CORNELL UNIVERSITY LIBRARY FROM Wm.S^'.lzer DATE DUE NOV 2 3 1949^ DEC 2 1949 -1 CORNELL UNIVERSITY LIBRARY 924 103 062 851 The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://archive.org/details/cu31924103062851 -<_ AMERICAN SUGAR REFINING COMPANY DIGEST OF AVAILABLE IN U^ PREPARED JUNE, 1903 REVISED AND ENLARGED MARCH, 1904 WASHINGTON igu I^JSlSie C O N TENTS. Page. Introduction 5 Part I. General organization and history: Principal business office 10 State of incorporation 10 Nature of business " 10 Form of combination 10 Officers '. 10 Directors 10 History of organization 10 Copies of articles, charters, etc 10 Part II. Plants, capacity, and output: Plants originally combined 11 Plants subsequently acquired 11 Plants erected 12 Plants closed 12 General stalislics of sugar production and sources of supply 13 (0) Totals for United States 13 (6) Statistics for leading center's of refining industry 13 ( 'apacity and output of plants of American Co 15 (1) Willett & Gray's figures for American Sugar Refining Co 15 (2) Estimate of producing capacity by James H. Post 16 Relation of American Sugar Refining Co. to other refinerie9 17 New refineries established diuring 1902-3 18 (See newspaper extracts in Appendix 5.) Louisiana sugar and beet sugar 19 Addendum, February, 1904 20 Alleged interests of American Sugar Refining Co. in beet-sugar refineries . 20 Part III. Capitalization: Amount 22 DivWends 22 Market value of shares 22 Promotion 23 Capitalization in relation to cost and value of plants 23 (a) Policy in original capitalization of sugar refineries company 23 lb) Statement of witnesses as to cost of refineries 24 (c) Cost and capacity of other refineries 25 Part IV. Financial reports 27 (See also newspaper extracts regarding annual meetings in Appendix 3.) Part V. Prices and cost of production: Price tables 29 (a) Introduction — Basis of quotations 29 (6) Description of tables 30 Effects of combination on prices as shown by tables and diagrams 30 (o) Table 1 and diagrams A and B — Annual average 30 (6) Table 2 and diagram D — Margin less waste 32 Statements of witnesses regarding effects on prices 33 Monthly fluctuations in prices 34 Competition in relation to price 35 (Competitive methods 38 (o) General cutting of prices 38 (h) Special cutting of prices in local markets 39 Factor system - 40 New Sugar Brokers ' Association 42 Cost of production and profits 43 Profits of refining industry 44 3 4 CONTENTS. Part VI. Tariff— Imports and exports: ^'*8«. Ral en of duty 78 (1) Specific rates ■ ■ - • - .•••;••. « (2) Relation of differential duty on refined sugar to margin of pnces. . 47 (3) Special duties to offset foreign bounties 48 (4) Tariff rates of 1890 and 1894 48 Import statistics 48 (1) Total imports 48 (2) Imports by countries 49 Effect of tariff on prices 51 f 1) General - 51 (2) Comparative prices in Great Britain, Hamburg, and United States. 61 (3) Export bounties and sugar combinations in Europe 55 Prices of sugar in London and Magdeburg 56 LIST OF APPENDICES. Appendix I . Documents relating to organization of sugar combination 61 II. Abstract from testimony regarding sugar before New York joint committee appointed to investigate trusts, 1897 71 III. Annual reports, etc., of American Sugar Refining Co 79 IV. Statistics of sugar production and consumption, 1879-1903 85-« V. Competing refineries (newspaper extracts) 89 VI . Beet sugar 96 VII. Beet sugar interest of American Sugar Refining Co. (news- paper extracts) 101 VIII. Statiitics of sugar prices 109 IX. Effect of competition on prices (newspaper extracts) 131 X. Effect of beet-sugar competition on prices (newspaper ex- tracts) 139 XI . Factor system in selling sugar (newspaper extracts) 147 XII . Sugar Brokers' Association (newspaper extracts) 163 XIII. Imports of sugar, by countries, fiscal years 1892-1902 159 XIV. Prices of sugar in England and Hamburg 171 XV. Cost of refining sugar 179 AMERICAN SUGAR REFINING CO. INTRODUCTION AND SUMMARY. OEGAXIZATION AND HISTORY. The Sugar Refineries Co., in the legal form of a trust, was organ- ized in 1887. In view of hostile court decisions it was reorganized as a corporation under the laws of New Jersey in 1891 under the name of the American Sugar Refining Co. PLANTS AND OUTPUT. The Sugar Refineries Co. originally brought together 17 refineries, including all in the United States except four or five. Fully half of the plants combined were later closed and abandoned. The combi- nation has since erected no new plants. It has, however, acquired several refineries from competitors. In 1892 four large refineries in Philadelphia, two of which had been newly built and had competed vigorously, were bought. Later a refinery at Baltimore and one at Camden, N. J., were acquired, and also a controlling interest in the Western Sugar Refinery at San Francisco. The capacity of the refineries owned or completely controlled by the American Co. is estimated at from 40,000 to 45,000 barrels per day. The refineries are located at New York, Philadelphia, New Orleans, Boston, San Francisco, and Baltimore, the order indicated showing approximately the importance of each refining center. The capacity of cane sugar refineries outside the combination is estimated at 22,000 tons. It is estimated that the American Co. produced 76.4 per cent of the total domestic consumption of sugar in 1894 and 55.2 in 1903. This decrease in its proportion is due partly to the added production of beet sugar, which now amounts to one-tenth of thia total consumption, and partly to the erection of new outside refin- eries. The leading concerns refining cane sugar aside from the American are the National Sugar Refining Co., with three plants at New York; Arbuckle Bros., New York; W. J. McCahan, Philadel- phia ; and smaller refineries at Boston, New Orleans, and San Fran- cisco. The freight on sugar is such an important item that each of the great refining centers has a considerable territory which is sup- plied almost exclusively from that center. It seems probable from the evidence that a certain understanding or community of interest exists between the American and National Cos., and also between the American and the other refineries at IJnston, Philadelphia, and New Orleans. 6 AMERICAN SUGAR REFINING COMPANY. The beet-sugar production is chiefly marketed between September and December. It has affected the prices of cane sugar during this period materially in recent years. It is currently reported, however, that the American Sugar Eefining Co., or its officers, in 1903 acquired an important interest in the American Beet Sugar Co. and in various other beet-sugar refineries. Three new independent sugar refineries are in course of erection at Yonkers, Hoboken, and Philadelphia and are expected to begin oper- ations in 1904. CAPITALIZATION. The original capitalization of the Sugar Refineries Co. was $50,000,000. The American Sugar Refining Co. when it purchased the Philadelphia refineries increased its capital to nearly $74,000,000. In 1901 the amount was again increased to $90,000,000, one-half pre- ferred stock. The company has no bonded debt. The capital stock of the various corporations which originally entered the Sugar Re- fineries Co. was $6,590,000 — with the exception of two concerns for which the capitalization is not reported. Doubtless this sum was much less than the cost of the plants. It is stated by the representa- tives of the combination that the issue of securities was based on the present and estimated future earning capacity of the plants. One refinery which had just been bought for $350,000 in cash (according to the statement of the buyer, an officer of the Sugar Trust) was made the basis for securities to the amount of $700,000. From various statements of the refiners, including that of Mr. Havemeyer, it appears probable that the cost of reproducing plants of the American Sugar Refining Co. would fall between $25,000,000 and $;ir),000,000. The capitalization properly based on these plants is about $74,000,000, the remaining capital of the company being ap- parently invested in the stocks of other concerns. A certain amount of working capital, however, is necessary in the refining industry. The American Co. seems to secure most of the working capital re- quired by short-time loans based on the sugar in stock and on the notes due it from purchasers. PRICES. The influence of the sugar combination on prices, so far as it exer- cises an influence, must be found chiefly in the margin between the price of raw sugar and that of refined sugar. The price of raw sugar, which constitutes much the greater part of the cost of refined sugar, is affected by causes almost wholly independent of the refiners, par- ticularly by the rates of duty imposed. The a\erage of the margins between raw and refined sugar at Xew York for the nine years— 1879 to 1887— preceding the formation of the Sugar Refineries Co. was 1.098 cents per pound. The average for the years 1888 to 1902 was 0.920 cent per pound (1903, 0.918 cent). The industry has undergone marked improvements, espe- cially during the years immediately preceding the formation of the combination. The average margin for the four years — 1884 to 1887— during which there was severe competition, was 0.796 cent. The margin for tlie period since the organization of the trust has been AMERICAN SUGAR REFINING COMPANY. 7 lowered materially by the sharp competition in four years. Omitting these years, the average margin for 11 years between 1888 and 1902 was 0.999 cent. There is a; waste of about 5 per cent of the weight of raw sugar during the refining process. Therefore the margin between the prices of raw and refined sugar must be greater when the price of raw sugar is high than when it is low, if the same profit is to be secured. De- ducting from the margin between raw and refined sugar 5 per cent of the price of raw sugar, the net margi-n for the years 1884 to 1887 becomes 0.519 cent and for the years 1888 to 1902 0.711 cent. The price of raw sugar was much higher in the earlier years than in the later. The Sugar Kefineries Co. raised prices immediately after its organ- ization. The margin in 1888 averaged 1.258 cents. xVctive new com- petitors in Philadelphia soon arose, and the average margin for 1890 fell to 0.720 cent. When these competing refineries were bought out the margin was at once greatly x*aised and remained roughly uniform down to 1899. In that year the new refineries of Arbuckle Bros, and the New York Sugar Refining Co. were started, and vigorous competition brought down the margin to an average of 0.503 cent. In 1900 some understanding appears to have been reached between the American and its competitors, particularly the National Sugar Refining Co., which had absorbed the New York refinery and two others. There have been occasional indications of competition dur- ing 1902 and 1903, mostly on the part of Arbuckle Bros., but the margin remained much higher than before. Indeed, except for the cutting of prices during the fall months, when beet sugar is being marketed, the margin , would have been higher during 1901-1903 than at any time since 1893. The president of the American Sugar Refining Co. stated before the Industrial Commission that he considered it proper to get all that he could out of the consumer. He also stated that the combina- tion would cut prices, if necessary, below cost of refining in order to retain its business. There is little doubt that the margin in 1899 was below the cost of refining. The factor system has been extensively employed by the American Sugar Refining Co. and by other refiners as well in selling sugar. The wholesale grocers under this system agree not to sell below a price fixed by the refiner, and after a period of time they receive a rebate from that price. This practice appears to have been intended mainly to prevent loss to the wholesale grocers through excessive competition rather than to enable the combination to keep up prices. It may have tended, in some measure, in the latter direction. The American Co. has not required the grocers to buy exclusively from it as a condition of receiving rebates. The factor system has now broken down in most parts of the country, but is in force in certain markets. COST OF REFINING AND PROFITS. Only an approximation to the cost of refining sugar can be made. An important element in cost is the loss in the weight of raw sugar. From the statements of various refiners, it seems probable that the cost of refining, including waste, at the present prices of raw sugar, 8 a:^iebicax stjgak refining company. Ues between 0.50 and 0.60 cent per pound. This is exclusive of ^Th^e proXct of ^the American Sugar Refining Co. is about 3,000,- 000,000 pounds per year. A profit of one-tenth of a cent per pound amounts to $3,000,000 yearly. The average margin between raw and refined sugar since 1888 has been about 0.92 cent, or m the neighbor- hood of 0.35 cent above the cost of refining, leaving that amount tor depreciation and profit. . The American Sugar Refining Co. has each year paid 7 per cent dividends on its preferred stock. The average rate of dividend on common stock from 1892 to 1903, inclusive, was 11 per cent, the rate since 1901 having been 7 per cent. The dividends have amounted to about $7,000,000 per year, on an average, during this period. Ihe combination has also laid aside a surplus out ot its earnings, which now amounts to more than $12,000,000/ In view of the probable overcapitalization of the company, its profits are presumably between 15 and 20 per cent of the cost of duplicating the plants, including working capital/ TARIFF IN RELATION TO PRICES. The duty on raw sugar varies with the quality, amounting to 1.685 cents per pound for 96° centrifugal sugar, which is the most com- mon grade imported. The duties collected on raw sugar amount to from 75 to 90 per cent of the foreign value of the sugar. This duty constitutes a heavy protection' to the planters of cane sugar in Louisiana, Hawaii, and Porto Rico and to the producers of beet sugar in the United States. The protection to the refining industry consists in the difl'erential between the duty on refined sugar, 1.95 cents per pound, and the duty pn the quantity of raw sugar required to produce a pound of refined. Accepting the official estimate of the Treasury Department for this quantity, the differential duty on refined sugar amounts to 0.1285 cent per ])ound. It is practically certain that this Treasury estimate is too high and that the actual differential protective duty on refined sugar is between 0.15 and 0.17 cent. If the differential be taken at O.lL'8.") cent, it is equal to from one-fourth to one-half of the margin between the price of raw and refined sugar in foreign markets. The protective difl'erential on refined sugar practically prohibits imports. The greatest imports during recent years amounted to less than 4 per cent of the domestic consumption, while in 1903 the imjjorts of refined sugar were less than one-fifth of 1 per cent of the domestic consumption. The average margin between the pv\ce of raw beet sugar and granu- lated sugar for export at Hamburg for the years 1890 to 1901 amounted to 0.442 cent as compared with 0.868 cent for the margin lietween raw and refined in Xew York. The qualities of sugar com- pared are not precisely the same, but it is probable that the compari- son is a fair one-. Possibly the margin between raw and refined sugar for export in Germany is reduced somewhat by the existence of ex- port bounties and of a combination both of producers and refiners of sugar in that country-, which aims to keep up domestic prices by large exportations. The average margin between the price of cube AMERICAK SXJGAK BEFINING COMPANY. 9 sugar in London and Java raw sugar at the same port for the years 1890 to 1900 was 0.922 cent (1901 being omitted because of the im- f)osition of a new tax) . Cube sugar in the United States, as in Eng- and, bears a higher price than granulated sugar. The margin t^- tween cube sugar and raw sugar in London has steadily fallen during the decade, and in 1900 was only 0.62 cent. / It appears, therefore, that the differential duty between raw and refined sugar in the United States serves to keep the margin mate- rially higher than that in foreign countries/ No information of value regarding the comparative costs of refining in the United States and foreign countries is available, but in view of the high profits of the American Sugar Refining Co./it would seem that a, reduction of the duty would serve to secure more reasonable priced while still leaving moderate profits to the refining industry. At the same time, a reduction of the differential duty on refined sugar would make so little difference in the gross price of sugar that few people would notice it. Part I. ORGANIZATION. Primipal business oifice.—lll Wall Street, New York City. State of incorporation. — New Jersey. Date.— June, 1891. Nature of busitiess.—'Re&nmg of sugar and, recently, production of raw sugar in Cuba. Form of eornhination. — Partly by ownership of plants; partly by ownership of all or part of stocks of other companies. For pro- portion of assets represented by these two classes of ownership, see balance sheet below. Officers. lf)OJ.—H. O. Havemeyer, president; Arthur Donner, treasurer. Diircturs. 190J.—R. O. Havemeyer, Arthur Donner, John Meyer, John E. Parsons, Charles H. Senff,'Lowell M. Palmer, W. B. Thomas. IIISTORY OF ORGANIZATION. (See IiKlnsti-ial ('inmiiission. \'ol. I. Testimony, p. 43; Now York Rept. of Trusts. 