States are being taxed indirectly for the benefit of the owners of those plantations, by reason of the fact that while Sandwich Island sugar comes in free, it is at once brought up to the level of dutypaid sugar. * * * In plain words, while we are ostensibly importing free sugar from the Sandwich Islands, we are in reality making a 'free gift' of about $5,000,000 a year to the owners of the sugar plantations in these Islands. It is as much a 'free gift' to them as if we were to-day to vote them this amount from the Treasury of the United States, for the reason that the sugar coming in from those Islands free of duty is brought up to the level of duty-paid sugar."

Of course, any conclusions regarding profits accruing from Hawaiian sugar culture must be largely dependent upon the facts concerning the use of improved machinery, etc. The character of the machinery used gradually grew better, but it must also be remembered that the price of sugar declined. While the profits reaped by Hawaiian producers in 1898-1900 cannot, therefore, be taken as strictly representative of profits during a period twenty years earlier, they may, nevertheless, be cited as throwing light on the subject. In the following table, the profits of some of the companies operating in Hawaii, with cost of production, etc., are stated from an official source: 22

COST OF PRODUCING CANE SUGAR IN HAWAIIAN ISLANDS IN 1898.

The names of the companies are withheld.

Some idea of the extent of the profits realized in certain cases may also be gathered from statements made about in

22 House Document, No. 699, 56th Congress, 1st session. Progress of the Beet Sugar Industry in the U. S. in 1899. Government Printing Office, 1900. Appendix, p. 120.

dividual plantations, whose conditions of production, etc., were reviewed in the document just cited. Speaking of the situation on a plantation, the name of which was withheld, the statement was made that:

* * *

A "plantation which will be designated No. 7, produced 20,000 tons of sugar at a cost of $22.50 per ton. The plantation started with an original capitalization of $1,000,000. The profits of the concern were so great that the original capital stock was taken up and in its place $5,000,000 of stock was issued: that is, the original capital was multiplied by 5, making $5,000,000 paid-up capital. Rating the selling price of sugar at $69 per ton, * * * and the cost of production at $22.50, this plant would yield a profit of nine per cent. on its expended capital."

The question might well be raised how far such profits were exceptional and how far they were the rule. This could be ascertained only by a complete census of the plantations of the Islands, which, of course, was impracticable. The rate of profit, however, obtained from the same selected plantations studied by the compilers of the government report already referred to (p. 121), was as follows:

PROFITS OF SOME HAWAIIAN SUGAR COMPANIES IN 1898.

That the Hawaiian treaty had very much the effect upon the production of sugar in the Islands, that had been anticipated for it by its opponents, is clear from a bare inspection of the sugar trade which arose under it. Our imports of sugar from the archipelago aggregated only 30,642,081 pounds, of a value of $2,108,473, in 1877. That figure remained substantially unchanged in 1878, but took a strong upward trend

in 1879, increasing by about a third in quantity and by a trifle less than that in value. This again grew by fifty per cent. of its own amount in 1880. By 1883, when the discussion over the renewal of the treaty arose, we were importing 114,132,670 pounds of Hawaiian sugar, valued at $7,340,033. Thus an increase of nearly 300 per cent.. in quantity, and of about 250 per cent. in value, had occurred in our sugar imports during those years.

It is worth noting that sugars above No. 16 Dutch standard actually fell off, while those below No. 10 increased only slightly, and at the close of the period were not much above what they were at the outset. In 1883, the estimated amount of duties remitted on imports of Hawaiian sugar, and hence lost to the United States, aggregated $3,554,139.

