SPECIAL REPORTS

ON

VARIOUS BRANCHES OF TRADE.

THE SUGAR TRADE OF THE UNITED STATES.

Annual Review, showing the Imports and Consumption of Raw Sugar in the United States, for the year ending December 31, 1911, compared with the previous four years.

GENERAL STATEMENT.

RECEIPT OF FOREIGN SUGAR IN THE UNITED STATES FOR THE YEAR ENDING DECEMBER 31, 1911, COMPARED WITH THE PREVIOUS FOUR YEARS.

ANNUAL REVIEW OF THE SUGAR TRADE OF THE UNITED STATES.

THE year 1911 will go down in the annals of the sugar trade as one of the most exciting periods in its history, for prices soared until the highest level since 1897 was recorded. It was only natural under the circumstances that the equilibrium of the industry should have been badly disturbed and the country witnessed a situation which will hardly be duplicated for years to come.

Unlike many other staples of everyday consumption, sugar had fluctuated for years around 5 cents, so much so that the people of this country which is the leading consumer of sugar, came to regard the quotation as practically a fixed quantity. Naturally, the unexpected sharp advance of more than 2 cents a pound gave rise to the ready cry of manipulation though a simpler explanation may be found in the old law of supply and demand. Undoubtedly, the pinch might not have been felt so severely in this country had not the refiners been caught with only a few weeks supply in their storehouses and consequently compelled to purchase in a rising market where competition from Europe acted as a decided stimulus. Until June, it should be noted, while prices were well maintained for raw sugar at a profitable basis for the shipper, there was nothing to indicate the sensational movement which was to develop during the summer months, and even when the first reports of the damage to beets were current, little

credence was given to the stories by local trade interests. They reasoned that while the beet root requires much moisture, a dry spell does not of itself necessarily mean a crop failure, provided it is not unduly drawn out, as was the case in 1911.

The rapidity of the rise in the price of the raw sugar inevitably meant large profits to the fortunate buyer though this was the case with the speculator rather than the refiner since the latter as a rule aims to keep practically an equal amount of contracts for granulated booked. It was the distributor, therefore, who benefitted chiefly by the advance, and for the first time in years the grocery trade netted a large return on the sugar business transacted, which it might incidentally be remarked forms over 25 per cent. of the total of all staples handled. The country at large, in spite of its disinclination to pay a 40 per cent. advance which was evident in the talk of boycotts, managed to show a fair increase in the consumption though no doubt under normal conditions this gain would have been even larger. As bearing out the statement that the refiners did not take undue advantage of the situation, it is worthy of notice that although refined sugar advanced 1.85 cents in the interim between June and September, raws rose 2.10 cents during the same months.

The United States was fortunate, considering this combination of adverse circumstances, to have at its call over 500,000 tons of domestic beet sugar which came on the market during the fall months at a time when supplies were sorely needed, the movement to market tending to bring down the price. The same was true of the 300,000 tons of Louisiana cane sugar which began to be received the latter part of October and found a ready welcome from refiners. Including the 200,000 tons of Philippine sugar, 350,000 tons from Porto Rico and 500,000 tons of Hawaiian which come in free of duty because they are produced in our dependencies, this gives the country control over some 1,850,000 tons. Cuba, because of the 20 per cent. differential which it enjoys in the tariff schedule, sends the bulk of its production to our shores and promises ultimately to displace Java and the other nonprivileged countries as sources of supply; for its possibility of development is still great.

The exceptional flurry in the market during the summer months, which made speculation easy and exceedingly profitable, prevented the measure taken to place the trade on a sounder basis from having its full effect. Reference is made, it should be stated, to the action of refiners in cutting out the guarantee against decline which in the past kept the sugar business in a constant state of uncertainty. Distributors under the old methods were allowed to contract ahead with the understanding that if the price reacted before the sugar was ordered out, the shipment would be billed on the basis of the quotation at that time, regardless of the level on the day of booking. On the other hand, if the market went up the grocer or other buyer received his bill at the contract price. The inevitable result was that there existed a direct incentive for placing orders with refiners for much more sugar than the business of the purchaser warranted, who if the

situation went against him frequently refused to live up to the contract. The refiner, having protected himself with raw sugar, was naturally compelled to stand the decline and as a result profits were commensurately lower, the margin during recent years being none too large. The sugar trade apparently, was the only branch of industry where this policy prevailed, and the abolition of the guarantee meant progress toward sounder conditions and more stability for all concerned.