1S!I7, pp. Kis. ff.) The Sugar Refineries Co. was organized by a trust deed dated August 6, 1887, and going into effect October 1, 1887. Fifteen con- cerns entered that first combination and two others soon after; some of these were in the form of firms but changed to corporations. The shareholders of each corporation deeded all of their shares in trust to a board of 10 trustees, which thus held absolute control of all the separate corporations. Trust certificates were issued in exchange for these shares and were dealt in on the- general market. In June, 1890, the Court of Appeals of New York held that this form of combination was illegal. The North River Sugar Refining Co.. one of the constituent companies, was held to have acted ultra vires. The court declared that corporations must retain their in- dividuality and can not form partnerships, as was virtually done by the unanimous act of all the stockholders of the North River Refin- ing Co. (People /'. North River Refining Co., 121 N. Y., 582.) The Sugar Refineries Co. was accordingly dissolved, and all of its properties were bought in fee by a new corporation, the 'American Sugar Refining Co., organized in New Jersey in 1891. This corpora- tion has since increased its capital stock and acquired shares in various other sugar-refining companies and, more recently, in Cuban sugar plantations. COPIES OF ARTICUES, CHARTERS, ETC. Appended to this summary is a copy of the trust deed of the Sugar Refineries Co. taken from the New York investigation and a copy of the articles of incorporation of the American Sugar Refining Co. taken from the report of the Industrial Commission. (Appendix I.) 10 Part II. PLANTS, CAPACITY, AND OUTPUT. PLANTS OKIGINALLY COMBINED. List of plants originally entering the Sugar Eefineries Co., with loca,tion and capitalization of each. (Eegarding significance of cap- italization, see under Part III.) (Statement of capitalization from New York Kept., 1897, p. 384.) Brooklyn and New York Harbor : Capital, Havemeyer & Elder Sugar Refining Co $500, 000 Dick & Meyer Co 200,000 De Castro & Donner Sugar Refining Co .3^0,000 Mollei- & Sierck Co 210,000 Oxnard Bros. Co 100,000 F. O. Matthicssen & Wlechers Sugar Refining Co 400,000 Brooklyn Sugar Refining Co 300,000 Havemeyer Sugar Refining Co 1,000,000 North River Sugar Refining Co Cleveland, OHio: Forest City Sugar Refining Co 300,000 Boston, Mass. : Boston Sugar Refining Co 6,50,000 Standard Sugar Refining Co 1,000,000 Bay State Sugar Refining Co 225,000 Continental Sugar Refining Co , St. Louis, Mo.: St. Louis Sugar Refining Co 7.55,000 New Orleans; La. : Louisiana Sugar Refining Co 450, 000 Planters' Sugar Refining Co 250. OOO These 17 plants included all the active refineries in the United States,, except 2 in Philadelphia. 1 (the Revere) in Boston, and 1 (the Western) in San Francisco. (Industrial Commission, Vol. I, p. 43, Testimony.) PLANTS SUBSEQUENTLY ACQUIRED. The American Sugar Refining Co. acquired at an early date $500,000 out of the $1,000,000 stock of the Western Sugar Refining Co., the remainder being controlled by Mr. Claus Spreckels. In 1899 Mr. Spreckels established a large pew refinery at Phila- delphia, and another was also built there. During 1890-91 the four re- fineries now in Philadelphia — Spreckels, Franklin, Knight, and Dela- ware — engaged in vigorous competition, refining about one-third of the national output of sugar. All four of these plants were bought by the American Sugar Refining Co. in March, 1892. About this time also a controlling interest was bought in the Baltimore Sugar Refin- ery Co., a newly established concern, apparently not yet in operation at the time of the purchase. In 1896 the American Sugar Refining Co. further added to its holdings of the stock of the Baltimore Co. In 1897 Mr. John E. Searles, secretary of the American Sugar Refining Co., testified before the New York joint committee that his company was contemplating the purchase of the United States Sugar 11 12 AMERICAN SUGAR REFINING COMPANY. Eefining Co.. whose plant v:as then in process of erection at Camden, N. J.; apparently this purchase was also carried through. (New York Kept., 1897, p. 357.) Regarding the rumored acquisition of interests in the American Beet Sugar Co. and in various other beet-sugar concerns, see section 9 l^elow. PLANTS ERECTED. The American Sugar Eefining Co. has erected no new refining plants itself, but has increased its capacity entirely by the purchase of competin8 wa-s only l.o per cent of the total production of refined sugar, and rose to 5.-1 per cent in 1902 and 10 per cent in 1903. There was also, howe\fr, up to 1901, a great absolute increase in the production of the so-called independent refineries of cane sugar, which rose from 256,394 tons in 1893 to 924,106 tons in 1902. The output of the com- bination in 1902 and 1903 was less in absolute amount than in 1894, though on the average there has been a slight tendency toward an increase in the absolute production of this company. As more fully shown below, the National Sugar Refining Co., whose production is from 12 to 15 per cent of the total, is apparently closely allied with the American Co. (2) ESTIMATE OF PRODUCING CAPACITY, BY JAMES II. POST. In his testimony before the Committee on Ways and Means re- garding reciprocity with Cuba in 1902 Mr. Post, president of the National Sugar Refining Co., gave an estimate of the capacity of the leading refineries, as follows: Capacity per day in barrels. American Sugar Refining Co 4 0, OOP Mollenhauer refinery 3, 000 New York refinery 4,000 Xationai refinery 3,000 Arbuckle refinery 4,000 McCalian refraery. of Philadelpliia 3,000 Xash-Spaulding refinery, of Boston (Revere) 1,000 Henderson refinery, of Xew Orleans 1,000 Oramercy refinery, of New Orleans 1,000 Hawaiian refinery, of San Francisco 1,500 Cnuningliani refinery, of Texas . 500 22. 000 AMEftieAN SUGAR EEFINt»S COMPANY. IT ilr. Post furthei- stated that the actual output of the Americam Sugar Refining Co. was about five-eightlis of the total production: of refined sugar. EEI.ATION OP AMERICAN SUGAR REFINING CO. TO OTHER REFINERIES. (Regarding history of competition, see Part V, sec. 5.) i There is much evidence to show that the American Sugar Refining •Co. either has a certain degree of control of some of the other refin- ?.:)0,000 in cash offered by Mr. Searles. (New York Trust Investigation, 1897, pp. 198-210.) AMieii the American Sugar Refining Co. absorbed the Spreckels, Franklin, and two other refineries, in 1892, it paid for them, together with a part ownership in the Baltimore refinery, the sum of $23,- 546,000 in its stock, half common and half preferred. It is stated that these comi):inies produced about one-third of the refined sugar output of the United States. Assuming that practically all the remaining two-thirds was produced by the American Sugar Refining Co., it would appear that the capital issued for these corporations was in about the same proportion to their producing capacity as that of the original trust. (Industrial Commission, Vol. I, testimony, p. 43.) (h) STATEMENT OF WITNESSES AS TO COST OF REFINERIES. The capacity of the American Sugar Refining Co.'s plants is esti- mated at about 40,000 barrels, or approximately 12,000,000 pounds, per day. (See Pt. II, p. 11.) The actual output of the company for the year 1903 was estimated at 2,958,464,000 pounds, or nearly 10,000,000 barrels. Assuming that the factories worked 300 days to the year, this would give roughly 33,000 barrels per day actually produced. (A barrel of sugar averages somewhat more than 300 pounds in weight.) As indicated in Part II, the company does not operate to its full capacity. We may assume that the new stock added to the capital of the American Sugar Refining Co. in 1901 is intended solely for invest- ments in raw-sugar production or in other outside properties. The remaining capital of the corporation, $73,936,000, is equal to $1,848,400 per thousand barrels of daily estimated capacity, or about $6 per pound of daily estimated capacity. Estimates by independent refiners as to the cost of constructing refineries differ considerably. These estimates must all be deemed very rough and possibly intentionally misleading. Mr. Doscher, AMEBICAX SUGAR EEFINING COMPANY. 25 who had recently completed the construction of the Xew York Sugar Eefining Co.'s plant, testified before the Industrial Commission in 1899 that a good refinery should cost about $2 per pound of daily capacity, exclusive of running capital. A refinery of 3,000 barrels daily capacity could probably be built for about $1,800,000, includ- ing land. Mr. Jarvie, of Arbuckle Bros., who had also recently com- pleted the construction of a refinery, estimated the cost of a 3,000- barrel plant at $2,000,000, exclusive of land. Mr. Post, of the Na- tional Sugar Refining Co., gave a somewhat lower estimate than Mr. Jarvie. All of these estimates related to the cost of the plant and equip- ment, aside from working capital. Mr. Post maintained that about $2,000,000 of running capital was necessary for a refinery of this capacity, although, owing to short credits, this capital could be turned over from four to six times yearly. This company, it should be noted, is apparently friendly to the American, and perhaps allied with it. (Ind. Com., Vol. I, p. 68.) It seems probable that a very large proportion of the working- capital required by the American Sugar Refining Co. is obtained by short loans, against which it has the credits due it from wholesale grocers, and that only a small part of its capitalization ,can be con- sidered as representing running capital. The balance sheet of the company for 1903 shows debts payable of $31,922,032, against which it has cash and debts receivable of $34,683,022. The value of sugar in stock was reported at only $12,338,661. ^ Mr. Havemeyer himself admitted that the capitalization of the American Sugar Eefining Co. was much in excess of the cost of con- struction and equipment. The cost of building refineries for an out- put of 45,000 barrels per day was estimated by him at from $30,000,000 to $35,000,000. The witness did not lay much stress on running capi- tal. He asserted, however, that capitalization ought properly to cover good will, and business reputation, and that the brand of " Havemeyer & Elder " would bring $35,000,000 alone. (Industrial Commission, Vol. I, p. Ill, of testimony.) It is not clear what is meant by this latter statement. Doubtless the Havemeyer & Elder plant was very efficient and could claim an earning capacity much greater in proportion to cost of plant than many of the other con- cerns. But the trade-mark as such can not be considered of much value. Most consumers of sugar know little of brands, and there is almost no difference in quality of granulated sugar. The grocers have no preferences, and the comments m trade papers show that the whole- sale grocers shift their purchases frequently from one refinery to an- other when prices are shaded by small fractions. The sugar industry can not be likened to one making a specialty, where advertising and special characteristics of goods create a demand for the wares of a particular maker as such. (C) COST AND CAPACITY OF OTHEB REFINERIES. An official advertisement for the sale of the bonds of the Pennsyl- vania Sugar Refining Co., of Philadelphia, in 1903 stated that the plant was practically completed, that it had cost more than $2,500,000 tor land, buildings, and machinery, and had a capacity of 4,000 26 AMERICAN SUGAB REFINING COMPANY. barrels daily. At this rate the 40,000 barrels and capacity of the .Vmerican Sugar Eefining Co. would cost $25,000,000. The circular stated further that the company would issue $3,000,000 of bonds, $500,000 being intended for working capital. The stock of the Penn- sylvania Co. is $5,000,000, but it may fairly be inferred from the circular that it represents no cash investment. (Com. and Fin. Chron., ]\Iay 16, 1903; see Appendix 5.) The Xational Sugar Eefining Co., since its consolidation in 1900, has been overcapitalized in fully as great proportion as the American Co. Its capitalization is $20,000,000, half preferred and half com- mon, and its annual production is between one-fourth and one-fifth of that of the American Co. Part IV. FINANCIAL EEPOETS. (See also newspaper extracts regarding annual meetings in Appendix 3.) The American Sugar Eefining Co. makes no financial reports to its stockholders. In accordance with the law of Massachusetts, in which State it has an establishment transacting business, the com- pany submits an annual balance sheet, a copy of which for the last six years is as follows: 1898 1890 1900 1901 1902 1903 1904 Assets: Real estate, etc... Cash and debts receivable Sugar, raw and $37,285,545 27,563,966 22,243,224 31,068,142 836,412,652 16,306,696 20,340,609 30,423,680 336,891,221 16,737,388 22,488,799 35,054,171 $34,328,664 36,862,702 12, 248, 640 39,111,883 $34,669,191 30,046,750 16,842,924 46,270,776 135,180,057 34, 683j 022 12,338,661 51,986,127 $36,061,343.17 38,320,032.86 24,936,523.17 54,212,196.09 Investments in other companies Total 118,150,877 102, 483, 637 110, 171, 679 122,561,888 125,829,641 134,187,868 162,520,095 29 Liabilities: Capital 73,936,000 32,987,200 11,227,677 73,936,000 21,152,323 7,396,214 73, 936, 000 27, 443, 372 8,792,207 88,280,370 24,364,027 9, 907, 491 90,000,000 24,958,821 10,871,320 90,000,000 31,922,032 12,265,836 90, 000, 000. 00 Debts Reserve 48,734,384.03 13,785,711.26 Total 118.160,877 102,483,537 110,171,579 122,661,888 125,829,641 134,187,868 162, 520, 096. 29 Comparatively little information of significance can be drawn from this condensed* balance sheet in the absence of further knowl- edge regarding the conditions of the business and the changes in the plants and properties during recent years. The investment in plants is represented by the item " Real estate, etc.," together with part of the item of " Investments in other com- panies." The former item is smaller by more than $2,000,000 in 1903 than it was in 1898. This quite probably indicates that the company has adopted the policy of writing off a part of its investment from time to time on account of depreciation. This has been done, however, by reducing the surplus and not by reducing the capital stock of the company. On the other hand, investments in other companies have greatly increased since 1899. It has been elsewhere suggested (p. 21) that this increase may represent purchases of stock in competing sugar companies, and particularly in beet-sugar concerns. With the excep- tion of the purchase of the Woolson Spice Co. in 1899, the American Sugar Refining Co. has not made public any of its acquisitions in the stocks -of other companies. Part of the large item of investments in other companies represents the Philadelphia and Baltimore refin- eries acquired in 1892. The increase in the amount of investments since 1900 has been slightly greater than the increase in the amount 27 28 AMERICAN SUGAR REFINING COMPANY. of capital stock. The considerable increase in investments during the year 1900 preceded the issue of stock and was apparently made by adding to the floating debt. A conspicuous reduction in the amount of cash and debts receivable appeared in the balance sheet of 1899, as compared with that of 1898. This decrease in assets was accompanied by a corresponding decrease in the amount of debts payable. On the other hand, the amount of cash and debts receivable rose enormously in 1901. Probably the new stock which appears on the liabilities side had been sold for cash or notes and the proceeds had been only partly invested. More- over, there was at this time a very great decrease in the value of sugar held in stock. This decrease in the amount of running capital tied up in sugar released a corresponding sum, serving in part to reduce the debts of the company and in part to increase its cash on hand. It is possible, also, that some change in the business policy of the com- pany enabled it to throw a larger part of the burden of carrying the supply of sugar upon the wholesale dealers, which would tend to increase the amount of debts receivable while decreasing the value of sugar in stock. The balance sheet of 1903 also shows a large amount of cash and debts receivable and a much smaller amount for sugar in stock than Avas the case several years ago. This would seem to indicate that the Sugar Co. requires less running capital than formerly. At the same time it should be noted that the item of debts payable is much larger in 1903 than in 1901. The profits of the American Sugar Refining Co. during the last few years have somewhat exceeded its dividends. As elsewhere indi- cated, the dividends, which were 12 per cent up to and including 1899, have since been only 7 per cent on common stock. The reserve of the company has increased from $7,395,214 in 1899 to $12,265,836 in 1903, indicating profits of about $1,000,000 a year in excess of dividends. The sharp decrease in the reserve at the close of 1899, as compared with 1898, was probably due to the payment of dividends out of reserve during a time when the profits had been nearly wiped out by severe competition. Part V. PRICES AND COST OF PRODUCTION. PRICE TABLES. (O) INTRODUCTION — BASIS OF QUOTATIONS. The quotations for raw and refined sugar are for the most part open and definite, so that the statistics of prices can be secured with reasonable accuracy. Willett & Gray's Sugar Trade Journal gives each week the prices of various grades, both of raw and refined sugar, together with the discounts and the net cash price for the New York market. It also gives quotations for New Orleans and San Francisco. The New York price is the basis for the Eastern States, the price being the same at Boston and Philadelphia, an,d the product being shipped ordinarily from the plant showing the lowest freight rate. The freight rates from the refineries to the various localities throughout the country are published