Something about sugar

by George M. Rolph

Sugar legislation in other sugar-producing countries of Europe was similar in general principles and gave practically the same results. Amendments were made from time to time with a view to bringing the basis provided for in the law closer to what was actually attained in production, but the manufacturers by constantly improving their processes managed to keep the advantage and consequently to receive a secret indirect bounty or rebate.

The payment of these drawbacks taxed the treasuries of the different countries concerned and in the case of Austria-Hungary amounted to more than the entire revenue from sugar. This brought new regulations and the payment of direct bounties instead of hidden or indirect. Furthermore, a limit was set upon the total that could be paid in any one year.

Nevertheless, the producers in all the sugar-raising countries used their utmost efforts to send as much sugar as they possibly could to foreign markets in order to secure the drawback. It naturally followed that the production was stimulated to an abnormal degree, and toward the end of 1883 there was a slump in prices that affected all raisers of sugar, both beet and cane, throughout the world.

The governments of Europe came to find these bounties a serious burden, and when Lord Salisbury arranged for a convention to be held in London in 1886, the proposal to do away with all bounties met with a good deal of favor. France, however, opposed the idea, as she wished to discontinue the direct bounty only and to leave the indirect still in force, while the British themselves, who used prodigious quantities of sugar and who, under the bounty plan, got all they needed at a price below the actual cost of production, did not wish to forfeit this advantage. So the interests of the British colonists were sacrificed and the London conference accomplished nothing.

In 1890 Germany resolved to divest sugar of all its privileges in order that the treasury should receive the entire amount of the taxes. A measure was proposed in 1891 providing for direct export bounty. This was to be reduced in 1895 and entirely abolished by 1897.

Owing, however, to a severe agricultural crisis at this time, American cereals were brought into Europe at such low prices that the home grower could not compete. It therefore became necessary to find another crop for the land that had been sown to corn and the beet-root was the logical substitute. The increase in beet production from this cause was followed by a crash in sugar prices. With such a condition confronting it, the German government could not do away with, or even reduce, the bounty, especially as none of its neighbors seemed to have any intention of doing anything in this direction. In the interests of the beet growers, the output of beets in 1895, instead of being restricted as proposed, was doubled, and the export bounty on raw sugar was raised from 1.25[24] marks to 2.50 marks per 100 kilograms and on refined from 2 marks to 3.55 marks per 100 kilograms.

This legislation was meant to foster the export trade and bring the sugar business of foreign countries to German manufacturers, and the framers of the law were confident that other countries would not venture to follow suit. In this they were utterly mistaken. Germany’s competitors simply raised their bounties to her figures, thus nullifying her plans for expansion of her export sugar trade.

In 1897 the United States levied a countervailing duty on all bounty-nourished sugar, in addition to the regular protective tariff, so that the bounty paid by European countries on sugar exported to the United States simply went to enrich the United States treasury.

The manufacturers of Germany and Austria enjoyed a profit over and above the bounty by the adoption of what was termed a cartel, or pool, a plan borrowed from Russia.