sentatives of the Louisiana producers, providing for the sale to the American Sugar Refining Company of 100,000 tons of Louisiana sugar at a price of $6.35 for 96 raw sugar at New Orleans. A freeze occurred, however, in Louisiana which reduced the crop seriously, so that only about 26,000 tons were actually delivered. The above machinery for control over the producers and refiners was supplemented by the various measures adopted for control over the distributing trade : the wholesalers, jobbers, and retailers. The activities of the Food Administration in this direction in control of sugar were based on policies and principles common to its control of the distribution of all other food com- modities and these are now too generally known to re- quire comment here. Encouragement of Production Perhaps the most serious problem confronting the Food Administration in its sugar activities was that of encouraging production while yet, at the same time, en- deavoring to check the upward tendency of prices. In the words of one critic, "it was proposed to reduce prices in spite of the overwhelming economic forces which were working always steadily and relentlessly toward their advance and at the same tune to stimulate MOBILIZATION BY THE SUGAR DIVISION 21 production. Nothing could be more desirable than both these purposes, but there was much doubt in the minds of those who reflected upon these subjects whether such an experiment as this could possibly succeed." 1 But when Mr. Hoover arrived in Washington, May 3, 1917, to advise the Council of National Defense on questions of food supply and control, he found the first serious threat to sugar production, not in any con- templated price control, but hi the political disturbances in Cuba. At the request of the Department of State, he investigated the situation, so that action might be taken by the United States Government to aid in preserv- ing order in Cuba. Subsequently, an agent of the American Government was sent to the island to co- operate generally with the Cuban Government in any measures which would be necessary to protect the sugar supplies of the United States. The final outcome was a decline in the Cuban crop of nearly 400,000 tons, al- though it was feared when the revolutionary disorders were at their peak, that the crop would be reduced by almost a miUion tons. After this initial disturbance in Cuba, no similar peril developed hi any of the principal sources of the American sugar supply during the war, but the Food Administration was confronted with the much more delicate and troublesome question of agree- ing upon prices with the producers which would stimu- late production. The problem would not have assumed such complexity if the entire sugar supply of the United States had originated in one or two localities. But of the total annual sugar consumption of the United States in prewar years, 49.8 per cent was shipped from Cuba, 13.66 per cent from Hawaii, 8.01 per cent from Porto Rico, 6.27 per cent came from Louisiana, 15.97 per cent from the domestic beet-sugar crop, and the balance, about 7 per cent, from miscellaneous foreign sources 1 Speech of Senator Henry Cabot Lodge in the Senate, February 27, igi8, on the shortage of sugar. 22 GOVERNMENT CONTROL OF SUGAR and the Philippines. Each of these regions differed in average costs of production, and reliable statistics of costs in most of these regions were meager and un- satisfactory. It was clear, however, that any significant increase in sugar production for any source but Cuba was out of the question, both for agricultural and economic considerations. Relatively large price increases would have been required to influence the production but slightly in Porto Rico, Hawaii, Louisiana, and the domestic beet industry, while tremendous strides in production, as the last few years have amply demon- strated, could be expected to result from an almost negligible price increase in Cuba. In the purchase of the 1917-18 crop "en-bloc" by the International Sugar Committee, the price of 4.60 f. o. b. Cuba, which was finally agreed upon, after months of conference, was considered sufficient by the Food Administration to encourage production, although the Cuban repre- sentatives requested 5.25 cents. The tremendous in- creases in the Cuban crops which have followed this action are testimonials to the sound judgment displayed at that time by the Food Administration officials. 1 So much for encouragement of Cuban production. The activities of the Food Administration in encourag- ing domestic production and the problems resulting therefrom are inextricably interwoven with other matters and are therefore best set forth in their proper places in other chapters below. Restrictions on Consumption While the Food Administration was endeavoring to encourage sugar production in the United States and Cuba as far as possible, it was inevitable that, should the war continue for several years, there would be a 1 See page 128 for figures of increased production in Cuba. MOBILIZATION BY THE SUGAR DIVISION 23 continuous and progressive decline in domestic sugar production, following the increased absorption of men into the military machine and into war industries. Moreover the European beet-sugar supply was being reduced further each year of the war, thus causing proportionally greater inroads upon the sugar supply of the Western Hemisphere. Finally, the basic problem was always the question of tonnage. It was evident that if the people of the United States would reduce their sugar consumption by only 500,000 tons, the result- ing conservation of tonnage would be a significant con- tribution towards a solution of the shipping problem. The advantages of such conservation from the view- point of economies in the national fund of labor, ma- chinery, and raw materials were also obvious. Accordingly, appeals were made by the Food Ad- ministration for voluntary conservation by the con- suming public. Thus, for example, on October 16, 1917, Mr. Hoover requested the people in the Western areas of the country to reduce their consumption of candy and sweet drinks, so that more of the beet sugar produced in this part of the country might move east- ward to relieve the shortage conditions there existent. Then again, the American public was asked to go on an honor basis of 3 Ibs. per person per month on December 13, 1917, and also to reduce the use of candy and sweet drinks. Supplementing appeals to the general public, the distributing trade was requested to regulate the amounts of sugar sold to the various sugar-using in- dustries. Thus, for example, on October 25, 1917, refiners were advised to deliver to manufacturers such quantities of sugar as when added to their stocks on hand, would amount to fifty per cent of their normal requirements. These voluntary appeals did not reduce consumption sufficiently and the "certificate" plan of rationing, described below, was adopted early hi 1918. 24 GOVERNMENT CONTROL OF SUGAR The year 1917 thus closed with the various branches of the domestic sugar industry mobilized for war pur- poses, cooperation established between the Allies and the United States, the distribution of available supplies under government direction assured for the crop year 1917-18, and measures initiated aiming at increased production and regulation of consumption. The work of the Food Administration was, however, only begun. For it was essential to prepare for the future on the generally recognized assumption that the war would continue beyond the coming crop year of 1917-18. The beet farmers in the West were already preparing for the planting of the 1918-19 crop and active measures were essential to stimulate an increased sowing or at least to maintain the normal acreage. Moreover, it was necessary to consider the prospects of available supplies and demand for the Allies for the year 1918 in order to provide for a possible shortage in the last quarter of the year. It was in the attempted solution of these difficulties that the Sugar Equalization Board was created, as the following pages indicate. CHAPTER II Problems Relating to Price THE difficulties of the Food Administration in re- gard to the price of sugar for the 1918-19 crop emerged from its accepted policy of encouraging domestic sugar production. For early in the history of the Food Ad- ministration there was definite acknowledgment of the fact that an encouragement of domestic sugar pro- duction was highly desirable, mainly because of the necessity for conservation of import tonnage but also in view of the gradual reduction in the world's supply. It was hardly to be expected that war conditions, with the consequent reduction of the labor supply, the high prices paid for competing crops, and the high price of materials, would allow much increase in the domestic sugar production,, but it was essential to take measures to maintain, at least, the normal production. In anticipation of a possible reduction in the sugar- beet acreages for the campaign of 1918-19, owing to the competition of more lucrative crops and high costs of labor and materials, Mr. Hoover sent the following circular letter to all sugar-beet farmers, dated October 22, 1917: One of the most vital problems confronting the nation is that of procuring sufficient sugar to meet the requirement of our people and of the Allied Nations fighting our common battle. The production of cane sugar in this hemisphere can and will be increased to a limited degree. But we must rely upon the farmers 25 26 GOVERNMENT CONTROL OF SUGAR in sugar-beet producing sections of the country for a part of the needed supply. I, therefore, earnestly appeal to every farmer, so situated, to come to his country's aid in this hour of need. Without the cooperation of the American beet grower our task will be very difficult and our ability to respond to the calls to be made upon us for this very essential commodity will be cur- tailed. It is at least the duty of every beet grower to maintain in 1918 his normal acreage of sugar beets. It is his privilege to increase the acreage to the extent that a well-balanced production of crops will permit, and in this manner effectively demonstrate his patriotism. It developed, however, that the beet farmers in the West were refusing to sign the customary contracts for acreage with the beet-sugar companies because they felt themselves unjustly treated with regard to prices. Moreover, their costs of production were mounting rapidly, competing crops were becoming more profitable, and there was a feeling that with a price restricted by agreement between the sugar factories and the govern- ment, the raising of beets would become progressively less profitable in comparison with the production of other food commodities, the prices for which were not regulated by the government. Mr. Hoover thereupon appointed local commissions in the principal beet- growing states to investigate costs of production and he further urged the beet-sugar companies to abide by the decisions of these commissions, promising these companies that if they would do so, the government in turn would undertake, in so far as it was able, to read- just prices for the sugar made from these higher cost beets so as to cover the increased outlay involved. These commissions summoned witnesses and conducted exhaustive examinations in the various states, later submitting reports to Mr. Hoover. The stenographic reports of the California hearings alone consisted of nine thick volumes of typewritten matter, containing the testimony of nearly one hundred growers of sugar beets from the various sections of California. REASONS FOR FORMATION OF SUGAR BOARD 27 The Colorado and the Nebraska commissions recom- mended that farmers be paid a basic price of about $10 per ton for beets, while the California Commission recommended a basic price of $8.25 per ton for beets of 15 per cent sucrose content, with various differentials for higher and lower grade beets, respectively. The beet-sugar factories agreed to abide by the decisions of these commissions and there is definite evidence that they carried out their promises. The Department of Agriculture reports the following average prices paid farmers for beets in 1918 in the various states as compared with other years : AVERAGE PRICE PAID FOR BEETS PER TON 1 STATE 1918 1917 1916 California $Q.CK $7.60 $6.30 Colorado ...... 10.02 7.28 6.06 Idaho 10.00 7.06 6.16 Michigan ...... 10.08 8.04 6.14. Nebraska 0.06 7.22 Ohio 10.03 7.18 6.83 Utah IO.OI 7.O4 ^.7^ Wisconsin IO.OO 8.81 Others 9.86 7.28 6.18 United States (average) . $10.00 $7-39 $6.12 The percentage of increase for the United States as a whole, in the price paid the farmers for beets in 1918, as compared with 1917, was thus 35.3 per cent. This increase in the price of beets was of course reflected in higher costs for the beet-sugar factories since the outlay for beets represented 58.2 per cent of the total cost of sugar production in the years 1909 through 1914. Moreover, the cost of all other materials used hi sugar 1 From Monthly Crop Reports, April, igig, and April, 1918. 28 GOVERNMENT CONTROL OF SUGAR production and the wages of labor had also increased rapidly. The Tariff Commission cooperated actively with the Food Administration in seeking to determine as far as possible the actual increase in costs. The results of the investigations carried on at that time have been incorporated in part in a bulletin published recently by the Tariff Commission. In this bulletin the Com- mission made the following pertinent comment relative to increasing costs : l "There has been a substantial advance in the prices of all the principal items entering into the production of sugar. Prices were higher for the season 1917-18 than before the war, and higher for the season 1918-19 than for 1917-18. The greatest percentage advance is shown in textiles, 231 per cent for bags and 256 per cent for filter cloth. Such high percentage advances, however, add less to the cost of sugar than items such as labor, which show a lower percentage advance but are relatively more important. A rise of 200 per cent in filter cloth would add about $1.30 to the cost of a ton of sugar in 1918-19 above the cost of 1917-18, while an increase of only 40 per cent in the wages of factory labor alone would add over $3 and if the rise extended to agricultural labor, as manifested by the increased cost of beets, the increased cost of a ton of sugar would be over $12." On the basis of the data submitted by the producers to the Tariff Commission and the Food Administration, it was possible to compute the probable cost of produc- ing a ton of sugar for the campaign of 1918-19 for each producer and it was possible to prepare a cost line curve showing the relative importance in sugar production of the low and high cost producers. Such analysis revealed the following situation : (i) A price of n^ cents per pound for seaboard re- fined sugar would have been essential to cover all pro- ducers and yield a profit of a cent a pound to the highest cost producers (excluding several sporadic cases of ab- 1 Costs of Production in the Sugar Industry, Tariff Information, Series f g, page 31. REASONS FOR FORMATION OF SUGAR BOARD 29 normally high costs due to special disaster or disad- vantage). (2) 9 cents a pound would have been essential to cover approximately 85 per cent of the production and yield a profit of a cent a pound to the higher cost producers of the group. (3) 7.45 cents a pound, the preceding year's price, would have covered but 30 per cent of the production, yielding a profit of i cent per pound to the higher cost producer of this group. It was therefore necessary that a price of at least 9 cents a pound for refined sugar be agreed upon if the beet-sugar production was to be maintained. Even at that relatively high price it was clear that many factories would face a loss, but, on the other hand, it was to be reasonably expected that a decreased pro- duction from this source would be counterbalanced by the increased production of the lower cost companies, owing to the stimulation of a profitable price. COST: CENTS PEE POUND (VALUE OP MOLASSES DEDUCTED) PER CENT OF TOTAL PRODUCTION or SUGAR PRODUCED UNDER EACH COST IN LOUISIANA Campaign of 1917- 1918 Anticipated for 1918-1919 5 cents II.7 I4.I 34-6 6l.2 86.4 95-8 96.4 98.3 99-4 99.4 2.1 2-3 I 7 .8 27-3 33-9 47.8 53-8 74-9 91.1 95-2 52 cents 6 cents . 65 cents 7 cents 7^ cents 8 cents 8| cents 9 cents oA cents . The domestic cane-sugar producers of Louisiana were in much the same situation. Figures submitted to 30 GOVERNMENT CONTROL OF SUGAR the Tariff Commission and the Food Administration by the Louisiana producers showed the situation there, as given in the table on the preceding page : l While the above figures show the cost of sugar pro- duction to be rather high for Louisiana, it must be re- membered that the greatest part of the sugar produced in that part of the country is suitable for direct con- sumption and commands a price almost equal to that of the refiners' standard grade of granulated sugar. The cost figures above, therefore, are more comparable with the beet-sugar producers' costs rather than with the Hawaiian or Cuban cane producers' figures. It was however clear from the figures submitted that a large proportion of the Louisiana Sugar Industry could not be maintained at a price basis of less than 10 cents per pound for refined sugar. 2 Investigation made by the Tariff Commission of the Hawaiian costs revealed a situation generally similar to that obtaining in the continental United States. The average cost of producing a pound of sugar in Hawaii had mounted from 3.06 cents hi 1913-14 to 4.08 cents in 1916-17 and 5.34 cents in igiy-iS. 3 The increase was thus much greater in the one year from 1916-17 to 1917-18 than in the three-year period from 1913-14 to 1916-17. It was anticipated that there would be a still greater increase in cost for the season of 1918-19, owing to a decreased production resulting from the impos- sibility of obtaining nitrates for fertilizer. Nitrates are absolutely essential for sugar production in Hawaii, since the soils there are of volcanic origin and contain 1 These figures were compiled by the writer from two sets of schedules sub- mitted by the Louisiana producers, one set having been submitted to the Tariff Commission, the other set to the Statistical Division of the Food Administration. 2 That is to say, it was anticipated that about 10 per cent of the production for 1918-19 would be produced at a cost of over 9 cents per pound. A basic price of 10 cents per pound would thus be required in order to give these pro- ducers a profit of a cent per pound. 'See page 14 of Tariff Information Series No. 9 for detailed figures of in- creasing costs for various items. REASONS FOR FORMATION OF SUGAR BOARD 31 no nitrates inherently, such as the soils of other sugar- producing regions. The United States Shipping Board ruled, however, that on account of the scarcity of ton- nage, no agricultural nitrates should be transported to Hawaii. It was estimated that the crop would be re- duced 160,000 tons if there were no further deliveries of nitrates. In contrast, however, with those high costs hi the domestic industry was the condition hi Cuba. Here, too, costs were mounting, but they were not as high as in the United States. The Mission from the Republic of Cuba, appointed by President Menocal to negotiate a price for the 1918-19 crop, submitted a brief to the Food Administration relative to the costs of production and the price for the 1918-19 crop, in which it was stated that the average cost per pound of sugar in 1916-17 for firms representing a production of 946,146 short tons, or 31.28 per cent of the total crop of that year, was 3.355 cents, whereas in 1917-18, the cost per pound for firms representing a production of 1,037,318 short tons, or 30.1 per cent of the total crop, had mounted to 3.88 cents, an increase of .525 cents per pound. The Mission stated that a price of 5.60 f. o. b. at the north ports of Cuba and 5.55 f. o. b. south ports would be required to sustain and to stimulate the production of sugar for the 1918-19 crop, as compared with 4.60 north ports of Cuba and 4.55 south ports for the previous crop. The Commission thus apparently anticipated an average increase of about i cent per pound in the cost of sugar production in Cuba for 1919 as compared with 1918. Not only were producers' costs mounting but re- finers' costs as well. The committee of the refiners, which was appointed to inquire into and report upon the increased costs of refining, reported on May 3, 1918, the following average increases since September 15, 1917, on the principal items which go to make up the cost of refining : 32 GOVERNMENT CONTROL OF SUGAR On labor 0313 cents per Ib. On fuel 0089 cents per Ib. On packages ..... .1178 cents per Ib. On supplies 0076 cents per Ib. Total 1656 cents per Ib. The price situation, as it appeared in June, 1918, may be then summarized as follows : (1) Cuba, which normally supplied the United States with 49.8 1 per cent of the total annual supply, requested a basic price for raw sugar of 5.60 cents per hundred pounds f. o. b. Cuba. This price was considered suf- ficient to stimulate production in Cuba. (2) The domestic beet sugar industry, which supplied 15.97 l P er cen t f the total annual consumption of the United States, required a basic price of at least 9 cents per pound for refined sugar to maintain production. (3) The domestic cane industry in Louisiana, which supplied 6.27 l per cent of the total annual consumption of the United States, required a basic price for refined sugar of about 10 cents per pound to maintain the pro- duction. (4) The Hawaiian industry, which supplied 13.66 per cent of the total annual consumption, required about the same price as the domestic beet industry. (5) The refiners requested an increased margin of about 1 6 cents per hundred pounds to cover the in- creases in refining costs. If the price of sugar was to be raised only sufficiently to meet the needs of the Cuban producers, the resulting basic wholesale price for refined sugar at seaboard re- fining points would have been 8.54 cents per pound. The difference between 8.54 cents and the 5.60 cents to be paid to the Cubans for raw sugar would have been made up as follows : 1 Average for years 1911-12 through 1914-15, compiled from figures on page 446 of reports on "The Cane Sugar Industry," Miscellaneous Series, No. 53, of Department of Commerce. REASONS FOR FORMATION OF SUGAR BOARD 33 Basic price for 96 test centrifugal sugar f. o. b. north ports Cuba per 100 Ibs $5.60 Duty, freight, and insurance 1.40 Refiners' existing margin (net cash basis) 1.30 Probable increase in refiners' margin essential to meet in- creased cost of refining .15 Plus 7 per cent of increased price of raws 1 to refiners . . .09 Basic (net cash) wholesale price for refined sugar per 100 Ibs. 8.54 Between the above price of 8.54 per 100 Ibs. for the refined Cuban sugar at seaboard points and the basic net cash price of 8.82 2 desired for the domestic beet sugar there was a differential of 28 cents per hundred pounds. The dilemma confronting the Food Adminis- tration was either to advance the price of sugar in the United States to 8.82 2 cents, thus covering the needs of the domestic industry, but giving the Cubans 28 cents a hundred pounds more than they had asserted was essential to maintain and stimulate the Cuban pro- duction, or disregarding the previous promise to the domestic industry, to advance the price only to $8.54, the point where the Cuban production would be main- tained. There were two objections to the first plan the fixing of a price of 8.82 cents : (1) It would have involved the payment to Cuba by the people of the United States of about $18,000,000 more than was essential to maintain the Cuban pro- duction during 1919. (2) The Allies, particularly the United Kingdom, who wished to buy about one-third of the Cuban crop to meet their needs, as they had done in the previous year, strongly objected to making this unnecessary payment to Cuba. There were, on the other hand, several objections to the second plan the fixing of a price of 8.54 : 1 Required to cover the 7 per cent loss of sugar in the melting process. 3 The list price of $9, less 2 per cent for cash. 34 GOVERNMENT CONTROL OF SUGAR (1) The Food Administration, as explained above, 1 had assured the beet-sugar producers that if they would abide by the recommendations of the various state commissions relative to the prices to be paid farmers for beets, the Food Administration would undertake, so far as it was able, to obtain for them a fair price for the sugar made from these beets. As the figures indicated above show 2 there was no question but that the beet- sugar producers had done as required and the Food Administration in turn was under obligations to main- tain its previous promises. (2) The lower price would have had a tendency to discourage the domestic sugar production, every ton of which saved an equivalent amount of shipping tonnage. The importance of the domestic industry was em- phasized in June by the sudden appearance on the Atlantic Coast of German submarines, which sank 13,000 tons of sugar in a few days. The one practical solution was the creation of a sugar commission, such as Mr. Hoover had suggested to the Senate Committee on Agriculture in June, 1917, which would purchase sugar in cooperation with the Allies, who already had a similar organization. Such an organization could purchase from Cuba, Java, Peru, or from any foreign source of supply at any price that was desirable with a view to better economy of supplies and shipping for all the Allies, and resell to the American refiners at an average price. Problems Relating to Supply and Distribution A careful inventory made in the spring of 1918 of the available supplies for the United States for the seven months June-December, 1918, revealed the strong probability of a sugar shortage. It was of course difficult to foretell exactly the size of the various crops at that 1 See page 26 above. 2 See page 27 above. REASONS FOR FORMATION OF SUGAR BOARD 35 early date. Varying weather conditions in Cuba be- tween June and August could easily accbunt for a dif- ference of some 200,000 to 300,000 tons, or the equivalent of almost a month's supply for the United States. The estimates for the crop by the experts varied from 3,200,000 long tons 1 to 3,589,429 2 long tons, and it was of course advisable to use as a basis the most con- servative figures. The situation then appeared as follows : (Quantities in Short Tons) Stocks on hand June i, 1918 298,000 Raw cane (in refiners' hands) 163,000 Beet sugar 85,000 Refined cane sugar (in refiners' hands) 50,000 298,000 Expected receipts (June i-Dec. 31, 1918) 1,981,000 Cuban 954,000 Hawaiian 338,000 Porto Rican 189,000 Domestic cane 150,000 Domestic beet 350,000 1,981,000 Total stocks and receipts (raw and refined) 2,279,000 Total stocks and receipts (in terms of refined) 2,150,000 Requirements for United States consumption in terms of refined sugar on normal basis (June i -Decem- ber 31, 1918) , 2,616,000 Deficit considering United States consumption only 466,000 Deficit considering required minimum exports to Allies of about 200,000 tons 666,000 It was evident then that the margin between the available sugar supply and the requirements of the United States both for consumption and exports to the Allies, for the year 1918, would be a narrow one at best. This situation was due to three causes, first : the efforts to restrict the consumption of sugar in the United States by appeal to the public for voluntary conservation had 1 Willett & Gray's estimate. 2 Estimate of the Cuban statisticians, Messrs. Guma-Mejer. 36 GOVERNMENT CONTROL OF SUGAR not been sufficiently fruitful; secondly, there was no reserve supply of consequence on hand in the United States, either in refineries, mills, or warehouses, or in the hands of wholesalers, jobbers, and retailers ; thirdly, the Allies, in order to economize shipping, were becoming increasingly dependent on the Western Hemisphere for their supplies. It will be of importance to consider each of these matters more in detail. (i) Difficulties in Restriction of Consumption The problem of reducing the sugar consumption of the United States was an extremely difficult one. The prewar annual per capita consumption of the United States was about 83 pounds, as compared with 42 pounds for France and 91 pounds for the United Kingdom. The per capita consumption of the United Kingdom in 1917 had been reduced to about 52 pounds, while France was consuming at the rate of 35 pounds. There was, therefore, considerable room for reduction of sugar con- sumption in the United States. But war conditions tended to increase consumption in the United States. For one result of the war had been the increased pros- perity and the increased purchasing power of a very large part of the consumers. Sugar is normally used, unlike many other food commodities, as a constituent in many other food products, so that the demand for sugar ' multiplied in all directions. Condensed milk, candy, soft drinks, canned fruits and vegetables, ice cream, flavoring extracts, chewing gum, sweet pickles, catsup, chili sauce, baked goods, and many other edible products, all require sugar, as also certain nonedible products such as tobacco, dental preparations, drugs, explosives, and glycerine. Products such as condensed milk were exported in large quantities to the Allies and the sugar so used was therefore not to be considered as consumed by the people REASONS FOR FORMATION OF SUGAR BOARD 37 of the United States, but the effect was to create a larger demand for sugar in this country. In addition the armed forces of the United States consumed much more sugar per capita than the civilian population. Considerable amounts were shipped for the Red Cross, Y. M. C. A., Knights of Columbus, and other war or- ganizations. The Food Administration, in accordance with its general policy of voluntary conservation, had endeavored hi the first period of its control of sugar to combat this tendency towards increased consumption through ap- peals to the patriotism of the public and of the dealers. There has been a general impression both in and out of the Food Administration that these appeals to patriotism did not result in any saving. The figures available demonstrated, however, that a saving was effected. Consumption remained at the prewar level, when a large increase in consumption would have been an- ticipated such as actually occurred in 1919, the first year of unrestricted consumption. Conservation through patriotic appeal alone was not sufficient, however, particularly hi view of the probable continuance of the war for another year. It was es- sential to create some restrictive mechanism, which the Food Administration could count upon as being defini- tively productive of results whenever quick results were desirable. Any card rationing scheme such as existed in Europe involved a large expense for printing cards for a population of over 100,000,000 1 and a still greater expense for general supervision and execution. It was obvious that to solve the problem satisfactorily there was need for the creation of such a corporation as Mr. Hoover had originally suggested, which could under- take the problem of sugar distribution and control, and pay the expenses of such undertaking through a frac- 1 It was estimated that the printing cost alone would have beem $100,000 a month. (See page 44 below.) 