in what is known as the Equality Rate Book. Occasionally price discrimina- tions, either open or secret, are made between different markets, but this appears to be exceptional (see below). On a declining market the refiners doubtless maintain prices to avoid loss to the grocers. (American Sugar Industry and' Beet- Sugar Gazette, Mar. 20, 1905, p. 126.) The sugar refiners sell sugar almost always in large quantities to wholesale dealers, and the prices given below are the refiners' prices to such dealers. Brokers also intervene between refiners and whole- salers; they receive a commission. The significant figure is the margin between raw and refined sugar. Raw sugars differ greatly in their quality and polarization, the base price being usuallj^ fixed for either 89° Muscovado or 96° centrifugal sugar. This price is applied by certain calculations to sugar having other degrees of polarization. The reports of the Treasury Department show that much the larger proportion of raw sugar imported is from 93° to 96°; thus for 1902, out of a total import of 3,114,414,431 pounds of sugar entered below No. 16 Dutch standard, 1,217,248,680 pounds of cane sugar was 96° and 786,608,841 pounds 95°, while 340,211,603 pounds of beet sugar tested 94°. These three classes of sugar include about three-fourths of all of the raw sugar imported. Most of the rest is cane sugar testing either 83°, 86°, or 88°. . , . . The base price for raw sugar used in the following calculations is 96° rather than 89° Muscavados, which is the other standard base price quoted in trade journals. The price of refined sugar is that of standard granulated in barrels, less discounts and rebates. The methods of quoting sugars have varied at different times, different rebates and different discounts being made. 30 AMERICAN SUGAE BEFIKING COMPANY. (6) DESOEIPTION OF TABLES. Table 1 and diagram A^ show the average annual prices of raw and refined sugar from 1880 to date, together with the average differ- ence between them. The averages have been computed by Willett & Gray, the method being apparently to average the highest and lowest prices in each month, add these together, and divide by 1-2. Diagram B ^ shows this same difference between raw and refined sugar on a larger scale. Appended elsewhere (Appendix 8) are two tables showing the monthly prices and margins. One of these is taken from the report of the Industrial Commission, based on com- pilations of Willett & Gray. It is the base for the diagram pub- lished by the Industrial Commission. It is unsatisfactory for the earlier years, because the discounts are not deducted. The other set of monthly tables runs back to 1887, and is made the basis of diagram C.' .uiven herewith. This is based on net prices, and is obtained by averaging the highest with the lowest quotation each month. Tabic 2 and diagram D ^ herewith given show the average annual margin between raw and refined sugar after deducting a uniform per- centage from the price of raw sugar to represent the loss in refining. The object of these calculations and the significance of the results are discussed later. Taiile I. — Aierugc annual price of ran: and reflncil sugar at Ncin York and ditfcrcnecs between them. [Cents per pound.] Years. Raw sugar, 96° centrif- ugal. Granu- lated. Difierence. 1S79 . . . 7.423 8.206 8.261 7.797 7.423 5.857 5.729 5.336 5.245 6.749 6.433 5.451 3.863 3.311 3.689 3.235 3.258 3.631 3.563 4.149 4.418 4.566 4.047 3.542 3.720 3.974 4.278 3.690 8.785 9.002 9.667 9.234 8.606 6.780 6.441 6.117 6.013 7.007 7.640 6.171 4.691 4.346 4.842 4.119 4.140 4.539 4.481 4.976 4.921 5.320 6.06 4 465 4.638 4.772 6.266 4.514 1 362 1.396 1881 . 1.416 1882 1.437 18.S3 1.083 823 1884 1885 712 ISSfi .781 IMS" . . . 768 1.258 1.207 .720 1S,S') 1890 1891 828 1892 1 036 1893 1894 .884 .882 .908 028 1895 1896 1897 1898 827 1899 503 1900 .784 1.003 .913 .018 .798 .ass .824 1901 1902 1903 1904 1905 1906 EFFECTS OF COMBINATION ON PRICES AS SHOWN BY TABLES AXD DIAGRAM.S. (a) TABLE 1 AND DIAGRAMS' A AND B — ANNUAL AVERAGE. From Table 1 and diagram A.^ it will be seen that the price of refined sugar has fallen more than half since 1880. It averaged 9.602 ' Not printed. AMEEICAN" SUGAE KEFINING COMPANY. 31 cents in that year and only 4.455 in 1902 and 4.638 in 1903. This fall in price, however, is not in a material degree attributable to a change in the charge for sugar refining, but almost wholly due to the decline in the price of raw sugar due to causes not pertaining to the present in.vestigation. Some of the changes in the price of raw sugar have been caused by the modification of the tariff duty. Thus there was a reduction of 2 cents per pound in the duty on April 1, 1891, raw sugar being made free, while a duty of 40 per cent was put on raw sugar by the Wilson Tariff Act of 1894, and this rate was virtually somewhat increased by the specific duty of 1.68^ cents imposed by the Dingley tariff in 1897. The significant figure is the margin between the raw and the refined sugar, which is shown on a larger scale in diagram B.^ This margin represents three things : The cost of refining, the waste of raw sugar, and the profit on the investment. This margin is so low, never ex- ceeding 1.5 cents per pound, that a very slight fluctuation in the price of refined sugar may mean a very sharp fluctuation, if calculated on a percentage basis in the margin. Since ordinarily more than half of the margin between the raw and refined sugar (as shown more fully below) represents cost, which fluctuates comparatively little, the profit of the refiner varies markedly from month to month and year to year. The margin shows extremely sharp fluctuations, largely due to differences in the degree of competition existing at different times. The maximum is 1.437 cents per pound in 1883, but in 1888 a point nearly as high was reached — 1.258. The lowest margin is for 1899, barely half a cent per pound, which is perhaps below the actual cost of refining and waste of raw sugar. The trust was formed in October, 1887. The margin since that time has usually been somewhat lower than during the years 1880 to 1883, under competition, but somewhat higher than during the years 1884 to 1887, when the competition was especially sharp. On the whole, there is a tendency for the margin to rule somewhat lower dur- ing the past 10 years than it did during the first 2 years when the trust was in operation. The average of the annual margins for the nine years 1879 to 1887, under competition, was 1.098 cents per pound. The average margin for the years 1888 to 1902, since the formation of the trust, is 0.920 cent, or about one-sixth lower. It is doubtless true that this reduction in the margin has been partly due to improvements m methods of manufacture, and especially to the concentration ]n refin- ing business in very large plants at the most favorable locations. None of the comparisons of prices and margins for groups of years would be affected by the inclusion of figures for 1903, which aver- aged nearly the same as the average for 1888-1902. The margin m 1903 was 0.918 cent. . , , c, -r, ^ ■ r. u If the prices since the formation of the Sugar Kehneries Co. be compared with those for the four years immediately preceding (1884- 1887) when the margin averaged 0.79G cent, a very considerable advance is shown for the latter period. It is argued that the compe- tition in these four years was so severe as virtually to wipe out profits, and it is even a;-prrted that, in the absence of combination, prices would necessarily later have ruled higher than during these four years since some of the refiners would have been driven into bank- ruptcy and out of business. It is asserted that 18 out of 40 refineries 32 AMERICAN SUGAR REFINING COMPANY. had already failed during these years of sharp competition. The validity of this argument can not at this time be readily ascertained. I See Industrial Commission, Vol. I, pp. 45. 59.) ,, -, , The average margin for the years 1888 to 1902 is greatly reduced bv the low figures for the four years, 1890, 1891, 1899, and 1900, when sharp competition arose against the American Sugar Ketimng Co If the prices for these 1 years be omitted, the average for the remaining 11 years, ^ince the formation of the combination, is ■ilmost TKactlv 1 cent per pound as compared with 1.098 cents for the years preceding the formation of the trust and 0. 1 96 cent for the 4 vears last preceding that event. In every year since the year 1888, except the four years mentioned, the margin has exceeded the aver- age for the years 1884 to 1887. (h) TABLE 2, DIAGRAM D.'— MARGIN LESS WASTE. The calculations given below under the heading " Cost of refining" *ow that a very considerable element in cost is the loss of weight during the process of refining. While this loss of weight varies according to the grade of sugar used and the efficiency of the refinery, it is at present approximately equal to 5 per cent of the raw sugar. This percentage of waste is constantly being reduced by improve- ments in methods. Because of the impossibility of estimating the effects of these improvements, the table and diagram have been pre- pared on the assumption that the waste has been a uniform per- centage of the quantity of raw sugar each year since 1879 — 5 per cent. It is evident that when the price of raw sugar is high the monetary value of this waste will be larger than when the price is low, so that, assuming that the cost of the mechanical process of refining remains the same, the margin may be expected to be higher. The price of raw sugar during the years preceding the formation of the trust averaged very much higher than during most of the years since, so that a higher margin was necessary to secure a profit during the earlier years than at present. If, therefore, we take 5 per cent of the average annual price of raw sugar and deduct it from the margin between raw and refined, we shall obtain a figure representing more accurately the mechanical cost of refining, phis profit of the refiners. Tahi.e 2. — Arcrdi/r (iiiniml difftrciicc h'lwcin raw and refined sugar at 'New 1 or/,-, after (IcOiicling from margin 5 per cent of raw sugar price for waste. [Cents per pound.] Years. Difference. Years. Difference. 1879 0.991 .986 1.004 1.047 .712 .630 .426 .614 .506 .971 .885 .448 .636 .870 1893 0.969 1880 1894 .722 1881 1895 .719 1SS2 1896 .727 1883 1897. .760 1884 1898 .620 1885 1899 1900 1901 .282 1886 .526 1887 .801 1888 1902 .736 1889 1903 .732 1890 1904 .599 1891 1905 .774 1892 ,1906 .640 " Not printed. AMERICAN SXJGAB REFINING COMPANY. 33 Two typical years may be taken to illustrate the significance of this calculation. In 1880 the average price of raw sugar was 8.208 cents and the margin between it and granulated sugar 1.396 cents. If, however, one-twentieth of the raw sugar was lost in refining the value of this waste would be 0.410 cents per- pound of raw sugar handled. This represents between one- fourth and one-third of the margin, and the net margin after deducting the waste becomes only 0.986 cent. On the other hand, in 1902 the average price of raw sugar was only 3.542 cents and the margin 0.913 cent. The waste of 5 per cent in this case would amount to only 0.177 cent, or less than one-half the value of the waste in 1880. The waste in 1902 is less than one-fifth of the margin for that year, and the net margin becomes 0.736 cent. (Net margin, 1903, 0.732 cent.) While the gross margin for 1880 is 0.483 cent more than the gross margin for 1900, the net margin in the earlier year is only 0.250 cent more than the net margin for 1902. Applying this calculation throughout the years covered by the statistics, the results appear much less favorable to the Sugar Trust than those shown by the gross margin. The average yearly margin for the nine years preceding the formation of the combination is 0.757 cent, and for the four years immediately preceding the* forma- tion of the trust only 0.519 cent. For the 15 years under the regime of the combination, the average margin has been 0.711 cent, or about 6 per cent lower than for the 9 years 1879 to 1887, and more than 37 per cent higher than for the 4 years 1884 to 1887. If we omit the 4 years 1890, 1891. 1899, and 1900, when the mar- gins were reduced by sharp competition against the American Sugar Refining Co., we find the net average margin for the remaining 11 years since 1887 to be 0.797 cent, or more than 5 per cent higher than for the period of 9 years preceding the formation of the com- bination. There is no question that the actual percentage of waste was materially higher in the earlier 5'ears, so that the increased profit of the refining business under combination is presumably greater than appears from the figures just given. By way of illustration, if it be assumed that the waste in 1880 was 6 per cent (as compared with 5 per cent in 1902) the net margin for the earlier year would be reduced from 0.986 cent to 0.904 cent. (See below under " Cost of refining," p. 44.) STATEMENTS OF WITNESSES REGARDING EFFECTS ON PRICES. 1 The statements of witnesses before the Industrial Commission re- garding the effect of the cbmbination on prices are less significant than the evidence of the figures above given. They are mostly broad and indefinite. Mr. Post, president of the National Sugar Refining Co., nominally a competitor of the American Co., testified before the Industrial Commission that in his judgment the combination had reduced the price, but that it had done so through its economies and because of the fear of competition — not through generosity. Mr. Havemeyer, president of the American Sugar Refining Co., distinctly stated that it was the policy of the trust to " get out of the consumer all you " can," and that prices would be kept as high as possible without pro- voking additional competition. In his judgment, however, the fear 98244—11 3 34 AMERICAN SUGAR EEFIKING COMPANY. of competition, together with the economies made possible by the combination, has kept the price lower than it would have been had the trust not been formed. (Industrial Commission, Vol. I, Digest, p. 63.) MONTHLY FLUCTUATIONS IN PRICES. A table appended ^ and Diagram C ' shows the monthly fluctuations of the prices of raw and refined sugar and of the margin between them. These fluctuations, especially those in the margin, are often very sharp. The price of refined sugar is somewhat more stable than that, of raw. The margin therefore presents greater fluctuations than refined. The monthlv fluctuations in price of refined sugar are due prob- iiblv in jjiirt to the variation in stocks of raw and refined sugar on haiid. A refiner may cut the price of refined sugar and reduce the margin below tlie normal in order to get rid of his stock when he anticipates that the price of raw sugar will fall still further. Aside from the fluctuations due to the entrance of new competitors into the field described below, the figures and diagram show almost uniformly an increase in the price of refined sugar and in the margin during the summer months. The following table, based on the average monthly quotations for the 10 years 1893-1902,' shows the general nature of these monthly movements : January. . February March Apnl May June Cents per pound. 0. S108 . 7(.i;7 . sags . Sil?2 .8732 .8759 July August September October... NoA'emher December. Cents per pound. 0. 99S5 1.0M8 .9831 . 8285 .7837 .7733 This advance of price in summer is due largely to the increased demand for sugar at that time in connection with the canning of fruit. For some yeais the production at the four northern refining centers during the two or three months of summer is fully 50 per cent greater than during the winter months. ^Mien raw sugar is in demand the jjrice of centrifugal sugar is ■ frequently based upon 95° test, and at such times 89° sugar brings iilmost tlie value of the pure sugar it contains on the 95° base. On the contrary, when sugar is weak, the 96° test base is firmly adhered to, and 89° seconds (molasses sugar) bring much less than their pure sugar value on this base and are often a drug on the market. Average weight of 1 barrel of sugar, 350 pounds. (Jlr. Post, presi- dent National i^igar Refining Co., Cuban reciprocitv. hearings, 57th Cong.. 1st sess.. Senate, p. 343.) Experience of G. L. Spencer: One barrel soft white sugar, about 333 pounds. ]Mr. TIavemeyer further attributes the regular reduction of the margin between raw and refined sugar in the winter months to the competition of Louisiana sugars, which are mostly marketed from November to February. (See above under Pt. II, sec. 9.) It appears 'Appendix 8. ' Not printed. AMERICAN SUGAR EEFINING COMPANY. 