annually the consumption requirements of sugar for continental United States. Quotas were established for each area supplying sugar to the United States so that their total would equal the consumption requirements. The Act provided general rules for the Secretary to follow in making his determinations. It included a provision for a processing tax on all sugar whether imported or domestically produced which, under rules specified in the law, was established at 0.50 cent per pound of raw sugar. The law permitted receipts from the tax to be segregated for payment of subsidies to domestic producers of sugarcane and sugar beets. The tax receipts were actually so segregated and subsidies paid to domestic producers. No subsidies were paid to producers of sugar in Cuba or other foreign countries.

The Act provided that the quotas of the several areas were to be fixed on the basis of their respective marketings "during such three years, respectively, in the years 1925-1933, inclusive, as the Secretary of Agriculture may, from time to time, determine to be the most representative respective three years." The years selected were 1931-1933, the period when the high duties of the Smoot-Hawley Act of 1930 had reduced United States imports of sugar from Cuba to the lowest level for many years. They were the worst possible for producers of sugar in Cuba and resulted in a quota for Cuban sugar of approximately 28 per cent of United States consumption. If the Secretary had selected the years 1925-1927, the quota for Cuban sugar would have been about twice as large as the one actually established. On the other hand, the period 1931-1933 was the one most favorable to the domestic areas.

The Act also limited the imports of Cuban sugar in refined form to 22 per cent of Cuba's total quota. This had the effect of reducing refined sugar imports from a high of 504,000 tons, raw value, in 1932 to 423,000 tons in 1934 and 387,000 tons in 1935. Refined sugar entries from Hawaii, Puerto Rico and the Philippines were also limited, but at figures that represented approximately their maximum previous shipments.

The United States Supreme Court decision in the Hoosac Mills case in January, 1936, was generally accepted as invalidating sugar controls under the Jones-Costigan Act. Congress, however, promptly passed the Soil Conservation Act providing for certain payments by the Government to farmers, including those producing sugarcane and sugar beets, on condition that they followed certain farming practices prescribed by the Secretary of Agriculture.

Congress also by a joint resolution approved June 19, 1936, continued the quotas established in the Jones-Costigan Act until December 31, 1937, although the processing tax was no longer collected.

Sugar Act of 1937-The Sugar Act of 1937, which became law September 1, 1937, contained many provisions similar to those of the Jones

Costigan Act. Subsidies to domestic growers were continued. However, the Act provided for an excise tax, rather than a processing tax, on sugar. The proceeds of the tax went into the general fund of the United States Treasury. This tax was at the rate of 0.50 cent per pound of sugar, raw value, including imported sugar-the same as under the Jones-Costigan Act.

The 1937 Act provided that domestic producing areas should be allowed to supply a quota equal to 55.59 per cent, but not less than 3,715,000 tons, of the sugar consumption requirements for continental United States as determined by the Secretary of Agriculture. Foreign countries and the Philippines were allotted 44.41 per cent of the consumption requirements, except that when this proportion would reduce the quotas for the domestic areas to less than 3,715,000 tons, the share for foreign countries was reduced accordingly.

The quota for domestic areas was divided under the Act as follows:

was:

quota

Domestic beet sugar.

The division of the quota for foreign countries and the Philippines

Thus, this Act continued to limit Cuba's share of the United States market to 28.6 per cent of the total. Refined sugar imports from Cuba were reduced to 375,000 tons, raw value, per year, whereas those from Hawaii, Puerto Rico and the Philippines were continued at the same figures resulting from the 1934 Act.

The provisions of the reallocation of deficits in supplies from any quota area were changed in the 1937 Act so as to give the entire amount of any Philippine deficit to foreign countries other than Cuba.

The principal subsidies paid by the Government to producers of sugarcane and sugar beets in domestic areas were called "conditional payments" and were made to producers who complied with certain specified conditions. The basic rate of these payments was originally 60 cents per 100 pounds of recoverable sugar, raw value, in the sugarcane. or sugar beets produced. Effective in 1942, the basic rate was raised to 80 cents per 100 pounds.

The quota provisions of the 1937 Act were suspended by Presidential Proclamation on September 11, 1939, but were reimposed on December 27, 1939. They were again suspended on April 14, 1942, and remained suspended through December 31, 1947.

The Sugar Act of 1937, as originally passed, was to remain in effect only until December 31, 1940. However, the Act was extended by Congress several times. The last extension was passed in 1946 and provided that the Act should remain in force through December 31, 1947.

Philippine Trade Act—In April, 1946, Congress passed "The Philippine Trade Act of 1946," providing for tonnage quotas on sugar imported into the United States from the Philippines. For the period January 1, 1946 to July 3, 1974, the quota for each calendar year is 952,000 tons actual weight, of which not to exceed 56,000 tons may be refined sugars. The United States Department of Agriculture for the years 1948 through 1951 determined these amounts to be the equivalent of 982,000 tons, raw value, and 59,920 tons, raw value. For 1952, the equivalents have been set at 974,000 tons and 59,220 tons. The Act provides for the allocation of these quotas among sugar producers in the Philippines on the basis of their production in the years 1931, 1932 and 1933.