38 GOVERNMENT CONTROL OF SUGAR tional profit 1 made in the purchase abroad of foreign sugars and the resale to the American refiners. (2) The Reserve Stocks The sugar supply of the United States at any one time consists bf three parts: first, the "visible" stocks, that is, raw and refined sugars held in mills, factories, refineries, and bonded warehouses in the United States ; second, the "invisible" supply, or sugar held by hotels and restaurants, sugar-using industries, jobbers, whole- salers, and retailers ; third, the sugar available from the current seasonal production in the various sources of supply, principally Louisiana, the beet-sugar territory of the United States, Cuba, Hawaii, Porto Rico, and the Philippines. A gradual attenuation had occurred during the war in both the "visible" and the "invisible" sup- plies of sugar in the United States. This decline was due to a combination of several factors. First, the shipping situation for the United States had not been such as to encourage the movement of more sugar from Cuba, Hawaii, and Porto Rico than was necessary to meet current needs. Second, the stabilization of prices and profits for all the branches of the sugar industry from refiner to retailer had a strong tendency to dis- courage larger holdings than was essential for a "hand to mouth" trade. In previous years the speculative factor had induced larger holdings of sugar, particularly in those months of the year when there was heavy sugar production in all the sources of supply. During the war, on the other hand, with the price of sugar stabilized and with the prospect of equitable distribution of the available sugar supplies by government control, there was no inducement to accumulate stocks. Third, there was a general world shortage of supplies, particularly 1 Such a profit would otherwise have been dissipated in small margins to the foreign producer or the refiner. REASONS FOR FORMATION OF SUGAR BOARD 39 for allied and neutral countries, and this shortage forced reduced surplus holdings in all importing countries. In view of this reduction in marginal supplies the Food Administration was constantly in fear of a sugar famine, if there should be any interruption in the con- tinuous flow of sugar to the United States from Cuba, Hawaii, or Porto Rico. For there was always the pos- sibility of labor disturbances in the sources of supply or in the ports of the United States. It was felt that it was necessary to provide the United States with a reserve supply of at least two months requirements of sugar, or about 600,000 tons. 1 Such an undertaking, however, required large financial resources and could not properly be managed by the existing agencies in the Food Administration. (3) The Sugar Position of the Allies As the war continued the Allies had turned in in- creasing degree to the United States and Cuba for supplies of sugar. The figures on the following page show to what extent this was true. While the production of sugar hi Cuba and the United States had increased considerably in this same period, there had been a simultaneous increase 2 in consumption in the United States, which partially neutralized this gain hi production. The net result of the operation of the several factors noted was to leave a smaller margin of supplies for the United States for domestic use in 1917 than was present in 1913. But in 1918 the drain from the Allies was to be even greater, since the United 1 The Food Administration was influenced in this direction by the example of the British Ministry of Food, which had accumulated 271,000 long tons of sugar on June i, 1918, as against only 30,000 tons on June i, 1917, and 243,406 tons, the prewar average for June i . * This increase in production amounted to about 1,040,000 short tons, while the increase in consumption amounted to about 225,000 short tons of refined sugar. The requirements of the United Kingdom, France, and Italy from the United States and Cuba increased 877,000 tons in this period. GOVERNMENT CONTROL OF SUGAR States Food Administration, acting in cooperation with the Allied governments, had purchased in December, 1917, the entire Cuban exportable surplus for the United States and Allies, a full third of which, or approximately 1,150,000 short tons, was to go to the United Kingdom, France, and Italy. When the contract was made in December, 1917, it was believed that the needs of the Allies would be met fully by this allotment together with other minor sources of supply which they could tap. IMPORTS INTO THE UNITED KINGDOM, FRANCE, AND ITALY FROM THE UNITED STATES AND CUBA (Quantities in Short Tons) 1913 1914 1915 1916 1917 Imports from United States (mostly re- fined) to United Kingdom France .... Italy .... 141,602 978 211,346 210,648 187,803 275,644 32,830 42,534 232,726 20,962 142,580 421,994 496,277 296,222 Imports from Cuba (mostly raw) to United Kingdom France .... Italy .... 251,134 21,382 293,290 37,636 402,915 6,801 619,992 120,196 6,285 789,032 61,243 3,823 272,516 330,926 409,716 746,473 854,098 Total imports from U. S. and Cuba into United Kingdom, France, and Italy . 272,516 473,506 831,710 1,242,750 1,150,320 The great effort, however, put forth by the United States and the Allies in 1918 did not tolerate any waste of shipping, and it was found in June that, assuming a REASONS FOR FORMATION OF SUGAR BOARD 41 Cuban exportable surplus of 3,472,000 short tons, at least an additional 112,000 tons of refined sugar would be required in order to maintain the meager rations of the Allies and to prevent their recourse to distant markets such as Java. So much, then, for the problems facing the Food Administration in connection with the 1918-19 crops. Solution of the price problems was required immediately, since beet sugar made from the new crops was about to enter the market. The problems relating to supply and distribution were even more pressing, since a severe sugar shortage was threatening. The following pages discuss the manner in which these two sets of problems were met, through the work of the Sugar Equalization Board. CHAPTER III INCORPORATION AND ORGANIZATION IN the preceding chapter, the author endeavored to point out the main problems which the Food Ad- ministration faced in the spring of 1918 in connection with the price, supply, and distribution of sugar in the United States and the urgency for the creation of a com- mission or corporation, as had been done abroad, to solve these problems. In June, 1918, before taking definite action to form such a corporation, Mr. Hoover sent the following memorandum to the President, out- lining the entire situation : The time has arrived when we must make several changes in our methods of handling sugar. First: We must make some preparation for handling the new sugars, as our domestic beet- and cane-sugar production begins late in August, although the new Cuban sugar does not arrive until December. We have made great endeavors to stimulate our domestic sugar production this year, not only because of the world shortage in sugar but also to relieve import tonnage. Amongst our activities in this direction was the creation of a series of commissions, which arranged for a large advance to beet producers over their return for the year before. In order to secure from the factories an adherence to the "commission" price for sugar beets, I undertook that we would adjust the price of sugar so far as the Government was able, next year, to cover the increased cost of beets and a fair profit. Much the same story applies to Louisiana sugar. We shall probably not secure as large a production of do- mestic sugar as last year, however, as the shortage of labor (the beets are an intensive crop) will no doubt curtail them somewhat. However, in order to cover assurances it will be necessary to in- crease the price of domestic sugar somewhere between one and one half cents per pound, the figure not being accurately 42 INCORPORATION AND ORGANIZATION 43 determinable until we have completed further investigation as to costs of sugar production this year, in which matter the Tariff Commission is extending us great assistance. On the other hand, the cost of production in Cuba has not increased anything like the proportion of increased cost in the United States, for the fundamental reason that there has been no comparable advance in the cost of labor and supplies in Cuba to that of the United States. It will, however, be necessary to increase the price of Cuban sugar next year to some extent to cover their advanced cost and maintain a stimulated production, but advance in Cuban sugar will probably not amount to more than one half cent a pound to give ample satisfaction to the Cuban people. We therefore arrive at a disparity in these situations for which we must find some solution. If we advance the price of Cuban sugar to a level that will carry out our assurance to the domestic producer this year and stimulate it for next year, we will be paying to the Cubans from one half to one cent a pound more than is necessary to maintain their production with fair profit. This will mean a toll to the American people of from $20,000,000 to $40,000,000. The only solution that I can see and I have consulted Dr. Taussig, who is in agreement would be that we should, in order to secure foreign sugars generally in cooperation with the Allies, place ourselves upon the same footing as they by the pur- chase of foreign sugar for our government jointly. We should purchase in Cuba, Peru, Mexico, Java, or anywhere else at prices proper to the occasion and make an average price to our refiners. This next year the operation would show considerable profits. If this were done, we would need to secure from you, say, $5,000,000 capital and to make a corporation to handle the details. The business would not be accompanied with risk, for it would be protected with contracts for both purchase and sale. Such an arrangement would save us from many of the great difficulties of our present sugar arrangements with American refiners and would gain in better handling of shipping over present arrangements. Second: We have lost considerable sugar by submarines; the imports of Philippine sugar have been greatly curtailed by shortage of shipping; the Cuban crop has not come up to ex- pectations; the French and Italians have lost considerable beet sugar by the German drives all cumulating to shorten our supplies this year beyond expectations. In consequence we must by various devices gradually reduce sugar consumption from July first onward. Degeneration in sugar supplies is one of the marked features of every country and we must expect it 44 GOVERNMENT CONTROL OF SUGAR to go on through the war. Sugar is the one commodity that voluntary conservation does not sufficiently reach. I suppose the great sugar eaters are those of the least moral resistance in the community. Therefore we must put into effect some form of sugar rationing and a drastic control of distribution. Other- wise we shall have territorial and industrial injustices all over the country. I propose an honor system of cards. Any execu- tion of this kind becomes at once expensive, for printing alone for 20,000,000 households will cost $100,000 a month, to say nothing of supervision. I would propose to solve this by having the corporation above referred to undertake* the distribution of sugar as part of its ex- penses. It seems to me fundamentally sound that the users of a commodity should pay for the cost of its distribution rather than the Government. The problem would probably arise as to the ultimate con- version of profits into the American Treasury as the profits on foreign sugar will greatly exceed the cost of distribution. It might be that the year following we would want to use the re- serve thus created to stabilize sugar in the other direction by a larger proportion of imports, at a loss, from more distant markets if our shipping increases. If, at the end of the war, such a sum did exist, there should be no trouble in Congress finding a way to deal with it. The Food Administration had not the authority to buy sugar directly under the Food Bill, but the great success of the Grain Corporation and the smoothness with which it has operated, the integrity with which it has been carried on, and the tremendous volume of its operations give a sound precedent to the feasibility of the operation. Our legal staff see no reason why it should not be undertaken by yourself from your emergency funds, as it is an issue of national importance. I should be glad to have your views on the subject. In a letter to Mr. Hoover June 17, 1918, the President expressed his approval of the proposed plan. By virtue of the Sundry Civil Appropriation Act of July i, 1918, the President of the United States was empowered to expend at his discretion $50,000,000 "for the national security and defense and for each and every purpose connected therewith." Under the powers granted by the above Act, the President authorized l the formation of 1 See Appendix, Exhibit 16, for letter of authorization, page 225. INCORPORATION AND ORGANIZATION 45 a corporation to be known as the United States Sugar Equalization Board, Inc., and subscribed for the capital stock in the name of the United States. The Board was incorporated on July n, iQiS, 1 in the state of Delaware and the first meeting of the Board of Directors took place on July :i8, 1918. The Food Administration issued the following notice on July n, 1918, in relation to the objects of the corporation. The purposes of the Board are to equalize the cost of various sugars and secure the better distribution. The arrangements will facilitate joint dealing with the Allies in foreign sugars and the adjustments of differentials in overseas freight rates. Under certain circumstances, it may be advisable to acquire the pro- duction of some beet-sugar factories that cannot under the present price of beets be sold to the public at a reasonable price. The Board will take charge of the distribution plan initiated on July i, and will conduct this plan at the expense of the Board. The Board will be incorporated to the extent of $5,000,000 of capital, which will be supplied by the President from his special funds, in order to enable it to deal with facility in foreign sugars and otherwise, and the whole stock will be held by the President for the United States Government. The object is to absorb the high peaks of cost in sugar production and to make a small mar- gin on the low cost of certain foreign sugars which may be pur- chased, and thus secure an equalization of the price to the public on a lower level than will otherwise be possible. The arrange- ments will further secure an even distribution of the sugar through- out the United States. It is expected that any profit will be equalized to the consumer over the year's operations. At the first meeting of the Board of Directors, July 1 8, 1918, at the offices of the Food Administration in Washington, D. C., the folio whig officers were elected : Chairman of Board of Directors Herbert Hoover President George M. Rolph Treasurer Theodore F. Whitmarsh Secretary Robert A. Taft 1 For certificate of Incorporation and By-Laws, see Appendix, Exhibits 14 and 15 (pp. 213-225). 46 GOVERNMENT CONTROL OF SUGAR An offer was accepted from Woodrow Wilson, the President of the United States, acting in behalf of the United States, to subscribe for and pay in cash for air the unissued shares of the capital stock of the company. The acceptance of this offer marked the end of the legal processes necessary to the incorporation and forma- tion of the Board, and to the establishment of the corporation on a sound financial basis. A resume of the personnel of the Directorate of the Board may not be out of place at this juncture. The Chairman, naturally enough, was the Federal Food Administrator, Herbert C. Hoover; George M. Rolph, the president, had been chief of the Sugar Division of the Food Administration since its formation. Previous to his connection with the Food Administration he was general manager of the California and Hawaiian Sugar Refining Company at Crockett, California, and he re- signed from this position in order to enter the national service without compensation. George A. Zabriskie of the Produce Exchange of New York City had been with the Food Administration since December 12, 1917, in charge of wholesale and retail flour distribution. On June 25, 1918, he was appointed Chief of the Distribution Division of the Food Administration and both flour and sugar distribution were attended to from his office. Wm. A. Glasgow, Jr. of Philadelphia had been con- nected with the Food Administration as its chief counsel since January, 1918. Dr. Frank W. Taussig, Professor of Political Economy at Harvard, was chairman of the Tariff Commission at Washington. Theodore F. Whit- marsh had been connected with the Food Administra- tion since August 16, 1917. Clarence M. Woolley was one of the Directors of the War Trade Board. It will be noted that none of the Directors had any connection with the sugar trade and all, of course, served on the Board without compensation. The legal preliminaries over, the next step was an INCORPORATION AND ORGANIZATION 47 arrangement for an efficient organization to handle all the intricate detail necessarily involved in the control of an industry of nation-wide scope. The basic principle was the utilization of existing agencies previously created in the Food Administration dealing directly and in- directly with sugar problems. The chart on the fol- lowing page gives graphically the general plan. The Cuban, the Hawaiian, the Porto Rican, the beet-sugar and the Louisiana producers all had previously had com- mittees or representatives to act as media between themselves and the Food Administration, while the American Refiners' Committee, which had the task of carrying out the details of the provisions of the refiners' contract with the Food Administration, had functioned as the representative body for the American refiners. The Sugar Division of the Food Administration, headed by Mr. Rolph, who was at the same time President of the Board, occupied a central position in contact with the representatives of all the above producers, sugar manu- facturers, and refiners. This Sugar Division was the Clearing House where all problems were handled in relation to supplies, prices, and distribution of sugar from manufacturers and re- finers. Important questions of general policy, which arose constantly, were referred by the Chief of the Sugar Division, Mr. Rolph, to Directors of the Sugar Board for decision. Problems of distribution from jobbers and wholesalers on to the retail trade were to be handled by the Distribution Division of the Food Administration under Mr. Zabriskie. Subsequently a "certificate" scheme of distribution was set up which involved the utilization of the offices of all State Food Adminis- trators throughout the United States. In determina- tion of policies, frequent recourse was essential to statistical data on costs of sugar production, supply and consumption of sugar in all the countries of the world, import and export data, etc. The Board utilized 4 8 GOVERNMENT CONTROL OF SUGAR O c o: g DQ N _J < , functioning in a period of national stress and world upheaval. In order that the experiences and information derived in the period of control might not be lost to the general public, the Directors of the United States Sugar Equalization Board have authorized the publication of this book. Preliminary figures. APPENDIX APPENDIX TABLE OF CONTENTS THE CONTRACTS BETWEEN THE PRODUCERS OR REFINERS AND THE UNITED STATES GOVERNMENT Exhibit i, Agreement as to Cuban Sugars, 1917-18 crop, of December 24, 1917. Exhibit 2, United States Refiners' Raw Sugar contract terms, Cubas cost and freight. Exhibit 3, Conditions of the usual contract form of the Royal Commission on the Sugar Supply. Exhibit 4, Agreement between Herbert Hoover and the Re- finers of October i, 1917. Exhibit 5, Agreement with Beet-Sugar Producers, 1917-18 crop. Exhibit 6, Agreement as to Cuban Sugars, 1918-19 crop, be- tween U. S. Sugar Equalization Board, Inc. and a commission of the Republic of Cuba and agents of Cuban Producers. Exhibit 7, Authorization to sell under Agreement as to Cuban Crop of 1918-19. Exhibit 8, Agreement between the U. S. Sugar Equalization Board, Inc. and Herbert Hoover, U. S. Food Administrator, and U. S. Sugar Refiners, October 24, 1918. Exhibit 9, Agreement with the U. S. Food Administrator as to sale and distribution of beet-sugar crop, 1918-19, September 18, 1918. Exhibit 10, Agreement with U. S. Food Administration as to Louisiana Sugars, October, 1918. Exhibit n, Assignment to the Royal Commission on the Sugar Supply by the U. S. Sugar Equalization Board, Inc. of its Rights to one-third of the Sugar pur- chased under Agreement as to Cuban Sugars, crop 1918-19, October 24, 1918. Exhibit 12. Option given to Royal Commission on the Sugar Supply by Refiners of the United States for the 132 APPENDIX Refining of 321,000 tons Cuban Raw Sugar, November 22, 1918. Exhibit 13, Letter confirming the increase from 321,000 tons raw sugar (300,000 tons refined) to 535,000 tons raw sugar (500,000 tons refined) to be refined for Royal Commission, April 30, 1919. CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE U. S. SUGAR EQUALIZATION BOARD, INC. Exhibit 14, Certificate of Incorporation. Exhibit 15, By-Laws. Exhibit 1 6, Letter from President Wilson authorizing the forma- tion of the U. S. Sugar Equalization Board, Inc. IMPORTANT LETTERS AND MEMORANDA Exhibit 17, Letter from President of the Board to War Trade Board urging the reimposition of wartime control over exports of refined sugar from the United States, July 29, 1919. Exhibit 18, Memorandum from Dr. Raymond Pearl re the Im- portance of Sugar as Food, August 9, 1918. Exhibit 19, Letter from Messrs. R. B. Hawley and Manuel Rionda to Mr. Zabriskie on July 29, 1919, tender- ing the Cuban Crop of 1919-20 to the U. S. Sugar Equalization Board, Inc. Exhibit 20, Letter from Messrs. R. B. Hawley and Manuel Rionda of September 22, 1919 to Mr. Zabriskie withdrawing tender of 1919-20 crop. Exhibit 21, Letter and memorandum to the U. S. Secretary of Agriculture giving the Board's attitude on the McNary Bill. *STATISTICAL TABLES OF THE SUGAR INDUSTRY OF THE UNITED STATES Exhibit 22, Receipts and meltings for each refinery for years 1918 and 1919. Exhibit 23, Shipments of sugar refined for Royal Commission in 1919, by each refiner. Exhibit 24, Shipments of sugar by refiners exclusive of Royal Commission sugars, 1919. Exhibit 25, Basic Statistical Data of the U. S, Sugar Industry APPENDIX 133 for the years 1919 and 1918 compared (as issued by the Statistical Dep't of the U. S. Sugar Equali- zation Board, Inc.). Exhibit 26, Sugars supplied for the Army, Navy, and various relief organizations. STATISTICS OF THE WORLD'S SUGAR INDUSTRY Exhibit 27, Effect of the War on World's Sugar Production. Exhibit 28, Effect of the War on World's Exports. Exhibit 29, Effect of the War on World's Imports. EXHIBIT 1 AGREEMENT AS TO CUBAN SUGARS 1917-1918 CROP Agreement entered into this 24th day of December, 1917, in the City and State of New York, by and between the INTERNATIONAL SUGAR COMMITTEE of the UNITED STATES FOOD ADMINISTRATION, a CUBAN COMMISSION and a CUBAN COMMITTEE FOR ARRANGING COMMERCIAL TERMS appointed by the President of the Republic of Cuba, AGENTS OF VARIOUS CUBAN PRODUCERS acting severally for the producers of sugar in the Island of Cuba, THE ROYAL COMMISSION ON THE SUGAR SUPPLY and REFINERS of sugar in the United States, acting severally, signatory hereto, WITNESSETH : WHEREAS, pursuant to an Act of Congress, duly ap- proved on the loth day of August, 1917, and an Executive Order of the President of the United States of the same date, the United States Food Administration has been created and Herbert Hoover has been appointed United States Food Administrator ; and WHEREAS, the said United States Food Adminis- trator has appointed George M. Rolph, Earl D. Babst, William A. Jamison, Sir Joseph White-Todd and J. Ramsay Drake a Committee of the United States Food Administration called the International Sugar Committee, with headquarters in New York, to co- operate with The Royal Commission on The Sugar Supply, of London, England, and to arrange for the purchase of the imported raw sugar requirements of the 136 EXHIBIT 1 137 United States of America and of other Nations at war with Germany ; and WHEREAS, all refiners of sugar in the United States have heretofore entered into contracts with the said United States Food Administrator, in the form of that annexed and marked Exhibit A, to arrange for the pur- chase of raw sugar through the said International Sugar Committee and the sale of the same at a maximum re- fining margin, and the American Refiners' Committee named in the said Exhibit has fixed the basis of propor- tionate distribution of the said sugar so purchased as is set forth in Exhibit B annexed hereto (both Exhibit A and Exhibit B are made a part hereof) ; and WHEREAS, the President of the Republic of Cuba has appointed Carlos Manuel de Cespedes, Ernesto Longa, Miguel Mendoza, Hannibal J. De Mesa and Jose M. Tarafa, a Cuban Commission to arrange for the sale of sugar produced in the Island of Cuba during the crop season 1917-1918 and has also appointed Robert B. Hawley and Manuel Rionda a Cuban Committee for Arranging Commercial Terms of sale of such sugar; and WHEREAS, the said Cuban Commission have repre- sented that there is power" and purpose in the Govern- ment of the Republic of Cuba to co-operate in the es- tablishment of a stabilized price for a part or whole of the Cuban crop of 1917-1918, as well as for providing for its sale through and under the authority of a desig- nated entity, such as the International Sugar Com- mittee, and also to control by license the export of any Cuban sugar to any person, entity or country under specified terms and conditions, including price; and WHEREAS, the said International Sugar Committee and the said Cuban Commission in co-operation with the other parties hereto have arranged for the purchase and sale of sugar produced in the Island of Cuba during 138 APPENDIX the crop season 1917-1918, upon the terms and con- ditions hereinafter stated ; Now, THEREFORE, the parties hereto each for him- self for the part to be performed by him agrees as follows : The said Cuban Commission will immediately procure that each and every producer of sugar in Cuba, desirous of availing himself of the terms and conditions of this agreement, shall duly authorize an agent in the City of New York (hereinafter called the Seller) to contract for and sell to the International Sugar Committee (herein- after called the Buyer) as it may require an estimated seventy-five (75) per cent of, or at the Buyer's option as detailed herein, his or their output of sugar deliverable for export f. o. b. at shipping ports in Cuba and c. & f. for United States ports proportionately as hereinafter stated ; said authority to be in writing and filed with the Buyer and shall state the name and location of factory or factories of the said producers and the estimated pro- duction of each during the crop season 1917-1918; it being understood that an estimated seventy-five (75) per cent of the total amount of the sugar to be produced will aggregate about 2,500,000 tons of 2240 pounds each. The Buyer shall give the Seller a statement of the said authorizations. II Pursuant to the said authorizations the Seller agrees to sell and to deliver and the Buyer agrees to purchase and to receive as it may require raw sugar produced in the Island of Cuba during the crop season of 1917- 1918 up to a quantity of 2,500,000 tons, of 2240 pounds each. EXHIBIT 1 139 III About one-third of the aforesaid amount is purchased by the Buyer for the account of The Royal Commission on The Sugar Supply for shipment to Europe at the agreed prices of 4.60 cents per pound f. o. b. Northern Ports, or 4.55 cents per pound f. o. b. South Side Ports basis for 96 centrifugal sugar subject to all the con- ditions of the usual contract form of The Royal Com- mission on The Sugar Supply, a copy of which is hereto attached and made a part hereof. The Royal Commission on The Sugar Supply will use its best endeavors to have vessels in Cuba to ship this sugar as follows : 30/50,000 tons not later than Janu- ary 15, 1918; 50,000 tons not later than January 31, 1918, and thereafter at the rate of about 80/100,000 tons per month from February i, 1918. The remaining two-thirds the Buyer agrees to pur- chase as it may require for the account of the United States refiners, parties hereto, and the Seller agrees to ship the same at the price of 4.98^ cents per pound c. & f. to New York/Philadelphia, subject to United States Refiners' contract terms, a copy of which is hereto attached and made a part hereof, and subject to arrangement of freights. Shipments to the United States Ports are to be made as soon as possible and not less than 2 per cent of the amount during December, 1917; the balance in ap- proximate equal monthly shipments from January to November, 1918, both inclusive. The Buyer reserves the right to order larger quantities shipped in any month to the United States and to Europe if tonnage is obtainable and sugar is produced and available. IV The Seller agrees to the Buyer having the option to purchase part or all of any balance of sugar produced by 140 APPENDIX the Seller or his principals, and available at Cuban ports beyond the 2,500,0x30 tons named (not exceeding about one- third thereof for shipment to Europe), on the same terms and at the same prices of 4.98^ c. & f. to New York/Philadelphia, anc i if f or Europe, 4.60 north side Cuba and 4.55 south side Cuba f. o. b. Said options to be declared on or before the fifteenth days of June, July and August, 1918, respectively, the declaration at any date to be up to a quantity equal to 10% of the 2,500,000 tons referred to herein, namely, 250,000 tons ; each producer represented by the Seller to participate in said options in proportion to his allotment of the original 2,500,000 tons. A further option is given by the Seller to be declared on or before August 15^1918, for the balance of the crop already made or to be made by the Seller or his prin- cipals during the crop year 1918. In the event that the Buyer does not avail of the above options seriatim, then the Seller is free to dispose of any sugar not so taken, but always subject to the provisions of Paragraph 5 herein and to all other provisions of this agreement. In filling United States requirements the Buyer on equal terms agrees to take the sugar of the Seller in preference to other sugar except that produced in the West Indies, in the United States and its Insular Possessions. V At the request of the Cuban Committee for Arranging Commercial Terms, the following indented clause is made a condition hereof : This contract is negotiated in reliance on the representations of the Cuban Commission that all sugars of the 1917-1918 crop, shipped from the Island of Cuba, shall be by persons, firms or corpora- tions duly authorized and licensed by the Cuban Government, upon the express condition that they EXHIBIT 1 141 shall not sell or deliver for export at any less prices than the prices agreed upon herein, so long as there shall remain undelivered any portion of the 2,500,000 tons or any balance covered by any of the options detailed herein. In the event of failure on the part of the Cuban Gov- ernment to take said above action or in the event of the inoperation, rescission or suspension of such action, it is agreed that the Buyer shall have the right, immediately upon notice in writing to the Seller, to apply any lower prices established as to any bonafide sale for export from Cuba, to any portion of the said 2,500,000 tons or of any balance covered by any of the options detailed herein, remaining in and not cleared from Cuba. It is agreed, however, that sales with the consent of the Cuban Government may be made on terms not incon- sistent herewith to Spain or to Pan-American countries, up to a total of 50,000 tons. \ VI The parties obligated thereto will use due diligence and every effort to provide tonnage, but are released from re- sponsibility by acts or circumstances beyond their control. VII The Seller undertakes all lighterage charges and all customary shipping expenses, and also all Cuban taxes both domestic and export. The Seller also undertakes to pay all customary ex- penses, at the port of discharge, including a customary brokerage to be calculated on the average tons of Cuban sugar handled by brokers in the United States heretofore acting in their legitimate capacity as brokers in the three- year period of 1915-16-17. 142 APPENDIX The Seller further agrees to pay a commission of one- half of one per cent, on the part allocated to the account of The Royal Commission on The Sugar Supply. VIII In the event of any steamer being lost its cargo shall be settled on the Bill of Lading net weights and Cuban tests. IX Except as to any sugars for which steamers have been named for loading, this contract shajl become null and void in the event that the existing state of war between the United States and Germany shall have terminated and the fact and date of such termination shall have been ascertained and proclaimed by the President of the United States. However and whenever this contract is terminated it is agreed that The Royal Commission on The Sugar Supply shall have the option (declarable within 10 days from such event) of carrying out in whole or in part the terms of this contract, including the options detailed herein, for that portion of the sugar allocated by the International Sugar Committee for shipment to Europe, and similarly, each refiner in the United States, party hereto, severally, shall have the option (declarable within 1 2 days from such event and assignable in whole or in part to any refiner party hereto) of carrying out the terms of this contract, including the options detailed herein, for its, or his, pro rata portion, as set forth in Exhibit B annexed hereto, in the percentages then determined thereunder, as well as the portion of any other party hereto who does not exer- cise his or its option as herein provided. X All matters of disagreement arising under this contract between the Buyer and the Seller which cannot be ad- EXHIBIT 1 143 justed by them to their mutual satisfaction, shall be left to arbitration in New York. Each shall select one arbi- trator, and the two so selected shall select a third, and the decision of any two of said arbitrators shall be final and conclusive upon the parties hereto. Any expenses at- tached to such arbitration shall be divided equally be- tween the parties. It is agreed, however, that as to disputes arising on shipments to Europe that the arbitra- tion clause of The Royal Commission on The Sugar Supply shall apply. XI It is further understood that the individual members of the said International Sugar Committee and of the Cuban Committee for Arranging Commercial Terms are acting herein as volunteers, in a purely administrative capacity, without compensation, and accordingly the Seller and the other parties hereto agree that said members of the said Committees shall not incur any personal liability, individually or collectively, under the terms of this contract, nor be responsible for any damage of whatever kind connected with any matter or thing relating to this contract ; nor shall they be responsible or liable for any act, fault or misconduct of any agents or persons employed by said International Sugar Com- mittee, and the Seller and the other parties hereto hereby further release and discharge the said individual members of the said Committees from any and all claims of what- ever kind for personal liability or responsibility as aforesaid. XII The Cuban Commission acting under the express au- thority of the Cuban Government will promptly notify the President of the Republic of Cuba of the stipulations contained in this contract and secure such governmental action as is necessary on its part to carry out its terms. 144 APPENDIX ) XIII By giving five days' notice in writing to the Buyer and the Seller any refiner, party hereto, may cease refining operations at any refinery and thereupon shall be free pro tanto of his obligations and of his privileges under this agreement, except as to any sugars already arranged for his account and to arrive within thirty days from the date of said notice. This paragraph shall not be construed to prevent the refining of domestic sugar contracted for prior to date hereof. IN WITNESS WHEREOF, the parties hereto have sub- scribed this agreement as of the day and year first above written. EXHIBIT 2 UNITED STATES REFINERS' RAW SUGAR CONTRACT TERMS, CUBAS COST AND FREIGHT tons of 2240 Ib. each of Cuba Centrifugal Sugar. Delivery of five per cent more or less than this amount to be settled for at the market price of like sugars on day of arrival. SHIPMENT to be made DESTINATION by Steamer (or Steamers) or by Car-ferry via Key West. Steamers to be named as soon as possible for but at all events two days before steamer finishes loading at the last loading port. The buyer can order steamers to New York, Philadelphia, Boston, Savannah, New Orleans, Galveston, only one port for each trip, subject to supervision by United States Governmental shipping agencies. AT A PRICE of 4.985 cents a pound, cost and freight, New York or/and Philadelphia, basis 96 average polar- ization, net landed weights, based on a freight rate of & cents from North Side Ports west of and EXHIBIT 2 145 including Caibarien. In case the rate of freight to Boston, Savannah, New Orleans or Galveston is lower/higher than the rate to New York or/and Philadelphia the amount of the reduction/increase from same point of shipment shall be deducted/ added to the above price. In case the basis of freight rates from Havana, Matanzas, Cardenas, Sagua and Caibarien to New York or/and Phila- delphia is increased/decreased, the above prices shall be increased/decreased by the amount of such increase/decrease. DISCHARGE of the sugar in the United States to be made at a customary safe wharf or refinery, as directed by the buyer. Demurrage and dispatch money at port of destination to be for account of buyer and at port of loading to be for account of seller. Buyer not to be responsible for demurrage or other loss caused by reason of the failure of seller to furnish all necessary Cuban papers. Documents required to effect a prompt entry and discharge of cargo in the United States to be furnished by the consignee. Party in default in producing necessary papers for entry of sugar shall be liable for demurrage of the vessel and for actual expense incurred. PAYMENT to by cash in ten (10) days after presentation of shipping documents, or by ten (10) days' sight draft drawn on refiner to whom the cargo may be apportioned, for 95 per cent of the invoice amount with shipping documents attached. Any balance to be paid after final settle- ment of weights and tests, and interest on same at rate of five per cent to begin to run ten days from entry of steamer. All drafts and payments to be made in New York. CANCELLATION Should any unforeseen circumstances such as war, rebellion, insurrection, political dis- turbances, strikes, lack of fuel, riots or civil dis- 146 APPENDIX turbance in the Island of Cuba prevent the making of the sugar covered by this agreement, sellers shall so advise buyer immediately and be released from delivery of such portion of the crop as cannot be made or delivered, but sellers agree to use due diligence to carry out this contract in its entirety notwithstanding the circumstances mentioned. Should unforeseen circumstances, such as war, fire, explosion, acts of God and the public enemy, strikes, riots, car shortage, lack of fuel or disturbances in the United States prevent the buyer from receiving, manufacturing or delivering the sugar purchased under this agreement he shall immediately there- upon give notice of such conditions to the seller and the buyer shall be released from any damages by reason of non-acceptance of- raw sugar (except sugars afloat and for which steamers have been declared) during the time that the above conditions continue, but the buyer will use all due diligence notwithstanding the unforeseen circumstances to carry out this contract as far as possible in its en- tirety. SAMPLES to be drawn mutually by buyers and sellers. Three tests to be made of each sample of sugar, one by seller's chemist, one by buyer's chemist and one by the New York Sugar Trade Laboratory. The average of the two nearest polarizations to be taken as the final test. Settlement on each shipment to be made on the final test, with the allowance of 1/32^ per pound for each degree above the selling basis up to 98, and i/i6j per pound down for each degree below the selling basis down to 94, fractions in pro- portion. Any marks below 94 test 3/3 2 per pound per degree down. MARINE AND WAR RISK INSURANCE to be covered by buyer from shore to shore including risk of lighters at ports of loading and discharge. Any extra marine EXHIBIT 3 147 insurance in addition to that at the regular rates shall be for vessel's or sellers' account, to be de- termined in advance, but in no instance for sellers' account in excess of one half of i%. The buyer is not liable for any excess insurance over regular rates. EXHIBIT 3 CONDITIONS OF THE USUAL CONTRACT FORM OF THE ROYAL COMMISSION ON THE SUGAR SUPPLY tons (of 2240 Ib. each) of Cuba Centrifugal Sugar, Fair average quality of the Crop. For Shipment Free on Board Steamers at one or two customary safe Northside Cuban ports for each Cargo. Basis 96% average outturn polarization. For any ex- cess above 96% 1/32^ per pound per degree to be added to Contract price, for any deficiency below 96%, 1/16^ per pound per degree to be deducted from Contract price down to 94% pol. If any mark or marks polarize below 94% an allowance of 3/32^ per pound per degree to be deducted in addition to the aforementioned allowance from 96% to 94%, but no Sugar to be delivered below 93%- Fractions in all cases in proportion. Net landed weights & outturn polarization at port of discharge in U. K., U. S. or France. Usual conditions of sampling and polarizing. Sellers have the option of delivering at one or two cus- tomary safe Southside Cuban ports. Vessels are to receive sugars as fast as possible and the Sellers are to supply the cargoes at not less than 6000 bags per work- ing day at North Side ports and 4500 bags per day at 148 APPENDIX South Side ports in default of which demurrage is to be paid by sellers at the same rate as heretofore. Sugar to be shipped in Vessels to be provided by Buyers to load as above. Buyers to giye Sellers reasonable notice of expected readiness. Payment to be made by Buyers in Cash in New York in exchange for complete sets of Bills of Lading and Certifi- cates of Origin (old and new forms) immediately upon receipt of a cable from , to , saying that the Documents are in their possession in New York. Marine insurance from shore to shore, including craft risk loading and discharging, on usual full Lloyd's Con- ditions to be for Buyers' account. War risk, if any, to be for Buyers' account. Any dispute arising out of this Contract to be settled by Arbitration under the rules of the Sugar Association of London (Cane Sugar Section), Buyers being considered as a Refiner. If Sugar Shipped to Europe, Buyers to give Sellers at once copies of such Documents as are required by, and on forms acceptable to the Customs at port of Destina- tion, including full details of such Consular Certificates as are needful. Sellers to have shipping documents made on similar forms as soon as shipment is complete, but they are not to be held responsible for any delays owing to absence of, or distant locations of Consuls from port of Shipment. In the event of Buyers failing to provide tonnage as above they are to reimburse Sellers for the actual cost and proved loss of holding over the Sugar, including Interest @ 5% p. a. The provisions of tonnage not to be unduly delayed. EXHIBIT 4 149 EXHIBIT 4 REFINERS' AGREEMENT WITH UNITED STATES FOOD ADMINISTRATOR OCTOBER i, 1917 This Agreement, entered into the first day of October, 1917, between HERBERT HOOVER, as United States Food Administrator, acting in this behalf for the President of the United States, and hereinafter called the Refiner, WITNESSETH, that WHEREAS, pursuant to an Act of Congress entitled "An Act to provide for the national security and defense by encouraging the production, conserving the supply and controlling the distribution of food products and fuel," Approved August loth, 1917, and known as the Food Control Act, the President of the United States has duly appointed Herbert Hoover Food Administrator; and WHEREAS, the said Food Administrator and the under- signed, pursuant to the objects and purposes of the said Act, desire to secure an equitable distribution of sugar throughout the United States during the period of the war, and to prevent unjust, unreasonable, unfair and wasteful commissions, profits, and practices ; and WHEREAS, in order to carry out the purposes of the said Act and the objects of this Agreement, it is deemed advisable that the United States Food Administration, through its International Sugar Committee hereinafter named, should co-operate with the Royal Commission on the Sugar Supply in the purchase of the imported raw sugar requirements of the United States of America and of the other nations at war with Germany ; and in the sale of United States refined sugar to such nations ; and WHEREAS, the said Food Administrator, to effect said co-operation with the said Royal Commission on the Sugar Supply, has appointed i S 150 APPENDIX GEORGE M. ROLPH of Washington, D. C. EARL D. BABST of New York City WILLIAM A. JAMISON of New York City SIR JOSEPH WHITE-TODD of London, England J. RAMSEY DRAKE of London, England a Committee of the United States Food Administration, to be called the INTERNATIONAL SUGAR COMMITTEE, with headquarters located in New York City, to arrange sub- ject to his approval for the purchase and shipment of sugar to the United States of America and the other nations at war with Germany, and with the duties herein- after described ; and WHEREAS, the said Food Administrator has appointed CLAUS A. SPRECKELS of New York City JAMES H. POST of New York City CHARLES M. WARNER of New York City GEORGE H. EARLE, JR., of Philadelphia, Pennsylvania DWIGHT P. THOMAS of Boston, Massachusetts a Committee of the United States Food Administration, to be called the AMERICAN REFINERS' COMMITTEE, to per- form subject to his approval such duties as are herein- after specified, and has appointed ROBERT M. PARKER of New York City W. J. McCAHAN, JR., of Philadelphia BENJAMIN A. OXNARD of Savannah, Georgia M. E. GOETZINGER of New York City JOHN FARR of New York City WILLIAM HENDERSON of New Orleans, Louisiana W. T. ELDRIDGE of Sugar Land, Texas as alternates on said committee, who shall have the privilege of being present at all meetings and serving in the place of any absent member or filling any vacancies in said committee in the order named ; and WHEREAS, the undersigned is a buyer of raw sugar and is desirous of aiding and promoting the efficient administration of said Act and of securing the purposes to be accomplished thereby by voluntary agreement EXHIBIT 4 151 as authorized by Section 2 of the aforesaid Act of Congress ; Now, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto agree as follows : 1. The United States Food Administrator agrees that the said International Sugar Committee shall arrange for the purchase of raw sugar from the West Indies and such other import sources as are available, for the purpose of supplying and apportioning the requirements of the United States and of the other nations at war with Ger- many. 2. That all questions of a purely domestic nature com- ing before the International Sugar Committee in the per- formance of the duties assigned to it by this contract shall be referred to the American members of said committee for action. 3. That after the date of this agreement the Refiner will not import or purchase any such raw sugar as is de- scribed in paragraph one (i), except through the Inter- national Sugar Committee of the United States Food Administration, and will permit said Committee to ar- range, route and distribute such purchases for Refiner's account, so far as possible according to Refiner's conven- ience and requirements. Such purchases may be made either direct or through a broker if customary, or other- wise as said International Sugar Committee shall find ex- pedient. 4. That the United States Food Administrator will direct the said American Refiners' Committee to fix the basis of proportionate distribution of the sugar provided by the International Sugar Committee for the United States, among the refiners who enter into this or a similar agreement with him, and to arrange for the apportion- ment to each refiner of a fair proportion of such sugar. In case of disagreement between the refiner and the American Refiners' Committee, or between the American 152 APPENDIX Refiners' Committee and the International Sugar Com- mittee, the matter shall be submitted to the United States Food Administrator and his decision shall be final. 5. That in apportioning said sugar to any refiner, as provided in Paragraph 4, the American Refiners' Com- mittee shall take into consideration any written contracts now in effect made by the refiner for the purchase of for- eign or domestic raw sugars for delivery after the date of this agreement, and also any contracts which refiner may hereafter make for domestic raw sugars which are not im- ported into the United States or any purchases of same. 6. On each purchase arranged for by the said Interna- tional Sugar Committee and the American Refiners' Committee the buyer will pay to the said Committees a sum for each ton that, calculated on the entire tonnage handled by the Committees, will be sufficient to pay the actual expenses of the Committees, this amount to be calculated at such intervals as the Committees may de- termine. 7. The Food Administrator agrees that he will cause the International Sugar Committee to determine on each business day, and to post in its office and to publish in certain daily newspapers and trade journals to be desig- nated by the Committee, basic prices for 96 centrifugal sugar delivered duty paid refining points. 8. The Refiner agrees that it will sell all sugar refined by it at a price not more than one and three-tenths cents net per pound wholesale of refined sugar on the basis of Fine Granulated Sugar in barrels or in 100 Ib. bags (when used as the standard basis) f. o. b. refinery, above the basic price for 96 centrifugal sugar as determined by the International Sugar Committee under Paragraph (7) above and in force on the day when such sale of refined sugar is made, with such differentials as are shown on its official price list. Said net margin shall include the fee paid to the Committee and be exclusive of the 2% cash discount, payment ten days to the trade. This margin EXHIBIT 4 153 is determined on a delivered duty paid price of from $\i to 6 per pound, and in case the basic price pro- vided for in Paragraph (7) goes below 5!^ per pound shall be decreased by the United States Food Administrator in such a manner as to return substantially the same profit to the refiner. In case the basic price goes above 6 per pound, said margin shall be increased by the United States Food Administrator to accomplish the same purpose. 9. It is mutually agreed that said margin is also subject to revision from time to tune by reason of changes in costs of refining and of distribution, or in the event of an excise or similar tax. 10. It is further understood that inasmuch as this agreement has been entered into at the urgent request of the Food Administrator for the purposes above recited and notwithstanding the absence of any statutory power on the part of the Food Administrator to fix the price of raw or refined sugar and in view of the limitation on the price to be secured by the Refiner for its refined product herein agreed to, the said Food Administrator through the said International Sugar Committee and the Ameri- can Refiners' Committee will co-operate with the Re- finer to prevent so far as possible any loss by the said Refiner on any sugar purchased as herein provided. 11. The Refiner agrees to conduct its cargo export business under the supervision of the United States Food Administrator, and in fixing the price to nations repre- sented by the Royal Commission on the Sugar Supply will add not more than, the net refining margin for domes- tic business, with drawback allowance to the buyer of one cent per pound for granulated sugar when made from dutiable imported Cuban raw sugar, unless otherwise ap- proved by the United States Food Administration, such drawback being based on present rate of duty upon Cuban sugars, and to be adjusted in the event of any change in the present rate of duty on Cuban sugar. 154 APPENDIX 12. It is understood and agreed by the Refiner that a violation of any of the terms of this agreement may re- sult in and be cause for revocation of its license. 13. This agreement shall remain in full force and effect from October i, 1917, until the existing state of war between the United States and Germany shall have terminated, and the fact and date of such termination shall be ascertained and proclaimed by the President and thereupon this Agreement shall end. IN WITNESS WHEREOF, the parties hereto have sub- scribed this agreement on the day and year first above written. BASIS OF PROPORTIONATE DISTRIBUTION FIXED ON OCTOBER 26, 1917, BY AMERICAN REFINERS' COMMITTEE OF THE UNITED STATES FOOD AD- MINISTRATION RESOLVED, That the proportionate distribution of sugar provided by the International Sugar Committee for the United States, from and after October ist, 1917, is hereby fixed on the following basis, viz. : American Sugar Refining Co. . . . 40.650 per cent. Arbuckle Brothers 7.000 California & Hawaiian 4.803 Colonial Sugars Co 2.330 Federal Sugar Refining Co 9.605 William Henderson .960 Imperial Sugar Refining Co J-5I3 W. J. McCahan 2.402 National Sugar Refining Co 12.007 Pennsylvania Sugar Co 4.802 Revere Sugar Refining Co .960 Savannah Sugar Refining Co. . . . 2.402 Warner Sugar Refining Co 7-204 Western Sugar Refining Co 3.362 This basis to be subject to revision whenever the Com- mittee finds it necessary ; provided, that no refiner shall EXHIBIT 5 155 be allotted less than two hundred tons per day for each day his refinery shall be in operation. M. E. GOETZINGER Secretary EXHIBIT 5 AGREEMENT WITH BEET SUGAR PRODUCERS 1917-1918 CROP AGREEMENT WITH UNITED STATES FOOD ADMINISTRATION This Agreement entered into this day of , 1917, between the President of the United States acting by and through Herbert Hoover, United States Food Administrator, and of hereinafter called the producer, Witnesseth, That, WHEREAS, The United States Food Administrator, pursuant to the Act of Congress approved August 10, 1917, known as the "Food Control Act," is about to is- sue regulations relating to the conduct of the business of all persons importing, manufacturing, storing or distributing sugar, and desires under said Act to secure an equitable distribution of the sugar crop of 1917- 1918 and to prevent unjust, unreasonable, unfair and wasteful commissions, profits and practices, and WHEREAS, The United States Food Administration has urgently requested all producers of beet sugar in the United States to enter into a contract with him and for producers who enter into such a contract has determined a maximum price of $7.25 per hundred pounds, cane basis, seaboard refining points, for the time being, and WHEREAS, The said Food Administrator would not under the terms of the Food Control Act and under a 156 APPENDIX system of individual licenses authorized by said Act, or the showing now made, determine a higher price than $7.25 per 100 pounds, cane basis, seaboard refining points, and WHEREAS, The President of the United States act- ing by and through the Food Administrator has ap- pointed a committee of the United States Food Admin- istration to be called the Food Administration Sugar Distributing Committee to carry out subject to his ap- proval the provisions of said Act so far as they relate to the distribution of beet sugar, which Committee is composed of the following persons, to wit : H. A. Douglas E. C. Howe W. H. Hannam S. H. Love W. L. Petrikin S. W. Sinsheimer W. P. Turner WHEREAS, The undersigned is a producer of beet sugar and is desirous of aiding and promoting the efficient administration of said Act and of securing the purposes to be accomplished thereby by agreement as authorized by Section 2 of the aforesaid Act of Congress : Now, THEREFORE, In consideration of the premises and the agreements of the United States Food Ad- ministrator hereafter set forth, the producer hereby agrees : 1. That in selling and distributing beet sugar it shall observe, respect and be governed by any and all orders and regulations which said United States Food Administrator, through the Sugar Distributing Com- mittee, may from time to time make or prescribe, or any general orders made by him, which are applicable to all licenses under the provisions of said Act. 2. That it will ship sugar only at such times, to such EXHIBIT 5 157 places and in such quantities as may be directed by the United States Food Administrator through the Sugar Distributing Committee, that it will route all sugars as directed by the Sugar Distributing Commit- tee, that it will promptly comply with any and all such directions, and with all orders for change of destina- tion and route, and for reconsignment, and that it will ship all sugar sight draft attached to bill of lading un- less otherwise permitted by the Sugar Distributing Committee at the request of the producer; in case of such request being made and such permission being given, should any loss occur, the loss shall be borne by the producer making such request. 3. That unless a special allowance is made by the Sugar Distributing Committee by reason of deteriora- tion or otherwise, it will sell all sugar at the market price ruling on the day of sale, cane basis, less any differential which may be established by the Sugar Distributing Committee and be then in force, between cane sugar and beet sugar; in no case, however, to ex- ceed the maximum price of seven dollars and twenty- five cents ($7.25) per 100 pounds, cane basis, at sea- board refining points less said differential if any, unless increased by the Food Administrator to meet price fixed for refined cane sugar manufactured from foreign raw sugar; the Sugar Distributing Committee shall have power to fix a differential between cane sugar and beet sugar at its discretion, but no such differential need be established until cane sugar becomes a close competitor of beet sugar, and such differential shall in no event exceed 20 cents per one hundred pounds. Provided: That should any excise tax on sugar be levied by the United States Government, the maximum price of $7.25 per one hundred pounds shall be increased by the amount of said excise tax. That the Sugar Distribut- ing Committee shall determine a schedule of freight differentials at different places, based on freight rates 158 APPENDIX from seaboard refining points; and a regular schedule of package differentials for package goods, and such differentials shall be observed by the producer in com- plying with the terms of this paragraph ; that the Sugar Distributing Committee shall issue and send to the pro- ducer uniform price lists showing the seaboard base price, the differentials, and the terms upon which sugar may be sold ; that it will issue a new price list whenever any change occurs in the seaboard base price or in the differential or terms, and that no sale of sugar shall be made by the producer except at the price, differentials and terms shown herein, until the Sugar Distributing Committee shall have issued a new price list showing any such change and mailed a copy of same to the United States Food Administrator; but this clause shall not be construed to authorize the Sugar Distribut- ing Committee to name any higher price than that hereinbefore prescribed. 4. That it will promptly make complete and true reports to the Sugar Distributing Committee of all sales of sugar made by it at such intervals and in such forms as may be required by said Committee. 5. In consideration of the foregoing agreements, the United States Food Administrator agrees that he will cause the Sugar Distributing Committee to direct distribution of the beet sugar crop herein referred to in the most economical and efficient method consistent with an equitable distribution; that at such intervals as the Sugar Distributing Committee may determine he will cause to be calculated by said Committee the average net proceeds per pound of sugar received dur- ing a definite period by all the beet sugar producers who shall have entered into a similar agreement with him, less the expense per pound of the Sugar Distrib- uting Committee incurred in the distribution of the beet sugar crop as herein provided, and in case the average net proceeds per pound for sugar, actually re- EXHIBIT 5 159 ceived by the producer, are less than the general average net proceeds per pound, less such expense, as calculated by the Sugar Distributing Committee, the United States Food Administrator promises to pay to the producer the difference per pound therein, multiplied by the number of pounds sold by the producer during such period, and the final calculation, settlement and dis- tribution in accordance with the provisions of this para- graph shall be made as soon as feasible, but not later than July 3ist, 1918. The producer agrees that if the net proceeds per pound of all sugar received by it is greater than the general average net proceeds per pound less such expense, as calculated by the Sugar Distributing Committee, he will pay to the United States Food Administration, or such person as it may direct, the difference per pound therein, multiplied by the number of pounds sold by the pro- ducer during such period. In cases where the Com- mittee has permitted the sale of sugar at less than market prices, unless such decrease hi value is caused by some action of the Committee, the difference between the price actually received, and the market price, shall be added to the actual net proceeds of said sugar before averaging the net proceeds of the particular producer or of all producers ; and the producer thereof shall stand such loss. 6. Nothing in this agreement shall be construed to limit the power of the President or of the United States Food Administrator to promulgate regulations for the conduct of the business of licensees under Sec- tion 5 of the Act of August 10, 1917, known as "The Food Control Act." 7. Sugar shall be delivered to the United States Government for Army and Navy uses when and in such amounts as the Government may require, at prices to be fixed by the United States Food Administrator, and the net proceeds of such sugar shall be included in 160 APPENDIX calculating the general average net proceeds per pound of all sugar sold by producers entering into this agree- ment. 8. It is understood and agreed by the producer that a violation of any of the terms of this agreement may result in and be cause for revocation of its license. 