35 from a previous discussion, however, that only a small part of the Louisiana sugar is refined on the plantation or sold to consumers in the unrefined state. Most of it is bought and refined, either by. the large plant of the American Sugar Refining Co. at New Orleans or by the Henderson and Gramecy refineries there. Representatives of the Louisiana plantations assert that, so far from suffering because of this competition of, Louisiana sugar, the American Sugar Refining Co. profits by its purchase of the raw crop of that State. They assert that there is virtually no competition between the refineries of New Orleans in buying raw sugar, and that the price of raw, during the months when the great bulk of it is marketed, is fixed at from three-sixteenths to one fourth cent less than the same sugar would bring in New York. This difference about covers the freight charges to New York. They assert, also, that the price of refined sugar in New Orleans and the territory supplied from that city is kept practically as high as the New York price, so that the margin of profit is greater on the New Orleans out- put than on the New York output of the combination. (Report on Reciprocity with Cuba, 1902, pp. 263, 264, 289, 299.) This contention of the planters appears to be fairly well borne out by the price quotations. Taking the weekly quotations of raw aiid refined sugar, respectively, at New York and New Orleans for the four months of November, 1901, to February, 1902, inclusive, as given by Willett & Gray, we have the following result : Eaw sugar, average price : Cents. New York 3.66 New Orleans 3-48 Eeflned sugar, average price: New York 4.56 New Orleans 4.52 These figures do not show as great a difference between the New York and New Orleans prices of raw sugar as claimed by the plant- ers, but the difference amounts' to 0.18 cent, while the refined price in New Orleans ranges only about one-twentieth of a cent less than in New York. A comparison of the figures for 1900-1901 and for 1902-3 shows very similar results to those for 1901-2. COMPETITION IN RELATION TO PRICE. Several of the most conspicuous movements in the annual aver- age margin shown under the above tables and diagrams are due to • the introduction or cessation of sharp competition. The suddenness of the changes dependent on thi'^ cause is still better shown in the table and diagram of monthly fluctuations in the margin. (Table appended;! Diagram C;' ante.) ^ r^ ■ ^ ■ Immediately after the formation of the Sugar Refineries Co. in 1887 it increased the margin very greatly, from 0.T19 cent in Septem- ber 1887, to 1.219 cents in January, 1888. In July, 1888, the maxi- mum of 1.594 cents was reached. The average margin for 1888 was 1.258 cents, and for 1889, 1.207, while the net margin, after deducting the waste of raw sugar, was nearly twice as great during these two years as during the three years preceding the period. ^Appendix 8. ^ Not printed. 36 AMERICAN SUG-iE EEFINING COMPANY. COMPKTITION IN 1890-91. The few independent refineries remaining outside of the trust had simply followed its prices during 1888-89. Very soon after the formation of the trust, hoAvever, the prospect of profit, either from selling their sugar at ' a higher margin or from selhng out their plants to the combination, led to the construction of huge refineries at Philadelphia. The Spreckels refinery, especially, was of enormous capacity. It began operation toAvard the close of 1889. Mr. Have- meyer savs, " We either had to fight or make no dividend." (Indus- trial, Commission, Vol. I, Testimony, p. 108.) Price cutting there- fore began immediately, and the margin dropped from 1.625 cents in September, 1889. to O.Gf^l cent in December. The average margm during the entire Year 1890 was only 0.720 as against 1.258 in 1888. The n^t margin, deducting 5 per cent for waste, was rather less than half as great duriuir this year of competition as during the monopoly of 1888—0.448 as against 0.971. The lowest point was reached in February, 1902, when the gross margin was 0.495, or considerably less than the cost of refining. Early in ilarch. 1892. the American Sugar Refining Co. com- pleted its negotiations for buying all four of the existing Philadel- phia refinei-ies. The effect on prices was immediate. The margin rone to 1.10.") in April " to the u^ual margin which we had laid out as necessary for the benefit of the stockholders and the proper con- duct of the business," according to Mr. Havemeyer. (Industrial Commission, Vol. I, Testimony, p. 108.) FREEDOM FHOM COlirETITION. l.S;);i-l SOS. Several minor new refineries entered into the field about this time — the ^follenhauer, Xew York, in 1890; McCahan, Philadelphia, and the National, New York, in 1892. The capacity of each of these was about 3,000 barrels ; their aggregate capacity somewhat less than one-fourth that of the combination. These refineries, however, appear to have followed closely the lead of the trust and not to have competed actively in prices. (See testimony of Mr. Post, Industrial Commission, Vol. I, Testimonj', p. 149.) The slightly lower level in the price of refined sugar and in the margin from 1894 to 1897 was probably due rather to the general depression of business than to the effect of existing or potential com- petition. The profit from the business was high enough during all these years to permit the paying of dividends by the American Sugar Refining Co. It may be indicated that the net margin after deducting waste was practically the same in 1893 as in 1888. COMPETITION OF 1899-1900. !Mr. Doscher, former owner of the Brooklyn refinery, which en- tered the trust in 1887, completed the construction of a new plant, the New ^ ork Sugar Refining Co., capacity 4,000 barrels, in the latter part of 1898. The great cofi'ee-roasting firm of Arbuckle Bros, began the practice a considerable num^ber of years ago of putting up granu- lated sugar in paper packages by the same process as was employed for the packing of coffee. In 1896 the MoUenhauer refinery, accord- AMEEICAN SUGAR REFINING COMPANY. 37 ing to the testimony of Mr. Havemeyer, offered to pay more for the empty sugar barrels used by Arbuckle Bros, than the American Sugar Refining Co., and Arbuckle Bros, accordingly threw their trade to the smaller establishment. Soon after they began the construction of a new refinery, which was opened for operation in September, 1898. (New York Trust Investigation, 1897, p. 117 ; Industrial Com- mission, Vol. I., pp. 63, 64.) These " new interlopers " — to use the phrase of Mr. Havemeyer — threatened to' cut largely into the product of the American Sugar Refining Co., and it concluded to fight, in Mr. Havemeyer's termi- nology. The margin, which had been 0.802 in August, 1898, fell to 0.535 in September, and in April, 1899, reached the record minimum of 0.337, or much below the cost of refining. The average margin for the year 1899 was 0.503, or considerably less than in any preceding year. This " sugar war " did not end in the final absorption of the re- fineries, as had been the case in 1892. It appears from evidence of various sorts, however, that some understanding was reached among the refiners during 1900, and that they have worked more or less in harmony since that time. As elsewhere indicated (see p. 15), there is considerable reason for believing that some community of interests exists between the National Sugar Refining Co., which was organized in 1900 as a combination of the National, MoUenhauer, and New York refineries, and the American Sugar Refining Co. It is certain that the margin between raw and refined sugar rose rapidly in 1900. It was 0.487 cent in April and 1.017 cents in August. During most of the time since the margin has remained much higher than during the period of active competition. Willett & Gray, in their Sugar Trade Journal, made a definite reference to reports of an understanding among the refiners toward the close of 1900. Reference to active competition among refineries is much less common during the past three yeais than during 1889 and the first part of 1900. In the fall of 1903, however, the usual cutting of prices to meet beet-sugar competition seems to have been supple- mented by cuts on the part of Arbuckle Bros., designed to secure a larger share of the business. The margin between raw and refined sugar fell to about 0.65 cent in October and November, as compared with 1.10 cents in July. The Journal of Commerce has gone so far as to claim that all efforts to maintain prices have failed and that the combination is no longer effective as a monopoly. Since, how- ever, practically as great a cutting of prices took place in 1902, and was then attributed to the competition of beet sugar. It is by no means certain that active competition among cane-sugar refiners has been permanently reestablished. (See extracts from trade journals in Appendix 9.) COMPETITION OF BEET SUGAR. Already in the fall of 1901 the American and other eastern refiners had cut prices severely in the Missouri Valley against the competition of beet sugar. (See below, under competitive methods, digest of evidence on subject in Appendix 10.) For the first time, in the fall of 1902 California beet sugar was shipped both overland and by sea to the New York market. It was estimated about November 1 38 AMERICAN SUGAE. REFINING COMPANY. that 7,000 tons would be sent to New York. Before any of this sugar had actually arrived the eastern refiners began to cut prices. The price of refined was reduced 10 cents per hundred pounds on November 5, and 10 cents more three days later. The reductions in the margin as the result of this movement were marked ; it fell from 1.022 in August to 0.605 in November. Willett & Gray predicted that " a determined effort will undoubtedly be made to put an end to such an innovation." This beet sugar, however, was not imme- diately put on sale after its arrival, and the price of refined sugar was restored somewhat. The beet sugar was disposed of in small quantities from time to time. As just indicated, the cutting of prices in the fall of 1903 was also attributed in some measure to the competition of beet sugar. It has been stated in the Sugar Trade Journal that special reductions made by Arbuckle Bros, in Ohio and West Virginia during the fall of 1903 were designed to meet the competition of Michigan beet sugar. It is possible that the increasing interests of the American Sugar Eefining Co. in the production of beet sugar may lessen the effective- ness of this competition in the future. C03IPETITIVE METHODS, (a) GENERAL CUTTING OF PRICES. The tables and diagram, together with the discussion thereof, in section 5 show clearly l;hat it is the policy of the American Sugar Re- fining Co. to cut prices to the level which leaAos little or no profit whenever active comjK-tition on a large scale arises. Since tlie trust is presumably able to produce even more cheajily than its competitorsy and since it has a larL':e snrplus accumulated, it is able to stand the price cutting better than its competitors are likely to do. The president of the American Sup'ur Eefining Co. has distinctly stated that the above is the actual policy of the American Sugar Refining Co. or course, it .irocs witlidiit sayins, that if we protect our own meltings it can only lie done nniler a condition of tliin,;;s t^at malces it nii|irofita)3le for our com- petitors, tl]i> real motive being the protection of onr own business and the result being an absence of profit to thcui. Elsewhere Mr. Havemeyer denied that it was the policy of the com- bination to crush out all competition, but reiterated tliat it was its policy to maintain and protect its trade — and If it resulted in crushini; a competitor it is no concern of the American Co.; if he gets in the jiress, that is his affair, not ours. Further testimony of ^Mr. Havemever is as follows (Industrial Commission. Vol. I, pp. 108, 120) : METHOD OF THE COMPETITION. Q. Xow, as regards the cut in sugar, did the cut come in the first place from the .Vmerican Sugar defining Co. or from the opposition? — A. I am not sure. Q. I inferred from your expression a moment or two ago — " these interlopers came in "—that it was perhaps a part of your policy to see to it that they did not stay in the business too long ; something in the same way that you dealt with the Spreckles's opposition in Philadelphia. — A. It was part of our policy and principles. We did not think they could have any advantage to profit over us, and we let them take the results, whatever they may be. AMERICAN SUGAR REFINING COMPANY. 39 Q. Your policy was, substantially, to put the price down so they would not find it profitable to remain in the business? — ^A. And to secure the continuation of the output of the American Sugar Refinery, which is very vital to it. Q. If the opposition refiners were to remain in the business they would lessen the percentage to your stockholders, you say? — A. If they remained in the business and sold the product — two different things again. Every sale by them displaces so much of the American Co.'s product, and this is what we have to look out for — that they do not. Q. If you can make it unprofitable to them they will stop their sales, and in the long run the expectation is that the profit will be larger to your stock- holders? — A. That would be the natural inference. Of course, it goes without saying, if we protect our own meltings it can only be done under a condition of things that makes it unprofitable for our competitors, the real motive being the protection of our own business and the result being an absence of profit to them. Mr. Searles, secretary and treasurer of the American Sugar Re- fining Co., testified, in 1897, tliat it was the policy of the company to buy out competing plants whenever practicable. Although the com- pany had closed a considerable number of refineries which orig- inally entered the combination, it had bought four refineries in Philadelphia, one in Baltimore, and one in Camden, N. J. The company had built no new plants since it began operations, but every plant acquired had been that of a competitor. In reply to the question : How is it that we do not find you building factories, but always buying com- peting concerns? Mr. Searles said: We deem that the better brsincfs of the two. Q. Incidental, then, to the mtiin object of the puichcse is to get rid of the competition of these factories which are nin by others? — A. Of course that is simply incidental ; it would be incidental undoubtedly. The witness asserted, however, that the combination had increased its capacity in some measure by improvements to existing plants. (New York Trust Investigation. 1897. pp. 355-365.) (b) special cutting or prices in local makkets. On account of the policy of selling sugar through large wholesale houses instead of directly to retail dealers, it is scarcely possible to make local cuts in prices from town to town or State to State. It is practicable, however, to make a special reduction in price in an en- tire section of the country. So far as at present ascertained, the anly cases in which it has been shown that the American Sugar Eefining Co. has adopted this policy are those which relate to com- petition with beet sugar. The chief center of beet-sugar production is California, Utah, and Colorado. In these States the price of sugar in recent years has been, most of the time, much lower, par- ticularly in California, than it has in the East. This is more readily gossible. because sugar sold in this section is mostly refined from [awaiian raw sugar, which enters the country without duty. It is stated that beet-sugar producers in California in the fall of 1902 refrained very largely from disposing of their product in that State on account of the existing low price, oeing able to get a larger price by shipping it East. (Discussion of this subject above, under 5.) In the fall of 1901 the American Sugar Refining Co. made a vig- orous attack upon the beet-sugar interests by special local cuts in 40 AMKHU-VN srr.Alt UKKli^lNll I'OMl'.VNV. prices at ami west of tlii> Missouri Kivcr in tiio Icrritory closi-sl to bcrt-siiiiiii- i)ro(liU'tion. Mr. Aili'ii, sciTotarv of liu> .\iiu>rii'aii Hwt Su.v snecial price iiuliicenieuts, toniake its sii<;ars 75 ])er cent oi' I lieir annual sai(>s. ( )n ( )clolier;! tlu> combination rednccil flie price of griUiiilated sui;ar at points aloii^' tlic Missouri River to ;\\ cents ])ei' pound, a cut ol' more llian U cents. The jn-ice ol' granulated at New \ ovk at the same lime was 4.S."i cents. "Willett & (iray, pnblisliers of the Su^ar 'I'rade Journal, de- fended the policy of the Amei'ican Su^'ar Kelining ("o., asserting that the " relined-sugar interests of the coutifry feel compelled to protect their interests to such an exti'ut that the domestic lieet-sugar iiidiis- tiT nuiy not make any hngir pi'olits on the making of reliiuvl than would come to them from the manufacture and sale of raw sugar.'' They argued that, aftei' the Knropean custom, the heel-sMgar pro- ducers shoidd conline themseh-es to making of raw sngai'. Shortly after October 10 it was announced in the Hugar 'I'rade .lourind that Missouri Ki\er ])rices foi- granulated sugar had l)een adxanced to I (HMits, and that the amount sold at the lower price id' ',\\ cents hiu bt^en restricted by the combinatioii. In November, apparently, prices wci'c rcsloi'ed to their normal level in the Missouii N'alley. tSi^e fuller digest of eviih-uce regai'ding lliis special cut in .Vppendix 10.) F.urroit svs'ruM. Much stress has be(M: laijl in the various ollieial investigations oil the factor system adopted for the sal(> n{ sugars. It has been siip- j)osed thaf in some way this system tended to strengllien the coiiti'd! (/f the American Sugar Uelining Cn. o\'er the market. From the statements of tlui representatives, not only of this company, but. of competing rcliners, as well as from the terms of the factor agree- nu'iils wliich ha\'(> been used, it appears that the system was intended ])rimiu'ily for the proti'clion of the wholesale dealers in their prolit, and thair it could ha\'e had little, if an\', ell'ect in st rengliieiiing the position of the American Siigai' h'elining (^o. The eompetibn's of the conibinalion ha\<' adopted the same nielhod. 'I'he following is a copy of the circulars used at one lime by the American Sugar Keliiiine- ('o. in proposing to the wholesiili' dealers the terms of tjie factor s\'slein : xkw ^|]HK, , isi) . IHAti Sot: We Inclnsc licrewllli linnli-e nl' cicii (JiUc, riniii wlileli ynii are eiilllled hi cmi- usniil (IcdiielloiiH (if 1 pci' criil Irnilc iMhi'duiiI on Inn lnuTei l(itS niid J |jrr cciil fcir ciihIi If paid wllljlii sevea days. Slioald .von mi drsii-c, \m' shnll lie iileiis<.d, iiii'iui r'ei-ei|i| (if wllldn wrillrii re- <|ii<'»l. Ill I slilele .