distinct organizations. One included all those sugar producers manufacturing raw sugar direct from beets and the refiners who worked up the raw beet sugar into a marketable product. The other organization included those producers who manufactured a marketable white sugar product direct from the beet and those refiners who produced refined out of raw sugar. It should be understood that there are, in fact, three classes of sugar factories in Germany. One produces raw sugar direct from the beet, a second produces refined marketable sugar direct from the beet, while the third manufactures a refined marketable white product out of the raw sugar. Some factories do two or more of these processes, but in general they may be classified as above stated. It appears from what has been said that the factories which produce the marketable product direct from the beets stand in a sense midway between the producers of raw sugar and the manufacturers of refined from raw. In forming the combination, however, it was deemed advisable to recognize the two parts already spoken of, one of which was to be regarded as primarily consisting of those who manufacture raw sugar, the other as consisting primarily of refiners, while those who produced marketable sugar direct from the beets might be classed either with the raw sugar producers or with the refiners. The object of the combination was to have the refiners the second of the groups mentioned above-guarantee to the producers of raw sugar a certain minimum price whenever the market price of the raw product falls below a certain specified level.

In accordance with this object, the refiners have established a normal price (on raw sugar) for home consumption. of 12.75 marks per 50 kilograms of 88 sugar. Each month the refiners, the factories which produce marketable sugar direct from the beet, and those who produce sugar from molasses, pay to the refiners' syndicate, on the amount of their production for home use, the difference between the normal price

thus fixed and the price in the world's market. To this sum 10 per cent. of such difference is added in order to meet the expenses of carrying on the combination. This amount is then paid by the syndicate to the producers of raw sugar in proportion to the amount the latter are allowed by the state officials to produce. The service performed by the raw sugar factories in return for the payment thus made to them is the acceptance of an agreement to produce no refined sugar for home consumption and to sell their raw sugar for home consumption only to the factories belonging to the combination. Outside of this agreement the factories are left free to sell their raw sugar abroad at whatever price they can get. Thus, if the price of refined sugar in the world's market rises to the price fixed by the combination, there is nothing to be paid by the refiners to the raw sugar producers; again, if the price of raw sugar in the world's market drops below a certain point nothing further is to be paid by the refiners to the raw sugar producers, for the total compensation for fall in price below the normal to be made by the former to the latter is limited to 3.40 marks per 50 kilograms of production. The price of raw sugar in the world's market is, of course, determined by a process of competition outside the control of the trust.

Speaking of the effect of this combination, the details of whose organization are too complicated to be followed more at length, Prof. J. W. Jenks reported to the Industrial Commission that:

3

"It should be noted that the effect of this combination is likely to be felt chiefly by the home consumer. The producer of raw sugar is guaranteed a living profit. Owing to the command that he has of the home market, the refiner can practically secure for himself likewise a living profit from the consumers, but there seems to be no way for the consumer to avoid paying a high price for sugar in order to have the industry maintained. At the rates that have been given there is, of course, a possibility of competition arising outside of those belonging

3 World's Sugar Production and Consumption, ante cit., p. 2601.

to the combination, but with so great a percentage as is now included in the combination working together, and with the certainty that any attempts to start new refineries or new sugar factories outside would be met at once by positive competition of the most vigorous kind on the part of the combination, there seemed little likelihood of the combination being broken."

From what has been said, and from the fact that the sugar "cartel" (or "Trust") is confessedly an institution for the insurance of its members against low selling-prices, it can be seen how injurious it is certain to be to the consumer. It is upon the consumer that the burden of the higher prices must fall, for only from such high prices would it be possible for the raw sugar manufacturers to gather in the funds. which are turned over to them by the refiners who draw them direct from the consumer.

"The two conditions which enable the working of such a system are: first, an agreement between the raw sugar manufacturers, by which the former are restricted to the manufacture of raw sugar only, which they are to turn over to those refineries only, which are members of the Refiners' Combination, and the latter agree to buy raw sugar for refining only from those factories which are members of the Manufacturers' Combination; second, the existence of a surtax on imported sugar-that is, an import duty higher than the domestic excise tax. Without the latter, of course, any excessive increase in price would invite competition of imported sugar." Just what has been the effect of this elaborate and highly organized scheme for mulcting the consumer with the assistance of the government, thereby throwing into the hands of German producers a satisfactory profit, and at the same time furnishing sugar on low terms to the foreign consumer, may be seen from the fact that the London price of German granulated sugar varied between 27.36 and 21.75 francs per

Monthly Summary of Commerce and Finance of the United States, January, 1902, p. 2601.

hundred kilograms during 1901, while the price of the same sugar at Magdeburg ran substantially from 72.375 to 70.500 francs. The excise tax and the export bounty being reckoned at 29.4 francs, the difference between the price of crystals in Magdeburg and the price in German granulated at London was from 15.615 to 19.350 francs during 1901. In general, it seems to be the opinion of the best authorities that from 15 to 16 francs per hundred kilograms is paid by the German consumer to the sugar trust, a total of about 100,000,000 francs annually. This sum is probably divided nearly equally between the raw sugar producers and the refiners.

In the table on following page some of the more important figures for the study of the German sugar situation in its bearing on the world's sugar problem have been presented.

Some attention needs to be paid to Austria-Hungary. In this country very much the same course of development has been followed as that which has characterized the German beet sugar industry. Early experiments began about 1830, and from the start it was sought by the government to promote the welfare of the industry. A false method of estimating, for fiscal purposes, the sugar product was then in vogue. An assumption, based upon antiquated standards for the capacity of the machinery used in extracting sugar, rather than upon the weight of sugar actually produced, was employed in assessing taxes. Then followed a rapid improvement in the sugar yield of the beet and in the machinery used for extracting the sugar. Moreover, it shortly appeared that there was a strong tendency to centralization. During the past fifteen or twenty years, in the face of a steady and rapid growth in the output of sugar, there has been an actual decline in the number of factories. The industry is somewhat highly localized, about 45 per cent. of the beet area being located in Bohemia. In that province the condition of the industry, both as to quantity and quality of beets for sugar, is highly favorable. In the other provinces the condition of affairs

GERMANY.

[1 metric ton=10 metric quintals=1,000 kilograms=2,204.6 pounds.]

IMPORTS AND EXPORTS AND HOME CONSUMPTION OF SUGAR FROM 1837 TO 1901.

[From Jahrbücher für Nationaloekonomie and Statistisches Jahrbuch für das Deutsche

Reich.]

is less advantageous. Austria-Hungary now exports something like two-thirds of her sugar product and imports but little from abroad. As early as 1875-6 the payment of boun