The trust, if it can be called such, does not seem to attempt to regulate prices, that being against the law. The profits of the French refiners have, however, been extremely, not to say exorbitantly, high. It is, moreover, confessed, as we have already pointed out, that they depend chiefly upon the export trade, their sales of sugar being made to the foreigner at a price which perhaps would not cover the cost of production, but which, taken in connection with the domestic bounty, places them in a very satisfactory condition.

In the following table are given some figures illustrative of conditions in France, and the dependence of the sugar trade upon the foreign market:

IMPORTS INTO AND EXPORTS FROM FRANCE OF SUGAR DURING THE YEARS

FRANCE.

[1 metric ton=1,000 kilos. 1 kilogram=2,204.6 pounds. I franc=19.3 cents.] PRODUCTION, IMPORTS, AND EXPORTS OF SUGAR FROM 1884 TO 1900. [All quantities expressed in terms of refined sugar.]

The great development of the beet sugar industry in Germany is, as in most other countries, a matter of very recent date. There had been a limited growth of the product from 1800 to 1860, and down to 1840 the manufacture of beet sugar had not been taxed. The heavy customs duty on imported cane sugar (roughly speaking, during the second quarter of the century) was therefore equivalent to a large bounty on the growth of German beets. As a consequence of this attitude on the part of the government, beet sugar so far supplanted that produced from imported cane that, because of the falling off in the customs receipts from imported cane sugar, it became necessary to tax the product from beets. The first internal revenue tax was imposed in 1841, and was gradually raised until 1851. Two years later it was doubled. Efforts had already been made to obtain a return of this internal revenue tax on beet sugar whenever it could be shown that the product had been exported. The application had, however, been de

nied, probably on account of the danger that sugar, relieved of the internal revenue tax, might be smuggled back into the country again, and partly because of the difficulty of computing the exact amount of sugar produced by given quantities of beets. Should any miscalculation take place on the latter point, the natural result would be the payment of an indirect bounty. The beet sugar industry, however, continued to develop to such a remarkable extent that it almost drove cane sugar from the market. Over-production caused serious suffering. At last, in 1861, it was decreed that the domestic tax on beet sugar should be returned to the producer at a specified rate when exported. Both the internal revenue duty and the rate of drawback were gradually increased from time to time.

It had been maintained from the start that improved methods of cultivation and production had made the customs drawback practically equivalent to a bounty. The information available concerning the situation during the earlier years of the drawback legislation are, however, insufficient to supply trustworthy data concerning the exact extent of the bounty, if there was one. There seems to be much reason to doubt whether the bounty actually existed for a good many years after the legislation already sketched had been initiated. The truth seems to be that, quite apart from the bounty, the great growth of sugar growing in Germany was due to the application of more scientific principles, both in raising beets and in working them up. After 1870, German producers were very successful in selecting the proper seed and improving the grade of beets used, thus largely increasing the sugar content, and in applying processes which were effective in extracting a much larger percentage of the sugar in a given weight of beets. The fact that the agriculturists engaged in producing beets very soon came into close financial relations with the factories was also a great stimulus. This enabled the factories to dictate the character of the beets which were

planted, and it also gave the beet growers a direct interest in securing as large a product as possible, both of beets and of sugar, because they became financially interested in the profits of the factories.

In consequence of this great development in the production of beets and the manufacture of sugar, two distinct results were brought about. By 1875-6 the importation of sugar practically dropped to zero, that being the last year when the imports of foreign sugar were larger than the exports of the domestic product. The second result was the invasion of foreign markets by domestic sugar-a process which would probably not have been possible except for the assistance yielded by the bounty already described. This bounty was, of course, growing larger from year to year, as the improvement in processes of production raised the quantity of sugar manufactured from a given weight of beets. It was impossible that the sugar producer should suffer any loss by shipping his product abroad, for he was effectually protected by the bounty. Hence the development of the industry was progressive and the area devoted to beet culture became larger and larger. By 1880-1 exports abroad were greater than domestic consumption, so that the industry had become primarily devoted to manufacturing for other countries. In 1899-1900 there were produced in Germany a total of 1,691,258 metric tons of beet sugar, while exports were 976,165 tons, or 58 per cent. of the total. In 1894-5 they had already risen as high as 72 per cent. of the total.

The growing discrepancy between the ratio of beets worked up and the sugar actually produced from them, on the one . hand, and the official estimate on the other, inflicted heavy losses on the Treasury from the moment when the export of beet sugar began to reach any considerable figures. From $10,708,000 in 1882 the amount of the bounty to exporters grew to $30,572,000 in 1885. In the latter year, therefore, more than $30,000,000 of the sugar tax, which had in all amounted to

about $40,000,000, was paid out again in the shape of drawbacks. The government was on the verge of losing its entire income from the taxation of sugar, and in order to counteract this danger it was determined to alter the system of taxation. On July 9, 1887, it was ordered that the older tax on beets should be reduced by more than 50 per cent. A new tax on sugar consumed at home was introduced. In 1892-3 the tax on beets was done away with, and the tax on sugar for home consumption was raised from 12 marks to 18 marks per hundred kilograms. In 1896 this consumption tax was raised to 20 marks per hundred kilograms, at which point it remains fixed at the present time. During the period when changes in this system of taxation were in progress, the indirect export bounties of which mention has been made were, at first, reduced, and later (in 1891) they were superseded by direct bounties. Moreover, a system was introduced in 1896 whereby it was sought to limit production and thus to limit exportation, thereby reducing the amount of bounty paid by the government. The new legislation was successful in its object of partially protecting the government from the inroads of the manufacturers, for the output, although increasing slightly from 1895 (the last year before the introduction of the new legislation), was much more largely consumed at home than it had been. Exports fell off somewhat in absolute amount, but relatively to total production their decline was much more marked, going from 72 per cent. in 1894-95, as already indicated, to 58 per cent. in 1899-1900.

The change in the German sugar situation thus produced aggravated the difficulties with which the industry had for a long time supposed itself to be struggling. It had been thought that a remedy might be found in such organization as would put the industry under a centralized control, permitting certain economies as well as certain restrictions upon the amount of the production. This combination was at last brought about in the latter part of 1900. It consisted of two