\ line ef nuv aKCMlH, 111 wllleli cnse snynr will I ea- signed Id .\(iii I'm siile iiH ear rnchir, iipDii INe relloulni,' Icnim, llie lllle In re- am In 111 UN, siilijecl hi yiiiu' ;id\iini es iind rel ai'a hi \ if yniir nei-i>ssMry oallay : I. Villi lire lo ndviiiii'" In lis wllldn .'10 diiys tile ii mi nf I lie linulre, wllleli will lie iiiiiiN' lip III (iiir dally tpiiiliil lens. Ichh 1 per eeiil Inidi- (llseiiiinl nil 10(1- liili rel InlH, wllll tile ii;;lil In deduel 1 per eenl iiddlllnliiil If linnlre Ih iiiiide eiiMll 111 ,-.e\cii iliiy.-,, the iidMiii.-e hi lie wllliniil reeniirse In nr reel.. inn I Inn llpnn IIH, and In be due In iiny evetil. •J. 'I'lie n\ii:!iv when snid In hi lie hllleil In ymir liiiine. iilllinii^di In fuel, as I'lielnr fur lis, and ynn Hhall witliniil rerliiiiiiillnn iipnii im, nl ynnr nwn enwl, pn \' nil ex|ieiee.>j, niid iissiiine nil rIskM nf the properly .iiiil nf'|iiiyii I nf enllei'dlnll. Villi are mil lo Inmr any e\prnses mi mir aecmnil. AMERICAN SUGAR EEFINIXG COMPANY. 41 3. None of the sugar shall be sold or disposed of by you, either directly or indirectly, for less than our daily quotations, with freight added from refining ix)int to point of sale (as per equality rate book), nor on more liberal terms as to oiedit or cash discounts. So long as the foregoing conditions are observed by you we will, upon an affidavit to that effect, puy you a commission of three-sixteenths of a cent per pound, and in addition thereto you shall retain the profit, if any, over the ad- vnnce made a? above provided. lu case of uny failure to comply with either of the above conditions no commissions will be pnyable. Settlements will be made for each month's commissions at the expiration of three months thereafter. All conmiii^sious !jay;,ble for the period prtK-eding the three months will then be- come due. I'.iyments will only be made as above. This a;). contained the following language: The eastern bioluns have entered intfi thif^ matter from the start in the proper spirit, nnrt alrendy it has develojied a better quality and regard for each other personally and f(ir each other's rij,'hts. The refiners have given us their hearty encouragement, and we talie pleasure in referring you to them, if you have any doubt as to the strength of our position. • * * AMERICAN SUGAR REFINING COMPANY. 43 • Inasmuch as it will be impossible for New York brokers to work with their present correspondents after the 20th of October, unless such correspondents are elected to membership before that date, it is the sincere hope of the new membership committee that immediate consideration will be given to this mat- ter and your application returned, so that it will be recsived by the new mem- bership committee in New York by October 5. In the address of the president of this association at the first annual meeting, held in January, 1904, it was said : In founding the association we have followed the lines of the pledge or guar- anty that, as is is well known, has for many years been required by our leading sugar refiners; so we have the active support and cooperation of several of the largest of these in the United States, together with the sympathy of them all. No organization of the kind, therefore, has started under more favorable auspices, and great success has already attended our efforts. These extracts seem to indicate a purpose in some way to restrict competition among brokers in refined sugar. It is possible that the refiners of sugar expect in this way to check in some measure the competition among themselves. It is not known to what extent sugar brokers intervened between the refiners and the wholesale grocers. It seems probable that each refining company has certain brokers who are chiefly engaged in handling its product to the exclusion of the product of other refineries. Thus the firm of B. H. Howell & Sons is the representative of the National Sugar Refining Co., and its three refineries are often referred to as the Howell refineries. Mr. James H. Post, who testified before the Industrial Conunission. as a I'epresentative of Howell & Sons, has since become president of the National Sugar Eefining Co. COST OF PRODUCTION AND PROFITS. Detailed and accurate accounts of sugar refineries showing the exact cost of operation have never been submitted in any public investigation. The statements of representatives of the refining interests must necessarily be accepted with some question, partic- ularly as they do not agree closely. Nevertheless the evidence of several witnesses experienced in the refining business points to the limits of cost of refining as being somewhere between 0.50 cent and 0.65 cent per pound, including the loss of weight but not including any return on capital. Mr. Jarvie, of Arbuckle Bros., stated to the Industrial Commission that the cost was between 0.50 cent and 0.60 cent; Mr. Doscher, of the New York refinery, stated that there was no profit in sugar when the margin was 0.51 cent^ but that he ex- pected to make " a nice profit " if the margin remained between 0.70 •cent and 0.97 cent. Mr. Havemeyer's testimony is not clear, since he does not show whether interest or capital is included in his esti- mate of cost. (Industrial Commission, Vol. I, Digest, pp. 65-66.) Mr. James H. Post, in June, 1899, submitted an estimate to the Industrial Commission prepared by the general manager of the National Sugar Refining Co. According to this estimate, out of every 100 pounds of 96° centrifugal sugar, the refinery secures 92|- pounds of granulated and yellow sugar, chiefly granulated, and the equivalent of 2i pounds of sugar in sirup of lower value. The loss of weight of 6 per cent would, at the prices prevailing when Mr. Post testified, have amounted' to about 0.25 cent. (The average price of raw sugar 44 AMERICAN SUG-4E EEFINING COMPANY. in 1899 was 442 cents, 5 per cent of which is 0.221 cent. The loss on' 2i pounds, worth 1 cent less per pound than granulated sugar, amounts to 0.025 cent, giving a total of 0.246 cent.) The actual cost of refining is stated to be 0.348, divided as follows; Cents per pound. Brokerage and Government revenue 0.048 Tax and office expenses .10 Packages, w;iges. fuel, bone black, repairs, and sundries .20 .348 It is not clear whether this represents cost per pound of refined or of raw sugar. If the latter, the cost per pound of refined would be 0.366 cent. This is evidently a rough estimate rather than an accurate calcula- tion from actual accounts. The total cost of refining would thus appear to be about 0.60 cent. (Mr. Post himself calculates from the same figures and gives 0.63 cent, but evidently by erroneous methods.) Mr. Post further stated that probably a very large refinery, such as that of Havemeyer & Elder, in the American Sugar Refining Co., could refine sugar at from 3 to 5 cents per hundred pounds less. (In- dustrial Commission, Vol. I, Testimony, p. 150.) For 1902, with raw sugar at 3.54 cents, the cost of refining, mcluding loss of weight, on the basis of the above estimate would become 0.55 cent. Mr. Henry T. Oxnard, president of the American Beet Sugar Ee- fining Co., is an opponent of the American Sugar Refining Co., but was formerly engaged in refining cane sugar. He estimates the cost of refining, including waste, at between 50 and 60 cents per hundred pounds. (Report on Reciprocity with Cuba, 1902, p. 187 ; see Appen- dix 14.) PROFITS or REFINING INDUSTRY. It seems probable from the above statements that the cost of refining sugar, including waste, is not more than 0.55 cent per pound, exclusive of return to capital and perhaps of dejDreciation also. The production of refined sugar by the American Sugar Refining Co. in 1!K)2 was estimated at 3.217,tGl,760 pounds. The margin between raw and refined sujiar in that year was 0.913 cent, leaving for return to capital and depreciation 0.3C3 cent per pound. This would give a total for the year of *11,680,2.'')7. This represents 12.98 per cent of the $90,000,000 capital of the trust, but allowance for depreciation might make the percentage of profit one-fourth or more lower. If the actual cost of the plants be asstuned. according to the estimate of :Nrr. Havemeyer, to be thirty or thirty-five million dollars, the rate of ])rofit would be two and three-fourths or three times the per- centage on the total capitalization. (See Pt. III.) Applying the same estimate of cost to the entire period of 15 years from ISSs to inOi'. inclusive, when the averaije margin between raw and refined sugar was 0.920, we have an average excess above cost of 0.3( cent. .Statistics for the production of the American Sugar Re- fanmg Co. are not available back of 1893. but since that time it has averaged, according to the estimates of Willett & Gray, more than 3.0()().()no,000 pounds per annum, and probably this would not be much greater than the average for the entire 15 years; On this basis AMERICAN SUGAR REFINING COMPANY. 45 the annual sum remaining for depreciation and profits of the combi- nation would have averaged about $11,100,000. For the 10 years, 1892 to 1901, the dividends of the American Sugar Refining Co. averaged about $7,000,000 per j^ear. The combination, however, has a reserve amounting in 1902 to $10,871,320, and it is impossible to know how much profits may have been invested in improvements since the formation of the combination, and charged to operating expenses^ thus not appearing in the balance sheet. Taking the dividends for the basis of an estimate of profits, it will be found that for the 10 years 1892 to 1901 the average dividend was nearly 12 per cent on the common stock and 7 per cent on the preferred stock, or about $7,000,000 per year on a total capitalization of approximately $74,000,000. If it be assumed that the cost of the plants was $35,000,000, this would give almost 20 per cent per year return on the actual investment. If the other estimates of the cost of plants above mentioned be accepted, the cost of reproducing the refining capacity of the American Sugar Refining Co. would appear to be from twenty to twenty-five million dollars. One should, how- ever, note the statements as to running capital required. Part VI. TARIFF— IMPORTS AND EXPORTS. RATES OF DUTY. (1) SPECIFIC BATES. According to the Dingley tariff of 1897, a duty of 0.95 cent per pound is imposed on raw sugar not testing above 75° by the polari- scope, with an addition of 0.035 cent per pound for each higher degree of test. This gives rates, at the polarization of the largest quantities, as shown in the following table, which also indicates the percentage which the rate of duty bore in 1902 to the value of the imported product without duty : Duties on raw sugar. Degrees. Rate of duty per pound. Ratio of duty to foreign value, 1902. Beet sugar. Cane sugar. 83 86 88 94 95 90 Ci nis. 1.23 1.0.36 1.405 l.lil.j l.ti.i 1. (i« Per cent. Per cent. 91.35 90.99 86.97 72. S4 ,S4. 2s .s.-,. 10 92. 22 97.7li By the Cuban reciprocity treaty of 1903 the duties on raw sugar imported from that country are reduced 25 per cent. The imports from Hawaii, which aie quite large, and those from Porto Rico, which are comparatively small, bear no duty, but at present the im- ports from the Philippine Islands are subject to the full rates. The table (p. — ) below indicates the relative importance of the imports from these various countries as compared with the total imports. The duty on refined sugar is l.!).") cents per pound, as compared with 1.0S5 cents for 96° centrifugal raw sugar. The duty collected in l!t02 rejDresented 82.23 per cent of the foreign value of refiaed sugar imported. The actual protection to refined sugar depends not merely on the excess of the rate of duty per pound on refined above that on raw sugar, but also on the quantity of raw sugar required to produce a jjound of refined sugar. For the purpose of allowing drawbacks on the exportation of refined sugar, the United States Treasury De- partment calculates, at present, that from each 100 pounds of ra.Tf sugar, i'tr test. 92-J pounds of refined sugar can be secured — that is, it requires 108.1 pounds of raw to make 100 pounds of refined. The duty on this amount of raw sugar would be $1.8215. The difference between this and $1.9.j, 12.85 cents per 100 pounds, represents theo- 46 AMERICAN SUGAR REFINING COMPANY. 47 retically the protective tariff on refined sugar. As a matter of fact, the amount of raw sugar required to produce 100 pounds of refined is apparently generally believed to average considerably less than the amount estimated by the Treasury Department. Mr. Buynitsky, then Assistant Chief of the Customs Division of the Treasury De- partment, testified before the Industrial Commission, in 1899, that in his judgment, 93 pounds of refined out of 100 pounds of raw would be a safer basis than 92|, and both Mr. Post and Mr. Doscher, promi- nent sugar refinfers, confirmed this opinion. Mr. Post holds that the actual differential or protective duty on refined sugar is about 0.15 or 0.17 cent. (Industrial Commission, Vol. I, p. 70. See also p. — , above.) '(2) EELATION OF DIFFEEENTIAI, DUTY ON REFINED STJGAK TO MAKGIN OF PRICES. Assuming the Treasury estimate that the protective duty is 0.1285 cent per pound, some idea may be gained of the degree of protection actually afforded. In 1902 the average value of all sugar of 96° test' imported into the United States was 1.98 cents per pound in the foreign markets of origin. The average value of refined sugar imported in that year was 2.37 cents in the foreign markets of origin. The difference between the raw sugar and the refined sugar in the foreign markets was thus 0.39 cent. The difference in the rate of duty, 0.1285 cent, is equivalent to 33 per cent of this margin between the foreign values. This calculation is somewhat misleading, because the raw sugar im- ported comes in a large measure from different countries from those which furnish the refined sugar. The differential duty may likewise be compared with the margin between the price of raw and refined sugar in the German market, from which most of our imports of refined sugar are derived. For the year 1901 the average price of granulated sugar for export at Hamburg was 2.26 cents and that of raw beet sugar of 88 per cent analysis, which is equivalent to about 94° test, was 1.87 cents, giving a margin of 0.39 cent. The difference between the duty on the quan- tity of 94° sugar required to make a pound of refined sugar and the duty on refined sugar is approximately 0.20 cent, or more than 50 per cent of the margin between the price of raw and refined sugar for export at Hamburg. The export bounties prevailing in Germany in 1902, however, possibly tended to reduce the margin between raw and refined sugar below the normal level. Finally the differential duty on refined sugar may be compared with the margin between the price of raw sugar, duty paid, and re- fined sugar in the United States. This margin is doubtless increased somewhat by the existence of the differential duty. The average dif- ference between the price of 96° sugar and granulated sugar in the year 1903 was 0.918 cent. The differential duty of 0.1285 cent is thus equal to 13.99 per cent of the margin then prevailing. The lowest margin between the price of raw and refined sugar in the United States was, for the year 1899, 0.503 cent. The differential duty at that time was equivalent to a little more than 25 per cent of the do- mestic margin. . n ■, , If according to the more liberal estimate above mentioned, it be assumed that the differential duty on refined sugar, as compared with 96° sugar is equal to 0.17 cent, the ratio which this duty bears to the 48 AMERICAN SUGAR REFINING COMPANY. foreign and domestic margins of price will be about one-third higher than the ratios calculated in the preceding paragraphs. (3) SPECIAL DUTIES TO OFFSET FOREIGN BOUNTIES. In addition to the ordinary duties on raw and refined sugar there is levied, under the general provisions of the law regarding foreign bounties, an additional import duty, on either raw or refined sugar, e(iual to the amount of any export bounty paid , by any foreign couiUry. Numerous Treasury rulings have fixed for the respective European countries exporting sugar the differential duties to be thus imjooseil. In the case of Germany, from AA^hich the United States dra^vs its largest supply of raw-beet sugar, as well as its largest sup- ply of refined sugar, the additional duties thus imposed were, prior to the abolition of the bounties in 1903, 0.26 cent per pound on raw sugar over 90^ and 0.313 cent on granulated or refined sugar. (Treas- ury Decisions Xos. 21274, 2210-1.) This gave an additional differ- ential on refined sugar from Germany of approximately 0.053 cent per pound. This can, however, scarcely be considered strictly an addition to the normal protection of the American refining industry, since it simply offsets the export bounty of Germany. (4) TARIFF RATES OF 1800 AND 1894. Under the McKinley tariff of 1890 raw sugar was free. The pro- tection to refined sugar was very much higher than it has been since, a duty of half a cent per pound being imposed thereon, together with one-tenth of a cent additional on such sugar as should receive an L'Xjjort bounty from any foreign government. The tariff of 1894 made the rate of duty on all sugar 40 per cent ad valorem; as a differential protection to refined sugar one-eighth of a cent additional was imposed, together with one-tenth of a cent on sugar coming from bounty-paying countries. This differential was probably somewhat lov/er than that under the tariff of 1897, IMPORT STATISTICS. (1) TOTAL IMPORTS. The table in Part II (p. 13) shows for 1902 and 1903 the sources of the raw sugar consumed in the United States as estimated by Willett & Gray, together v.ith the amount of refined sugar imported m that form. It appears from this table that of a total consumption m 1903 amounting to 2,549,643 tons the domestic production of cane, beet, maple, and molasses sugar was equal to 567,038 tons, or 22.2 per cent. The imports from Hawaii and Porto Kico, which pay no duty, were 443,839 tons, and those from the Philippine Islands 29,947 tons, making a total of 473,786 tons from our insular posses- sions, or 18.6 per cent of the consumption. The imports from other countries m 1903 were 1.508,819 tons, or 59.2 per cent of the total consumption. According to Willett & Grav's estimates, only 4,631 tons of refined sugar were imported in this year, altogether an in- significant quantity. The following table shows for each year since 1893 the total con- sumption of raw sugar (including refined sugar imported as such) AMERICAN SUGAE REFINING COMPANY. 