The tariff situation loomed up more prominently, and while free sugar is not regarded as a probability now, there is a strong feeling that some reduction in the duty is likely. The United States collects some $52,000,000 on the imports of raw sugar, the full duty for 96° test being 1.685 cents per pound. Cuba, which enjoys a 20 per cent. differential pays 1.348 cents and would lose the present advantage over Javas and other non-privileged sugars with the tariff' removed. The refiners generally are desirous of having the tariff on sugar lowered, and they argue that the result would be to stimulate consumption, the importance of cheap granulated to the preserving industry being advanced as an argument for such action.

It is interesting to note that the domestic beet factories accounted for a larger proportion of the production consumed during the year under review, their quota it should be said being 15.51 per cent. as compared with 13.92 per cent. for 1910. This increase tended to offset the reduction in the output of the independent refineries incidental to the fire in the ARBUCKLE plant, the percentage of the independents. being 41.91 as against 43.49 the previous year. The American Sugar Refining Company still leads the van in the distribution of sugar, its total for 1911 being 42.12 per cent. as compared with 42.14 per cent. for 1910. The refiners in the Hawaiian Islands contributed .41 per cent. as compared with .42 per cent. the previous year, showing the same tendency to fall off as previously noted. Receipts of foreigu refined were negligeable being only .05 per cent. though slightly larger than in 1910 when the percentage was .03.

There was a larger margin of profit for refiners in 1911 due in part to the rapid rise in the market, the difference between raw and refined averaging .892 per cent. for the twelve months, this comparing with .784 cents in 1910, .758 cents in 1909, .884 cents in 1908, and .893 cents in 1907.

Importations of Foreign.-There was a further increase in the importations of raw sugar these being 101,175 tons larger than the previous year. In explanation of the gain it might be pointed out that there was a falling off in the Louisiana production while on the other hand the consumption of sugar in the country showed a further increase. Shipments from our colonial territory, which as stated are allowed to come in free of duty, accounted for 785,815 tons, Hawaii during 1911 increasing its exports to 493,932 tons and Porto Rico to 291,883 tons, to which should be added 179,352 tons from the Philippines which are becoming an increasingly important factor, making a grand total of 965,167 tons free sugar as compared with

Cuba

814,686 tons the previous year or a gain of 150,481 tons. which enjoys a reduced rate of duty on sugar shipped to this country is still our chief source of supply, imports from that quarter during 1911 amounting to 1,425,312 tons as compared with 1,639,809 tons the previous year, a decrease of 214,497 tons. A short crop explained the falling off of the importations. From Java, San Domingo and other countries, the receipts amounted to 325,921 tons.

Despite the fact that the refining facilities of the United States have been considered ample for the requirements of consumption even with a normal yearly increase, there will be a further addition to the output the coming year incidental to the operation of the Pennsylvania. refinery. This plant, over which there was so much litigation, is expected to have an ultimate capacity of some 4,000 barrels, so that the competition for business on the Atlantic Coast promises to become even keener. While the beet sugar manufacturers through their policy of underselling cane granulated have a strong hold upon the market during the fall months, the refineries at the ports of New York, Philadelphia and Boston, owing to their superior location on the seaboard and splendid railroad facilities continue to dominate the situation. Exception should be made for the gulf territory which is taken care of by the refineries in New Orleans, Galveston being but a small factor. The refiners in San Francisco who obtain their raw supply chiefly from Hawaii and the Philippine Islands are in a class by themselves since the freight rates preclude competition from the east and permit very profitable operations.

Under the prevailing rate of duty, there is no competition from Europe and the unimportant shipments hither of refined are as a rule some especial grade called for by confectioners or other importers. There was a further decrease for the year, the total being only 1,332 tons as compared with 1,893 tons in 1910, 2,639 tons in 1909, 2,713 tons in 1908 and 3,953 tons in 1907. Although the shipments of refined from Hawaii come in free and might logically be expected therefore to increase, they fell off to 13,082 tons as compared with 13,648 tons for the previous year, 15,146 tons in 1909 and 16,075 tons in 1908.

According to the Bureau of Statistics figures imports of beet refined from Europe the past decade were as follows; in tons:

The total importations of foreign raw and refined sugar into the United States, including Hawaii and Porto Rico, according to the Bureau of Statistics for each calendar year for the past sixteen years, have been as follows: