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sugar industry in the United States, there can be absolutely no doubt for the following reasons:

"(1) Of the tropical countries which it is proposed to annex to the United States, Porto Rico is too small to cut any figure, and the Philippine Islands have not the necessary elements for the expansion of the sugar business sufficiently rapid to give any concern to those interested in the production of sugar from beets in this country for the next twenty-five years to come.

"(2) The Island of Cuba is so situated that its sugar industry can rapidly recover the ground lost during the insurrection, provided that the labor question there can be satisfactorily settled. There is, however, no fear that Cuban production even under an annexation to the United States can in our day expand to the point where the United States would become exporters of sugar instead of importers, and hence, that protection would no longer protect.

"(3) Greater than all the above assurances of the permanence of the sugar industry in this country is the fact that sugar can be produced cheaper here than it can be in Europe. The sugar industry is, after all, merely an agricultural one. We can undersell Europe in the production of all other crops, and sugar is no exception. The sugar consumed in the civilized world consists of three million tons of cane sugar grown in the tropics and five million tons of beet sugar grown on the continent of Europe. Therefore, in considering any given sugar enterprise, if it can meet and overcome the competition of sugar on the continent of Europe it is perfectly safe to say that it has a permanent future.

"(4) In addition to all the above the main fact is to find out what the conditions would be under free trade in this country. This was tested practically by admitting the raw sugars of the world free to compete with us in the period from 1891 to 1894. During these three years the duty was entirely removed from raw sugars coming from foreign countries and in place of this duty a bounty of two cents per pound was given to the home producers which was paid out of the national treasury until the McKinley law of 1890 was repealed and in its place the Wilson tariff bill was substituted on the 28th of August, 1894.

"The average prices of granulated sugar during the years 1891, 1892 and 1893 taken from Willett and Gray's Journal, which is the recognized authority in the sugar world are as follows:

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"The average price of sugar in 1890 before the duty was removed was 6.17 per pound. Taking the lowest year, say 1891, it is found that sugar sold at an average price during that year of four cents a pound. This was under free trade admitting all the raw sugars of the world to our markets duty free. Therefore, if the lowest price (four cents) be taken as an average, it will give a guide to go by in the event that we ever again return to absolute free trade. During 1898 the Chino factory produced 256 pounds of granulated sugar per ton and the Norfolk, 250 pounds per ton. In the new factory at Hueneme a production of about 270 pounds is anticipated. However, let us take the average as 250 pounds which is the product of one ton of beets manufactured into granulated sugar. If we multiply this figure by four it gives us $10 as the net result from a given ton of beets manufactured into granulated sugar at free-trade prices."

It is no more than fair to say that it has since been claimed that this letter was written merely with a design of "stimulating industry;" that the statements made in it are not actually representative of existing facts, but that the farmer and beet sugar manufacturer are really dependent upon the tariff for the maintenance of the industry. Granting that the letter may be disregarded, it remains to inquire how far a high protective duty is necessary to the maintenance of the beet sugar industry in the United States. At this point the inquirer, of course, passes into a technical domain in which it is necessary to depend primarily upon the evidence furnished by "experts," most of whom are interested persons and whose statements must, therefore, be heavily discounted.

In opening the argument on this subject, it is first of all necessary to be perfectly clear in the assumptions on which all statements are based. Much of the confusion and doubt which have arisen in many minds on the sugar question, is due to the rapid shifting of ground by those who debated. At the start, then, it should be remembered that the output of our beet sugar factories is refined sugar; and that a change in tariff whereby raw sugar should be admitted at reduced duties would not affect them save in so far as it could lead to a production of refined sugar at lower prices

by companies which might thus be enabled to get their materials at a lower cost.

The first point to be carefully considered is the actual expenses of production of refined sugar from beets. On this point, a considerable body of evidence was collected by the House Ways and Means Committee during January, 1902. At that time Mr. Oxnard, the principal beet sugar advocate in the United States, appeared before the Committee in regard to this matter in company with several other producers. Mr. Oxnard testified among other things that:

"The cost of producing beet sugar in the existing factories in the United States to-day varies tremendously, and the only way to arrive at any satisfactory conclusion is to take the averages. If this is done, we find that Michigan has produced sugar at about four cents. Taking the average of all the factories with which I have been connected in the past ten years, we will find that the cost is just about four cents, varying all the way from three and a half to nearly six cents in the different factories during different years."