9. This agreement shall remain in full force and effect from October i, 1917, until the entire crop of 1917- 1918 shall have been disposed of or marketed. IN WITNESS WHEREOF, the parties hereto have sub- scribed to this agreement on the day and year first above written. EXHIBIT 6 AGREEMENT AS TO CUBAN SUGARS BETWEEN THE UNITED STATES SUGAR EQUALIZATION BOARD, INC. AND A COMMISSION OF THE REPUBLIC OF CUBA AND AGENTS OF CUBAN PRODUCERS 1918- 1919 CROP Agreement entered into this 24th day of October, 1918, in the City and State of New York, by and between UNITED STATES SUGAR EQUALIZATION BOARD, INC., a corporation of the State of Delaware, party of the first part, CARLOS MANUEL DE CESPEDES, ROBERT B. HAWLEY, and MANUEL RIONDA, a CUBAN COMMISSION, parties of the second part, and AGENTS OF VARIOUS CUBAN PRODUCERS acting severally for the producers of sugar in the Island of Cuba, parties of the third part, WITNESSETH : WHEREAS, the United States Sugar Equalization Board, Inc., was created and is acting as an agency of the United States for the purpose in part of equalizing the distribution and selling price of sugar, and to that end has power and authority to purchase domestic or foreign raw sugar in such quantities, at such prices and upon such terms and conditions as it may deem advisable, and to resell said sugar in its discretion at, below or EXHIBIT 6 l6l above cost and upon the same or other and additional terms and conditions ; and WHEREAS, the President of the Republic of Cuba by Executive order has appointed Carlos Manuel de Cespedes, Robert B. Hawley and Manuel Rionda a Cuban Commission to arrange for the sale of sugar pro- duced in the Island of Cuba during the crop season 1918-1919, and to pledge the Republic of Cuba to the terms and conditions provided herein to be performed by said Republic ; and WHEREAS, the said Cuban Commission has repre- sented that there is power and purpose in the Govern- ment of the Republic of Cuba to co-operate in the es- tablishment of a stabilized price for the whole of the Cuban crop of 1918-1919, and also to control by license the export of any Cuban sugar to any person, entity or country under specified terms and conditions, including price; and WHEREAS, the said United States Sugar Equalization Board, Inc., and the said Cuban Commission have ar- ranged for the purchase and sale of sugar produced in the Island of Cuba during the crop season 1918-1919, upon the terms and conditions hereinafter stated ; Now, THEREFORE, the parties hereto each for its or himself for the part to be performed by it or him, or in behalf of others herein described, agree as follows : The said Cuban Commission agrees that it will imme- diately arrange that each and every producer of sugar in the Island of Cuba shall duly authorize an agent in the City of New York, one of the parties hereto (hereinafter severally or collectively called the Seller), to contract for and sell to the United States Sugar Equalization Board, Inc. (hereinafter called the Buyer) the whole of his or their output of sugar deliverable at the option and upon 162 APPENDIX v the direction of the Buyer for shipment to the United States, United Kingdom, Canada, France or Italy, or to any other country upon the terms and conditions hereinafter stated ; said authorizations shall be in writ- ing and filed with the Buyer and shall state the name and location of the factory or factories of each of the said producers and the estimated production of each during the crop season 1918-1919. II Pursuant to the said authorizations the Seller on behalf of himself and his principals agrees to sell and to deliver to the Buyer all the raw sugar produced by him or his principals in the Island of Cuba during the crop season of 1918-1919 (except that actually used for local consumption in Cuba) and the Buyer agrees to purchase and receive the same, on the following terms : For shipment to the United States at the price of 5.88 cents * per pound c. & f. to New York/Philadelphia basis 96 average outturn polarization, net landed weights, based on a freight rate of 383- cents per 100 pounds from North Side Ports west of and including Caibarien, subject to United States Raw Sugar contract terms, a copy of which is hereto annexed marked Sched- ule A and made a part hereof ; For shipment to the United Kingdom, France and Italy at the price of 5.50 cents per pound f . o. b. Northern Ports, or 5.45 cents per pound f. o. b. South Side Ports basis for 96 centrifugal sugar, subject to all the condi- tions of the usual contract form for shipment to these 1 (NOTE.) Inasmuch as the Buyer assumes all risk of insurance up to an average rate of 3ic. per $100, which risk includes the excess insurance of 7c. per $100 paid by the Seller under the agreement for the 1917-1918 crop, the basic cost and freight price is made 5.88c. per pound for shipments to the United States in place of s.88sc. per pound. The difference of .005 is to compensate the Buyer for the excess insurance paid by the Seller under the agreement for the 1917-1918 crop and to provide for the contingency of advancing rates under the Buyer's average rate policy up to an average of 310. per $100. EXHIBIT 6 163 countries, a copy of which is hereto annexed marked Schedule B and made a part hereof ; For shipment to Canada, if shipped direct to a Cana- dian port, at the same prices and upon the same terms as are provided for shipments to the United Kingdom, ex- cept that all matters of disagreement shall be determined pursuant to the provisions of Article VI hereof, but if shipped via a United States port, at the same prices and upon the same terms as are provided for shipments to the United States. For shipment to all countries other than the United States, the United Kingdom, Canada, France and Italy, at the same prices and upon the same terms as are pro- vided for shipments to the United Kingdom, except, how- ever, that net shipping weights, less i%, and Cuban tests shall be accepted by the Buyer and the Seller (weight to be calculated on U. S. standard), and that payment for such sugar shall be made by the Buyer in cash in New York in ten days after presentation of shipping docu- ments, or, at Seller's option, by ten days sight draft drawn on Buyer with shipping documents attached, and except that ah* matters of disagreement shall be deter- mined pursuant to the provisions of Article VI hereof. Shipments are to be made as soon as possible after grinding commences and not less than 2 per cent of the amount shall be shipped during December, 1918; the balance in approximate equal monthly shipments from January to November, 1919, both inclusive. Sugar shall be shipped in sound jute bags containing approximately 325 Ib. each. In all cases where ship- ment is made in second hand bags there shall be deducted not less than 15 cents for each second hand bag. The Buyer reserves the right to order larger quantities shipped in any month if tonnage is obtainable and sugar is produced and available. The Buyer will notify the Seller from time to time of proposed allocations of sugar for shipment as between 164 APPENDIX the United States and other countries, and shipments shall be made as directed. The Seller undertakes to pay all lighterage charges and all shipping expenses, and also all Cuban taxes both domestic and export. On all shipments on the c. & f. basis provided in Schedule A, the Seller undertakes to pay all necessary expenses at the port of discharge to effect delivery to Buyer on such safe wharf or refinery dock as may be designated by Buyer. The Seller agrees to pay to the Buyer a commission of one-half of one per cent on the sugar shipped to other than United States ports. The Seller agrees to pay on the sugar shipped to United States ports, a brokerage to be calculated on the aver- age tons of Cuban sugar handled by brokers in the United States heretofore acting in their legitimate capacity as brokers in the three year period of 1915-16-17, but the total disbursement for this purpose shall not exceed $350,000. The concurrent decision of the Buyer and the Cuban Commission shall be final and conclusive on any question or dispute arising under this clause. In the event of any steamer being lost its cargo shall be settled on the Bill of Lading net weights and Cuban tests as soon as possible but not later than 30 days after proof of loss. The parties obligated to provide tonnage will use due diligence and every effort so to do, but are released from responsibility by acts or circumstances beyond their con- trol. Marine Insurance to be covered by the Buyer from shore to shore including the risk of lighterage to and from the vessel at ports of loading and discharge. Sugar shall not be loaded on any steamer, nor other vessel not accept- able to the insurers under Buyers' average rate policy, unless specific directions to load an unacceptable vessel are given by either the Buyer or the Seller and insurance EXHIBIT 6 165 satisfactory to the Buyer is obtained. When such specific directions are given, the excess insurance over an average rate of 31 per $100 shall be paid by the party ordering the vessel loaded. All war risk, from shore to shore, is for account of Buyer. Ill The Buyer shall have the right from time to time to assign this contract, without recourse, in respect to any part of the sugar contracted for herein, to the Govern- ments of the United Kingdom, Canada, France or Italy, or to any duly constituted agency representing all or either of said governments, or to any sugar refiner of the United States. The Buyer, upon making any such assignment, shall give notice thereof to the Seller. IV The purchase of the sugar crop of 1918-1919 by the Buyer as herein provided is made in reliance upon the representation and agreement of the Cuban Govern- ment that it will effectually prohibit any sugars of the 1918-1919 crop from being shipped or exported from the Island of Cuba except under this contract, and that it will enact such laws and promulgate such orders and decrees as are necessary to faithfully fulfill and observe the stipulation and condition aforesaid. In the event of failure on the part of the Cuban Government to take the action above provided, or to faithfully fulfill and observe said stipulation and condi- tion, or in the event of the inoperation, rescission or sus- pension thereof, the Buyer shall have the option, upon notice in writing to the Seller, to cancel this contract in respect to any undelivered portion of the said sugar crop of 1918-1919. If the Seller fails to deliver the sugar required to be delivered to the Buyer under this contract or if any sugar 1 66 APPENDIX is directly or indirectly shipped or exported from the Island of Cuba by the Seller or his principal to any consignee other than the Buyer or its assigns, the Buyer shall have the right, either in law or in equity, to sue for and recover all damages resulting therefrom, whether or not the above option of cancellation is exercised. V This contract is also made in reliance upon the repre- sentation and agreement of the Cuban Government that it will place no restrictions or embargoes on the export of molasses to the United States. VI All matters of disagreement arising under this con- tract between the Buyer and the Seller which cannot be adjusted by them to their mutual satisfaction, shall be left to arbitration in Washington. But before any ar- bitration can be called by the Seller the matter in dis- pute shall be submitted by it or him to the Cuban Com- mission and its approval of and consent to the arbitration obtained in writing. For the purposes of the arbitration, the Buyer and the Seller shall each select one arbitrator, and the two so selected shall select a third, and the de- cision of any two of said arbitrators shall be final and conclusive upon the parties thereto. Any expenses at- tached to such arbitration shall be divided equally be- tween said parties. It is agreed, however, that as to disputes arising on shipments to the United Kingdom, France or Italy the arbitration clause in Schedule B shall apply. VII The Cuban Commission is acting hereunder solely in a representative capacity as an administrative agency EXHIBIT 6 167 of the Cuban Government under the express authority of said Government and its members do not assume nor shall they be charged with any personal liability. Upon the execution of this contract the Cuban Government will promptly take such governmental action as is necessary on its part to carry out its terms. It is understood and agreed by the parties hereto that the obligations of the Buyer hereunder are conditioned upon the undertakings of the Cuban Government here- in expressed and upon the faithful fulfillment and obser- vance thereof. It is also agreed that the stockholders, directors and officers of the United States Sugar Equalization Board, Inc., do not assume nor shall they or either of them be charged with any personal liability under this contract or in respect to any matter or thing arising therefrom. VIII It is contemplated by the Buyer and Seller that the greater part of the sugar delivered for shipment to the United States will be resold directly or indirectly to the Atlantic and Gulf sugar refiners of the United States, who will be made the consignee of such sugar. For the convenience of the parties in all such cases, it is agreed that before departure of vessel from loading port the Seller, upon the request of the Buyer, will execute with the consignee a confirmation in the form of Schedule A hereto annexed, and will settle with such consignee in accordance with this contract, and it is further agreed that the Buyer will guarantee performance by the con- signee unless the sugar is assigned pursuant to Article III hereof. All such consignments shall be by negotiable Bill of Lading to Seller's order duly endorsed and said Bill of Lading shall not be delivered to consignee until payment for 95% of the invoice is made as provided in said Schedule A. l68 APPENDIX rx It is agreed that the Seller or his principals shall not export from the Island of Cuba during the term of this contract any edible syrups fit for human consumption from which sugar may be commercially extracted with- out the consent of the Buyer. X Should any unforeseen circumstances such as war, re- bellion, insurrection, political disturbances, strikes, lack of fuel, riots or civil disturbance in the Island of Cuba prevent the making of the sugar covered by this con- tract, the Seller shall so advise the Buyer immediately and thereupon shall be released from delivery of such portion of the crop as cannot be made or delivered, but the Seller agrees to use due diligence to carry out this contract in its entirety notwithstanding the circum- stances mentioned. Should any unforeseen circumstances, such as war, fire, explosion, acts of God and the public enemy, strikes, riots, car shortage, lack of fuel, lack of storage facilities or disturbances in the United States prevent the Buyer from receiving, or delivering or the refiners of the United States from refining the sugar purchased under this con- tract the Buyer shall immediately give notice of such conditions to the Seller and thereupon the Buyer shall be released from any damages by reason of non-accept- ance of raw sugar (except sugars afloat) during the time that the above conditions continue, but the Buyer will use all due diligence notwithstanding the unforeseen cir- cumstances to carry out this contract as far as possible in its entirety. IN WITNESS WHEREOF, the parties hereto, being duly authorized, have executed this agreement as of the day and year first above written. EXHIBIT 6 169 SCHEDULE A CONFIRMATION U. S. RAW SUGAR CONTRACT CUBAS COST AND FREIGHT New York, , 191 . . TO REFINING CO. hereinafter called " Consignee " At the request of the United States Sugar Equalization Board, Inc., we hereby confirm the sale to you for its account under the terms of the Agreement as to Cuban Sugars, 1918-1919 crop, dated October 24th, 1918, of about long tons of Cuba Centrifugal Sugar. Delivery of five per cent more or less than this amount to be settled for on same basis. SHIPMENT to be made by negotiable bill of lading per s/s expected to load at about 191 . . for port of via Steamer (or Steamers) or by Car-Ferry via Key West. The Consignee must give notice of destination at least two days before steamer finishes loading at the last loading port. The Consignee can order steamers to New York, Philadelphia, Boston, Savannah, New Orleans or Galveston, but to only one port for each trip. Ax A PRICE OF 5.88 cents a pound, cost and freight, basis 96 average outturn polarization, net landed weights, and is based on a freight rate of 38^ cents from North Side Ports west of and including Caibarien to New York or/and Philadelphia. In case the rate of freight to Boston, Savannah, New Orleans or Galveston is lower/higher than the rate to New York or/and Philadelphia from said North Side Ports, the amount of the reduction/increase shall APPENDIX be deducted from/added to the above price. In case the rate of freight from said North Side Ports to New York or/ and Philadelphia is increased/de- creased, the above price -shall be increased/de- creased by the amount of such increase/decrease. DISCHARGE of the sugar in the United States to be made at a customary safe wharf or refinery, as directed by the Consignee. Demurrage and dispatch money at port of destination to be for account of Consignee and at port of loading to be for account of Seller. Consignee not to be responsible for demurrage or other loss caused by reason of the failure of Seller to furnish all necessary Cuban papers. Documents required to effect a prompt entry and discharge of cargo in the United States to be furnished by the Seller. Party in default in producing necessary papers for entry of sugar shall be liable for demur- rage of the vessel and for actual expense incurred. PAYMENT to be made by the Consignee to either in cash on presenta- tion of all necessary shipping documents or at Buyer's option by one day sight draft attached to negotiable bill of lading to Seller's order, duly en- dorsed, for 95% of the invoice, based on net shipping weights and tests, less interest for nine days at the rate of 6% per annum. Any balance to be paid im- mediately after final settlement of weights and tests, with interest on balance at the rate of 6% per annum from ten days after date of entry of steamer. If sugar is shipped in sailing vessel payment to be made in cash on presentation of documents after entry of vessel at Customs House, for 95% of the invoice based on net shipping weights and tests, any balance to be paid immediately after final settlement of weights and tests with interest on said balance as above. All payments to be made in New York or New York Exchange. EXHIBIT 6 171 SAMPLES to be drawn mutually by Consignee and Seller. Three tests to be made of each sample of sugar, one by Seller's public chemist, one by Consignee's public chemist and one by the New York Sugar Trade Laboratory. The average of the two nearest polari- zations to be taken as the final test. Settlement on each shipment to be made on the final test, with the allowance of 1/20^ per pound for each degree above the selling basis up to 98, and i/io^ per pound for each degree below the selling basis down to 94, fractions in proportion. Any marks below 94 test 3/20^ per pound per degree down, fractions in pro- portion, but no sugar to be delivered below 93, unless on discount terms mutually satisfactory to Consignee and Seller. MARINE AND WAR RISK INSURANCE arranged by United States Sugar Equalization Board, Inc. SCHEDULE B CONDITIONS OF THE USUAL CONTRACT FORM FOR SHIPMENT TO THE UNITED KINGDOM, FRANCE AND ITALY tons (of 2,240 Ibs. net each) of Cuba Centrifugal Sugar, Fair average quality of the Crop. For Shipment. Free on Board Steamers at one or two customary safe Northside Cuban ports for each Cargo. Basis 96% average outturn polarization. For any ex- cess above 96% 1/20^ per Ib. per degree to be added to Contract price ; for any deficiency below 96%, i/io per Ib. per degree to be deducted from Contract price down to 94% pol. If any mark or marks polarize below 94% an allowance of 3/20^ 172 APPENDIX per Ib. per degree to be deducted in addition to the aforementioned allowance from 96% to 94%, but no Sugar to be delivered below 93%. Fractions in all cases in proportion. Net landed weights & outturn polarization at port of discharge. Usual conditions of sampling and polarizing. Sellers have the option of delivering at one or two customary safe South Side Cuban ports. Vessels are to receive sugars as fast as possible and the Sellers are to supply the cargoes at not less than 6,000 bags per work- ing day at North Side ports and at Cienfuegos and 4,500 bags per day at all other South Side ports in default of which demurrage is to be paid by sellers at the same rate as heretofore. Sugar to be shipped in Vessels to be provided by Buyers to load as above. Buyers to give Sellers reason- able notice of expected readiness. Payment to be made by Buyers in Cash in New York in exchange for complete sets of Bills of Lading and Cer- tificates of Origin (old and new forms) immediately upon receipt of a cable from , to , saying that the Documents are in their possession in New York. Marine Insurance from shore to shore, including craft risk loading and discharging, on usual full Lloyd's Con- ditions to be for Buyers' account. War risk, if any, to be for Buyers' account. Any dispute arising out of this Contract to be settled by Arbitration under the rules of the Sugar Association of London (Cane Sugar Section), Buyers being con- sidered as a Refiner. If Sugar Shipped to Europe, Buyers to give Sellers at once copies of such Documents as are required by, and on forms acceptable to the Customs at port of Destination, including full details of such Consular Certificates as are needful. Sellers to have shipping documents made on EXHIBIT 7 173 similar forms as soon as shipment is complete, but they are not to be held responsible for any delays owing to absence of, or distant locations of Consuls from port of Shipment. In the event of Buyers failing to provide tonnage as above they are to reimburse Sellers for the actual cost and proved loss of holding over the Sugar, including Interest @ 5% p. a. The provisions of tonnage not to be un- duly delayed. EXHIBIT 7 AUTHORIZATION TO SELL UNDER AGREEMENT AS TO CUBAN SUGARS CROP OF 1918-1919 CUBA, OCTOBER 24th, 1918. New York, U. S. A. DEAR SIR : By these presents we authorize you to sell to the United States Sugar Equalization Board, Inc., under the Agreement as to Cuban Sugars, Crop of 1918-1919, dated the 24th day of October, 1918, by and between the United States Sugar Equalization Board, Inc., the Cuban Commission and various sellers of Cuban sugar, all parties signatory thereto, a copy of which Agreement we have read and now hold, all sugar to be produced by us, or by plantations we represent, during the crop year 1918-1919, except that actually sold for local consump- tion in Cuba. We attach hereto a list of our plantations participat- ing in said Agreement and a conservative estimate of the amount of sugar that will be produced by each during the crop year 1918-1919, in tons of 2240 pounds each, also statement showing actual outturn of the same planta- tions for crop of 1917-1918. 174 APPENDIX These presents will serve as your authorization to sign the said Agreement for and in behalf of ourselves and the plantations enumerated herein. We authorize and direct you to pay to the Buyer -5 of i % commission on all sugar produced on our plantations and shipped to other than United States ports. We also authorize and direct you to pay to the Cuban Adjustment Committee hereinafter named i of i% on all sugars shipped to United States ports, and said Adjustment Committee is authorized and directed to pay to each of the brokers in the United States who received brokerage on the sugar shipped to the United States of the 1917-1918 crop, the same amount as was allotted to them on that crop by the Committee on brokerage appointed for that purpose, and said Adjust- ment Committee is authorized to use for its purposes here- inafter stated any balance that may remain in its hands. We also consent and agree to the appointment by the United States Sugar Equalization Board, Inc., of a Com- mittee to be known as the Cuban Allotment Committee, with headquarters in New York, to consist of the follow- ing members : MR. B. BRAGA RIONDA MR. T. A. HOWELL MR. W. M. CARSON MR. F. DE ZALDO MR. JOHN GILMOUR The duties of this Committee will be to handle, super- vise and direct the details of carrying out the allocations of sugar and its shipment from Cuba, as may be necessary in the interests of the respective parties, and we agree to carry out its directions. The membership of said Committee may be changed from time to time by the United States Sugar Equalization Board, Inc. We also consent and agree to the appointment by the Cuban Commission appointed by President Meno- cal, the personnel of which is as follows : EXHIBIT 7 175 HON. CARLOS MANUEL DE CESPEDES MR. ROBERT B. HAWLEY MR. MANUEL RIONDA of a Committee to be known as the Cuban Adjustment Committee to handle all matters (not involving sugar allocations) such as financial adjustments, problems in- volved in "shorts and overs" in cargoes, insurance matters, demurrage and dispatch, and all other adjust- ments that might be necessary hi the interest of all parties to the Agreement as to Cuban Sugars, Crop of 1918-1919, or in connection with the Charter Party under which the sugar will be transported, or in con- nection with the payment and settlement of all broker- age matters arising out of deliveries to the United States or Canada, and we agree to abide by the decision and action of said Committee in all such matters ; said Com- mittee to consist of the following five members, or as the same may be changed from time to time by the Cuban Commission : MR. JAMES H. POST MR. MANUEL E. RIONDA MR. EDW. S. MCMANUS MR. JAS. S. CONNELL MR. WM. W. GARDINER In order to defray the expenses of the Cuban Adjust- ment Committee and any legitimate adjustments that might be necessary in carrying out the Agreement as to Cuban Sugars, Crop of 1918-1919, we hereby author- ize you to pay to the Cuban Adjustment Committee 20 per bag on each bag of sugar shipped by us and sold under said Agreement. It is understood, however, that the Cuban Adjustment Committee shall at stated periods render an accounting to the Cuban Commission of its receipts and disbursements and any balance remain- ing in the hands of the Cuban Adjustment Committee on the termination of said Agreement shall be disposed of as the Cuban Commission, for and in the name of the Cuban Government, may determine. 176 APPENDIX We hereby further agree to furnish to the Cuban Allot- ment Committee for use of the United States Sugar Equalization Board, Inc., a weekly statement showing : First: The production of sugar on each of our planta- tions during the previous week ; Second : Our production to date ; Third: Our shipments for export for the week and up to date ; Fourth: Our sales for direct consumption in Cuba for the week and up to date ; Fifth: Our sales to local buyers (not for direct con- sumption) for the week and up to date, and names of such buyers ; Sixth: Our deliveries to Colonos for the week and up to date ; Seventh: Amount of sugar on hand at end of each week in our possession wherever located. Yours truly (2) *(i) Sign here (2) Give address EXHIBIT 8 AGREEMENT BETWEEN THE UNITED STATES SUGAR EQUALIZATION BOARD, INC., AND HER- BERT HOOVER, UNITED STATES FOOD ADMINIS- TRATOR, AND UNITED STATES SUGAR REFINERS, OCTOBER 24, 1918. AGREEMENT entered into this 24th day of October, 1918, in the City and State of New York, between the UNITED STATES SUGAR EQUALIZATION BOARD, INC., a corporation of the State of Delaware, hereinafter de- scribed as the ''EQUALIZATION BOARD," and the Refiners of Sugar in the United States acting severally, signatory hereto, hereinafter described as the " REFINERS," and EXHIBIT 8 177 HERBERT HOOVER, as United States Food Administrator, hereinafter described as the "FOOD ADMINISTRATOR," WlTNESSETH : WHEREAS, the Equalization Board has been created and is acting as an agency of the United States for the purpose in part of equalizing the distribution and selling price of sugar, and contemporaneously with the execu- tion of this Agreement has entered into an Agreement bearing even date herewith for the purchase of raw sugar produced in the Island of Cuba during the Crop Season 1918-19, which Agreement, described as the " CUBAN AGREEMENT," is hereto annexed and marked "Exhibit A," and WHEREAS, with a view to securing regular and suf- ficient supplies of sugar to the American people and the Army and Navy at a reasonable price, even during the disorganized period of world trade, the Equalization Board has, in the interest of the American people and the Allies, purchased the Cuban Sugar Crop of 1918-19 for distribution to the American people, their Allies and others, and WHEREAS, the Food Administrator and the Equaliza- tion Board are desirous of securing an equality of dis- tribution of said sugars according to the requirements or to secure such exports from said sugar as may be in surplus and may be determined by the agencies of the Government as necessary to meet its international obli- gations, and WHEREAS, it is necessary and advisable in order to secure an equitable distribution of sugar throughout the United States to apportion Cuban and other sugars among the Refiners for their requirements, and to that end to continue THE AMERICAN REFINERS' COMMITTEE, and WHEREAS, the American Refiners are desirous of fully co-operating with the agencies of the Government in the purposes above set forth, 178 APPENDIX Now, THEREFORE, the parties hereto in consideration of the premises and the mutual covenants herein con- tained, each for itself and himself, for the part or propor- tion of this Agreement to be performed by it or him, severally and not jointly, agree as follows : I The Food Administrator and said Refiners agree that the Agreement of October i, 1917, between the Refiners and the Food Administrator, shall be and same hereby is cancelled and annulled so far as the rights and obliga- tions of the parties hereto to each other are concerned, except as to such sugars of 1917-18 crop as have not been delivered. II Such of the following named persons as are officers of companies signatory hereto, are hereby appointed by the Food Administrator for the period of this agreement and shall constitute the American Refiners' Committee with the powers and duties hereinafter set forth JAMES H. POST, Chairman CLAUS A. SPRECKELS CHARLES M. WARNER GEORGE H. EARLE, JR. ROBERT M. PARKER and the following named persons who are representatives of companies signatory hereto are appointed as alternates on said committee, who shall have the privilege of being present at all meetings and serving in the place of any absent member or filling any vacancies in said Committee in the order named DWIGHT P. THOMAS W. J. MCCAHAN, JR. BENJAMIN A. OXNARD M. E. GOETZINGER JOHN FARR EXHIBIT 8 179 WILLIAM HENDERSON W. T. ELDREDGE E. L. WEMPLE. Ill Until the 3ist day of December, 1919, the Refiners will not purchase any sugar except from the Equalization Board, other than such sugars as are provided under the said Agreement of October i, 1917, and Hawaiian sugars hereinafter referred to, provided, however, that Refiners may purchase sugars, other than the crop of 1918-19, for delivery after December 31, 1919. IV The sugar provided by the Equalization Board shall be distributed among the Refiners who enter into this Agreement to meet their requirements, in the proportions set forth in " Exhibit B," which is made a part hereof and in case there is a disagreement between a Refiner and The American Refiners' Committee as to apportionment, the matter shall be submitted to the United States Food Administrator and his decision shall be final, and any sugar received by a Refiner from any source shall be charged against his pro rata amount under such distribu- tion. The Hawaiian sugar that may be deliverable under any contract to any Refiner party hereto shall be taken over in rotation in an order to be determined by lot to be drawn by the Chairman of the American Refiners' Com- mittee and upon the terms provided for in such contract for account of the New York and Philadelphia Refiners, parties hereto, and the rights and obligations of the pur- chaser under said contract are to be assumed by said Refiners. V The American Refiners' Committee is, under the di- rection, supervision and control of the Equalization l8o APPENDIX Board, hereby charged with the duty and responsibility on behalf of the Refiners hereto, of arranging, routing and distributing to the several Refiners, the sugar to be purchased as hereinafter set forth from the Equalization Board, and such duties shall, so far as possible, be carried out in accordance with the requirements and convenience of the several Refiners. VI The several Refiners, not in any way limiting their ordinary power or business discretion to determine to what extent they may severally operate their refineries, agree to and do hereby purchase from the Equalization Board, and the Equalization Board agrees, subject to its commitments from time to time to Governments or per- sons outside the United States and to the requirements of the United States Government and buyers in the United States other than refiners, to sell to the Refiners their entire requirements of raw sugar for the operation of their several refineries for such time as the respective refiners in their respective judgments determine to oper- ate their respective refineries, for the period beginning with the date of this Agreement and ending on December 31, 1919, (except such raw sugars as are purchased by the Refiners under the Agreement of October i, 1917, and the Hawaiian Contracts herein referred to) ; and they severally agree not to purchase any sugar from any per- son, country or source of supply, during said period, other than from the Equalization Board. For all such purchases of sugar from Cuba the several Refiners agree to pay the price of seven and twenty- eight one-hundred ths cents (7.28) per pound, 96 degree average outturn polarization (duty, if any, paid). 