The hostility of Great Britain and Germany to any steps which would tend to give to the United States a larger measure of control in the Hawaiian Islands has already been observed. It was natural, therefore, that the negotiations on reciprocity were regarded with anxious eyes by these two countries, and that international difficulties immediately threatened. Presently, the different interpretations given to the "most favored nation clause" by Europeans and Americans came into sharp contrast. Some difficulty had been encountered with Great Britain at the outset. A "most favored nation clause" had been incorporated into the treaty signed between that country and Hawaii in 1852. Under this, it was claimed, any privileges granted by Hawaii to the United States were ipso facto extended to Great Britain. Germany, likewise, was disposed at first to take a similar view. Mr. Carter, however, acting as Hawaiian Commissioner, succeeded in overcoming the claims of both these governments, although at a considerable cost. After some discussion, England proposed a compromise by which a duty of ten per cent. was to be assessed on those goods included in the free list described in our treaty whenever such goods should enter the Hawaiian

Islands from England. The original claim of the British Government to privileges similar to those granted to the United States had received considerable support in the Hawaiian legislature, but the affair was finally settled on the basis of a ten per cent. compromise. Not until there had been a change of ministry did we succeed in maintaining the contention that the privileges for which we had bargained were exclusive, and that they must not be impaired by similar concessions to other countries. The claim of Germany having, as it did, much less foundation than that of Great Britain, was rejected without compromise. Our views in the matter were very clearly stated by Mr. Blaine in a letter written at a later date, 23 in which he used the following language:

"It would be an unnecessary waste of time and argument to undertake an elaborate demonstration of a proposition so obvious as that the extension of the privileges of this treaty to other nations under a 'most-favored-nation clause' in existing treaties would be as flagrant a violation of the explicit stipulation as a specific treaty making the concession. The Government of the United States considers this stipulation as of the very essence of the treaty and cannot consent to its abrogation or modification directly or indirectly.

* * *

* * In the event, therefore, that a judicial construction of the treaty should annul the privileges stipulated, and be carried into practical execution, this government would have no alternative, and would be compelled to consider such action as the violation by the Hawaiian Government of the express terms and conditions of the treaty, and with whatever regret would be forced to consider what course in reference to its own interests had become necessary upon the manifestation of such unfriendly feeling."

It was certainly to be expected that there would be strong opposition to the renewal of the reciprocity treaty at its expiration. Most of the objections of those who opposed it had been verified during its seven years' life. When, in 1883, the subject came up again in the House of Representatives it was possible to reiterate all of the earlier arguments against

23 Senate Miscellaneous Documents, 49th Congress, 1st session, Vol. IX., chapter III., section 62, or, Wharton's "Digest of International Law," Vol. I.,

pp. 423-4.

the agreement, fortified by experience. In support of the treaty, could be urged only the familiar considerations concerning the political and strategic importance of the Islands. Even those who favored the continuance of the Hawaiian treaty could not bring themselves to support it in an unmodified form. The strongest thing that could be said was that it should not be wholly abrogated, but that modifications should. be introduced into it, such as would obviate the evils which had given such grounds of complaint. In a report upon the resolution to extend the treaty, submitted by Mr. Kasson on behalf of the Committee on Foreign Affairs, 24 it was freely stated that the importation of low grades of unrefined sugar below the Dutch standard of color had wrought an injustice to refiners, and it was conceded that this abuse should be remedied. Further, the progress of annexation sentiment was seen in the argument that, inasmuch as the main object of the treaty was the maintenance of our influence in Hawaii, some stipulations looking to naval control over that part of the Pacific ought to be inserted. Finally, it was granted that in the case of sugars subject to reciprocity the fineness and grade ought to be determined by their percentage of absolute fineness and clarification instead of by the existing Dutch standard of color.

In the minority report, much was made of the fact that the importation of low-test sugar had violated the terms of the agreement. Another charge was that much more sugar came to the United States from Hawaii than was actually produced there. It was hinted that illegitimate importations from China and from the Philippines had been made for the purpose of re-exportation to the United States. This claim was based upon the testimony of Treasury agents before the Committee on Foreign Affairs in February-March, 1882. The minority closed by recommending the passage of a resolution calling upon the President to make an investigation of the averred frauds

24 For report see House Report, No. 1860, 47th Congress, 2d session, 1883, parts 1 and 2, 12 pp.