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This testimony of Mr. Oxnard was also confirmed by W. L. Churchill, Esq., the President of the Bay City Beet Sugar Company, Michigan. Mr. Churchill testified that the average expense of producing a pound of beet sugar in his works during the sugar year 1900-1901, was 3.96 cents.10

Mr. Heyward G. Leavitt, President of the Standard Beet Sugar Company of Leavitt, Neb., also testified that the cost of production of beet sugar in his establishment in 1901 was 4.134 cents per pound and in 1900 was 5.91.11 Mr. Francis K. Carey, of Baltimore, Md., President of the National Sugar Manufacturing Company, however, stated before the Committee, that:

"Coming down to the question of producing sugar in Colorado, I wish to be understood as saying in the most explicit manner that

Hearings before the Committee on Ways and Means concerning reciprocity with Cuba, 57th Congress, 1st session, 1902, p. 169.

10 Ibid., p. 469.

11 Ibid., p. 245.

it is my honest belief that our factory at Sugar City will, within a reasonable time, manufacture sugar at three cents a pound.” "

Before the Ways and Means Committee, also, Col. James D. Hill, a sugar planter, of New Orleans, La., who was, of course, opposed to reciprocity with Cuba, testified that the cost of producing cane sugar in Louisiana was about 3.5 cents per pound. Furthermore, Dr. H. W. Wiley, the Chief of the Bureau of Chemistry in the Department of Agriculture at Washington, testified before the Committee that:

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"It may be safely stated * * that the minimum cost of the production of beet sugar in the United States up to the present time has not been less than four cents a pound.

"The cost of making beet sugar is slightly greater than that of cane sugar, and this is easily explained when it is considered that the process of manufacture of beet sugar is by far more complicated and more expensive than that required for cane sugar.'

"13

With all these different statements before him, the inquirer can take his choice of estimates concerning the cost of the production of beet sugar. Mr. Oxnard was undoubtedly right in saying that cost varies greatly according to the location of the plant, its supplies of raw materials, its outlay for wages, its expenses of shipping the product to market, etc. That there were many beet sugar factories in the country which could show a cost of production as low as from three to three and a half cents per pound may be fully believed. That there were some whose cost of production ran from five to six cents a pound is possible.

It is now practicable to see what was the situation confronting those who might desire to secure a reduction of the tariff on Cuban and South American sugar imported into the United States. It must be borne in mind that the proposed reduction was to be given on raw sugar, that is to say, sugar unrefined and of a low grade of saccharinity as shown by the polariscope test. In the contest there stood on the 18 Ibid., p. 486.

12 Ibid., p. 422.

one hand, the sugar refineries of the United States, and on the other, the beet sugar producers, while midway between were the producers of cane sugar located in Louisiana and elsewhere. It was manifestly to the interest of the refiners to have their raw material come in subject to as little expense as possible. In this way they would be able to develop a steady and increasing source of supply. But how would such a situation affect the interest of the beet sugar producers on the one hand, and Louisiana cane growers on the other? It is clear that if the importation of raw sugar did not result in a reduction of the price charged by the refiner to the consumer, the interests of the beet growers would not be affected in the least degree, since they were competitors in the market for the refined product. The position of the cane growers would be somewhat different. Granting that they were obliged to sell their product to the refiners, the way in which their interests would be affected was evidently dependent upon the question whether the reduction on raw sugar imported would result in a lowering of the price paid by the refiners for raw sugar. If it did have that effect, then the cut in the tariff on imported raw sugar would result in diminishing the price paid by refiners, not merely for the imported product, but also for the output of the Louisiana sugar planter. Would the reduction in tariff also reduce the price paid by the refiner? This evidently was the crucial point in the situation so far as regarded the American producers of cane sugar. It was a question whose answer must depend upon the popular demand for refined sugar which, of course, directly determined the demand of the refiner for raw sugar. If this demand was sufficient to absorb the total Louisiana supply and the total supply upon which a tariff reduction had been granted, and also to necessitate reaching out for additional supplies which must come in subject to the full duty, evidently the price realized by the Louisiana cane planter and by the foreign planter (producing, e.g., in Cuba) favored by

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