France held the first place in output of beet sugar until 1880, when Germany took the lead and has maintained it ever since. The beet industry assumed important proportions in Austria-Hungary, Russia, Holland and Belgium shortly after 1850, but it was not established in Sweden, Spain and Italy until comparatively recent times.
The laws that were passed by the various European countries for the encouragement and protection of beet sugar were so beneficial in their effect that these countries not only were able to supply their own domestic demand, but found themselves able to export sugar. This stimulation finally led to abuses, as a result of which the Brussels convention was brought about and the bounties abolished.
Apart from certain details, the various regulations in European countries for the purpose of building up the manufacture of beet sugar and making it a revenue producer were very much alike. The essential features were a prohibitive import duty and a slightly lower excise tax. The latter provided revenue for the government, and the difference between the import duty and the excise shut out foreign competition and fixed the amount of profit the domestic beet-sugar producer could make. Still worse, it created pools or combinations for the control of both output and price.
With increased production, which was more than sufficient to supply the home demand, these countries were in a position to export sugar, and in order to enable their manufacturers to compete in outside markets, a drawback of the excise was allowed on all exported sugar. A peculiar condition of the law affecting this drawback was that it really, though not directly, provided for a bounty on export sugar, and while this was not the original intent of the law, the improvements that it encouraged accomplished the purpose.
In Germany the principle was that the excise was levied upon the quantity of beet-root sliced, while the export drawback was allowed on the actual sugar produced.[21] At the time of the passing of the law that was in operation from September, 1869, to July, 1886, the assumption was that the yield in sugar would be 8.51 per cent of the weight of the beets, allowing 11.75 tons of beets for one ton of sugar, and on all raw sugar exported the manufacturer was given $2.03 per hundredweight drawback, the exact equivalent of the excise tax, which was 17 cents per hundredweight of beets.
For some years after this law became effective it took twelve tons of beets to make a ton of sugar, consequently the drawback allowed the exporter did not represent all of the excise. Thus it became the aim of the manufacturers to raise the sugar content of the beets and to improve the extraction. By 1882 they had succeeded so well that a ton of sugar was produced from 10.46 tons of beet-roots instead of 11.75 tons, as predicated when the law was drawn up. The drawback, however, was still allowed at the rate of $2.03 per hundredweight, which netted the producer a clear gain of 22 cents.[22]
In France from 1864 to 1875 the calculations were made from the quantity and purity of the juice. In other words, a certain arbitrary rendement[23] of sugar from the beet-root was the basis of taxation, while any excess recovery was exempt. This was equivalent to an indirect bounty, but the French government saw to it that the estimates and the actual outturn did not get too far apart. No bounty whatever was paid on French sugar from 1875 to 1884.
About 1880 the sugar production of Germany exceeded that of France, so that in 1884 the French authorities revived the indirect bounty system to put new life into the industry, and the effect of this action was soon apparent.