49 and the amount imported from foreign countries, including the col- onies of the United States. For comparison, the margin between the prices of raw and refined sugar at New- York is indicated : Imports and consurn/ption of sugar. Total con- sumption. Imports. Imports ol refined sugar. Margin of price be- Years. Total. Percentage of con- sumption. tween raw and refined (cents per pound). 1893 Tons. 1,905,862 2, 012, 714 1,949,744 1,940,086 2,070,978 2,002,902 2,078,068 2,219,847 2,372,316 2, 566, 108 2,649,643 Tons. 1,623,862 1,718,848 1,572,438 1,670,963 1,760,607 1,638,937 1, 839, 642 1,960,011 1,932,33(1 2,092.l,.fj7 l,982,liOi 0.852 .854 .8065 .8613 .8501 .8183 .8»3 .t83 .8i;5 .m Tons. 14,277 14,524 28,036 77,362 77, 288 26,625 5,036 17, 743 42,515 24,603 4,631 1.163 1894 .884 1895 .882 1896 .908 1897 .928 1898 .827 1899 .603 1900 .754 1901 1.003 1902 .913 1903. .918 This table shows very considerable fluctnr.tions in the proportion of the sugar consumption supplied by imi^cjrts a.s compared with the proportion furnished by domestic production. The variations in the Louisiana cane crop largely account for these differences. The marked increase in the production of beet sugar during the past three or four years has reduced the percentage of imports sharply. Thus in 1900 the imports were equal to 88.3 per cent of the total con- sumption while in 1903 they were only 77.7 per cent. The imports of refined sugar consist chiefly of the beet product from continental European countries. Prior to 1903 the fluctuations in the quantity of imports bore some relation to the fluctuations in the margin between the price of refined and raw sugar in the United States. The greatest imports of refined sugar were in 1896, 77,362 tons. When the margin of prices was at the minimum in 1899 the imports of refined sugar fell to less than 6,000 tons. The imports of refined sugar in 1903 were smaller thaii in any previous year, not- withstanding a fairly high margin. The abandonment of the policy of paying bounties in accordance with the Brussels treaty, which went into effect September 1, 1903, must be considered in part the cause of this reduction of imports of refined sugar. As shown belo>w, the imports of raw sugar from European countries have likewise fallen off enormously. These statistics show in general that the dif- ferential duty on refined sugar is practically prohibitive, the imports of such sugar varying from less than 1 per cent to about 4 per cent of the domestic consumption. (2) IMPOBTS BY COUNTRIES. The printed table on the following page shows for the calendar years 1901, 1902, and 1903 the sources of imports of raw sugar and refined sugar (above No. 16, Dutch standard). These figures in- clude not only imparts for consumption, but a^lso those intended for transshipment and reexportation. For this reason they do not cor- respond exactly with the figures of Willett & Gray above presented. They serve fairly, however, to indicate the sources of our sugar supply. 98244—11 4 50 AMERICAN SUGAB REFINING COMPANY. [Monthly Summary, December, 1903.] Twelve months ending December— 1^1 i 1902 1903 Quantities. Values. Quantities. SI, 331, 702 13, 45'i.685 Values. S857,328 Quantities. Values. Sugar and molasses: Molasses. . ..galls, .dut. . 13, 929, S95 19,208.205 SI, 208, 717 Supar— Not above No. 16 Dutch, standard in color- Beet Ibs.-dut.. Cane Ibs.-dut.. i 1 ! 4S4,344,004 ' 9,^n6,SM 233. 74'^, S4,S 3,104,390.0.')IJ ; 66,094.055 3.o27,.'^71. 517 3.323,758 56,682,663 20,026,306 3, 290, 525, 732 338,176 59,995,724 Total 3,588,734,060 71.. 503, 947 3.7(il.620.365 60,006.421 3,310,552,038 1 60,333,900 Imported from— United Kingdom. Austria-Hungary. 1,616.403 80,296,640 34,417 ' 9,896,1X« 1,641,593 1 34.357.'-10 167. 446 509, 4S4 i ~ . ] ; 399,565,344 662, 3S2 3,822.690 00 8, 954, 550 , 1,313.934 242, 428, 043' 1,302,800,614 128, 768, 725 368,266,987 277,358,035 439,527 686,676,954 11,424.000 00,335 74.220.911 .S, 060, 948 199.359.207 2,813,645 20,019,666 338,068 18,035 89. 376 3 220,491 34, 386 Other Europe British North America Central America. - Mexico . 32, 50^ 7, 677,.S,.-() 292. lao 680 1,511.045 N.624 3,0,-.l,4R5 29,871,955 2, .534, 760 3.321,661 5.610,822 4, 31 2 10,002,149 73.277 .2,343 6,853,918 2,369,606 162,311,985 1,994,307,020 143,407,565 73,858,292 221, 545, 492 265, 701 587,306,494 65.348.247 69 124,369' 96,866 West Indies- 5.025,421 !• 2011. ,S77, 311 29,969.244 1, 7^7.90S,029 3,431,393 , 143, .-)7,s. .507 6,442,317 ! 248,22,-).71.i 5,994,414 1 315,181,904 7,893 ' 276,242 13,565,626 741,731.073 188,159 , ...440,000 1,140 79. 72-: 1,779.091 (■.0,70,S,72il 2,776,494 Cuba 37,593,266 Other West Indies and Bermuda Brazil 2,707,214 1, 150,009' Other South America Chinese Empire.. East Indies Philippine Islands 4,260,029: 3,755 9,696,16? 952,112, Other Asia and Oceania Africa 1,2)1 114.397 94,s,.53.5 1 32,841.412 2,519- 632.978' Other countries Total 3.588.731.060 7(i,,iO:i.947 3.7i;i,n2:l,:!l« On.ODii 421 3. 310. ,552, 028 60.333,900 Above No. 16 Dutch standard in color (pounds, duti- able)— Imported from— United Kingdom. Austria-Hungary. Belgium.. .■ 71.622 55.083,055 1,024.185 ■ 39.709 25,792,368 20.919.953 12,499,717 1.179.867 5,308,593 200.054 1,263,400 94,385 1 , as,-< 1.305,74i; 2o,().5r, 4!.210,22,i 96,5 7,\S.3'J,S 1.770 7.262.620 38 1 149,152- France Germauv- . . 1,077 047.312 ,541.166 .308.023 86.520 151,984 6,039 37. 09^ 2,050 27.783 I 1.2l)3 ' 21,184 ■^1 .574 614 '^^^ 'l"'t ! ^ 1«;a (147 880 63, 948' Netherlands Other Europe 2')'),0im 4 ,«S8 ! 1 British North America Chinese Empire.. 6 011,Sf,l .524,S,S2 205.968 11.717 5,027,040 1,875.401 244,443 47,512, Other Asia and Oceania Other countries.. 110.775 ! 2,284 105.229 1 2,351 198, 400 882,078 4.530 27.579 ToJ;al 123.476,908 3,115.859 1 72.150,72.5 1,417.702 \ IX. 321, 440 538,082 \ ' Total sugar 3,712,210.968 79.019.800 3. S33, 777,030 | |-,1.424.183 |3. 328, 8/3, 478 j 00.871.f82. • It will be observed that the imports of raw sugar from European,, countries fell greatly in 1902 and nearly disappeared in IDOH. For,-, merly Germany and Austria-Hungary supplied us Avith considerabliij. quantities of raw beet sugar and with moderate quantities of refined sugar. The decrease in the imports from Europe is partly due to the rehabilitation of the Cuban sugar industry and the consequent AMERICAN SUGAR REFINING COMPANY. 51 cheapening of the cost of production there. Even with export boun- ties European beet sugar can scarcely compete with the cane sugar of Cuba under an equal tariff. The imports from Cuba rose from 1.302,860,514 pounds in 1901 to 1,994,307,020 pounds in li;0'l Thj- abolition of the sugar bounties in September, 1903, would probably have practically put a stop to exports to the United States from European countries under any circumstances. An examination of earlier figures for sources of imports presented in Appendix 13 show marked variations in the source of supply from year to year. These variations depend on the local crops and prices chiefly. The importers in the United States are always ready to play off one country against another and secure sugar at the lowest possible prices. The imports from Java (East Indies) are usually niuch the most important aside from those from Cuba. The importK from Hawaii, which are not shown in the statistics of recent years. are constantly and rapidly increasing, the freedom from duty tendinis- to develop the sugar industry of those islands. EFFECT or TARIFF ON PRICES. (1) GENEBAI,. It is evident, of course, that the duty on sugar, the great bulk of which is imported, fixes the price to the American consumer at a much higher level than would be the case if there were no duty. As already shown, however, this high duty falls chiefly on raw sugar, and does not constitute a protection to the refining industry. It does protect the American beet-sugar producers and the Louisiana cane- sugar producers, but doubtless its chief purpose is the raising of revenue. The total revenue from srfgar duties in 1902 was no less than $52,622,601. It is not necessary in this report to discuss the de- sirability of this protection to domestic producers of raw sugar or the effect on them of the concession of 25 per cent made on the importation of Cuban sugar. We are concerned only with the differential duty on refined sugar, whicji constitutes the sole protection of the refiner. This differentia] can not in itself increase the price of sugar by more than from one- eighth of a cent to one-fifth of a cent per pound. At the same time it must be remembered that the real charge which the American refiner imposes on the consumer is merely that for refining. The price paid to the refiner for his work averages, usually, less than 1 cent per pound. The removal of the duty, therefore, might possibly reduce the charge to the people for the refining of sugar by from 15 to 25 per cent. Furthermore, if European countries had continued their policy of paying bounties on the export of sugar, we might, by abol- ishing both the differential general duty and the differential in the countervailing duties directed against bounty-fed sugar, have secured refined sugar at, $ay, one-fourth of a cent less than we do; that is, the two differentials were equal to from 25 to 40 per cent of the domestic margin. , ; (2) COMPABATIVB JPRICES IN GREAT BRITAIN, HAMBURG, AND UNITED STATES. On account of the existence of internal taxes on sugar and of com- binations of sugar producers and refiners in continental European countries it is impossible properly to compare the prices of sugar there with those of the United States, arid especially, to compare fhe" 52 AMERICAN STJGAB, REFINING COMPANY. charges for refining. This comparison is also made the more com- plicated by the slight difference in the grades of sugar produced in different countries as compared with those produced in the United States. In neutral markets, such as Great Britain, which have neither tariff nor internal tax, the prices of sugar are usually reduced below a normal level by the importation of the bounty-fed product of these continental countries, so that here also comparison with Ameri- can prices is complicated. The table following shows since 1890 the average annual price of German raw and refined sugar free on board at Hamburg, as quoted in the British trade journals, together with the margin be- tween them; also the average annual price of Java raw sugar at London and of Tate's cubes in the same market, with the differ- ence between them. For comparison, the average prices of raw and refined sugar in the United States for the same years are also pre- sented. (See also diagram.^) The business of refining sugar in Great Britain has been greatly reduced by the competition of continental sugar. Apparently the larger part of the sugar now refined in the United Kingdom is of specially high qualitj'. The standard quotation is that for Tate's cubes. The price of "these cubes in London before the imposition of the duty of 1901 was nearly one-third higher than that for the best quality of German granulated sugar. The margin between Java afloat, raw sugar, and Tate's cubes ranged during the years 1894 to 1901 from 0.68 cent to 1.14 cents, averaging, on the whole, a trifle higher than the margin between raw and refined sugar in the United States. It is, however, improper to compare this British margin with that between the American refined sugar and 96° centrifugal, because of differences in the quality of both raw and refined products. (Monthly Summary, November, 1902, p. 1265; price statistics from Industrial Commission, see Appendix 14. ) Cube sugar in the United States is considerably higher than granulated. Comparative prices of refined .lugar, Lo/k/oi), Hamburg, and New York, with margin above raw sugar. (For sources sec Appendix XIV and Sugar Trade Journal, Ian. 4, 1900, Jan. 3, 1901.) [Cents per pound.] Refined sugar. Margin above raw. Year. London. Hamburg. New York. Londqp. Bambijrg. New York. Tate's cubes. First marks granulated. Standard granulated. Tate'a cubes and Java afloat. Granulated and 88 per cent raw. Granulated and 96° raw. 1890. 4.27 4.43 4.45 4.84 4.03 3.49 3.65 3.26 3.32 3.42 3.35 «3.66 3.29 3.33 3.50 3.91 2.96 2.56 2.67 2.35 2.45 2.52 2.62 2.25 6.17 4.69 4.35 4.84 4.12 4.14 4.54 4.48 4.98 4.92 5.32 5.05 4.4« 4.64 1.00 1.09 1.04 1.06 .98 .92 .93 .90 .80 .80 .62 1.31 0.62 .38 .53 .56 .47 .43 .38 .43 .39 .34 .39 .39 0.72 .83 1.04 1.15 .88 .88 .91 .93 .83 .50 .75 1.00 .91 1891 1892. 1893 1894 1895 1896 1897 1898 1899 1900 1901 1902 1903 92 ' Not printed. 2 Tax imposed. AMERICAN SUGAR REFINING COMPANY. 53 Parity of 88 analysis beet and 96 polarization cane sugar. [Without bounty or countervailing duty. Excliange at $4.88 per pound sterling.] Beet at 14s. per hundredweight (112 poundis) f. o. b. Hamburg add 4Jd. for freight and lighterage to refinery, say 14s. 4id. net per hundred- Cents. weight c. and f. to New York 3. 134 Insurance, bank commission, loss weight (together li per cent) .047 Duty (88 analysis outturn, 94 polarization) 1.615 Difference in value to refiners between beet and cane . 19 Beet 88° f. o. b. Hamburg parity of centrifugals at New York^ per pound ^ 4. 986 fFrom Willett & Gray's Weekly Statistical Sugar Trade Journal, Dec. 8, 1904.] Beet, f. 0. b. Ham- burg. Equal to centrifu- Beet, f. 0. b. Ham- burg. Equal to centrifu- Beet, f. 0. b. Ham- burg. Equal to centrifu- Beet, t. 0. b. Ham- burg. Equal to centrifu- gals at Kew York. gals at New York. gals at New York. gals at New York. s. d. Cents. «. d. Cents. s. d. Cents. s. d. Cents. 8 3.66 10 6 4.21 13 4 76 15 6 6.31 8 0} 3.67 10 6i 4 22 13 OJ 4 78 15 6} 5.33 8 li 3.69 10 7i 4.24 13 14 4 79 15 7i 5.34 8 2i 3.70 10 8i 4.25 13 2i 4.80 15 8i 5.35 8 3 3.71 10 9 4.26 13 3 4 82 15 9 5.37 8 3i 3.73 10 9J 4.28 13 3J 4 83 16 9} 15 104 5.38 8 4J 3.74 10 lOi 4.29 13 44 4 85 5.40 8 5i 3.76 10 llj 4.31 13 5i 4 86 15 Hi 5.41 8 6 3.77 11 4.32 13 6 4 87 16 5.43 8 6J 3.78 11 0} 4.33 13 6J 4 89 16 05 5.44 8 7i 3.80 11 H 4.35 . 13 74 4 90 16 14 5.45 8 8i 3.81 11 2i 4.36 13 8i 4 91 16 2i 5.47 8 9 3.82 11 3 4.37 13 9 4 93 16 3 5.48 8 93 3.84 11 3i 4.39 13 9| 4 94 16 3i 5.49 8 lOi 3.85 11 4i 4.40 13 104 4 95 16 4i 5.51 8 Hi 3.87 11 6J 4.42 13 Hi 4 96 16 51 5.52 9 3.88 11 6 4.43 14 4 99 16 6 5.54 9 Of 3.89 11 6} 4.44 14 0} 5.00 16 6J 6.55 9 ll 3.91 11 74 4.46 14 14 5.01 16 74 5.57 9 2j 3.92 n Si 4.47 14 2i 5.02 16 8i 5.68 9 3 3.93 11 9 4.49 14 3 5.03 16 9 5.59 9 3| 3.95 11 9i 4.60 14 3J 6.05 16 93 5.60 9 44 3.96 11 104 4.51 14 44 5.06 16 lOi 6.62 9 6 3.98 11 Hi 4.53 14 54 5.08 16 Hi 6.63 9 6 3.99 12 4.54 14 6 6.09 17 5.65 9 6} 4.00 12 0} 4.55 14 6} 5.11 17 OJ 5.66 9 71 4.01 12 14 4.57 14 7 5.12 17 14 6.68 9 8} 4.03 12 2i 4.68 14 8 6.13 17 2i 5.69 9 9 4.04 12 ,3 4.59 14 9 6.15 17 3 5.70 9 9i 4.06 12 3J 4.60 14 9J 5.16 17 3J 5.71 9 lOJ 4 07 12 44 4.62 14 104 5.17 17 44 6.73 9 lli 4.09 12 5i 4.64 14 Hi 6.19 17 5i 6.74 10 4.11 12 6 4.65 15 5.21 17 6 5.75 10 Oi 4.12 12 6J 4.67 15 03 5.22 17 69 5.77 10 li 4.14 12 74 4.68 15 14 15 2| 5.23 17 7 6.79 ]0 2i 4.15 12 8i 4.69 6.26 17 8i 6.80 10 3 4.16 12 9 4.71 16 3 6.26 17 9 6.81 10 3} 4.18 12 9f 4.72 15 35 5.27 17 93 6.82 10 4i 4.19 12 lot 4.73 15 H, 5.29 17 104 5.84 10 5i 4.20 12 llj 4.78 15 5i 5.30 17 Hi 5.85 54 AMERICAN SUGAR REFINING COMPANY. Up to 1901, when Great Britain imposed a tax of about 1 cent per pound on sugar, there was a very striking difference between the price of German granulated sugar in the English market and the price of granulated in the United States. The price of German and Austrian granulated f. o. b. Hamburg (which is but little less than the price delivered in London and is the quotation given in London) scarcely rose above 3 cents per pound during the years 1894 to 1899 and during the latter year averaged only about 2| cents per pound. The Xew York price of refined sugar (slightly superior in quality, "perhaps, to German granulated) ranged from 4.119 in 1894 to 4.07G in 1898 and in 1899 averaged 4.921. (Detailed figures, by months, up to 1899 from Eeport of Industrial Commission, and up to 1901 from Monthly Summarv. November. 1902, shown in Appendix 8 and 14.) German and Austrian raw sugar was also benefited by the export bounties, and the combinations had a motive for exporting it also at less than the domestic price. The average price of German export raw sugar, 88 per cent analysis (equal to about 94° test), f. o. b. Hamburg, for the year 1901 was 1.87 cents. The margin between raw and refined sugar for export at Hamburg is materially less than the margin maintained between raw and re- fined sugar in the United States. This is probably due in part to the slightly lower quality of German granulated sugar, but it is also doubtless due in part to the protective tariff' which permits American refiners to maintain a higher margin. The difference between the price of German granulated and raw sugar for export just quoted for the year 1901 was 0.394 cent, as compared with an average of 1.003 cents for the United States in the same year. The margin in Germany for export sugar has ranged during the years 1890 to 1901 betAveen the limits of 0.28 cent and 0.72 cent, nearly always falling below 0.50 cent. (See monthly tables in Appendix 14.) It is not clear whether the margin between German raw and refined sugar for export was decreased by the bounty system. The margin on export sugar at Hamburg in January. 