1 1 For sugar polarizing over 96 degrees there shall be added to the price 70. per 100 pounds per degree up to 98 degrees. For sugar polarizing under 96 degrees there shall be deducted from the price 120. per 100 pounds per degree down to 94 degrees. For sugar polarizing between 94 degrees down to 93 degrees there shall be deducted from the price lye. per 100 pounds per degree, fractions in proportion. EXHIBIT 8 l8l All sugar furnished the Refiners from Cuba shall be settled for by each Refiner on the same terms and con- ditions under which said sugar was purchased by the Equalization Board under the Cuban Agreement. The Refiners severally agree for their proportions of the Cuban sugar hereby purchased by them to pay the amounts required to be paid by the Equalization Board, under, by and in accordance with the terms of the Cuban Agreement and in addition thereto to pay to the Equaliza- tion Board the difference between the amount per pound they are required to pay under the Cuban Agreement for the sugar delivered and 7.28 cents per pound for 96 degree test. The Equalization Board states that the amount so paid to it may be used by it for the liquidatioh of any losses it may incur on 'excess stocks of sugar purchased by it or in equalizing the distribution or price of sugar to the American people. Any balance in the treasury of the Equalization Board after the discharge of its obli- gations hereunder and other liabilities belongs to its only stockholder, the United States. VII The Refiners severally agree to receive, accept and pay for any sugar, other than from Cuba, which may be purchased by the Equalization Board from time to time, for the requirements of such Refiners, respectively as stated in paragraph VI, at the price of seven and twenty- eight one-hundred ths (7.28) cents per pound 96 degree test, average outturn polarization (duty, if any, paid) delivered at refinery, with allowances for differences in test as specified in Paragraph VI, provided that the Sugar Equalization Board is not required to deliver sugar under this and the preceding Paragraph VI unless due notice of the requirements of such refiner is given to the said Board and the sugars are reasonably obtainable 182 APPENDIX \ at a delivered duty paid price of seven and twenty-eight one-hundredths cents (7.28) per pound or less. VIII Marine insurance on sugar purchased by the Equaliza- tion Board on a cost and freight basis shall be arranged by the American Refiners' Committee under direction of the Equalization Board, from shore to shore, including the risk of lighterage to and from the vessel at ports of load- ing and discharge, the cost thereof to be paid by the Re- finers severally and charged against the price of the sugar delivered hereunder. IX The Equalization Board, however, reserves the right in its sole discretion, from time to time, to change the price to the Refiners as to any sugar to be delivered under this Agreement, upon giving fifteen (15) days previous notice of such change of price, and in case of any such change of price, settlement by the Refiners for their purchases of all sugar shall thereafter be upon the basis of such changed price instead of the seven and twenty- eight hundredths (7.28) cents per pound 96 test above mentioned. Due regard to be given allowances up and down from 96 degrees. In making settlement for sugars purchased by them hereunder, the Colonial Sugars Company and the Leon Godchaux Company, Ltd., shall each be entitled to charge against any sum or sums to be severally paid by them (to cover inland freight to refining points when paid by such Refiners) the sum of three and one-half (si) cents per one hundred pounds of sugar purchased by them from the Sugar Equalization Board aforesaid. These charges, however, may be cancelled or changed EXHIBIT 8 183 from time to time at the option of the Equalization Board. XI Each of the undersigned Refiners agrees that it will sell all sugar refined by it at a price not more than one dollar fifty-four cents ($1.54) net per hundred (100) pounds wholesale of refined sugar on the basis of Fine Granulated sugar in barrels or in 100 pound bags (when used as the standard basis) f. o. b. refinery above the price for 96 centrifugal sugar paid to the Equalization Board provided for in this Agreement, with such differen- tials as are now shown on its official price list, same being subject to change from tune to time on consent and approval of the Equalization Board. Said net margin shall be exclusive of the 2% cash discount, payment in ten days to the trade. This margin is determined on a delivered duty paid price of from 7.10 i to 7.35^ per pound for 96 test raw sugar, and in case the price provided for in this Agreement goes below 7.10^ per pound the margin aforesaid shall be decreased in such a manner as to return substantially the same profit to the Refiner. In case the basic price goes above 7.35^ per pound, said margin shall be increased to accomplish the same pur- pose. It is mutually agreed between the parties hereto that said margin shall be promptly revised by the parties hereto from time to time in case of changes in cost of refining and of wholesale distribution, or in the event of an excise or similar tax. It is further understood that the margin upon any sugar purchased under the Hawaiian Contracts above referred to may be increased by the amount of the differ- ential under which such sugar is purchased. XII It is further understood that inasmuch as this Agree- ment has been entered into at the request of the Food 1 84 APPENDIX Administration and the Equalization Board for the pur- poses above recited, in view of the limitation on the price to be secured by the Refiner for its refined product, it is mutually agreed between the Equalization Board and the Refiners that in case of an advance or decline in the price of sugar from 7.28^ per pound for 96 degree test, raw basis, due to any action of the Equalization Board, the Equalization Board will pay to each of the Refiners in the event of a decline in price, and each of the Re- finers will pay to the Equalization Board in the event of a raise in price, a sum equivalent to the change in price multiplied by the number of pounds of raw or refined sugar (raw basis) l which each of the Refiners may have purchased hereunder, and which is undelivered or on hand or in transit on the date when such change takes place. XIII Each Refiner signatory hereto agrees to conduct his or its export business under the direction of the Equaliza- tion Board, and to export or distribute to the domestic trade such proportion of its refined sugar as the Equaliza- tion Board may direct, upon prices and terms which will yield the Refiner the same margin as is specified in Paragraph XI, and in the event of sales for export at a higher price, the excess over the Refiners' margin is to be for the account of the Equalization Board. The Equalization Board furthermore agrees in con- ducting its export business that it will endeavor where conditions permit to provide (in case the Refiners desire) additional quantities of dutiable raw sugar, after giving due consideration to the requests and requirements of other nations, or buyers. 1 Refined sugar shall be reduced to raw basis by adding seven (7) per cent, to its weight. EXHIBIT 8 185 XIV So long as raw sugars are available for Refiners' re- quirements, the said Food Administrator and the said Equalization Board will not restrict the sale and dis- tribution of Refined Sugar made from raw sugar pur- chased under this Agreement. The Food Administrator or the Equalization Board shall have the right to super- vise the domestic distribution of sugar during the life of this contract. No restrictions shall be placed upon domestic consumption until after the Refiners have been consulted. XV In the event that any Refiner named in "Exhibit B" does not enter into this Agreement its pro rata propor- tion of sugar shall be allotted to the Refiners signatory hereto, if they desire, in the proportions and at the price and upon the terms and conditions herein provided as to the sugar purchased hereunder. XVI From October i, 1919, to December 31, 1919, if re- quested so to do by the Equalization Board, the Refiners agree to refine any raw sugar the Equalization Board may have purchased and not sold to the Refiners at the Re- finers' margin then in effect to be ascertained as provided in Paragraph XI, less three (3) cents per 100 pounds. The Refiners agree to offer said sugar for sale and dis- tribution, if requested so to do, at such price and on such terms as said Equalization Board may direct, for a com- mission of three (3) cents per 100 pounds. XVII Should any unforeseen circumstances such as war, rebellion, insurrection, political disturbances, strikes, lack of fuel, marine loss, fire, explosion, riots or civil l86 APPENDIX disturbances, embargoes, prohibitions, or other causes, either in the United States, Cuba or elsewhere, prevent the Equalization Board from making delivery of the sugar according to the terms hereof, it shall so advise the Refiners' Committee immediately and be released from delivery of such portion of the sugar as cannot be delivered, but the Equalization Board agrees to use due diligence to carry out this Agreement in its entirety, notwithstanding the circumstances mentioned. XVIII All matters of disagreement arising under this Agree- ment between the Equalization Board and any other party hereto which cannot be adjusted by them to their mutual satisfaction, shall be left to arbitration in Wash- ington. The Equalization Board and the American Re- finers' Committee shall each select one arbitrator and the two so selected shall select a third, and the decision of any two of said arbitrators shall be final and con- clusive upon the parties thereto. In case the disagree- ment is between only one Refiner and the Equalization Board, the arbitrator provided to be appointed by the American Refiners' Committee shall be appointed by such one Refiner. Any expense attached to such arbitra- tion shall be divided equally among the parties to the arbitration. XIX It is agreed by all parties hereto that said Equaliza- tion Board may earn a profit on any sugar it may pur- chase and resell to said Refiners or on any sugar it may purchase from said Refiners and resell for Export. XX It is further understood that the individual members of the said American Refiners' Committee are acting EXHIBIT 8 187 herein as volunteers, in a purely administrative capacity, and accordingly the parties hereto agree that said mem- bers of the said Committee shall not incur any personal liability, individually or collectively, under the terms of this contract, nor be responsible for any damage of what- ever kind connected with any matter or thing relating to this contract ; nor shall they be responsible or liable for any act, fault or misconduct of any agents or persons employed by them and the parties hereto hereby further release and discharge the said individual members of the said Committee from any and all claims of whatever kind for personal liability or responsibility as aforesaid. XXI The Refiners severally agree to pay their pro rata share on the basis of sugar purchased of any expenses incurred by the American Refiners' Committee in carry- ing out this Agreement. XXII This Agreement shall remain in full force and effect up to and including December 31, 1919, and shall cover all sugar shipped or in transit prior to that date. IN WITNESS WHEREOF, the parties hereto have sub- scribed this Agreement as of the day and year first above written. BASIS OF PROPORTIONATE DISTRIBUTION AS FIXED ON NOVEM- BER 4, 1918, AT A MEETING OF THE AMERICAN REFINERS' COMMITTEE OF THE UNITED STATES FOOD ADMINISTRATION American Sugar Refining Company 38.001 per cent Arbuckle Brothers 6.613 " California & Hawaiian Sugar Refining Company 6.945 " Colonial Sugars Company 2.185" Federal Sugar Refining Company 8.645 " William Henderson 1.220 " 1 88 APPENDIX Imperial Sugar Refining Company . . . . . 1.122 per cent The W. J. McCahan Sugar Refining Company 2.489 National Sugar Refining Company 11.940 Pennsylvania Sugar Company 4-537 Revere Sugar Refining Company 2.985 Savannah Sugar Refining Corporation . . . 2.149 Warner Sugar Refining Company 6.187 Western Sugar Refining Company 3-549 The Leon Godchaux, Company, Limited . . . 1.433 EXHIBIT 9 AGREEMENT WITH THE UNITED STATES FOOD ADMINISTRATOR AS TO SALE AND DISTRIBUTION OF BEET SUGAR CROP 1918-1919 THIS AGREEMENT, entered into this i8th day of September, 1918, between Herbert Hoover, United States Food Administrator, acting for and in behalf of the President of the United States, and , of , State of , hereinafter called the Producer, WlTNESSETH, THAT: WHEREAS, The United States Food Administrator, pursuant to an Act of Congress, approved August 10, 1917, known as the "Food Control Act," has issued, and from time to time continues to issue rules and regu- lations relating to the conduct of the business of all per- sons importing, manufacturing, storing or distributing sugar; and WHEREAS, The said Food Administrator is desir- ous of securing an equitable, fair and economic distri- bution of available sugars among the various consuming communities ; of minimizing the burdens upon the transportation facilities required for such distribution; and of preventing unjust, unreasonable, unfair and wasteful commissions, profits and practices ; and EXHIBIT 9 189 WHEREAS, The United States Food Administrator has urgently requested all producers of beet sugar in the United States to enter into an agreement with him, in order to accomplish the purposes contemplated by said Act ; Now, THEREFORE, In consideration of the premises and agreements of the United States Food Adminis- trator hereafter set forth, the undersigned producer hereby agrees : 1. That in selling and distributing beet sugar pro- duced from the crop of 1918-19, it shall observe, re- spect and be governed by any and all regulations which said United States Food Administrator, either directly or through his duly appointed Food Administration Sugar Distributing Committee, may from time to tune prescribe under the provisions of said Act. 2. That it will ship sugar at such times, to such places, and in such quantities as may be directed by the United States Food Administrator, through the said Sugar Distributing Committee; that it will route all sugars as directed by that Committee; that it will promptly comply with any and all directions for change of destination and route, or for reconsignment ; and that it will ship all sugar sight draft attached to bill of lading, unless, at its request, it is otherwise permitted by the Sugar Distributing Committee. In case such request is made and such permission given, the loss, if any, shall be borne by the requesting producer. Pro- vided that nothing in this agreement shall authorize the United States Food Administrator to direct distri- bution to a particular individual, firm or corporation. 3. That it will sell all sugar at not to exceed the basic market price for fine granulated cane sugar in 100 pound bags or barrels at seaboard refining points, as established by the United States Food Administration, plus such prepaid basing freight rates as may be ruling at point of destination on day of sale, or on such other I 9 APPENDIX day as shall be directed by the United States Food Ad- ministration, less the differential, if any, between cane and beet sugar which may then be in force at point of destination, the said Committee being authorized to establish or revoke a differential whenever it may be deemed advisable. Provided that no differential shall be established at any point unless it is established at all other points within the same zone. For the purpose of this agreement the United States shall be divided into such zones as may be approved by the United States Food Administrator; provided, that unless otherwise permitted by the United States Food Administrator, such price shall not exceed the maximum basic price of Nine Dollars per hundred pounds at seaboard refin- ing points. 4. That it will not tender for regular trade distribu- tion at ruling market prices any "off sugar," or any sugar which is inferior to standard granulated sugar. That should the producer have inferior sugar in its possession, it shall notify the Sugar Distributing Com- mittee of such fact. After the Committee is satisfied that the sugar reported is actually "off sugar," said Committee, or the producer itself under the Commit- tee's instructions, may dispose of such product at a dis- count from the ruling market price, the resulting loss to be borne exclusively by the producer. 5. That it will promptly make complete and true reports to the Sugar Distributing Committee of all sales made by it at such intervals and in such forms as may be required by said Committee. 6. That it will promptly remit to the Sugar Dis- tributing Committee its proportionate amount (based upon production), of all expenses actually paid, in- curred, or estimated to be incurred by said Committee in making the distribution herein provided for. 7. That on the 3ist day of December, 1918, and every three months thereafter, the said Food Adminis- EXHIBIT 9 191 tration Sugar Distributing Committee will calculate the average net proceeds per pound of sugar then sold and invoiced by all producers who have entered into agreements with the United States Food Administra- tion similar to this agreement, and cause copies of the results of such calculation to be mailed to each of such producers. The difference between such average and the actual amounts paid to the respective producers shall be temporarily adjusted by requiring producers whose actual price is in excess of such calculated aver- age, to pay such excess to the United States Food Ad- ministrator, or to a representative appointed by him who will distribute such excess proportionately to those producers whose actual price is less than the calculated average. 8. That prior to March 3ist, 1919, the undersigned, together with all other beet sugar producers who have entered into agreements as aforesaid, will select an Adjustment Committee of five persons. All producers operating east of the Missouri River shall constitute and be deemed to be a separate group; and all pro- ducers operating west of the Missouri River shall con- stitute and be deemed to be a separate group. Each of these separate groups shall select two members of said Adjustment Committee, and such four members shall select the remaining fifth member of said Com- mittee. Said Adjustment Committee shall thereupon determine the amount of allowance, if any, per hun- dred pounds, which shall be paid by one group to the other group, in order to correct any injustice resulting from distribution under this agreement. The Adjust- ment Committee shall report their determination to the Food Administration Sugar Distributing Committee, and thereupon said Distributing Committee shall ad- just its calculations in conformity with such determi- nation and all exchange payments between the United States Food Administrator or his representative and IQ2 APPENDIX the undersigned shall be made in accordance there- with. 9. That at the close of the 1918-1919 selling cam- paign, but not later than August 3ist, 1919, the said Sugar Distributing Committee shall prepare a final set- tlement statement, showing the actual price per pound of sugar received by each producer, the average net proceeds per pound of sugar resulting from the sale of all sugars constituting the crop of 1918-1919, the allowance between groups as determined by the Adjust- ment Committee, and the amount that each producer should receive for his sugar, based upon such average price, and as modified by the Adjustment Committee; provided that all ~ unsold sugars on hand on August 31, 1919, shall be inventoried in such manner and at such price as the Food Administration Sugar Distributing Committee may direct. In consideration of the foregoing agreements, the United States Food Administrator agrees : 10. That the President of the United States, act- ing by and through the said Food Administrator, has appointed a committee of the United States Food Ad- ministration, to be known as the Food Administration Sugar Distributing Committee, to carry out, subject to his approval, the provisions of said Act of Congress so far as they relate to the distribution of beet sugar, which Committee is composed of the following persons, to- wit : W. L. PETRIKIN, Chairman, W. H. HANNAM, S. H. LOVE, E. C. HOWE, S. W. SlNSHEIMER, H. A. DOUGLAS, W. P. TURNER. 11. That he will cause said Sugar Distributing Com- mittee to direct the distribution of the beet sugar crop EXHIBIT 9 193 herein referred to in the most economical and efficient method consistent with an equitable distribution of sugar where needed throughout the United States. 12. That the said Committee shall establish pack- age differentials for package goods not in excess of dif- ferentials for similar package goods established for the Cane Refiners of the United States; shall from time to time issue and mail to each producer schedules of prepaid basing rates at the different shipping points, to be based on freight rates from seaboard refining points ; and shall issue and mail to each producer uni- form price lists, showing seaboard base price, and the terms upon which sugar may be sold, including the differential, if any, between cane and beet sugar. No sale of sugar shall be made by any producer except at the price, differential and terms stated in the last price list issued. Whenever a change occurs in price, terms or differential, the said Committee shall issue a new price list, which shall not become effective until after a copy thereof has been mailed to and approved by the United States Food Administrator. 13. Nothing in this contract shall require the United States Food Administrator or his representative to make any payments except out of funds paid to him under this contract or similar uniform contracts with other pro- ducers. 14. Sugar shall be delivered to the United States Government for Army and Navy uses and for Red Cross, Y.M.C.A., Belgian Relief, Salvation Army and kindred organizations when and in such amounts as the Government may specify, at prices to be fixed by the United States Food Administrator, and the net pro- ceeds of such sugar shall be included in calculating the general average net proceeds per pound of all sugar sold by producers entering into this agreement. 15. The output of any beet sugar producer whose output is commandeered by the Government of the 194 APPENDIX United States or the Food Administration for public purposes, shall not so far as it is reasonably possible to prevent the same, be permitted to be handled, sold or distributed in any manner which will detrimentally affect the markets of the producer, or the net proceeds resulting from the sale and distribution of sugar as provided in this agreement. 1 6. It is understood and agreed by the producer that a violation of any of the terms of this agreement may result in and be cause for revocation of its license. 17. This agreement shall remain in full force and effect from the date hereof until the final disposition of the crop of 1918-1919. IN WITNESS WHEREOF, the parties hereunto have signed this agreement the day and year first above written. SUPPLEMENTARY AGREEMENT WITH THE UNITED STATES FOOD ADMINISTRATOR AS TO BEET SUGAR CROP 1918-1919 THIS AGREEMENT, entered into this i8th day of September, 1918, between Herbert Hoover, United States Food Administrator, acting for and in be- half of the President of the United States, and the Sugar Company of , State of , hereinafter called the Producer, WlTNESSETH, THAT: WHEREAS, the parties to this contract have entered into a uniform agreement of even date herewith in re- gard to the distribution of beet sugar produced from the crop of 1918-1919 ; and WHEREAS, the Producer together with other east- ern producers is in a special situation as regards distri- bution ; Now, THEREFORE, In consideration of the premises and of said agreement of even date herewith, it is hereby mutually agreed : EXHIBIT 10 195 1. That when the adjustment referred to in Para- graph 8 of the principal agreement of even date here- with has been made, but in any event prior to March 31, 1919, all producers located east of the Missouri river and entering into a supplementary agreement similar to this, shall select an "Eastern Adjustment Committee" of three persons. Said committee shall consider the location of the various factories among such producers constituting the eastern group, and shall determine whether the same net price per hundred pounds among all the members of said group is in all respects just and equitable. 2. If the committee shall find that such a net price is not just and equitable, it shall then cause proper and equitable deductions or additions to be made from or to the various amounts due and payable to such eastern producers as adjusted and reported by the Food Ad- ministration Sugar Distributing Committee. 3. The Adjustment Committee shall report their determination to the Food Administration Sugar Dis- tributing Committee, which shall adjust its calculations in conformity with such determination, and all ex- change payments between the United States Food Ad- ministrator or his representative and the undersigned shall be made in accordance therewith. IN WITNESS WHEREOF : the parties hereto have signed this supplementary agreement the day and year first above written. EXHIBIT 10 AGREEMENT WITH UNITED STATES FOOD AD- MINISTRATION AS TO LOUISIANA SUGARS, 1918-1919 CROP THIS AGREEMENT, entered into this day of , 1918, between Herbert Hoover, 196 APPENDIX United States Food Administrator, acting in this behalf for the President of the United States, and of , hereinafter called the producer, WlTNESSETH, THAT WHEREAS, the United States Food Administrator, pursuant to the Act of Congress approved August 10,, 1917, known as the "Food Control Act/' has issued regulations for the conduct of the business of all persons importing, manufacturing, storing or distributing sugar, and desires under said Act to secure an equitable dis- tribution of the cane sugar crop of the season of 1918- 1919 and to prevent unjust, unreasonable, unfair and wasteful commissions, profits, and practices, and WHEREAS, the United States Food Administrator has requested all producers of cane sugar in the State of Louisiana to enter into an agreement with him cover- ing the sale and distribution of all cane sugar produced in the State of Louisiana and manufactured for direct consumption, and WHEREAS, the United States Food Administrator has appointed a committee of the United States Food Administration to be called the Louisiana Sugar Com- mittee, and, subject to his approval, to superintend the distribution of Louisiana sugar and carry out the pro- visions of this contract. A majority of said Committee shall constitute a quorum and the assent of four members of said Committee at a meeting duly called shall be con- sidered the action of the Committee. The Committee shall be composed of the following persons, and in the event of vacancies occurring the .United States Food Administrator shall appoint successors to all such vacancies : R. E. MILLING, Chairman, C. D. KEMPER, E. J. GAY, J. C. LEBOURGEOIS, EXHIBIT 10 197 W. J. BARKLEY, E. A. PHARR, E. A. BURGUIERES. WHEREAS, the undersigned is a producer of cane sugar and is desirous of aiding and promoting the efficient administration of said Act and of securing the purpose contemplated by said Act by agreement as authorized by Section 2 of the aforesaid Act of Congress ; Now, THEREFORE, in consideration of the premises and the agreements of the United States Food Adminis- trator hereafter set forth, the producer hereby agrees : (1) That in selling and distributing Louisiana cane sugar he will observe and respect and be governed by any and all orders and regulations which said United States Food Administrator, through the said Sugar Committee may from time to time make or prescribe, or any general or special regulations issued under the pro- visions of said Act. (2) That the "basic price" of fine granulated sugar at any time for the purposes of this contract shall be that price which is then determined by the United States Food Administrator under the provisions of his uniform contracts with the sugar refiners of the United States dated October i, 1917, as the maximum price which may be charged by such refiners for fine granulated in barrels or one hundred pound bags f. o. b. seaboard points with the customary discounts, terms and con- ditions, which contract is on file with the United States Food Administrator and made part hereof by reference ; and the basic price of Louisiana sugars shall be' such basic price less the following differentials : Plantation granulated No differential White clarified oicpercwt. Off plantation granulated IDC " " Off white isc " " 1 98 APPENDIX Choice yellow clarified iScpercwt. Prime yellow clarified 20 c Kettle 20 c Off yellow clarified 300 Seconds and thirds (ist group) 80 c " " (2nd group) 90 c " " " (3rd group) i.oo " (4th group) 1. 10 " (sth group) 1.20 The differential on all grades of semi-refined direct consumption sugars not listed above shall be the differ- ential indicated for sugars of equal grade, or if of an intermediate grade at the differential of the listed grade next below; and the differential on sugars, the grade and price of which cannot be thus determined, shall be fixed by the said Sugar Committee. The above grades shall be determined with reference to the standard samples thereof as fixed by the New Orleans Sugar and Rice Exchange with the approval of the United States Food Administration and now on file with said Exchange. In case of dispute regarding the grade the final decision shall be made by the Louisiana Sugar Committee. (3) That unless the aforesaid Louisiana Sugar Com- mittee permits the sale at a lower price by reason of deterioration, or sets a lower price for any or all grades under the provisions of Section 4 hereof, the producer will sell direct consumption sugars manufactured by him at not more than such price as is found to be just and fair by the United States Food Administrator, hereafter called the ''maximum price." The said United States Food Administrator agrees that he will not name a price less than thor basic price mentioned in Section 2 hereof for sugar in barrels or one hundred pound bags f. o. b. New Orleans or point of origin carrying the same freight rate as New Orleans; provided, how- ever, that if domestic beet sugar is generally selling at a higher price than the basic price of fine cane granu- EXHIBIT 10 199 lated sugar, the United States Food Administrator will not name a price less than the price of domestic beet sugar less the differentials named in paragraph 2, provided that if there is a sale to the United States or any of its agencies such price shall not necessarily govern. That he will sell raw sugar at a price delivered at customary Louisiana refining points not greater than the price which may be found to be just and fair by the United States Food Administrator and not less than the price of duty paid 96 degree Cuban raw sugar delivered at such refilling points. That he will sell washed sugar (which is denned as any first sugar above the grade of raw sugar, and be- low the grade of off yellow clarified, and having a color test of not less than 22 Dutch Standard) at a price 40 cents above the price of raw sugar as determined by the foregoing paragraph and paragraph 4, with an addition of 1/16 of a cent per pound for each degree or fraction thereof above 96 degrees and a deduction of i/io of a cent per pound for each degree or fraction thereof below 96 degrees. (4) The producer further agrees that the said Sugar Committee with the approval of the United States Food Administrator may name a price for any grade or grades of Louisiana sugar from time to time at any figure not greater than the price for such grade or grades which may be fixed as the "maximum price" therefor by the United States Food Administration under para- graph 3 hereof, and that after the prices thus fixed are posted at the New Orleans Sugar and Rice Exchange he will sell the sugar at the price named until changed under the provisions of this contract. (5) In the event that the producer is required by the United States Food Administrator directly or through said Committee to ship sugar to a point carrying a freight rate higher from point of origin to point of destination 200 APPENDIX than that from New Orleans to point of destination the producer may add to the price prescribed under paragraphs 3 and 4 hereof the extra freight, provided that the selling price to the retailer shall not be greater than the maximum authorized selling price of similar sugars at such point to retailers. (6) a. The producer further agrees that he will ship sugar at such time, to such places, and in such quantities as may be directed by the United States Food Adminis- trator through the said Sugar Committee, that he will route all sugars as directed by said Committee, and that he will promptly comply with all orders for change of destination and route and for reconsignment. Provided that if no instructions or directions are given by the said Food Administrator or the Sugar Committee he may continue to distribute his sugar in the customary manner heretofore existing for the dis- tribution of such sugars, subject to the price provisions of this contract. Provided, further, that nothing in this contract shall require the producer to ship or dispose of his sugar when prices lower than the "maximum price" named under paragraph 3, less the differentials stated in para- graph 2, are named by the Sugar Committee under paragraph 4. b. The producer, unless notified to the contrary, will keep the Committee constantly informed of the quantity and grade of sugar that is being produced daily and the disposition of the same. (7) In consideration of the foregoing agreement, the United States Food Administrator agrees : a. That he will cause the said Sugar Committee to direct the disposition of direct consumption sugars in the most economical and efficient method consistent with equitable distribution and the needs of the country. b. That he will use his best efforts to secure prefer- ence in the distribution and sale to local refiners of EXHIBIT 10 201 Louisiana raw sugars manufactured by the producer herein, if the producer is desirous of selling to such re- finers. c. That he will use his best efforts with the proper authorities to secure an adequate supply of railroad cars for the distribution of all Louisiana sugars, covered by this contract. (8) Sugar shall be delivered to the United States Government for Army and Navy uses when and in such amount as the Government may require at prices to be fixed by the United States Food Administrator. (9) It is understood and agreed by the producer that a wilful violation of any of the terms of this agreement may result in and be cause for revocation of his license. (10) This agreement shall remain in full force and effect from October i, 1918, and until the final dis- position of the crop of the season 1918-1919, and for each succeeding year thereafter until the existing state of war between the United States Government and Germany shall have terminated and the fact of such termination shall have been proclaimed by the President of the United States ; provided that either party hereto may withdraw from the contract after the disposition of the crop of 1918-1919, by giving a thirty days' written notice to that effect before October i, 1919; or may withdraw for any subsequent crop year by giving such notice on or before October i, of that year. (n) The word "he" wherever used in this contract to indicate the producer, shall refer to such producer whether an individual, partnership or corporation as the case may be. IN WITNESS WHEREOF, the parties hereto have sub- scribed this agreement on the day and year first above written. 