Sugar from the Philippines is admitted to the United States free of duty until July 3, 1954. For the remainder of 1954 the rate will be 5 per cent of the lowest rate charged another country. The rate for 1955 will be 10 per cent of the duty charged any other country and for each year after 1955 it will be increased 5 per cent until it reaches 100 per cent on January 1, 1973.

International Sugar Agreement The United States, including the Philippines, together with twenty-one other major sugar producing and consuming countries,* is a party to the International Sugar Agreement of May 6, 1937. At the time the agreement was made, the signatory nations represented between 85 and 90 per cent of the world's total sugar production, about 85 per cent of world consumption, and nearly all the sugar that entered into international trade.

The Union of South Africa, Australia, Brazil, Belgium, the United Kingdom, China, Cuba, Czechoslovakia, the Dominican Republic, France, Germany, Haiti, Hungary, India, the Netherlands, Peru, Poland, Portugal, the Soviet Union, Yugoslavia, and Mexico.

The primary object of the agreement was to establish and maintain an orderly relationship between the supply and demand for sugar in the world market in a manner equitable to both producers and consumers. By regulating exports in accordance with world import requirements, it was intended to eliminate the wide price fluctuations injurious to both producers and consumers, and to raise world sugar prices which in 1936 had been but little above those at the lowest point of the depression.

The agreement provided that the United States would permit the importation for consumption of at least the same proportion of full-duty sugar (from foreign nations other than Cuba and the Philippines) as that provided for in the Jones-Costigan Act. The Philippines agreed not to export sugar to countries other than the United States unless the United States quota for Philippine sugar was reduced.

Basic quotas were set up for the thirteen major exporting countries, including Cuba. These quotas were fixed in relation to recent exports. Cuba's quota was for countries other than the United States, its exports of sugar to the United States being subject to the quota legislation of this country.

The principal importing countries, including the United States, agreed to sustain the outlets for sugar from the principal exporting countries. In general, this was to be done by limiting their domestic production.

An International Sugar Council, with headquarters in London, was established to administer the agreement.

The original agreement was to remain in force for five years. The outbreak of war in Europe prevented it from being effective during the entire five years, as its provisions generally were suspended shortly after the start of hostilities. However, all the signatory nations, except China, India and the Soviet Union, have extended the agreement several times. The last extension was for the year ending August, 1952.

In the last three years, meetings and conferences of representatives of the signatory nations have been held from time to time for the purpose of considering the negotiation of a new International Sugar Agreement.

Throughout the World War II era, sugar was under international control, by, first, the Combined Food Board and, later, its successor, the International Emergency Food Council. These two agencies determined how much of the total sugar supply available to the wartime allies would go to each country.

In addition, the use of sugar by housewives and industrial consumers in the United States was regulated by the Federal Government through controls, chief of which were rationing of the sugar supply and establishment of ceiling prices. A chronology of the principal United States regulations of sugar in World War II is given in Appendix R.

Chapter Six

Current United States Sugar Legislation

The Sugar Act of 1948-The Sugar Act of 1948, as amended in 1951, is the basic law regulating the sugar industry in the United States and imports of sugar into this country. Originally enacted in August, 1947, most of the provisions of the law became effective January 1, 1948 and extended through 1952. The Act was extended and amended in certain important respects in 1951, the amendments to become effective January 1, 1953. Except for authority to complete tax and subsidy programs of previous years, both the amendments and those parts of the law which were not changed are now to terminate December 31, 1956.

The text of the 1948 Act, with the 1951 amendments, is printed in Appendix A, beginning on page 123. The most significant features of this legislation, together with their differences from the provisions of previous Acts, are analyzed in this chapter.

Consumption Requirements-Section 201 of the 1948 Act directs the Secretary of Agriculture to determine for each calendar year, beginning with 1948, the amount of sugar needed to meet the requirements of consumers in continental United States. Section 202 provides that the consumption requirements so determined by the Secretary from time to time constitute the total of the quotas which can be marketed from the various producing areas. The powers thus conferred by Section 201 upon the Secretary are so important, to consumers as well as producers, and their exact terms are so vital to an understanding of the Act, that the section is quoted here in full:

"Sec. 201. The Secretary shall determine for each calendar year, beginning with the calendar year 1948, the amount of sugar needed to meet the requirements of consumers in the continental United States; such determinations shall be made during the month of December in each year for the succeeding calendar year (in the case of the calendar year 1948, during the first ten days thereof) and at such other times during such calendar year as the Secretary may deem necessary to meet such requirements. In making such determinations the Secretary shall use as a basis the quantity of directconsumption sugar distributed for consumption, as indicated by