1904, after the abandonment of (xovernment bounties, was about' 0.40 cent. (Quotations from Willett & Gray's Journal, Jan. 7, 1904.) The averafre German margin. 1890-1901. was 0.442 cent; aA'erage for New York, 0.868 cent. Were there not other reasons also for the small margin between raw and refined in Hamburg than those stated here? (See " Inter- national sugar situation," Frank E. Eutter, Bui. 30, Bureau of Sta- tistics, Department of Agriculture.) Beet sugars are more expensive to refine, on account of their action on the bone black and their large content of mineral matter (ash). The mineral matter prevents the crystallization of a part of the sugar. One hundred pounds of a cane raw, of 94°, will yield about 90.6 pounds refined, whereas the same quantitv of a beet raw, 94° polari- zation (fss° titrage), will give about 88 pounds refined. In fixing the price of raw beet sugar the additional cost of refining and the decreased yield as compared with raw cane sugar are un- doubtedlv taken into account. AMERICAIf SUGAR REFINING COMPANY. 55 (3) EXPORT EOUNTJES AND SUGAR COMBINATIONS IN EUBOPE. The growth of the system of export bounties on sugar has been recently described in a monogralph of the Bureau of Statistics (The World's Sugar Production and Consumption, 1800-1900; monthly summary of Commerce and Finance, November, 1902.) Geimany, Austria, France, and Russia especially have encouraged the develop- ment of the beet-sugar industij, vphich has risen almost entirely dur- ing the past half century. For this purpose they have maintained protective tariffs to check the importation of sugar, and have granted bounties, direct or indirect, on the exportation of the domestic product. All four of these countries maintain a high internal tax- o}i sugar; On exportation this tax is remitted. At various times in all of these countries, the drawback allowed on exportation has been based on an estimate of the amount of tax paid on the sugar exported which ex- ceeded considerably the tax actually paid, so that an indirect bounty was granted. In other instances direct bounties have been granted. As already indicated, the United States Treasury Department cal- culated that this bounty in the case of refined sugar in Germany amounted in 1902 to 0.313 cent. By a treaty adopted by tjie leading European countries at the Brussels Sugar Conference of 1902, all these direct and indirect export bounties were abandoned on Sep- tember 1, 1803. Russia did not sign the treaty. This system of export bounties, as well as of improvements in meth- ods of cultivating beets and of extracting and refining sugar, led to an enormous development of beet-sugar production, so that the four countries above named came to export a very large share of their product. During the year 1900 Germany exported 1,008,000 tons of sugar out of a total output of 1,790,000 tons. This condition of virtual overproduction in several of the leading continental countries led both the raw sugar producers and the rcr finers to seek to protect their profits by means of combination. The organization of such combinations in Russia, Austria, and Germany is open and strong, while it is understood that a less formal and open combination exists in France. These combinations undertake to main- tain the domestic price of sugar at a high level and to export sufficient quantities to enable them thus to maintain the domestic price. This practice was, of course, specially fostered by the bounty system, but doubtless it will be continued in some measure without the bounties. The result was that the domestic price, even with the excise tax de- ducted, was usually much higher than the export price, or than the price in England, which enjoyed the advantage of being the chief dumping ground for the surplus sugar of all the continental countries. The effect of the German sugar combination, which was established about the middle of 1900, can be clearly seen from the following table of prices, prepared by M. Dureau, editor of the Journal des Fabri- cants de Sucre. 56 AMERICAN SXJGAB REFINING COMPANY. Prices of sugar in London and Magdehurg. Date. London price of German granulated sugar per 100 kilos. Price of crystals at Magdeburg (inclusive of excise tax and export bounty) per 100 kilos. Price of loaf at Magdeburg (including excise tax and export bounty) per 100 kilos. Excise tax and export bounty per 100 kilos. Diflereneo between the net prifce of crystals in Magde- burg and the price of German granulated at London per 100 kilos. 1900, Jan. 26 Feb. 16 Mar. 16 .A.pr. 20 May 25 June 29 July 27 Aug. 31 Sept. 28 Oct. 26 Nov. 23 Dec. 28 , 1901. Jan. 25 Feb. 22 Mar. 29 Apr. 26 May 31 June 28 July 26 Aug. 30 Sept. 27 Oct. 24 Nov. 29 Francs. 27.65 27.21 28.09 29.28 30.11 31.30 34.20 33.17 33.40 27.79 27.21 26.37 27.36 28.25 26.08 27.27 27.21 27.06 25.92 23.33 21.75 21.75 Francs, 58. 125 59.150 59. 375 60.926 62. 800 70.875 72.000 72.000 70.800 68.800 69.200 69.625 72. 375 72. 375 72. 375 72. 375 72. 375 72. 375 72. 375 72. 376 71. 750 70.600 70. 500 Francs. 59. 375 60.000 60.000 I 61. 875 63.760 70.875 72. 000 72.000 70.800 68.800 09.200 70.250 73.000 73.000 73.000 74.000 73.000 73.000 73.000 73.000 72. 375 71. 126 71. 125 Francs. Francs, 1.075 2.440 1.885 2.245 3.290 10. 175 8.400 9.430 7.940 11. 610 12.590 13. 866 15. 616 14.726 15.706 16.895 15. 705 16.766 15.915 17.056 19.020 19.350 19.360 It will be seen that immediately after the formation of the com- bination the difference Ijetween the net price of sugar in the Magde- burg market and the price of similar sugar at London rose from 3.29 franr.s per hundred kilograms to 10.175 francs, while by the end of 1901 It had reached 19.350 francs; that is to sav, the Magdeburg price in November, 1901, was -serv nearly double "the London price, deduction being made of the excise tax and export bounty. One of the curious results of this export bounty sy.?tem is the fact that German refined sugar has about the same price in the London market as raw sugar from Java. The standard prices for German reftned sugar quoted in London are f. o. b. Hamburg, and a small addition must be made to cover freight, but this would not exceed one-tenth of a cent per pound. According to the tables above, the average price of Java raw sugar (Java afloat Nos. 15 and 16, Dutch standard) m London in 1899 was 6 cents per pound. During the same year the average price of German granulated at Hamburg was — cents. ^For 1901 the average price of Java afloat was 2.36 cents per pound and of German granulated 2.264 cents. (See Monthly hummary of Commerce and Finance, 1902, p. 1412; table in Appen- dix 14.) '^^ LIST OF APPENDICES. 57 APPENDIX I. DOCUMENTS EELATING TO OEGANIZATION OF SUGAR COMBINATION. 59 DOCUMENTS RELATING TO OKGANIZATION OF SUGAR COMBINATION. Testimony from Hearing by New York Senate Joint Committee to Investi- gate Trusts, 1897. Q. Have you got the figures for 1890? — ^A. Xinety-eight one-liundredths cent; now I have got the average for the nine years preceding_the trust and nine years since. . Q. Yes? — A. One cent and nine-tenths — and for the nine yenrs preceding the trust, and nine years of the trust, and the American Sugar Reflnii:^ Co., of New Jersey, ninety-eight one-hundredths. Q. Novir ^A. Do you want to marlt this? I would like to have it marked if you will let me have it oit- moment, Mr. Havemeyer, before it is marked [witness hands paper to chaiimr.nl. Q. Now that difference has been made, notwithstanding Uie f ot tbnt in the meanwhile new improvements, better machinery, and ecour.mii t^ in business transportation and other directions have prevailed; that is so, is it not? — A. Yes, sir; that difference. Q. Do you regard Willet & Gray as an authority upon this qicstion; upon statistics? — A. Yes, sir; I think so. Q. They are so regarded in the business world? — A. In the sugar com- munity ; yes. ("Analysis of Sugar Refining Business for 1888-89 by Willet & Gray, Sugar Statisticians," marked "Exhibit A," Feb. 6, 1897.) Q. Will you look at this so-called deed and state whether it is the deed or agreement referred to in your testimony of yesterday, a true copy of it [indi- cating] ? — A. Yes ; it is. (Deed of Sugar Trust put in evidence.) DEED THE SUGAR REFINERIES CO. The undersigned, namely: Havemeyer & Elder, the De Castro & Donner Sugar Refining Co., P. O. Matthiessen & Wiechers Sugar Refining Co., Have- meyer Sugar Refining Co., Brooklyn Sugar Refining Co., the firm of Dick & Meyer, the firm of Moller, Sierck & Co., North River Sugar Refining Co., the firm of Oxnard Bros., the Standard Sugar Refinery, the Bay State Sugar Re- finery, the Boston Sugar Refining Co., the Continental Sugar Refinery, and the Revere Sugar Refinery, for the purpose of forming the board hereinafter pro- vided for, and for the other purposes hereinafter set forth, enter into the follow- ing agreement : Name. — The board herein provided for shall be designated by the name of the Sugar Refineries Co. Objects.— The objects of this agreement are: 1. To )iromote economy of administration and to reduce the cost of refining, thus enabling the price of sugar to be kept as low as is consistent with reason- able profit. 2. To give to each refinery the benefit of all appliances and processes known or used by the others and useful to improve the quality and diminish the cost of refined sugar. . 3. To furnish protection against unlawful combinations of labor. 4! To protect against inducements to lower the standard of refined sugars. 5] Generally to promote the interests of the parties hereto in all lawful and suitable ways. , ,, ^ v, ^ .« Board. The parties hereto who are not corporations shall become such before this deed takes effect. ^. r. ^ -l. Each corporation subscribing hereto agrees, and the parties hereto who are not corporations agree, as to the corporations which they are to form, that all 61 62 AMERICAN SUGAR REFINING COMPANY. the shares of the capital stock of all such corporations shall be transferred to a board consisting of 11 persons, which may be increased to 13 by a vote of tlie majority of the members of the entire board, and 2 additional members to belong, respectively, to the first and second classes hereinafter provided for. Any member of the board may be removed by vote of two-thirds of the mem- bers of the Pi'tire board in case of incapacity or neglect or refusal to serve. Any member may resign by filing written notice of his resignation with the secretary of said board. Vacancies during the term of oflBce of members shall be filled by appointment by vote of the majority of the members of the entire board. A member appointed to fill a vacancy shall hold office until the expiration of the term of the member in whose place he is appointed, which new appointee shall succeed to all the rights, duties, and obligations of his predecessor under this deed. , Vacancies by expiration of office shall be filled at the annual meeting of the holders of certificates herein provided for, or at such other times as shall be' prescribed by the board. . Such annual meetings shall be held in the city of Xew York in the month of June, and notice sU.-ill be given to each certificate holder of record of every meeting of cortiflcate holders by mailing to him, at least seven .days before s;\id mwctiDj!:. .i iiotii-e of the time. plur^. iiiul objects of such meeting. Holders of certificates shall vote according to the number of shares for which they hold certificates. Thi^y may vote by proxy. The board may make by-liiws. All arrangements for meetings, elections and all ili'tails not hi'rc^iii siicriiically i)rovide(l for shall be made by the board. A member of the board may act by proxy for any other member with like effect as if he were jiresent and acting. A majority of the members of the board shall constitute a quorum for the, transaction of business. The action of the board meeting, by a majority vote of such meeting, shall have the same effect as the unanimous action of the board except as herein otherwise provided, and that to authorize the appropriation of money, or shares shall require the assent, either written or expressed, by vote at a board meeting, of at least a majority of the members of the entire board. No member of the board shall, during the time that he holds office, buy or sell sugar or be interested directly or Indirectly in the purchase or sale of sugar, whether for the purpose of speculation or otherwise, without a vote of a majority of the members of the entire board. For any violation of this pro- vision he may be removed as a member of the board, and shall be liable to account for all profits which shall be realized by him to the board for the pur- pose of pro rata benefit of the certificate holders. As it is desirable that the board shall consist of members who are largely interestoii in the propertie-; and the business con template!, it is hereby agreed that all members nt the hoard shall be free to join in or become parties to agree- ments and transactions which the several boards of directors hereinafter re- ferred to, or this board may arranu'e. to the same extent .and in the same man- ner and with like effect as if they were not members of the board. This board may transfer, from time to time, to such persons as it may be desired to constitute trustees or directors or other officers of corporations, so many of the shares as may be necessary for that purpose, to be held by them subject to the provisions of this instrument. Such transfers may be executed' by the president and treasurer of the board in behalf of and as attorneys ,f or the board for that purpose and be retransferred when so requested by the board. -The first board shall consist of the persons hereinafter mentioned; they shall' hold office as follows, and until their successors shall be elected- . . ' • .Members of the first class.— Harry O. Havenieyer, F. O. Matthiesseii, John K' •Searles, jr., Julius Stur.sherg; to bold office for seven years. Members of the second class.— Theodore A. Havemeyer, Joseph-B. Thomas, John Jergensen. Hector C. Haveniejer: to hold office five years Members of the third class.— Charles H. SenfC, William Dick; to hold office three years. At the expiration of the terms of the third class and of each successive class • their successors .-is members of such class shall be elected for seven years Officers.—The board shall appoint from its members a president, vice presi- dent, and treasurer, and it shall also ap[)oint a secretarv, who may or may not be a member of the board. The board may from time to time create other offices, and appoint persons to fill them. It may appoint committees. It shall AMERIGAN SUGAR REFINING COMPANY. 63 designate the duties and prescribe the powers of the several officers and com- mittees. Plans. — ^The several corporations, parties to this agreement, shall maintain their separate organizations and each shall carry on and conduct its own business. The capital of each corporation shall be transferred to the board, and in lieu of the same certificates not exceeding $50,000,000, divided Into 500,000 shares- each of $100, shall be issued by the board and distributed as hereinafter provided. The certificate shall be in the following form : No. Shares [Shares $100 each.] THE SUGAR REFINING CO. This is certify that is entitled to shares of the Sugar Re- fineries Co. This certificate is issued under and subject to the provisions of a deed dated the 16th day of August, 1887. The shares represented by this certificate are transferable by the holder and his personal representatives in person or by attorney, upon the books of the board and not otherwise, and only upon the surrender of this certificate. They entitle the holder to the rights and are subject to the provisions men- tioned in the deed. The interest of the holder is in the proportion of the number of shares rep-, resented by this certificate to the entire number of shares outstanding. The total amount represented by outstanding certificates and the terms of the deed- may be changed from time to time by a majority in interest as therein provided. •In witness whereof the board has caused this certificate to be signed by its president and treasurer, and the seal of the board to be affixed hereto, the day of , 188__. For value received do hereby assign, transfer, and set over unto shares of those represented by the \-\-ithin certificate, and do hereby con- stitute and appoint attorney irrevocable for and in name and stead to transfer the said shares upon the books kept for the purpose under the direction of the within board. The assignee, by accepting this transfer, assents to the terms of the deed referred to inthe certificate as the same shall be changed from time to time. Witness my hand and seal this day of , 188-_. Title. — The shares of the capital stock of the several corporations to be trans-. ferred to the board as herein provided shall be transferred to the names of the board as trustees, to be held by them and by their successors as members of the board strictly as joint tenants. , By the death, resignation, or removal of any member of the board, the whole, title shall remain in the others. All members ceasing to be such shall execute such 'instrument as may be.necessai-y, if any, to keep the title vested in the persons who from time to time shall be members of the board. ' The board shall hold the stock transferred to it with all the rights and. powers incident, to stockholders in the several corporations, and subject only to purposes set forth in this deed. , Division of interest.