202 APPENDIX EXHIBIT 11 ASSIGNMENT TO THE ROYAL COMMISSION ON THE SUGAR SUPPLY BY THE UNITED STATES SUGAR EQUALIZATION BOARD, INC., OF ITS RIGHTS TO ONE-THIRD OF THE SUGAR PURCHASED UNDER AGREEMENT AS TO CUBAN SUGARS CROP 1918- 1919, DATED OCTOBER TWENTY-FOURTH, 1918. WHEREAS, on the 24th day of October, 1918, the - United States Sugar Equalization Board, Incorporated, entered into an agreement as party of the first part with Carlos Manuel de Cespedes, Robert B. Hawley, Manuel Rionda, a Cuban Commission, parties of the second part, and agents of various Cuban producers acting severally for the producers of sugar in the Island of Cuba, parties of the third part, under and by the terms of which the seller therein described agreed "on behalf of himself and his principals" to sell and deliver to the buyer (United States Sugar Equalization Board) all the raw sugar produced "by him or his principals in the Island of Cuba during the crop season of 1918-1919" except that actually used for local consumption in Cuba ; and WHEREAS, by the third paragraph of said agreement right and power was given to the United States Equaliza- tion Board to assign said contract without recourse in respect to any part of the sugar contracted for therein as follows : "The Buyer shall have the right from time to time to assign this contract, without recourse, in respect to any part of the sugar contracted for herein, to the Governments of the United Kingdom, Canada, France or Italy, or to any duly constituted agency repre- senting all or either of said governments, or to any sugar refiner of the United States. The Buyer, upon making any such assign- ment, shall give notice thereof to the Seller." and WHEREAS, the United States Sugar Equalization Board, Incorporated, has this day agreed to transfer EXHIBIT 11 203 to The Royal Commission on the Sugar Supply, an agency duly authorized to act and now acting in making this purchase on behalf of the Governments of Great Britain (not including Canada), France and Italy, without recourse, the rights of the United States Sugar Equaliza- tion Board, Incorporated, to one- third of all of the raw sugar purchased by the said United States Sugar Equali- zation Board, Incorporated, under the agreement afore- said of October 24, 1918. Now, THEREFORE, by this agreement, the United States Sugar Equalization Board, Incorporated, does hereby assign to The Royal Commission on the Sugar Supply, without recourse upon the said the United States Sugar Equalization Board, Incorporated, its rights to and to have delivered to it one-third of all of the raw sugars purchased by the said United States Sugar Equalization Board, Incorporated (together with any commission upon such one-third of all the raw sugars purchased by the United States Sugar Equaliza- tion Board, Incorporated, under said Agreement of October 24, 1918, to which the United States Sugar Equalization Board, Incorporated, would be entitled under said agreement) under the agreement of October 24, 1918, aforesaid, at the respective prices for delivery f. o. b. Northside and Southside Cuban ports, and upon the terms therein stated. A condition of this assignment is the right of the Royal Commission on the Sugar Supply at its option to take 321,000 tons, or any part thereof, of the one- third of the Cuban crop hereby assigned for shipment to the United States for refining purposes on the cost and freight terms of Paragraph 2, Section 2, of Page 3 of the Cuban Contract dated October 24, 1918. And the said The Royal Commission on the Sugar Supply as to such one-third of the raw sugars from Cuba as aforesaid does hereby accept said assignment and agree to and does hereby assume as to said one-third of the 204 APPENDIX sugars aforesaid all of the payments, duties and obli- gations of the said United States Sugar Equalization Board, Incorporated, under the agreement of October 24, 1918, aforesaid. Said agreement of October 24, 1918, is made a part hereof. WITNESS the signature of the United States Sugar Equalization Board, Incorporated, by George M. Rolph, its President, and the seal thereof hereto affixed duly attached by H. H. Bundy, its Secretary, and witness the signature of The Royal Commission on the Sugar Supply of the United Kingdom of Great Britain by J. Ramsey Drake, this day of December, 1918. EXHIBIT 12 OPTION GIVEN TO ROYAL COMMISSION ON THE SUGAR SUPPLY BY REFINERS OF THE UNITED STATES FOR THE REFINING OF 321,000 TONS CUBAN RAW SUGAR November 22nd, 1918 The Royal Commission on the Sugar Supply, London, England. Gentlemen : We are advised by Mr. George M. Rolph, the Head of the Sugar Division of the United States Food Ad- ministration and President of the United States Sugar Equalization Board, Inc., that you have made arrange- ments with the latter Company for the assignment by it to you of a portion of the Cuban Sugar Crop for 1918-19 and that such arrangements are made with the approval of the Food Administration. We also under- stand that with the approval of the Food Administration and with a view to securing a supply of refined sugar for distribution to the United Kingdom, France and Italy EXHIBIT 12 205 you are considering the advisability of having a part of your purchase refined in the United States. At the present writing, we are negotiating with the United States Sugar Equalization Board looking toward the purchase of our requirements of raw sugar for the period up to December 31, 1919, and the sale of the same at an agreed margin. Accordingly, therefore, in consideration of the margin to be paid to us as hereinafter set forth we, Sugar Re- finers of the United States, at the request of the United States Sugar Equalization Board, Incorporated, severally agree to give and do hereby give to your Commission the option of having refined in our refining plants during the year 1919 up to 321,000 tons of Cuban Raw Sugar of the Crop of 1918-19 to produce an equivalent quantity up to 300,000 tons of refined sugar, upon the following terms and conditions : Quantity and Option : 300,000 tons of refined granu- lated sugar at the rate of 27,275 tons monthly beginning February ist, 1919, and if option for any month is not exercised, the total quantity is automatically reduced by the amount so not taken in any month. Declaration of Option : By Sixty Days' written or cable notice to the American Refiners' Committee previous to first day of month in which refined is to be delivered except for deliveries during February, 1919, for which the declaration of the option must be made before January ist, 1919. Delivery of Raws: That to the extent that the Royal Commission on the Sugar Supply exercises its option to take American refined sugar, an equivalent quantity of Cuban raws shall be transferred by the Royal Commission on the Sugar Supply to the American Refiners through the American Refiners' Committee on the basis of Paragraph 2, Section 2, of Page 3 of the Cuban Contract dated October 24, 1918. Selling Price of Refined : The price of refined sugar 206 APPENDIX delivered in customary packages, will be the c. & f . price of the raw sugar delivered at refinery, plus insurance, duty and the refiners' margin in effect for domestic business as approved by the United States Sugar Equali- zation Board, Inc., at the date of shipment, less a draw- back allowance of i^ per pound, said drawback allow- ance and price subject to any change in United States Custom Laws or in the event of an export, or excise tax or any government action which would alter the re- finers' margin herein agreed upon, as more particularly stated in printed form of Refined Sugar Export Con- tract attached. Tonnage: Tonnage to load refined shall be furnished promptly by you and within the period for delivery of refined referred to in any notice of your availing your- selves of any part of the option herein given. If tonnage is not so provided you shall compensate us for interest, insurance and storage, or at our option we shall have the privilege of sending the sugar to store for account, ex- pense and risk of the Royal Commission on the Sugar Supply. Shipment to be made subject to terms of refined sugar export contract, a copy of which is hereto annexed and marked Schedule A. Releases from Responsibility: Both your Commission and ourselves shall be relieved from any liability here- under if prevented from carrying out our obligations, by Acts of God or from causes beyond our control. Ports of Shipment : You shall take the refined sugar at any of the following ports as may be directed by us : Boston, New York, Philadelphia, Savannah, New Orleans. We hereby severally accept and agree to be bound by the foregoing option for our pro rata portion of said option as set forth in the percentage named. If the percentages named do not total 100% we agree that the percentages for the refiners signing this option shall be EXHIBIT 12 207 raised pro rata to make this option good for 100% de- livery. THE AMERICAN SUGAR REFINING COMPANY 38.001 By. THE NATIONAL SUGAR REFINING CO. OF NEW JERSEY 11.94 By ARBUCKLE BROTHERS 6.613 By.... WARNER SUGAR REFINING COMPANY 6.187 By COLONIAL SUGARS COMPANY 2.185 By FEDERAL SUGAR REFINING COMPANY 8.645 By WM. HENDERSON 1.220 By.. THE W. J. McCAHAN SUGAR REFIN- ING COMPANY 2.489 By PENNSYLVANIA SUGAR COMPANY 4.537 By REVERE SUGAR REFINERY 2.985 By.. 208 APPENDIX SAVANNAH SUGAR REFINING CORPO- RATION 2.149 By : LEON GODCHAUX COMPANY 1433 By REFINED SUGAR EXPORT CONTRACT WITH THE ROYAL COMMISSION ON THE SUGAR SUPPLY THE SUGAR REFINING COMPANY has sold, and the ROYAL COMMISSION ON THE SUGAR SUPPLY, London, England, has purchased bags of One Hundred (100) pounds each, of Fine Granulated Sugar, packed in regular one hundred pound bags at cents per pound, net cash, f. o. b. steamer, stevedoring to be borne by ship. This price is subject to any change in export price that may be ruling on date of shipment. Invoice payable in New York on presentation of shipping documents ; drawback payable to the SUGAR REFINING COMPANY. THE ROYAL COMMISSION ON THE SUGAR SUPPLY agrees to pay to the SUGAR REFIN- ING COMPANY the sum of One Dollar ($1.00) for each Custom House entry which may be necessary on this contract. Delivery to commence AT DELIVERIES : THE ROYAL COMMISSION ON THE SUGAR SUPPLY agrees that on lots of 2,500 tons or more the steamer will load at the wharf designated by refinery provided steamer can always safely load afloat. THE ROYAL COMMISSION ON THE SUGAR SUPPLY further agrees that steamer will load at two (2) refineries provided that quantities of not less than 2,500 tons are loaded at each refinery and provided that steamer can EXHIBIT 12 20Q always safely load afloat. Expense of moving to be for account of vessel. Time lost in moving to be for account of sellers, provided steamer is moved promptly after loading is completed at the first berth. In case de- murrage is incurred, the time lost in moving shall be for account of each seller in the proportion that his part of the cargo bears to the whole. If, through the dis- ability of the wharf . designated by the Refinery, it 'is impossible to safely berth steamer, then the Refinery must deliver the cargo to a loading berth appointed by steamer, within lighterage limits of the loading port, in which case all lightering expense to be for Refinery account. If the Refinery is able to load steamer, subject to foregoing provisions, but the steamer elects for its own convenience not to go to the wharf designated by the Refinery, but to load at its own pier, then the lighterage expenses at cost shall be for buyer's account. THE ROYAL COMMISSION ON THE SUGAR SUPPLY agrees to give the seller at least seven (7) days' notice of approximate date of arrival of vessel, whenever possible. In the event of not receiving notice the refinery shall not be held for damages, but will make all possible effort to furnish the sugars required. DATE OF DELIVERY: Delivery on full cargo lots to be made at minimum rate of 1,000 tons of 2,240 pounds per weather working day, Sundays and holidays ex- cepted. Any demurrage incurred to be charged for at forty-eight cents (48 c) per gross registered ton of steamer per day. Steamer's lay-days to count from the time the steamer is in berth ready to load. Any time lost by steamer through berth being occupied on arrival thereat or through awaiting shippers' instructions after steamer reports within the customary working hours of the port ready for cargo, to be for seller's account. PART CARGOES : Part cargoes, that is, lots of less than 210 APPENDIX 2,500 tons delivered by one refinery, may be delivered to steamer at its own wharf or at the Refinery wharf where the steamer is receiving the minimum quantity of 2,500 tons, at the option of the refineries. DELIVERY BY LIGHTER: The steamer to have three weather working days, Sundays and holidays excepted, free for discharge of lighters. Time to count from the time the lighter captain gives written notice to the clerk of the steamer of lighter's arrival alongside. As far as possible, the buyer is to give the seller at least seven days' notice of the approximate arrival of all vessels. In case of delay of vessels, demurrage on lighters, if incurred, shall begin five days from date on which buyer advises seller that vessel will receive cargo. No demurrage will be charged by steamer in case the steamer has alongside sugar from one or more refineries sufficient to load 1,000 tons of 2,240 pounds per day. Any lighterage expense resulting from steamer's failure to take delivery of full quantity ordered, to be for buyer's account. The demurrage on lighters to be charged to buyers at cost, but claims must be presented in accordance with custom of the port. In consideration of passing the Custom House entry and carrying the drawback, the Royal Commission on the Sugar Supply hereby agrees to furnish Custom House bill of lading and landing certificate free of charge, these to be delivered promptly to the Custom House Depart- ment of Any necessary consular certificates or expense for viseing any documents to be for buyer's account. If is unable to collect the drawback through any neglect on buyer's part to fulfill the foregoing agreement, buyer agrees to reimburse it promptly in full for the amount of said drawback. EXHIBIT 13 211 This sale is based on present rate of duty, and present laws as to drawback. If seller is unable, by reason of legislation, to collect the full amount of duty paid on any of the sugar delivered under this Contract by way of drawback, the buyer agrees to pay the seller, in ad- dition to the contract price, an amount equal to such duty which seller is unable to collect. All additional duties, excises or other taxes hereafter levied or assessed on the raw or refined sugar necessary to fill this contract to be at buyer's expense in addition to the price specified. The seller will not be responsible for any delivery under this contract, if prevented or delayed by war conditions, strikes, labor difficulties, accidents, embargo, fire or any other cause beyond its control, or if seller's supply of raw material shall be interrupted by any such cause. In such case, the obligation to deliver under this contract is cancelled to such an extent as deliveries shall be prevented or interrupted thereby and no liability shall be imposed upon the seller for damages resulting therefrom. The sale is made subject to the seller's ability to se- cure an export permit if such permit is required. Brokerage of three (3) cents per one hundred pounds to be paid. EXHIBIT 13 LETTER CONFIRMING INCREASE FROM 321,000 TONS TO 535,000 TONS. April 30, 1919 Royal Commission on the Sugar Supply London England Gentlemen : Referring to letter of February 27 from your Repre- sentative, Mr. J. R. Bruce, wherein you requested The 212 APPENDIX American Refiners' Committee to increase the tonnage of refined sugar under the Option of November 22, 1918, from 300,000 to 400,000 tons and to his letter of April 17, wherein you requested a further increase of the tonnage of refined sugar in the said Option Agreement to a total of 500,000 tons of refined sugar, we hereby confirm the increase in the quantity of refined sugar that may be called for from 300,000 to 500,000 tons, upon the terms and in accordance with the conditions of the said Con- tract of November 22, 1918. And, we hereby severally accept and agree to be bound by the foregoing option for our pro rata portion of said option as set forth in the percentage set opposite our names. If the percentages named do not total 100% we agree that the percentages for the Refiners signing this Option shall be raised pro rata to make this Option good for 100% delivery. THE AMERICAN SUGAR REFINING COMPANY 38.001 By. THE NATIONAL SUGAR REFINING CO., OF NEW JERSEY 11.94 By ARBUCKLE BROTHERS 6.613 By WARNER SUGAR REFINING COMPANY 6.187 By COLONIAL SUGARS COMPANY 2.185 By.. Approved: EXHIBIT 13 213 FEDERAL SUGAR REFINING COMPANY 8.645 By .' WM. HENDERSON 1.220 By THE W. J. McCAHAN SUGAR REFINING COMPANY 2.489 By PENNSYLVANIA SUGAR COMPANY 4.537 By REVERE SUGAR REFINERY 2.985 By : SAVANNAH SUGAR REFINING CORPO- RATION 2.149 By LEON GODCHAUX COMPANY 1.443 By UNITED STATES SUGAR EQUALIZATION BOARD INC. By. CERTIFICATE OF INCORPORATION, BY- LAWS AND PRESIDENT WILSON'S LETTER OF AUTHORIZATION TO INCORPORATE EXHIBIT 14 CERTIFICATE OF INCORPORATION OF UNITED STATES SUGAR EQUALIZATION BOARD, INCOR- PORATED First. The name of this corporation is UNITED STATES SUGAR EQUALIZATION BOARD, INCORPORATED. Second. The location of its principal office in the State of Delaware is in the City of Wilmington, County 2l6 APPENDIX of New Castle. The name of the resident agent therein and in charge thereof is the Delaware Charter Company. The street and number of said principal office and the address by street and number of said resident agent is 900-904 Market Street. Third. The objects and purposes for which and for any of which this corporation is formed are, to do any or all "of the things herein set forth to the same extent as natural persons might or could do, viz. : To purchase, or otherwise acquire, manufacture, sell or otherwise dispose of, store, handle and otherwise deal in and with raw and refined cane and beet sugar, syrups, molasses and other commodities, and to do all acts and things necessary, expedient or incidental to the efficient con- duct of said business, within or without the State of Delaware. To exercise all powers which may be delegated to it by the President of the United States. The foregoing clauses shall be construed both as ob- jects and powers; and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the powers of this corporation. In general, to have and to exercise all the powers conferred by the laws of Delaware upon corporations formed under the Act hereinafter referred to. Fourth. The total authorized capital stock of this corporation is Five Million Dollars ($5,000,000) divided into Fifty Thousand (50,000) shares of One Hundred Dollars ($100) each. The amount of capital stock with which this corpora- tion will commence business is the sum of One Thousand Dollars ($1,000), being ten (10) shares of One Hundred Dollars ($100) each. Fifth. The names and places of residence of each of the original subscribers to the capital stock and the number of shares subscribed for by each are as follows : EXHIBIT 14 217 NAME RESIDENCE NUMBER OF SHAKES George M. Rolph . . San Francisco, Cal. ^k, Theodore F. Whitmarsh New York, N. Y. 3- George A. Zabriskie . . New York, N. Y. 3 Sixth. This corporation is not to have perpetual existence. Its existence is to commence on the Fif- teenth day of July, 1918, and is to cease on the Four- teenth day of July, 1923, unless it is sooner dissolved in the manner provided by law. Seventh. The property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever. Eighth. The directors of this corporation shall hold office for one year from the date of their election and until their successors are elected and qualified unless sooner removed. The holder or holders of two-thirds of the outstanding capital stock may call a special meeting of stockholders at any time, upon mailing notice to the other stockholders of the tune and place of said meeting, three days prior to said appointed time, which notice may be waived by unanimous consent, or by the presence of all stockholders at said special meet- ing; and the stockholders present may by a majority vote remove any director or directors from office and elect a successor or successors to hold office for the re- mainder of the unexpired term. In furtherance, and not in limitation, of the powers conferred by statute, the board of directors are expressly authorized to make, alter, amend, and rescind the by- laws of this corporation, and to authorize and cause to be executed mortgages and liens upon the personal property of this corporation, and to authorize the bor- rowing of such sums of money from time to time, and the making and execution of such notes, mortgages, pledges and liens on the personal property of this corpo- ration, as they may deem advisable. 2l8 APPENDIX This corporation reserves the right to amend, alter, change or repeal any provision contained in this Certif- icate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred on stock- holders herein are granted subject to this reservation. WE, THE UNDERSIGNED, being each of the original subscribers to the capital stock hereinbefore named for the purpose of forming a corporation to do business both within and without the State of Delaware, and in pursuance of any Act of the Legislature of the State of Delaware entitled, "An Act Providing a General Corporation Law" (approved March loth, 1899), and the acts amendatory thereof and supplemental thereto, do make and file this Certificate, hereby declaring and certifying that the facts herein stated are true, and do respectively agree to take the number of shares of stock hereinbefore set forth, and accordingly have here- unto set our hands and seals this day of July, 1918. (SEAL) In presence of (SEAL) ' (SEAL) United States of America District of Columbia BE IT REMEMBERED that this , 1918, personally came before me a Notary Public for the District of Columbia, parties to the foregoing Certificate of Incorporation, known to me personally to be such, and severally acknowledge the said Certificate to be the act and deed of the signers respectively and that the facts therein stated are truly set forth. Given under my hand and seal of office the day and year aforesaid. /NOTARIAL \ \SEAL ) Notary Public, D. C. EXHIBIT 15 219 EXHIBIT 15 UNITED STATES SUGAR EQUALIZATION BOARD, INCORPORATED BY-LAWS OFFICES 1. The principal office shall be in the City of Wil- mington, County of New Castle, State of Delaware, and the name of the agent in charge thereof shall be the Delaware Charter Company. The corporation may also have an office in the City of Washington, District of Columbia, and also offices at such other places as the board of directors may from time to time appoint or the business of the corporation may require. SEAL 2. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware." STOCKHOLDERS' MEETINGS 3. All meetings of the stockholders shall be held at the office of the corporation in the city of Washington, District of Columbia. 4. The annual meeting of stockholders, after the year 1918, shall be held on the first Monday of June in each year, at n o'clock A.M. The fiscal year of the corporation shall be coincident with the calendar year. 5. The holders of a majority of the stock issued and outstanding, present in person, or represented by proxy shall be requisite and shall constitute a quorum at all meetings of the stockholders for the transaction of busi- ness except as otherwise provided by law, by the certif- 220 APPENDIX icate of incorporation, or by these by-laws. If, however, such majority shall not be present or represented at any meeting of the stockholders, the stockholders present in person, or by proxy, shall have power to ad- journ the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock shall be present. At such adjourned meeting at which the requisite amount of stock shall be represented any business may be trans- acted which might have been transacted at the meeting as originally notified. 6. No share of stock shall be voted on at any election which has been transferred on the books of the corpora- tion within twenty days next preceding such election. The vote for directors, and, upon the demand of any stockholder, the vote upon any question before the meeting, shall be by ballot. All elections shall be had and all questions decided by a plurality vote. 7. Written notice of the annual meeting shall be mailed to each stockholder at such address as appears on the stock book of the corporation, at least ten days prior to the meeting. 8. Special meetings of the stockholders may be called by the President, or by the holder or holders of two-thirds of the outstanding capital stock at any time upon mailing notice to the other stockholders of the time and place of said meeting three days prior to said appointed time, which notice may be waived by unani- mous consent or by the presence of all stockholders at said special meeting. Any business may be transacted at said meeting. DIRECTORS 9. The property and business of the corporation shall be managed by its Board of Directors, seven (7) in number. They shall be elected by the stockholders at EXHIBIT 15 221 the annual meeting of stockholders of the corporation, and each director shall be elected to service for the term of one year and until his successor shall Be ejected and shall qualify, unless sooner removed. The stockholders shall have the right to remove any director from office in the manner provided in the certificate of incorporation. 10. The directors may hold their meetings and have one or more offices, and keep the books of the corpora- tion, except the original or duplicate stock ledger, out- side of Delaware, at the office of the Corporation in the City of Washington, or at such other places as they may from time to time determine. 11. In addition to the powers and authorities by these by-laws and the certificate of incorporation ex- pressly conferred upon them the board may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certif- icate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD 12. The newly elected board may meet at such place and time as shall be fixed by the vote of the stockholders at the annual meeting, for the purpose of organization and otherwise, and no notice of such meeting shall be necessary to the newly elected directors in order to legally constitute the meeting : Provided a majority of the whole board shall be present ; or such place and time may be fixed by the consent in writing of all the di- rectors. 13. Regular meetings of the board may be held without notice at such time and place as shall from time to time be determined by the board. 14. At all meetings of the board a majority of the directors shall be necessary and sufficient to constitute a quorum for the transaction of business. 222 APPENDIX 15. Special meetings of the board may be called by the President on two days' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the President or Secretary in like manner and on like notice on the written request of two directors. 1 6. Directors shall not receive any compensation for their services as directors or members of committees. 17. The officers of the corporation shall be a chair- man of the board, a president, one or more vice-presi- dents, a secretary, a treasurer and a general counsel. Any two of the aforesaid offices, except those of presi- dent and vice-president, may be filled by the same person. 1 8. The board of directors, at its first meeting after each annual meeting of stockholders, shall elect by ballot a chairman of the board and a president from their own number, and the board shall also annually choose one vice-president, and as many second vice- presidents as it sees fit, a secretary, a treasurer, and a general counsel, who need not be members of the board. 19. The board may appoint such other officers and agents as it shall deem necessary, who shall have such authority and shall perform such duties as from time to time shall be prescribed by the board. 20. The officers of the corporation shall hold office for one year and until their successors are chosen and qualify in their stead. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the whole board of directors. No officer of the corporation should be entitled to any compensation for services rendered to the corporation unless such compensation shall have been fixed by resolution of the board of directors or of the executive committee. EXHIBIT 15 223 EXECUTIVE COMMITTEE 21. There may be an executive committee of three (3) directors appointed by the board ,"who may meet at stated times or on notice to all by any of their own number. The board may delegate to such committee authority to exercise any or all the powers of the board, excepting power to amend the by-laws, while the board is not in session. Vacancies in the membership of the committee shall be filled by the Board of Directors, at a regular meeting or at a special meeting called for that purpose. 22. The executive committee shall keep regular minutes of its proceedings and report the same to the board when required. 23. The officers of the company shall have such powers and duties as generally pertain to their offices respect- ively, as well as such powers and duties as shall from time to tune be conferred upon them by the Board of Directors or the Executive Committee. 24. The treasurer shall give the corporation a bond in a sum to be fixed by the Board of Directors, and with one or more sureties satisfactory to the board, for the faithful performance of the duties of his office, and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. VACANCIES 25. If the office of any director, or of the president, vice-president, secretary or treasurer or other officer or agent, one or more, becomes vacant by reason of death, resignation, retirement, disqualification, removal from office, or otherwise, the directors then in office, although less than a quorum, by a majority vote, may choose a 224 APPENDIX successor or successors, who shall hold office for the unexpired term in respect of which such vacancy oc- curred, except as otherwise provided in the certificate of incorporation and these by-laws. DUTIES OF OFFICERS MAY BE DELEGATED 26. In case of the absence of any officer of the corpora- tion, or for any other reason that the board may deem sufficient, the board may delegate the powers or duties of such officer to any other officer, or to any director, for the time being, PROVIDED a majority of the entire board concur therein. CERTIFICATE OF STOCK 27. The certificates of stock of the corporation shall be numbered and shall be entered in the books of the corporation as they are issued. They shall exhibit the holder's name, and the number of shares and shall be signed by the president or vice-president, and secretary or assistant secretary, treasurer, or assistant treasurer, and shall bear the corporate seal. TRANSFERS OF STOCK 28. Transfers of stock shall be made on the books of the corporation only by the person named in the certif- icate or by attorney, lawfully constituted in writing, and upon the surrender of such certificate. DIRECTORS' ANNUAL STATEMENT 29. The board of directors shall present at each annual meeting, and when called for by the stockholders, at any special meeting of the stockholders, a full and clear statement of the business and condition of the corporation. EXHIBIT 16 225 NOTICES 30. Whenever under the provisions of these by-laws notice is required to be given to any director, officer or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing by depositing the same in the post-office or letter box, in a postpaid sealed wrapper, addressed to such stockholder, officer or director at such address as appears on the books of the corporation, or, in default of other address, to such director, officer or stockholder at the general post-office in the city of Wilmington, Delaware, and such notice shall be deemed to be given at the time when the same shall thus be mailed. Any stockholder, director or officer may waive any notice required to be given under these by-laws. AMENDMENTS 31. The stockholders, by the affirmative vote of a majority of the stock issued and outstanding, may at any regular, or at any special meeting, alter or amend these by-laws. 32. The board of directors by the affirmative note of a majority of its members may alter or amend these by-laws at a regular or special meeting of the board, provided that the amendment shall have been proposed at a meeting of the board at least three days prior to said meeting. EXHIBIT 16 LETTER AUTHORIZING THE FORMATION OF THE UNITED STATES SUGAR EQUALIZATION BOARD, INC., JULY 8, 1918 Hon. Herbert Hoover, United States Food Administrator : I hereby authorize and direct you to proceed with the formation of a corporation to be known as the United Q 226 APPENDIX States Sugar Equalization Board, Incorporated, with general powers and character set out in the certificate of incorporation which you have submitted to me. I approve of the appointment of the following persons as directors of such corporation : Herbert Hoover of Washington, D. C. George M. Rolph of San Francisco, California. Theodore F. Whitmarsh of New York, N. Y. George A. Zabriskie of New York, N. Y. Clarence M. Woolley of New York, N. Y. Frank W. Taussig of Washington, D. C. All of the capital stock is to be held by the United States except such as may be required for qualifying the individual directors or incorporators, such qualifying shares to be held by such directors or incorporators in trust for the use and benefit of the United States. I will arrange to purchase the entire capital stock of such corporation out of the appropriation of fifty million ($50,000,000) dollars authorized by the first provision in the Act of July i, 1918, entitled "An Act making appropriations for sundry civil expenses of the Govern- ment for the fiscal year ending June 30, 1919, and for other purposes," from which appropriation I have set aside five million ($5,000,000) dollars for this purpose. I hereby direct that any outstanding stock standing in the name of the United States shall be voted by you or by such person as you see fit to appoint your agent for this purpose. (Signed) Woodrow Wilson. IMPORTANT LETTERS AND MEMORANDA EXHIBIT 17 229 EXHIBIT 17 Letter re Export Embargo on Sugar July 29th, 1919. Mr. Lawrence Bennett, War Trade Board, Washington, D. C. My dear Mr. Bennett : As you know, the Food Administration is rapidly closing up its affairs, and with its distributive and en- forcement machinery eliminated, the effectiveness of war time control is not possible at this time. The one commodity, however, it is highly important, in the interest of American consumers, we do keep con- trol of, is sugar, and in view of the fact that sugar is scarce throughout the world, and our price here is the most attractive, there is such a demand for our sugar from abroad that the Sugar Equalization Board is ex- periencing difficulty in getting the proper distribution throughout the United States. We have maintained imports of raw sugar to the full complement of refinery capacity, but recently, with the lifting of export embargoes and more shipping space available, due to the release of tonnage, the export demand for sugar has increased tremendously, so that today we find our own consumers in competition with those of other countries for available stocks. This Board has the full cooperation and help of the sugar refiners, but it is impossible at the present time to control the distributive trades. We find that large contracts for export have been placed with dealers and second hands for export, and there is no way to prevent this exportation except by action of the War Trade Board section of the State Department, issuing all ex- port licenses subject to the approval of the Sugar Board, and old export licenses cancelled. 230 APPENDIX Over 50,000 tons will be shipped to Europe during July and August unless something is done to prevent it. The result will be the scarcity of sugar in this country, which at this time of fruit harvest will be disastrous. The prices of sugar in Europe at retail are England fourteen cents France fifteen cents Italy sixteen cents Switzerland twelve and two-thirds cents as against our refiners' price of nine cents and retail price of ten to eleven cents. You will therefore see Europe will drain our country of refined sugar unless something is done to prevent it. You, of course, know that we have contracted for the entire Cuban crop of raw sugar which is now being shipped to America, and we are disposing of some of our raw holdings in Cuba in order to help out the Eu- ropean situation. The control of the exportable re- fined sugar, however, should be in our hands and enable our people to have sugar enough to care for and preserve the present harvest of fruits and vegetables. Yours very sincerely, U. S. Sugar Equalization Board, Inc., (Signed) George A. Zabriskie, President. NOTE. The members of the War Trade Board ruled positively against the imposition of any embargo upon the export of sugar. EXHIBIT 18 MEMORANDUM FOR SUGAR EQUALIZATION BOARD RE THE IMPORTANCE OF SUGAR AS FOOD BY RAYMOND PEARL STATISTICAL DIVISION, U. S. FOOD ADMINISTRATION (Aug. 9, 1918) i. The purpose of this memorandum is to put before the Board some data as to the importance of sugar as EXHIBIT 18 231 a food, and the necessity of maintaining an adequate supply. 2. Foods serve two purposes the repair and main- tenance of bodily tissues, and the furnishing of energy. Sugar plays no part in the replenishment of bodily tissues. Its sole function is to furnish energy, but within that field it occupies a position of first class importance. Quantitatively it is not replaceable in the dietary of this country by any other food material, and qualita- tively there are only a few materials like glucose, honey, maple sugar and sorghum syrup which can substitute for it. Certain foreign countries substitute alcohol for sugar in the dietary, but that is not done to any signif- icant extent by our population. 3. Food energy is measured in terms of calories. To our national food resources the domestic beet and domestic cane sugars, and molasses, contribute together 4,193,935,000,000 calories annually (7 year average), or 3.046 per cent of all the calories produced in the form of human food in the United States. Our domestically produced sugars (beet and cane) stand in the eighth place in importance as energy producers among all foods produced in this country, being exceeded in im- portance in this respect only by wheat, pork and lard, dairy products, cornmeal, beef, cottonseed oil and potatoes. 4. But our domestic sugar production is but a frac- tion of our total sugar consumption. We depend to a very large degree upon our island possessions and Cuba for our sugar supply. Our imports of sugar contribute to the nutrition of the nation about 14,000,000,000,000 calories annually. Our total sugars then stand in the dietary as sources of energy in fourth place, being ex- ceeded only by wheat, pork and lard and dairy products. 5. The experience of the war has shown that serious reduction in the sugar ration is followed by more dis- comfort, discontent, and loss of morale than reduction 232 APPENDIX in any other food. The physiological reason for this is that, with the exception of alcohol, sugar stands practically preeminent in the quickness with which its energy is made available in the body. The experience of Germany has shown that when other foods were scarce the people instinctively increase their sugar intake be- cause of the nutritional satisfaction it furnishes. In this country the flour restrictions, which were far more drastic relatively than sugar restrictions have at any time been, caused much less discomfort and complaint on the part of the population than have the sugar restrictions. 6. At prevailing prices sugar is one of the cheapest sources of energy among all human foods. In May, 1918, 100 calories in sugar cost .61 cents. The only foods in which one could procure 100 calories cheaper than this were, wheat flour including graham^ cornmeal, corn flour, rye flour and rolled oats. 7. The writer believes, for reasons set forth above and others not here developed, that during a war it is of first class importance to maintain a supply of sugar such that the civilian population may at all times have up to at least 80 per cent of their normal household intake of this commodity, and except for very brief periods of possible local shortage, up to 100 per cent of household consumption. There is great potential danger in a seriously lowered sugar ration in a warring country if extended over any considerable period of time. 8. It is distinctly to be understood that in this memorandum the writer expresses no opinion whatever as to the adequacy of the prospective sugar supplies for 1918-19, or 1919-20. These prospective supplies may be entirely adequate without any stimulation whatever by increased price. The problem of whether they are likely to be or not is a problem entirely separate and distinct from the subject of this memorandum, and one on which the writer expressly avoids stating any opinion at this time and in this document. EXHIBIT 19 233 EXHIBIT 19 Letter from Messrs. Hawley and Rionda tendering Cuban crop of 1919-20 to the American Government. New York, July 29, 1919 George A. Zabriskie, President of the "Equalization Board" in Wall Street New York City Dear Sir : In pursuance of the informal discussions conducted between the subscribers, speaking by authority for the Cuban Government, and members of "The Equaliza- tion Board" as the purchasers and distributors of Cuba's Sugar Crop for the existing year, we deem it expedient to submit for your information, and as far as you may determine, for your action hi continuing the control and disposition of Cuba's Crop of Sugar for the ensuing year of 1920. In presenting our suggestions, while acting directly for the Cuban producer, we accept the grave responsi- bility of speaking scarcely less for the American con- sumer, and for that vast army of foreign consumers whose needs are of such concern to the American Government. Fortunately for every interest involved, the great bulk of sugar required by importing countries is pro- vided by the Island of Cuba but she takes no note of this " coign of vantage " on the other hand, the Island Republic, its Hacendados and farmers, and manu- facturers of sugar, tender through its own Government, providing it meets with the consent and cooperation of the American Government, the entire wealth of her production, under such terms as may be agreed upon by contracting parties, at a price moderate, but compen- sating to the producer and well within the economic reach of the consumer. 234 APPENDIX This is the fundamental basis upon which our tender is made. If accepted through the continued life and active participation of your respected Board or a similar body the whole question would be greatly simplified. If, on the contrary, the opportunity to serve not the American people alone but the Universal Welfare is for any reason, technical or otherwise, not availed of through one medium or another, there is not a community any- where in America, in Europe or Asia that will not feel the consequence of our failure to provide a stable price for this most necessary article of human consumption. Cuba approaches this question with full recognition of her relations to the American people and their Government and in the spirit of comity and desire for a complete understanding. We await with unflagging interest your reply, the subject of which we are assured is to you, as it is to us, the most momentous in the world's economy of today. With assurances of great respect, Faithfully yours, (Signed) R. B. Hawley Manuel Rionda EXHIBIT 20 Letter from Messrs. Hawley and Rionda withdrawing tender of Cuban 1919-20 crop. September 22, 1919 Mr. George A. Zabriskie, Chairman of the "Equalization Board" in Wall Street New York City Dear Sir : We beg leave to refer to our letter bearing date of July 29th, 1919, copy of which we inclose; as you will EXHIBIT 20 235 observe by its terms, we were pleased at that time to inform your respected Board that the Republic of Cuba, its Hacendados and farmers, and manufacturers of sugar, acting through us in a representative capacity, were willing to tender to you or a similar body the entire production of Cuba on such terms as might be agreed upon by the contracting parties, at a price moderate, but compensating to the producer and well within the economic reach of the consumer, always provided that this offer met with the full consent and cooperation of the United States Government. In the interval that has transpired we have awaited your answer, confidently believing that the United States Government would undertake the continued control of sugar, and every interest concerned, especially the American consumer, would experience the advantage of a stabilized market. Unfortunately, the logic of the situation has not impressed the Government, or in keeping with its traditional policy, the war being over, it is thought best to permit the- market to be ruled by the natural law of supply and demand. While we had hoped for a different conclusion to the negotiations put forward by Cuba, with the wealth of production represented by her producers, we reluctantly accept the situation now existing and return the authority under which we were acting. The spirit of the times is so fraught with speculation that wide fluctuations must inevitably ensue, but whatever developments may occur, speaking now only for ourselves, and whatever influence we may exert, we shall employ our best efforts in hehping to maintain a conservative situation. With assurances of great respect, Faithfully yours (signed) R. B. Hawley Manuel Rionda 236 APPENDIX EXHIBIT 21 Memorandum to the U. S. Secretary of Agriculture on the McNary Bill. January 2, 1919 Hon. D. F. Houston Secretary of Agriculture Washington D. C. My dear Mr. Houston : Referring to our conference in Philadelphia on Wednes- day, and in conformance with your request, the Board at a meeting this morning prepared the enclosed Memo- randum, which I am authorized to forward to you as an expression of their views. Yours very truly (Signed) George A. Zabriskie President United States Sugar Equalization Board, Inc. MEMORANDUM Referring to the recent Act of Congress as to sugar control, of which Senator McNary was the patron, and the Conference of the President of the Sugar Equaliza- tion Board and several members thereof, with the Secretary of Agriculture on Wednesday, December 31, 1919: During the year 1919, the Board, by reason of its contracts with the producers of beet and Louisiana sugar for the crop of 1918-19 ; its agreement with the cane refiners and the purchase of the Cuban crop of 1919, was enabled to establish the price of refined sugar in the United States at not exceeding nine (9) cents per pound wholesale, which reflected a price of from io cents to ii cents retail, and this continued until the EXHIBIT 21 237 new 1919-20 crop of beet and Louisiana sugars began to come into the market, as to which this Board had no contract and over which it could exercise no control of distribution and price, and thereafter (from about October i5th) the control which the Board could exercise applied only to the remainder of the Cuban sugar (1919 crop) which it had purchased and which was deliverable on or before November 30, 1919, and refined sugar from this Cuban raw sugar has been sold at not exceeding nine (9) cents per pound wholesale. In view of the fact that there is and has been through- out the last several years a shortage of sugar in the world, and the fact that the people of the United States used this year, 1919, 600,000 tons of sugar in excess of the amount consumed in the year 1918 and 300,000 tons more than was ever used in the history of the country ; the further fact that the consumption of sugar per person increased in the year 1919, to about 92 pounds as against a previous normal consumption of about 85 pounds per person ; the further fact that the price of sugar over which the Board had control in the year 1919 was lower throughout the United States than in any other country of the world, the Board feels that its method of sugar control and distribution was amply justified, as an instrument for assuring a supply of sugar at a reasonable price, under abnormal condition. Of course, the Board cannot be responsible for distribution and prices of beet and Louisiana sugar, in the fall of 1919, after the contract which the Board had as to such sugars came to an end. In August, 1919, an offer was made by Cuban author- ized representatives to sell the Cuban crop of 1920 to the Board and at that time the Board felt that it could renew its agreements with the producers of beet and Louisiana sugars for the new crop, which was then about to come in. Refiners also indicated a willingness to extend their agreement with the Board for an additional 238 APPENDIX year, and in view of the abnormal conditions as to sugar supply and consumption, then apparent, the majority of the Board were of the opinion that the Cuban crop of 1920 should be bought by the Board and its agree- ments with the Refiners and domestic sugar producers should be renewed for another year, and a memorandum was sent to the President of the United States on August 14, 1919, on behalf of the majority recommend- ing this course. At the first hearing upon the McNary Bill before the Senate Committee on October 3rd, 1919, the Board, through its President, expressed to the Committee its view that the Cuban crop for 1920 could and should be purchased at a reasonable price, provided the powers heretofore exercised by the Board were continued until December 3ist, 1920, thus enabling the Board to see that the consumer secured refined sugar at a reasonable price, based upon the price of Cuban raw sugar. At that time the Board felt that its agreements with the beet and Louisiana sugar producers, as well as the Refiners, could be renewed, thus enabling the Board to carry out for another year the same course of action which, in the year 1919, secured the sugar supply of the United States at a price not exceeding 9 cents per pound wholesale, until the new sugar began to come in, over which the Board had no control. No action was taken by the President of the United States upon the Memorandum to him, above mentioned, and the Board concluded that his view was that its activities should cease on December 3ist, 1919, and it has been preparing to follow this course. No action was taken by Congress until December 2oth, when the Act above referred to was passed. Conditions have now so changed that the members of the Board do not believe that action by it, under the provisions of the Act of Congress above mentioned, offers a solution of the problem of securing a regular supply of EXHIBIT 21 239 sugar for the people of the United States, for the year 1920, at a reasonable price. A considerable quantity of the Cuban crop of 1920 has already been sold overseas and to American refiners, and one of the elements of strength, helping materially to make the Board's control, heretofore, effective, was the fact that it owned and controlled the entire crop of Cuban sugar and no refiner could secure any part thereof unless he conformed to proper regulations of distribution, prices and profits. There is no person or committee now authorized to sell the entire unsold balance of the Cuban crop of 1920, and if the United States, through the Board, should appear in the Cuban market as a purchaser of sugar, the tendency of such action, especially when the sugar must be bought in individual lots, would be to strengthen the market and further increase the price, which has already advanced to a point where the Board hardly feels that it would be sound judgment to buy. It is certain that the time must come when the United States will no longer assume the control of this industry, and up to December 2oth it seemed to be the policy for the United States to now cease its activities and allow this trade to go back to the ordinary basis of supply and demand, and it seems very doubtful to the Board whether, at this time, that apparent policy can be suc- cessfully reversed and effective control of supply, dis- tribution and prices be reestablished. The wholesale price of sugar in the United States is such for January, February and March delivery, that there is little hope of the Board being able to reduce the same, by purchasing Cuban sugar and attempting to reestablish control of the industry. It is possible, of course, that when the flow of raw sugars, from the large crops of Cuba and Porto Rico, reaches its peak in March and April, prices may be somewhat reduced. The Re- finers' price is now 15.20 cents per pound wholesale, which 240 APPENDIX is a considerable reduction from the first offerings of sugar refined from new cane sugars. The offering of refined sugar for February delivery is at 13.50 cents per pound wholesale, with still further reductions for March, which indicates a tendency in the industry towards settling down to normal conditions. The Government having, therefore, proceeded up to this time, apparently on the basis that the activities of this Board would cease with the end of the present agreement for the Cuban crop of 1919, the Board feels that any attempt on its part, at this late day, to carry on its former activities will be met with serious diffi- culties and embarrassment. The Act of Congress limits the control of the Board over domestic sugars to June 30, 1920, and should the Board succeed in purchasing a large quantity of Cuban sugar for delivery throughout the year 1920, after June 3oth, the Board would find itself in the situation of trying to maintain a uniform reasonable price over the whole country, with no control whatsoever over Louisiana, Beet, Hawaiian, and Porto Rican sugars, and this too at the time of the year when, if at all, absolute control of all sugars by the Board would be essential. The Act further forbids the Board from putting into effect its present system of zone distribution, under which consumers get their supply from the nearest and most convenient point of production. This system has been most useful, during the year 1919, in effecting a fair distribution of available sugar. Under the Act above mentioned certain powers are granted to the President to be used at his discretion, and the Board suggests that the situation should be made clear by authoritative statement as to what powers will or will not be exercised, so that the industry as a whole, and especially the Refiners, may without the embarrass- ment of uncertainty, proceed to make necessary plans to secure such raw sugars as may be essential to fill the requirements of the people of the United States. EXHIBIT 21 241 AMERICAN RELIEF ADMINISTRATION Herbert Hoover, Director General 115 Broadway, New York City January 19, 1920. Mr. George A. Zabriskie, Pres., U. S. Sugar Equalization Board, in Wall St., New York City. Dear Sir : The undersigned concur with the other members of the Board in the memorandum sent to the President. We were intimately associated with the operations of the Food Administration from the beginning to the end, and whether or not the Department of Justice exercise their licensing power, our observations from experience with the Food Administration may be of some value. The present and prospective sugar shortage and exces- sively high prices being obtained in the United States point to the possibility that the Department of Justice may exercise control through the licensing system to prevent hoarding and profiteering in the distributing trades. This suggests a control by the rationing system in order to curtail the consumption of sugar in non- essential industries, and thus enlarge the proportion available for the household. Such a rationing system of the candy, sweet drink, and other non-essential trades would reduce the demand and should (a) protect the supply to the householder throughout the year, (6) by decreasing the demand, decrease the price, (c) drive out speculation and hoarding to a large degree. While we assume the cost of such rationing could properly be paid from the resources of the Board, we would point out that some established government de- partment having already existing federal agencies through- out the country, such as the Department of Justice or 242 APPENDIX the Department of Agriculture, could easily use its machinery for sucb. a purpose. Our experience in the Food Administration demonstrated clearly, however, that the central control must emanate from Washington. Our suggestion is that, while high prices will effect conservation, it is a conservation of classes whereby the rich continue their purchases without restriction, while the poor are unable to buy at all. From our experience in the Food Administration, the present situation is not unlike the 1918 and 1919 periods, in that the peak of sugar importation will be reached in March or April, at which time there will be assured supplies, and possibly some amelioration in price. But after this time world shortages will aggravate the market and we can expect pronounced irregularities in the speculative sugar trade, and this also points to a repe- tition of an acute shortage at the period of greatest consumption in July, August, and September. Should there be any desire to prevent such shortages, drastic rationing of non-essential industries must be inaugurated at once. Faithfully yours, (signed) Edgar Rickard (signed) Theodore F. Whitmarsh STATISTICAL TABLES EXHIBIT 22 245 EXHIBIT 22 RECEIPTS AND MELTINGS FOR EACH REFINERY FOR THE YEAR 1918 Unit: Long tons REFINERIES TOTAL RECEIPTS FOB 1918 TOTAL MELTINGS FOR I9l8 BOSTON : American 16121/1 l6l382 Revere 24.2O7 22600 Total Boston IOC7TT 194982 NEW YORK : American, Brooklyn 272081 366066 American, Jersey City 82043 8226l Arbuckle 2I262I 2T262I Federal 27Q7CC 277I4.O National, New York 106700 I972OI National, Yonkers 13 4.127 124.127 Warner t 2I27>;2 212702 Total New York .....! I4.QIl8o I4.822IO PHILADELPHIA: American, Reed Street 27104.6 27l82C American, Reserve McCahan Pennsylvania 73359 1226^7 73359 131881 Total Philadelphia SAVANNAH : Savannah 477962 760 ?o 477075 727O4. NEW ORLEANS : American 2O2<\6o 204.624. Colonial . . . . ._ . . .' . 68872 6724.< Henderson 4.1 <;6o 4.2ICI Godchaux II286 10870 Total New Orleans 4.IS278 4.I4.8OO GALVESTON : Imperial 4.23 22 4.2222 SAN FRANCISCO : California-Hawaiian 227O2O 232O';O Western ifaiftC I6672O Total San Francisco 4OO4^ ^00780 Total American Sugar Refining Co. Grand Total 1180944 ? OQ0886 1176268 3086082 246 APPENDIX RECEIPTS AND MELTINGS FOR EACH REFINERY FOR THE YEAR 1919- Unil: Long tons RE FINERIES TOTAL RECEIPTS FOR 1919 BOSTON : American 180313 Revere 95230 Total Boston 275543 NEW YORK : American, Brooklyn 385003 American, Jersey City 151882 Arbuckle 259429 Federal .' 298165 National, New York . . . . . 282489 National, Yonkers 194595 Warner 279582 Total New York 1851145 PHILADELPHIA : American, Reed Street 312972 American, Reserve 113050 McCahan 87176 Pennsylvania 184634 Total Philadelphia . . . . . 697832 SAVANNAH : Savannah 92196 NEW ORLEANS : American 319961 Colonial 83280 Godchaux 58304 Henderson 49129 Total New Orleans 510674 GALVESTON : Sugarland Industries 59121 SAN FRANCISCO : California-Hawaiian 272025 Western 140529 Total San Francisco 412554 Total American Sugar Refining Co. Grand Total 1463181 3899065 EXHIBIT 23 247 EXHIBIT 23 TOTAL SHIPMENTS OF ROYAL COMMISSION SUGAR REFINED ON TOLL BY UNITED STATES RE- FINERS, 1918-19 CUBAN CROP Unit: Long tons ALLOCATIONS TO REFINERS TOTAL REFINERY Raw in Full Refined in Full SHIPPED BY REFINERS American 220 ^(X 2IA.4.QO 214 4OO Arbuckle 42.012 4.O.ICK 4O IO? Colonial 1^.646 12. 7 w w^iowl^O'* rj-oo >orTfOoo< toiO'* TJ- f>. ct cr>v)<* r^o l- O ^ fo s \O w 10 tCo 'f O O & O O O OO N O *^o5 w * 6 o jj ^ Oi I H 03 >OI-lO'*PI'OOO O O 1O f) M O* O> O 1O 0> ^ S5 ro H * ; ; ; : ; M M v> H OO O M tOO O H >O OO M w >O O* tOOO O> M fO Hi OO 00 1*3 V>OO M OO H H O >O H "; CO O t^ W -3- fO H -O 00 HI r- M & vo o o vO * O O H v^o ^t- O O O wcocot^Oronw * o : : : >o oo 6. M O> 4 i \O Tj- M O "OOO Q "t >O O 00 M OO P rO t- O OiO t^O M HOC t^W Tt-lOt^M t^OVW t~~ M OO 1 rffO 1 ^!-! rfcoOOO v>N w M tH tH (H M M O ^- J. fr! >- ^ i4, mill ?o- ? S- 12 S imi^Hljl ss-srs&^cBojsfi IJ 1 | -( *o fe5 EXHIBIT 25 249 EXHIBIT 25 BASIC STATISTICAL DATA ON SUGAR FOR YEAR 1919 COMPARED WITH 1918 (All Quantities in Long Tons) TABLE I GENERAL SUMMARY January i to December 31, 1919 REFINERS' DELIVERIES DELIV- ERIES BALANCE FOR Total Weekly Average SUGAR. LA. CANEf CONSUMP- TION ist Quarter 1919 . 711,000 SS.ooo 307,000 100,000 918,000 April (5 weeks) . . May (4 weeks) . . June (4 weeks) . . 454,000 382,000 430,000 91,000 95,000 108,000 68,000 72,000 73,000 78,000 49,000 128,000 444,ooo 405,000 375,000 ad Quarter 1919 1,266,000 97,000 213,000 255,000 1,224,000 July (s weeks) . . August (4 weeks) . September (4 weeks) 469,000 309,000 327,000 94,000 77,000 82,000 68,000 30,000 56,000 56,000 53,000 40,000 481,000 286,000 343.000 3d Quarter 1919 1,105,000 79,000 154,000 149,000 1,110,000 October (5 weeks) . November (4 weeks) December (4 weeks) 262,000 170,000 125,000 52,000 43,ooo 31,000 67,000 176,000 153,000 53,ooo 58,000 44,000 276,000 288,000 234,000 4th Quarter 1919 557,000 43,000 396,000 155,000 798,000 Total for Year, . . January I - Decem- ber 31 1919 52 weeks .... 3,639,000 70,000 i,u8,oooj 659,000 4,098,000 J January i to December 31, 1918 ist Quarter 1918 (13 weeks) . . . 651,000 50,000 202,000 9,000 844,000 2d Quarter 1918 (13 weeks) . . . 999,000 77,000 134,000 25,000 1,108,000 3d Quarter 1918 (13 weeks) . . . 690,000 53,ooo SS.ooo 36,000 709,000 4th Quarter 1918 (13 weeks) . . . 514,000 40,000 300,000 80,000 734,000 Total for Year, January i - Decem- ber 31, 1917 . . . 2,854,000 55,000 691,000 190,000 3,395,000 t Estimated. J Including imports for the year of Hawaiian refined and raw and washed sugars for which data are not available by months. 2 50 APPENDIX TABLE II EXPORTS FROM THE UNITED STATES, 1919 REPORTED REPC >RTED BV REFI HERS MONTH BY DEPT. OF COMMERCE Royal Com- mission Shipments Sales Aside from Royal Com. TOTAL January .... February .... March 29,315 31,224 39,265 28,944 17,893' 21,026 16,449 12,789 28,944 34,342 33,8i5 First Quarter . . . 99,804 67,863 29,238 97,101 April May 78,406 48,899 77,i4i 43,464 15,252 27,372 92,393 70,836 June 128,124 90,794 16,541 107,335 Second Quarter . . 255,429 211,399 59,165 270,564 July 55,784 43,855 24,293 68,148 August ..... 53,169 S 2A6 2O.7 26,001 September .... 39,908 10,300 2O,622 30,922 Third Quarter . . . 148,861 59,401 65,670 125,071 October 52,766 47,O7O O.257 56,327 November .... December .... 57,656 44,281 43,390 61,264 20,759 5,044 64,149 66,308 Fourth Quarter . . 154,703 151,724 35,o6o 186,784 TOTAL Jan. i-Decem- ber 31, 1919 . . . 658,797 490,387 189,133 679,520 NOTE. It will be seen from the above table that refiners reported their exports for 1919 as 20,723 tons in excess of the figure given by the Department of Commerce. It would have been reasonable to anticipate the reverse situation since exports by others than refiners are included in the figures of the Department of Commerce. The difference is perhaps to be accounted for by variations in dates, methods of calcula- tion, etc. EXHIBIT 25 251 TABLE III REFINERS' STOCKS or RAW AND REFINED SUGAR ON VARIOUS DATES DATE REFINED STOCKS RAW STOCK (REFINED BASIS) TOTAL STOCK (REFINED BASIS) 1 1 1. 747 64,313 178,060 January i, 1918 31,446 9,537 40,983 38,507 22,249 60,756 March i, 1918 32,189 47,863 80,052 April i, 1918 56,537 55,937 112,474 June i, 1918 July i, 1918 6l,I38 40,604 135,658 145,004 196,796 185,608 October i 1918 82,242 42,576 124,818 January i, 1919 April i 1919 47,737 156,068 18,522 99,407 66,259 255,475 May i, 1919 June i, 1919 123,379 110,515 172,343 187,210 295,722 297,725 July i, 1919 <\Q. 083 141,074 201,057 August i, 1919 September i, 1919 October i 1919 35,774 30,880 in O4.O 107,267 79,655 5 1 , 749 143,041 no,535 90,789 November i, 1919 December i, 1919 68,699 57,275 51,460 51,217 120,159 108,492 January i, 1920 38,680 13,566 52,246 TABLE IV REFINERS' MELTINGS MONTH No. OF WEEKS REP- RESENTED 1919 TONS WEEKLY AVERAGE 1918 TONS WEEKLY AVERAGE January . . February . . March . . 5 4 4 209,132 341,284 330,090 42,000 85,000 82,000 172,508 253,389 301,550 34,000 63,000 75,000 ist Quarter . 13 880,506 68,800 727,447 56,000 April . . . May . . . June . . . 5 4 4 450,962 398,34 408,197 90,000 100,000 102,000 382,863 339,88o 334,027 76,000 85,000 84,000 2(1 Quarter . 13 1,257,499 97,000 1,056,770 81,000 July . . . August . . September 5 4 4 478,264 327,214 360,542 96,000 82,000 00,000 354,737 229,553 201,926 71,000 57,000 50,000 3d Quarter 13 1,166,020 90,000 786,216 60,000 October . . November December 5 4 4 313,837 171,012 H3,9i7 63,000 43,000 28,000 232,502 156,411 126,736 46,000 39,000 32,000 4th Quarter . 13 598,766 46,000 515,649 40,000 Total for year January i- Decembersi . 3,902,791 76,000 3,086,082 59,ooo APPENDIX TABLE V DELIVERIES OF SUGAR OTHER THAN BY REFINERS A BEET SUGAR DISTRIBUTION 1919 January 87,016 February 59,578 March . l 64,843 i st Quarter 211,437 April 61,955 May 66,535 June 68,816 2d Quarter 197,306 July 63,000 August 23,000 September ;;< 50,000 3d Quarter 136,000 October * 67,000 November* 129,000 December* 128,000 4th Quarter 324,000 Total, for year 868,700 B LOUISIANA DIRECT CONSUMPTION SUGAR 1919 First Quarter 85,000 Second Quarter 6,000 Third Quarter None Fourth Quarter 100,000 Total for Year 191,000 C IMPORTS OF HAWAIIAN REFINED 1919 First Quarter 3,805 Second Quarter 5,625 Third Quarter None Fourth Quarter 1,246 Total for Year 10,676 * Monthly figures for new crop beet prorated last four months, but total figure is from returns by all beet sugar companies except three factories, production of which was negligible. EXHIBIT 25 253 D RAW AND WASHED SUGARS DIRECT TO CONSUMPTION 1919 1918 First Quarter 6,788 15,507 Second Quarter 4,000 10,691 Third Quarter 18,266 3,O32 Fourth Quarter 18,859 3,700 Total for Year 47,9*3 33,33O E PURCHASES AND ALLOTMENTS UNDER GOVERNMENT CONTROL OF THE SUGAR INDUSTRY PURCHASED BY UNITED STATES SUGAR EQUALIZATION BOARD, INC., 1919 PURCHASED BY INTER- NATIONAL SUGAR COMMITTEE 1918 Long tons Percentage Long tons Percentage Colombia .... Costa Rica .... Cuba 2,916,052 3,677 5,027 167,778 10,483 2,143 505 24,OOO 364,592 10,570 I,OOO 916 7,791 82.97 .11 14 4-77 30 .06 .02 .68 10.37 30 03 03 .22 48 22O 2,37i,5 I 9 3,855 8,953 31,028 11,966 n,45o 376,6i8 4,608 116,705 4,456 35,276 .01 79.67 13 30 1.04 .40 39 12.65 .16 3-92 IS 1.19 Haiti Honduras .... Hawaii Java Louisiana .... Peru Philippines. . . . Porto Rico .... St. Croix .... San Domingo . . . Surinam .... Venezuela .... TOTAL 3,514,534 IOO.OO 2,976,727 IOO.OO 254 APPENDIX EXHIBIT 26 MEMORANDUM OF SUGAR ARRANGED FOR BY ~ "COMMITTEE 1 ON SUGAR SUPPLY FOR THE ARMY, NAVY, AND VARIOUS RELIEF ORGANIZA- TIONS," FROM AUGUST 17, 1917, TO JANUARY 28, 1920 PRODUCER QUANTITY ALLOTTED PRO RATA DUE EXCESS DEFICIENCY Per Cent Quantity American .... National .... Arbuckle .... Federal .... Ibs. 165,690,519 51,653,600 30,051,700 39,870,000 33,179,200 2,954,000 17,845,600 8,885,400 10,890,000 3,585,000 19,665,000 9,368,000 2,510,000 2,045,098 40.650 12.007 7.000 9.605 7.204 .960 4.802 2.402 2.330 .960 2.402 1.513 4.803 3-362 Ibs. 161,865,502 47,811,048 27,873,518 38,246,449 28,685,832 3,822,654 19,121,233 9,S64,S99 9,277,899 3,822,654 9,564,599 6,024,662 19,125,215 L8,387,253 Ibs. 3,825,017 3,842,552 3,178,182 1,623,551 4,493,368 1,612,101 10,100,401 3,343,338 Ibs. 868,654 1,275,633 679,199 237,654 16,615,215 11,342,155 Revere Pennsylvania . . . McCaian .... Colonial .... Henderson .... Savannah .... Imperial .... California and Ha- waiian .... Western 2 .... Beet Go's La. Sugar Com. . . Amer. Ref. Com. Dealers 398,193,117 44,114,400 49,519,900 6,612,600 1,100,000 IOO.OOO 398,193,117 31,018,510 31,018,510 TOTAL .... 499,540,017 l This Committee was organized as the result of a conference held in Washington, D. C., on August 17, 1917, between representatives of the Advisory Commission of the Council of National Defence, the U. S. Food Administration, War Industries Board, the U. S. Army and Navy and a representative group of Sugar Refiners and Producers, called together by the Council of National Defence at the suggestion of Quartermaster General Smith, of the Army, to consider and provide for the prompt acceptance and delivery of the sugar requisitions of the various branches of the Government Service, the Army, Navy and Marine Corps. The members of this Committee were as follows Mr. James H. Post, Chairman, Mr. Manuel Rionda, Mr. F. R. Hathaway, Mr. R. M. Parker, Mr. Horace Havemeyer, Secretary. The U. S. Food Administration determined the prices which the Government was to pay for the sugars obtained by this Committee. * The small deliveries of sugar by the California-Hawaiian and Western Sugar Companies shown in the above statement were due to the very light demand from the Government in the Pacific Coast territory and also to the freight and other conditions favoring the placing of such orders with the Beet Producers. EXHIBIT 27 255 EXHIBIT 27 EFFECT OF THE GREAT WAR ON THE WORLD'S SUGAR PRODUCTION The impact of the Great War upon the world's sugar production is demonstrated in the following table. The total production in America increased from 4,983,432 long tons in the crop year of 1913-14 to 6,520,005 in 1918-19. The major portion of this increase was, of course, in Cuba, where production mounted from 2,597,732 tons in the crop year 1913-14 to 3,971,776 tons hi 1918-19. The Javan crop increased from 1,345,230 tons in 1913-14 to 1,669,637 tons in 1918-19, but there was an abrupt decline in the 1919-20 crop, which was only 1,300,000 tons. The total world's cane sugar production thus increased from 9,892,000 tons in 1913-14 to 11,982,320 tons in the 1918-19 crop and the forecast for the 1919-20 world's cane crop is 12,559,000 tons. 1 The great decline in European beet sugar production, it will be noted, more than neutralized the phenomenal increase in the cane sugar countries. From a produc- tion of 8,180,964 tons in 1913-14, there was a precipitous decline to 3,642,664 tons, and the forecast for the 1919-20 crop is even below this point, being but 3,409,000 tons. The total world's production, as a result of the Great War, has thus fallen from 18,738,326 tons in 1913-14 to 16,322,176 tons in 1918-19. 1 Since the above was written, the estimate for 1910-20 has been reduced to 11,747,000 tons. 56 *4 H 1 O TH 8 iH APPENDIX 10 l O >H O\ O w GO ro co M M co COCO * O w * o ^foo CO fN u-> *t H HMC4 M co CM PI oT M" 04 f A 1-1 o> p< 2iH ! il : $ H :H 5 o o 8 cO cO to -| co^plg 00 SST&: S ^.-: ; MJ M 0> M 10 to ^ CO a sHsfs sSH s ; H ills 00 o CO W) WOO Pl co M 73 CM Tj- COCO . PI OO * rf O PI ro w OO ro Pp H" ?! N M 3 CO O O O*o ) r^ c* o lO'O O t^* O\ t^* * O O *** O O *3 O co cO rO o o O co IO PI M t^VO O I t^ t* co IOT3 ^ CO" C> 10 . 6" W M T? ro rt 0" O CO ro 00 CN ro PI coiO 2 1 H M M IMC,. 1 s 3 H^ll" ci^f| < S,I': l?8Jc?J? o CO 10 IO O vO COCO t^* * J- CN CO C 1 * IO *3 ^" CO O 00 .OP* CO Ol co *** O tO O O <0 O O * ^ PI co W cT **^ 10 w V IO 1-1 3 O roOO 1 2& p??|^ as?: a^ll O M pT M" to 3 ro w 10 10 t^ t^ OO Tf co O O\ TTMM O O O O Tf O O O O ro 10 S PI * 1O O M CN H? w -0 10 ~t- 000 cs O* *- to Ol M 3 iH t^ PI lo IO 1- M 5> Q \O *o i/> ^* oo O O co 10 *Oto ^Otocotocr 06" ^ "^"O COHH CtCiTj-^^-C) MMM VO CO Tj- M M IN 10 M M ro O CO t" CO M 3 1 10 O O < o PI S 6 c 00 M o O i ol: ! ! 8 8^ O co 10 O ^ IO t^ PI M ro M CM PI PI CO roO (PRELIMI- NARY ESTIMATE) 1919-20 o PI O>O O OCO-^-CMM COPI1OMCOPI OMM J^r^O MTflOlO M M fO O O M HI o H 1 t^ to VO O C( M co S^ 00 o Tf -^-00 M O o 01 X vOOO ^1- Tf M O O O ro 00 ^t O* \O O l>- W w M^ 10 10 o M i?: -o LO oo" H 00 q> M SR co cf M M | p o to w o O co^ O O t^ o' CO CO' to HI -t q. 0*0 CO O ^* *o Q t^ o M CN O co O 10 ^f O O t^GO O O 10 i-t ^fO 10 fO 10 M 10 ci c o *o MM d LO o" w to ' o o CO o" O CO CO 00_ to H 8M CO t- O CO 00 O CO O O c* o CO O n M 00 -t 10 O\ fooo co co -^ co CO O CO 10 CO IO Tf M OO CO M O t^. to o vO <*- O M HI t 00 CO IO M M 3 0.0 vo <2 >o oo N o to co 6 oT OOO" Q\O co dl co M r^. o M co o C4 M hT Hi co" OI M vO o co" 1 oo" HI s ? o CO LO ! 1" % OO t- o* o CM vO co T(- tO O ci 3 10 O 10 O C1 M 10 CO toOOto 1- ^t CO HI a CO O CO IO M O * ^ |>. tN.00 W P*O^ CO O M M M co" to O tO HI If CO 00 co 00" HI CO co O O O oo O OO t^ O O CO CO CO 0^ Q *O M 00 OO *O t 1 ^ O M O O *O co CO LO N to r^ w HI 10 -t HI I r* to ^ oo 3 K %Z$ CO ri LO M o" o o o o o *o o oT M M A 10 vO CO Tj- HI VO oo" co 00 M f-00 LO oo 5 vo o S o o co o ~5 LO 0> IO CO 1 ||^ v |88 i VO HI tO Tj- 10 M 10 HI to O co 3 LO 4 o. o to O. HI cT oo o O O* ^" *O LO oo' HI 8M *O C* O ^* 4 s * *O O O *4" CO M CO M ^SO d C4 COO *O MM M q" 10 t>> HI CO LO Oi 10 10 VO HI O to to 0- 00 10 a \o CO O Q c? N IO o> o> HI 00 00 M N lO O ^J- o IN IO 10 *i IN M M M 10 8 10 CO HI tt LO t- LO f VO M 6 88 OOO 8 o o o o O o HI 10 5. co o to Q "^.0 Q Q Q v> Q Q o> vO to 00 M I to to 0> O> M co LO cs t** CO to t^ d 10 10 M LO LO n M IOO WMMOHHMMI-t M M CO OO M vO q CO co oo O t- Q vO O 10 M o 8< > 88 VO 3.8 CO 0 CO M O ^*o^"O O^*oO P 258 APPENDIX EXHIBIT 28 EFFECT OF THE GREAT WAR UPON THE WORLD'S SUGAR EXPORTS The changes in the world's sugar exports for the years 1911 to 1918 for all exporting countries for which data are available, are shown in the table on pages 259 and 260. The most significant fact shown is the total annihilation of the sugar export trade of the European beet sugar countries to the advantage of the cane-producing coun- tries and the countries possessing excess refining capacity. For example, Austria-Hungary, which in 1913 exported 1,184,000 tons of sugar, exported only 39,000 tons in 1917, and Germany which had exported 1,231,000 tons in 1913 exported but 16,000 tons in 1918. On the other hand the island of Cuba, which had exported only 2,625,000 tons in 1913, exported 3,569,000 tons in 1918, an increase of almost i ,000,000 tons. The United States, with a production of sugar equal to less than half of its requirements, and therefore with large import require- ments, nevertheless was enabled to utilize its excess refining capacity to refine for European needs 788,000 tons of raw sugar in 1916 and 505,000 tons in 1917 as against 36,000 tons in 1913. After the United States entered the War and rigorous control of exports was established, only 168,000 tons were shipped to Europe. EXHIBIT 29 EFFECT OF THE WAR UPON THE WORLD'S SUGAR IMPORTS The table below gives the imports of sugar for all principal importing countries. For recent years figures are not available for all the principal countries. France before the War produced sufficient sugar for her own needs but imported 330,000 tons (mainly from her EXHIBIT 28 259 v 4) s 3 ;s> 3 * C1 M* rO O>>flO* * OO OO O rl- V5* IS O O dO M M 1O - '* " a? *O o p C .-- C J 2 g 5 _o !? GJ 4) OCTOO* 5^0>^:2** ^- v, Tt r> ^-o S O) iH 3 60 M O, H'^3 H \Of '-3 M a C c a H ^U o to 1i " M o* S5 ? o M * 3 Jo* o 5* o? S> 2" * 8 s ^ C1 M M MM 1O M CO iH 00 a W ^ 1 V "1 10 fj v4 O r. ?O OwO^fOWMWOfO cOOOMiofr* d r* M M M vo M O en *^ u - h- < u 1 H S. 1OMCO COMr*W>/>MMO l O^J-O'OC (OOO %O r^MMMMlOSOM 12; H w / PH | V J CO C! M 3 3 !i> (J ^^toooj ?S; M^o>c S - ?5 o S . - < a M VZ3 a 4) 3 Cf 3 fa s 1-1 a> I" ** **5O ** ^" O *O ^" ^O fs MO M ^- VO 04 *r^ I "3b a I CO .a , H O) O M m M HI Ot in N 23 H a co H O > 8- ' ' '.| & 5 * j 3 ** E v W gri I g S^J " T3 O c- : Sll'l^ ej jl ig|; -1 illJ.5^. < '*Jli(l6u^"' S K S"^ '^ C - - S ,3 A r 260 APPENDIX 1 O iH 3 IT) W IO O^O M CO ^f M O C1 O ^- ro M W O M W M 2 I'i'Ct t^-OO M M Ti- O W 04 CO Tfjid co H 9 3 .S \O COO cocOOiloO^O ^^J'OI Tj- Ot H Ol CO IO^ I 1 to COUNTRV 13 "SiJ ' s -83 Q.S-2 ^ cj'S a g^- I'S-a'3r2.S.-S i MiSiSuSo^s a'c ^ a S S AaSai5HiQrio7H &S>> pri ri 11 SS 15 ss ^8 a d ai EXHIBIT 29 261 colonies) in 1912 and 127,000 tons in 1913. During the War she was forced to turn to other producing countries, mainly Cuba, and in the years 1915, 1916, and 1917 imported somewhat over 625,000 tons. In 1918, follow- ing more rigid rationing, only 225,000 tons were im- ported. The United Kingdom, which had imported 2,206,000 tons in 1913, of which over half was beet sugar from the Central Powers, was forced during the War to rely upon Cuba for raw supplies and upon the United States for refining capacity. Accordingly, follow- ing the adoption of drastic rationing regulations the imports dropped to 1,661,000 tons in 1915 and to 1,464,000 in 1918. 262 APPENDIX P , a -2 e 5 s 8 -5 u I S 8 ^ CO i-3 S o g s O CO CO s O PH . i te VO 1-0 H * * to * M >O 00 M t~-O>lO POOO M IOOO M OO CO O O 10 M COOO O-^-iOOW OOO coOO OCO On OO M ^J-^ t^O OO CO H OO f- H CO 10 COOO OO 10O -5J-HCOM COWO S9> I 36-i49, 160-176; adjust- ment committee, 1 75 ; negotiations with United States government, 31, 50, in, 116, 233-235 Cuban Commission, submits brief on cost of production and price, 31 ; negotiations with Sugar Board, 50; agreements with United States government, 16, 50, 51-59; repre- sentation on Cuban export commit- tee, 80 ; tenders 1920 crop to United States government, in; withdraws INDEX 265 tender of 1920 crop to United States government, 116 Cuban minister (see de Cespedes, Hon. Carlos Manuel) De Cespedes, Hon. Carlos Manuel, 137, 160, 161, 175 De Lima, E. A., 74 De Mesa, Hannibal J., 137 De Zaldo, F., 174 Dillingham, F. A., 48 Distribution, problems of, 34-41 ; re- strictions reimposed, 101-107 ; f remedial measures in, 14-15 ; con- trol of, 17, 18, 19, 63-67, 125; certificate plan of, 63-67 ; zone system of, 66, 117, 121 Douglas, H. A., 18 (note), 156, 192 Drake, John Ramsay, 15, 136, 150, 204 Drawback, agitation for repeal of, 8 Drescher, P. C, 106 Earle, George H., Jr., 150, 178 Earle, H. C., 48 Eldredge, W. T, 150, 179 England, see United Kingdom, Brit- ish Royal Commission and Allies Exchange, New York coffee and sugar, 10, 123 Exports, control of in Cuba, 137; discontinued with all but alh'ed countries, 10, 14; refiners' business in, under supervision of Food Ad- ministration, 19 ; from United States and Cuba to Allies, 40; monthly 1919 from U. S., 248, 249, 250; removal of restrictions upon, 78-83 ; arrangements for, 78-83, 97; re- strictions upon temporarily reim- posed, 100-102 ; necessity for em- bargo upon, 100 ; request for em- bargo by Mr. Zabriskie, 229-230; effect of war upon, 258, of all princi- pal countries, 1911-1918, 259-260 Farr, John, 150, 178 Federal Sugar Refining Co., 154, 187, 207, 212 Food Administration, lacks authority to fix prices and make purchases of sugar, VIII; its sugar problems, cause of, 3-9; action to reduce prices, 10-14; shortage conditions, alleviation of by, 14-15 ; cooperation with Allies, 15-16; sugar division, organization of, 10, 16-17; sugar trade, mobilization of various branches of, 17-20; encouragement of production by, 20-22; restriction on consumption by, 22-24; 1918-19 crop, problems of price, 25-34; 1918-19 crop, problems of distribu- tion, 34-41 ; announces formation and purposes of Sugar Board, 45 ; control of distribution by, 63-65 ; announces price increase, 58; urges anticipatory purchases, 97 ; organi- zation of practically dissolved, 100; enforcement division of, empowered to take action against profiteering, 108; utilization of various agencies of by Sugar Board, 47-49; powers of transferred to Department of Justice, 123; summary of work in sugar, 125-128 Food Administration Sugar Distribut- ing Committee see Beet Sugar Distributing Committee Food Administrator (see Herbert Hoover and United States Food Administration) Food Control Act, 10, 17, 18, 20, 78, 123, 155, 188, 196 Food Control Bill, VH, VTTI, n, 12 Foreign Sugars, purchase of, 83-84 France (see also Allies), usual contract form for shipment of Cuban sugars to, 171-173 ; decline in sugar pro- duction of, 6, 43, 256-257 ; repre- sented on International Sugar Com- mittee, 15; imports of, from United States and Cuba, 40 ; price to, es- tablished for Cuban sugars, 59; represented by British Royal Com- mission, 60; sugars sent to, f.o.b. Cuba 80 ; exports of, 259, imports of, 262 Gardner, Wm. W., 175 Gay, E. J., 196 266 INDEX Germany (see also Central Powers), 4, 6, 34, 74, 256-257, 250 Gilmour, John, 174 Glasgow, Wm. A., Jr., 46, 48, 57 Godchaux, Leon, Co., Ltd., 182, 188, 213 Goetzinger, M. E., 150, 155, 178 Hannam, W. H., 106 Hathaway, F. R., 254 Havemeyer, H., 254 Hawaii, production in, 6, 128, 256-257; importance of crop in United States consumption, 21 ; cost of sugar pro- duction in, 30; difficulty of obtain- ing nitrates for, 30-31; negotiations with sugar producers of, 50; im- ports of refined from, 252 ; exports of, 259 Hawley, Robert B., 80, 116, 137, 233- 235, 160, 161, 175 Herbert Hoover, on importance of sugar in household, VII; recom- mendation of to Senate Committee re Sugar Control, VII, VIII; ap- pointed Food Administrator, 10; appoints George M. Rolph chief of sugar division, 10, 16; memorandum of to President Wilson re legality of agreement with producers, 10-12; contracts with producers and re- finers, 18, 19, 60, 61-62, 149-155, 155-160, 176-201 ; action of to prevent destruction of Cuban crop, 21 ; requests voluntary conserva- tion, 23 ; letter of to sugar beet farmers, 25 ; appoints state beet sugar cost commissions, 26; as- surances to beet sugar producers, 26 ; memorandum of to President Wil- son re formation of Sugar Board, 42-44 ; elected Chairman of Board of Directors, 45-46; appoints Oscar Strauss to investigate refining costs, 52 ; memorandum of, to President Wilson re plan of sugar control, SS-57; estimate of post Armistice world sugar position, 75; cable of, re sugar control 1920, 109- iii Houston, Hon. D. F., 236 Howe, E. C., 18 (note), 156, 192 Howell, T. A., 174 Imperial Sugar Refining Co., 154, 188 Imports, prewar of United Kingdom, United States, and Canada, 3-4; of United Kingdom, France, Italy, 1913-1917, 40; of full-duty sugars into United States, 1910-1919, 83, 84; removal of war time con- trol over, 119; effect of war upon, 258; of all principal countries, 262 Industrial Board, 85 International Sugar Committee, crea- tion of and membership, 15-16, 136; purchase of Cuban 1917-1918 crop, 13, 16, 22, 136-148; expenses of, provision for, 19; allots various foreign sugars to Canada, 83 ; util- ization of by Sugar Board, 49, 65 ; liquidation of, 72 ; purchases of raw sugars by, 253 Italy, decline in sugar production of, 6, 43, 256-257 ; dependence of upon Western Hemisphere, 7 ; rep- resented on International Sugar Committee, 16 ; imports of, 40, 262 ; represented by British Royal Com- mission, 60 ; usual contract form for shipment of Cuban sugars to, 171- 173 Jamison, Wm. A., 16, 136, 150 Japan, 98, 256-257, 259, 262 Java, exports of to United Kingdom, 4 ; drain on tonnage involved in ob- taining sugar from, 5 ; supplies available in, 15, 87 ; rapid dis- appearance of stocks in, 89-90; production of, 256-257; exports of, 260 Justice, Department of (see attorney general) Keeley, E. S., 48, 72 (note) Kemper, C. D., 196 Le Bourgeois, J. C., 196 Lodge, Senator H. C., 30-21 Longe, Ernesto, 137 INDEX 267 Louisiana, production in, 7, 128, 256- 257; control of 1917-18 crop, 19- 20 ; contract of sugar producers with American Sugar Refining|Company, 20; cost of sugar production in, 29-30, 55 ; price of 8 cents requested by representatives of, 51 ; Food Ad- ministration agreement with, re 1918-19 crop, 62-63, 195-201 ; central distributing committee, 62, 66, 102, 103, 196-201 ; deliveries of direct consumption sugar from, 252 Love, S. H., 18 (note), 156, 192 Lowry, Frank C., 106 Marine strikes, 93, 99, 103-104 McCahan, W. J., Jr., 150, 154, 178, 188, 207, 213 McCarthy, J. A., 106 McManus, Edward S., 175 McNary Bill, signed by President Wilson, 119; memorandum of Presi- dent Wilson upon exercise of provi- sions of, 119-122 ; text of, 117 ; mem- orandum of Directors^of Board upon, 236-242 Mendoza, Miguel, 137 Merritt, Ralph P., 106 Milling, R. E., 48, 102, 196 National Sugar Refining Co., 154, 188, 207, 212 Netherlands, 4, 5, 80 New York Coffee and Sugar Exchange (see Exchange) / Nine-Cent Basis for refined sugar, re- quired to maintain beet production, 29; objections to establishment of, 33 ; requested by beet producers, 50; adopted for United States 1918-19 crop, 53; becomes effec- tive, 58 Oxnard, Benjamin A., 150, 178 Pacific Coast Equalization Committee, 106 Parker, Robert M., 150, 178, 254 Pearl, Raymond, 48, 230232 Pennsylvania Sugar Co., 154, 188, 207, 213 Petrikin, W. L., 18 (note), 156, 192 Pharr, E. A., 197 Philippines, 22, 65, 91 Porto Rico, sugar production of, 6, 128, 256-257 ; voluntary coopera- tion of sugar producers of, 10 ; per- centage of crop in United States consumption, 2 1 ; encouragement of sugar production in, 22, 128; repre- sentation of in Sugar Board organiza- tion, 47, 48; attitude of on price basis for 1918-19 crop, 51 (note), 54 (note), storage of surplus sugars of, 95 ; interruption in crop move- ment of, 96; exports of, 260 Post, James H., 105, 118, 150, 178, 254 President of Board (see George M. Rolph and George A. Zabriskie) President of the Cuban Republic, 136, 137, 161, 174 President Wilson (see Wilson) Prices, problems of, IX, 10-14, 2 5~34> 50-59, 95, 107-108 ; measures taken to solve problems of, 10-14, 50-59, 107-108; increase in, to producers, 27, 127; nine-cent basis of adopted, 53, 58; release of control upon, 118; in United States and abroad, July 1919, 126 Producers, increased return to, 27, 127 Production, encouragement of, 20-22, 25, 26, 127, 128 ; increase of in United States and Cuba, 6, 128; of each producing country, 1910-1920, 256- 257 ; war's effect upon, 255 Pulp, price of determined, 53 Refiners (see also American Refiners' Committee), competition of with allied sugar commission, VII ; margin for refining established, 12; negotia- tionswith, 18; government contracts with, 19, 60-61, 149-155, 176-188; Raw sugar contract terms of, 144- 147, 169-171;. increased refining costs of, 3132 ; report of Oscar Strauss on refining costs of, 52 ; mar- gin of increased, 52 ; requested to stop exports, 100; subcommittee of on distribution appointed, 106; grant option to Royal Commission INDEX for refining Cuban raws, 204-213 receipts and meltings of, 245-246 ; shipments of sugars from U. S., 247- 248; monthly meltings of, 251; deliveries of, 249 Refining, increased cost of, 31, 32-52 Reserve stocks, 38, 39, 57 Revere Sugar Refining Co., 154, 188, 207, 213 Rickard, Edgar, 74, 241-242 Rionda, B. Braga, 174 Rionda, Manuel, 80, 116, 137, 233-235, 160, 161, 175, 234 Rolph, George M., member of Inter- national Sugar Committee, 16, 136, 150; chief of Sugar Division, VIII, 10, 16-17 ; elected President of the Board, 45, 64; central position of in sugar control, 47, 48, 65; re- signs as President and Director, 73 ; Board's appreciation of services of, 73 ; authorizes refiners to accept export business, 82 ; appointed on Pacific Coast Sugar Equalization Committee, 106 Royal Commission (see British Royal Commission) Russia, 15, 256-257, 260 San Antonio, Chamber of Commerce, 102-103 Savannah Sugar Refining Co., 154, 188, 207, 213 Saving to consumer by sugar control, 13, 14, 127 Senate, United States, 12, 116 Senate Committee on Agriculture and Forestry, VII, IX, 116, 120 Shattuck, Edwin P., 48, 74, 80 Sherman Act, 10-12 Shipping, relation of to sugar problem, 3-7, 57, 65, 82, 83, in; Inter- national Sugar Committee to seek economy of, 16; loss of by sub- marines, 34 ; effect of situation of upon Javan stocks, 89; strikes in, 93, 9Q, 103 Shipping Board, 15, 49 (note), 65, 82, 103 Shortage conditions, alleviation of, 14. IS. 63-65, 100-107 Sinsheimer, S. W., 18 (note), 156, 192 Spreckels, Claus A., 150, 178 Spreckels Sugar Company, 106 State, Department of, 21, 119 State Food Administrators, function of in certificate plan of distribution, 64-67, 77 ; address of Hoover to, 75 Stocks, decline in reserve supply, 38-39; in refineries 1918 and 1919, 251 Strauss, Oscar, report on refiners' margin, 52 Submarines, 34, 43 Sugar Commission, VII, VIII (see also British Royal Commission and U. S. Sugar Equalization Board, Inc.) Sugar Distributing Committee (see Beet Sugar Distributing Committee) Sugar Division, creation of, VIII, 17 ; relation of to Sugar Board's work, V, 47 ; chief of appointed, 10, 16 Sundry Civil Appropriation Act, 44 Supplies of sugar, importance of ade- quacy of, 230-232 ; problems of, 34-41, 94; solution of problems of, 14-15, 63-67, 102-107, 118, 125- 126 Taft, Robert A., 45 Tarafa, Jose M., 137 Tariff Commission, United States, 28-30, 55 Taussig, F. W., agrees with Hoover on sugar control plans, 43 ; Director of Board, 46, 48; advice of acknowl- edged, 57 ; recommendation of 1920 sugar policy to President Wilson suggested, 1 1 1 ; dissenting view of on 1920 sugar control, 115 Thomas, Dwight P., 150, 178 Todd, Sir Joseph White, 15, 136, 150 Turner, W. P., 18 (note), 156, 192 Union Sugar Company, 106 United Kingdom (see also British Royal Commission and Allies), imports of, 4, 40, 262 ; dependence of upon Central Powers, 5, 7 ; dependence upon Cuba, 5-6; represented by British Royal Commission, 16, 60; option of for refining sugars in INDEX 269 United States, 60, 61 ; consumption of, 3, 74; price of Cuban sugar to, 59 ; conditions of usual contract form for shipment of Cuban sugars to, 147-148, 171-173; exports of, 260 United States Food Administration (see Food Administration) United States Sugar Equalization Board, Inc., DC, X, 24; reason for formation of, 25-42; incorporation of, 44-45; certificate of incorpora- tion of, 215-218; by-laws of, 219- 225; first meeting of Directors of, 45 ; authorization for formation of, 225-226; election of officers of, 45, 74; organization of, 47-49; Direc- tors of, 46; source of revenue of, 53, 58-59 ; capital stock of, 45 ; ne- gotiations of with producers, 50-51; agreements of with producers and refiners, 59-63, 160-176, 176-188; assigns one-third of Cuban crop to Royal Commission, '60, 202-204; action of on refiners' margin, 52 ; establishes nine-cent basis, 53, 58; purchases and resells stocks of sugar, 58; assumes control of distribution, 65-66; post armistice policy of, 71; offices of moved to New York, 72; reorganization of, 72-74; re- moves restrictions upon consump- tion, 74-78; arranges for exports, 78-82 ; export policy of, 82 ; policy of on purchase of various foreign sugars, 83-84; problems of disposi- tion of surplus stocks, 94-99; re- imposes restrictions on export and distribution, 100-107 ; purchases and stores surplus Porto Rican sugars, 95; purchases and distributes sur- plus army sugars, 102 ; also new crop beets, 103, 106 ; reestablishes zone system for refiners, 107 ; action to prevent profiteering, 108; Directors' letter and memorandum to President Wilson re 1920 sugar control, 112- 115; negotiations of with Cuba re 1920 crop, in, 112, 116; Director's memorandum to U. S. Secretary of Agriculture on McNary Bill, 236- 242; magnitude of operations of, 125-126; summary of work of, 125- 128; liquidation of, 122-123 Voluntary cooperation, dependence upon, Vm, 10, 23 Warner, Chas. M., 150, 178, 207, 212 Warner Sugar Refining Co., 154, 188 War Trade Board, 10, 78, 82, 100, 119, 229-230 Wemple, Edward, 106, 180 Western Sugar Refinery, 106, 154, 188 West Indies Transportation, Joint Committee on, 49 (note) Whitmarsh, Theodore F., elected Treasurer of Board, 45 ; appointed Director of Board, 46, 48 ; advice of acknowledged, 57 ; resigns as Treas- urer of Board, 72; elected Vice- president of Board, 74 ; cable of to Hoover re sugar control, 1920, 109; letter of to Mr. Zabriskie re 1920 rationing plan, 241-242 Willett and Gray, 35 (note), 52 (note) Wilson, President Woodrow, approves formation of Sugar Board, 44-45, 225-226; approves Board's plans for control of 1918-19 crops, 57 ; execu- tive policy of for 1920 control an- nounced, 119-122; subscribes for capital stock of Board, 46; memo- randum to from Herbert Hoover re legality of voluntary agreements with trade, 10-12; memorandum to from Hoover re formation of Sugar Board, 42-44; cable to from Hoover re 1920 sugar control, 109- ii i ; memorandum to from Directors re 1920 control, 112-115; letters to from George A. Zabriskie re purchase of 1920 Cuban crop, 116; authorized to continue control by McNary Act, 117; letter to from G. A. Zabriskie re liquidation of Sugar Board and other matters, 122-123 Woolley, Clarence M., 46, 48, 57 World War, influence of on sugar in- dustry, 3-9, 87-88, 255-262 270. INDEX Zabriskie, George A., Director of Board, 46 ; Director of distribution, 46-47, 65 ; advice acknowledged, 57 ; elected President of Corporation, 74; requests refiners to cease ex- portation, 100; requests embargo power of War Trade Board, 220- 230; cable of to Herbert Hoover re 1920 control, 109; letters to from Cuban representatives re 1920 Cuban crop, in, 233-235; letter of to President Wilson re purchase of 1920 Cuban crop, 116; letter of to Mr. Jas. H. Post re restrictions on consumption, 105 ; urges Amer- ican Refiners' Committee to super- vise distribution, 105 ; letter of to Mr. Post re distribution of old crop, 118; letter of to President Wilson re McNary Act, liquidation of Board, etc., 122-123; letter of to Hon. D. F. Houston, 236; recom- mendations of for 1920 sugar policy to President Wilson suggested, in; letter to from Messrs. Rickard and Whitmarsh re rationing for 1920, 241-242 Zone system, 66, 78, 106-107, 117, 121 LIST OF TABLES HEADING OF TABLE UNIT USED PAGE Imports and consumption of the United States, the United Kingdom, and Canada .... Prewar sugar supply of United Kingdom . . Sugar production of United States and Cuba . Sugar consumption of the United States pre- war 191617 short tons short tons short tons short tons 3 5 6 7 Increase in price of raws June i to Aug. 7, 1913- 17 cents per Ib. 8 Weekly fluctuations in raw sugar prices, . Aug. 7 Dec. 17, 1917 cents per Ib. 13 Average price paid for beets per ton 1916-17-18 Cost of sugar production in Louisiana . . . Increase in refining costs dollars per ton cents per Ib. cents per Ib. 27 29 32 Sugar supply situation, June i-Dec. 31, 1918 Imports from U. S. and Cuba into United King- dom, France and Italy short tons short tons 35 40 Prices requested and prices obtained by pro- ducers and refiners cents per Ib. 54 Outline of world sugar supply situation, 1919 . Available supplies for U. S., 1919 Exports of refined sugar from U. S., 1914-18 . Exports f.o.b. Cuba, 1918-19 crop .... Imports of full duty sugars into United States, 191018 short tons short tons short tons long tons long tons 76 77 79 80 , 83 Imports of full duty sugars 1919 by months Sugar crops of the world by periods of produc- tion long tons long tons 84 88 Forecast and outturn of 1919 crops compared . Exports (exclusive Royal Commission) con- tracted for by refiners prior to July 15, 1919 and amounts shipped thereafter .... Schedule and actual shipments of Royal Com- mission sugars long tons long tons long tons Qi IOI IOI Surplus army sugars sold and distributed . . Raw sugar available Sept. 20 Dec. 31, 1919 and 1918 compared Ibs. long tons 103 105 Wholesale prices of refined sugar in various foreign countries, July, 1919 cents per Ib. 126 271 272 LIST OF TABLES HEADING OF TABLE UNIT USED PAGE Sugar production of U. S. and Cuba, 1914-19 long tons Receipts and meltings for each refinery for the year 1918 long tons Receipts and meltings 1919 long tons Shipments of Royal Commission sugar 1918-19 crop by each refiner long tons Monthly shipments of sugar by refiners from the United States excluding Royal Com- mission sugars, 1919 long tons Deliveries of sugar, exports, and consumption, 1918 and 1919 long tons Exports from the United States by months, 1919 both crops long tons Refiners' stocks of raw and refined sugars on various dates long tons Refiners' meltings monthly, 1919 and 1918 totals and weekly averages long tons Deliveries of beet sugar monthly 1918 and 1919 long tons Deliveries of Louisiana direct consumption sugar long tons Imports of Hawaiian refined sugar .... long tons Raw and washed sugars direct to consump- tion, 1918 and 1919 long tons Purchases and allotments of raw sugar under Government control long tons Amount of sugar arranged for by the commit- tee on the sugar supply for the army, navy, and relief organizations Ibs. Sugar production of all principal countries . . long tons Exports of sugar' from all principal countries . short tons Imports of sugar for all principal countries . short tons 128 245 246 247 248 249 250 251 251 252 252 252 253 253 254 256-257 259-260 262 Printed in the United States of America. THE LIBRARY UNIVERSITY OF CALIFORNIA Santa Barbara STACK COLLECTION THIS BOOK IS DUE ON THE LAST DATE STAMPED BELOW. 30m-8,'65(F6447s4)9482 A 000 721 459 6