— The several corporations shall be entitled to the shares, in the following proportions of the $50,000,000, viz : . Havemeyer & Elder. De Castro & Donner Sugar Refining Co. F. O. Matthiessen & Wiecher's Sugar Refining Co. The Havemeyer Sugar Refining Co. The Brooklyn' Sugar Refining Co. Dick & Meyer. Moller, Sierck & Co. Oxnard Bros. North River Sugar Refining Co: Standard Sugar Refinery. Bay State Sugar Refinery. Boston Sugar Refining Co. Continental Sugar Refinery. Revere Sugar Refiftery. 64. AMERICAN SUGAR REFINING COMPANY. Each refinery and the corporation to which it belongs shall be freed from liability and indebtedness by the parties interested in it; or such parties, it the board shall approve, may provide in cash for such indebtedness or liability, leaving the same to stand at the pleasure of the board, except that the em- ployees' contracts shown in the schedules hereto annexed, and the contracts with Havemeyer & Elder and the P. O. Matthiessen & Wiecher's Sugar Refining Co., and the Bay State Sugar Refinery pending for improvements and enlarge- ments shall continue as liabilities. Annexed hereto are scheduled in general terms of the properties of the sev- eral refineries. The properties are guaranteed to correspond with the schedule by the parties interested therein, who are to make good any deficiency. On the complete execution of this agreement each of the said parties shall make a full inventory of the property not embraced in such schedules, and useful for the conduct of the business, on hand or contracted for, including raw and refined sugars, molasses, sugars in process, sirups, bone-black, fuel, barrels, packages, charcoal and other supplies; and suth inventory is to be examined and the articles appraised at their present cash value (except as to sugar and molasses to arrive, which are to be appraised at their market ^■alue on arrival) by a committee of five persons, as follows: , Theodore A. Havemeyer. F. O. Matthiessen. Julius A. Stursberg. John B. Searles, jr. , Joseph B. Thomas. The value of such property as fixed by four-fifths of the appraisers shall be paid for in cash by the snid board to the treasurer of each corporation. Bone black may at the option of the said board be paid for In cash or In bonds hereinafter provided for or in certificates at a rate for bonds or certifi- cates to bo fixed by vote of a majority of the members of the entire board. The property shall remain with the refinery, where it is to be used by it, except as such refinery shall make a different disposition of it. In consideration of the transfer of their stock to the board, the board shall also pay to Havemeyer & Elder the sum of to the F. O. Matthiessen & Wiecher's Sugar Refining Co. the sum of , and to the Bay State Sugar' Refining: Co. the sum of on account of payments already made on pending contracts for Improvements and enlargements. Additional shares to the amount of $400,000, less 15 per cent, to be left with the board as hereinafter provided, shall be received by Holier, Sierck & Co. for improvements and enlargement of capacity of their refinery now in progress, when said Improvements are completed and the increased capacity demon- strated. The shares assigned to the several refineries shall be distributed by them to and among the parties interested therein. Each holder of stock in a refinery company shall be entitled to so many of the shares allotted to such refinery as shall be in proportion of his stock to the capital of his company. Shares for stockholders of any refining company who shall not surrender their stock, may, under the direction of the board, be deposited for their account, with the right to receive the same upon the surrender of their stock. Of the shares allotted to the several refineries they shall leave 15 per cent with the board, and these shares and any shares not allotted of the $50,000,000, except as herein otherwise provided shall be subject to be disposed of by the board either for the acquisition of other refineries to become parties to this deed, payment for additional capacity, or by appropriations to the several re- fineries. But in no case shall any appropriation be made to or any action taken by any corporation without the approval of its board of directors, and no action be taken by the board which shall create liability by it or by its members. Profits.— The profits arising from the business of each corporation shall be paid over by it to the board hereby created, and the aggregate of said profits, or such amount as may be distributed by said board, at such time as It may determine, to the holders of the certificates Issned by said board for capital stock, as hereinbefore provided. Fiscal arrangements.— The funds necessary to enable the said board to mafee the payments herein provided to be made by it may be raided by mortgage AMERICAN SUGAR REFINING COMPANY. 65 to be made by the corporations, or either, any or all of them, in their property, and by such other means as shall be satisfactory to such board. In case any mortgage shall be paid on the property of any corporation by its directors or stockholders, the holders of certificates shall, within a time to be fixed by said board, have the right, at such uniform rates as said board shall arrange, to have the bonds, certificates, or other evidence of debt or interest in proportion to their respective holdings. Any parts which shall not be thus taken may be disposed of by said board. Clianges. — The number of shares and the total amount thereof issuable by said board may from time to time be increased or diminished by deeds exe- cuted by a majority in value of the certificate holders. The provisions of this deed may from time to time be changed by deed executed by not less than a majority in interest of the certificate holders, provided no change shall be made which shall discriminate to the disadvantage of the certificate holders as between themselves. Acquisition of other reflneriefi. — The capital stock of other sugar refining companies and of companies whose business relates directly or indirectly to sugar refining (in every instance to be incorporated) may be transferred to said board with the consent of a majority thereof at valuation and upon terms satisfactory to it, to be held by said board under and subject to all the terms of this deed and certificates may be issued therefor by said board, and may be sold by it to provide funds for such purchase or purchases, and any such cor- poration or corporations shall thereupon become a party to this deed upon causing the fame to be duly signed in its behalf. Custody of deeds. — This deed, when executed by the parties hereto, shall be delivered to the president of the board, who shall have the sole and inde- pendent custody and control of the same, and the said deed shall not be shown or delivered to any coriwration, firm, person, or persons whatsoever, except by the express direction and order of the board. A copy of the said deed shall also be lodged with a member of the board residing in Boston, Mass., which shall be held by him under the same condition and in the same manner as the original deed. In witness whereof the parties have hereto set their seals and affixed their names, these presents to become binding when completely executed by all the parties and to take effect from October 1, 1897. Dated August 16, 1887. Havemeyer & Elder ; Donner & De Castro Sugar Eefg. Co., per H. O. Ha^emeyer, Manager (subject to confirmation stock and scrip holders) ; F. O. Matthiessen & Wiechers Sugar Refg. Co., F. O. Matthiessen, P. ; Havemeyer Sugar Refining Company, .Tohn E. Searles, jr., Treas. ; Dick & Meyer; North River Sugar Refining Co., Geo. H. Moller, Secretary ; Oxnard Bros. ; MoUer, Sierck & Co.; Brooklyn Sugar Refining Co., Henry Offerman, Treas.; Standard Sugar Refining Co., by Charles O. Foster, Pres. ; liay State Sugar Refg. Co., per Edwin F. Atkins, Pres.; Continental Sugar Refinery, by Silas Picee, Pres. The undersigned hereby agree to become parties to the foregoing deed in accordance with the terms and condition therein stated, they to receive without discount the amounts in certificates set opposite their respective signatures: FoKEST City Sugar Refining Co., By H. J. LiBBY, President. Geo. S. Hunt, Treasurer. St. Louis Sugar Refining Co., By W. L. NooTT, President. A. D. Cunningham, Secretary and Treasurer. Planters' Sugar Refining Co., New Orleans, John Baekley, President. Louisiana Sugar Refining Co., John S. Wallis, President. Q. Will you look at page 78 of this record in the case of the United States against the E. C. Knight Co., and state whether or not that is a copy of a con- tract entered into between thie parties named, the American Sugar Refineries Co. and Harrison?— A. I believe it to be. Q You have no doubt that it is? — A. I have not the slightest doubt about it. (Contract of purchase of Franklin Refinery put in evidence.) 98244—11 5 66 AMEEICAM SUGAR KEFINIXG COMPANY. CONTEACT OF THE AMERICAN SUGAR EEFINING CO. WITH CHARLES C. HARRISON, REP- RESENTING THE STOCKHOLDERS OF THE FRANKLIN STJGAB REFINING CO. New York, March 10, 1S92. Gentlemex : Having heretofore proposed to buy the refinery and all buildings, wharves, and plant connected with the establishment of the Franklin Sugar Refining Co., of which you are owners of all the stock, in order that we might take the title as stockholders of the corporation which owns the property. In- stead of directly, as originally proposed, but not varying in substance the prop- erty intended to be sold and that intended not to be sold, the American Sugar Refining Co. offers to purchase from you the entire capital stock of the Frank- lin Co. for the sum of $10,000,000, payable in shares of the American Co. at par, one-half common and one-half preferred. Provided that the consent which is required to authorize an increase in the capital of the American Co. of $25,000,000 Is obtained. This offer, subject to the above proviso, is to become a binding contract upon the acceptance of the same by Mr. Chas. C. Harrison in behalf of himself and his associates, owners of all the stock of the Frankliu Sugar Bofiuipg Co., when the American Co. will, with all reasonable dispatch proceed to complete the required consent for the increase of capital. No property is intended to pass by this sale of shares for $10,000,000, payable in shares other than real estate, plant and bone black. (142) The title to the real property of the Franklin Co. shall be marketable iiiij clear of all encumbrances and liens. Included in this property is a wharf, the title to which stands in the name of Wm. W. Frazier (the title to be trans- ferred to the Franklin Co.), and excluded from this sale is the title to the prop- erty south of Almond Street and west of Swanson Street, and two houses north of Bainbridge Street, 618 Swanson Street, and 619 Penn Street, standing in the name of the Franklin Co., which we understand to have been placed in the name of that company by mistake. The bone black that shall have been received at the refinery on the 5th of March, 1S02, will pass as property of the Franklin Co. to the American Co. All running contracts connected with the business for the year 1892, or any part of it, such as those for coal, bone black, packages tight or shiek, blood, hauling and all similar contracts for supplies will be assumed and performed by the American Co., the sellers paying all liabilities under said contracts so far as the same shall have been executed liy delivery or performance, and also paying wages and salaries up to the 5th of March, instant, which is to be the day on which the transfer takes effect, if this contract is completed, the account of stock having been taken on that day. There will also pass by the sale the lease of the city wharf at the foot of Almond Street and the Philadelphia office ' of the company at No. 101 South Front Street. The Ameri Ajikhic.\n Sugar I!ekixing Co. — Certificate of Incorpoe.\tion.' This is to certify thiit we, F. O. Matthiesscn, John E. Searles, jr., H. O. Have- iiicyer, William Dick, and Theodore A. Havemeyer, do hereby associate ourselves into a company under and.by virtue of the provisions of an act of the legislature of Nefl- Jersey, entitled "An act concerning corporations," approved April 7, 1875, and the several supplements thereto and acts amendatory thereof, for the I)urposes hereinafter mentioned, and to that end we do by this our certificate set forth : First. That the name we have assumed to designate .such company and to be used m its business and dealings is " The American Sugar Refining Company." Second. That the place in this State where the business of such company is to be conducted is Jersey City, in the county of Hudson, in which the principal part of the business of such company within this State is to be transacted; that the principal place of business out of this State is to be situated in the city of Brooklyn in the county of Kings, in the State of New York ; that the States of Maine, JIassachusetts, Connecticut, New York, Pennsylvania, Louisiana, Mis- souri California, and .Maryland are the other States of the United States in which It proposes to carry on operations; and that the objects for which said company is formed are the purchase, manufacture, refining, and sale of sugar, molasses, and melads, and all lawful business incidental thereto. h^'if^l'^"'^'" accompanying the copy of the certificate of Incorporation states that the by-laws can not be sent on request without special vote of the board of directors. AMERICAN SUGAB EEFINING COMPANY. 67 That the business which is to be carried on out of this State is a part of the purchase, manufacture, refining, and sale of sugar, molasses, and melads, and all lawful business incidental thereto. Third. That the total amount of the capital stock of said company is $50,000,- 000, the number of shares into which tlie same is divided is 500,000, and the par value of each share is $100. That of this amount one-half will be general stock and one-half preferred stock, and that the holders of such preferred stock shall be entitled to receive from the surplus or net profits arising from the business of the corporation a fixed yearly dividend of 7 per cent, payable semiannually on the 2d day of January and July in each year before any dividend shall be set apart or paid on the said general stock. Should the surplus or net profits arising from the business of the corporation prior to any dividend day be insuflicient to pay the dividend upon preferred stock, such dividends shall be payable from future profits, and no dividends shall at any time be paid upon general stock until the full amount of 7 per cent per annum up to that time upon all the preferred stock shall have been paid or set apart. The holders of preferred stock shall be entitled to no dividends beyond the 7 per cent aforesaid. The amount with which said company will commence business is $11,000, all of which shall be general stock and which is divided into shares of the par value of $100 each. Fourth. The names and residences of the stockholders and the amount of shares held by each are as follows, viz : Names. Residences. Number of shares. Theo. A. Havemeyer. William Dick Jos. B. Thomas F. O. Matthiessen Jno. E. Searles, jr H. 0. Havemeyer Geo. C. Magoun Mahwah, N. J Brooklyn, N.Y... Boston, Mass New York, N.Y.. Brooklyn, N. Y.. Greenwich, Conn New York N. Y . 20 20 20 20 10 10 10 Fifth. The period at which said company shall commence is the 10th day of January, 1891, and the period at which it shall terminate is the 10th day of January, 1941. Sixth. The directors of said company shall be classified in respect to the time for which they shall severally hold office in three classes. Each class shall contain as near as may be one-third of the whole number of directors. At the first election of directors the first class shall be elected for a term of one year, the second class for a term of two years, and the third class for a term of three years, and at each annual election after the first the successors to the class of directors whose term expires in that year shall be elected to hold office for the term of three years, so that the term of office of at least one class shall expire in each year. In witness whereof we have hereunto set our hands and seals the 9th day of January, 1891. F. O. Matthiessen. [seal.] Jno. E. Seables, Jr. [seal.] H. O. Havemetee. [seal.] Wm. Dick. [seal.] Theo. A. Havemeyeb. [seal.] State of New Toek, City and County of New York, ss: Be it remembered that on this 9th day of January, A. D. 1891, before me, Frank K. Eunyon, personally appeared Francis O. Matthiesson, John B. Searles, jr., Henry O. Havemeyer, Theodore A. Havemeyer, and William Dick, who I am satisfied are the persons named in and who acknowledged the foregoing certificate, and I having first made known to them the contents thereof they did each acknowledge that they signed, sealed, and delivered the same as their voluntary act and deed. 68 AMERICAN SUGAB REFINING COMPANY. In witness whereof I have hereunto set my hand and affixed my official seal this 9th day of January, A. D. 1891. Fkank K. Runyon, Master in Chancery of New Jersey. [Indorsed:] "Recorded in Hudson Co., N. J., clerk's office, Jan. 9, 189], in book 11 of clerk's record. " Dennis McLaughlin, Clerk." [Indorsed:] "Filed January 10, 1S91. "Henry C. Kelsey, " Secretary of State." STATE OF NEW JERSEY — DEPARTMENT OF STATE. I, George AVurts, secretary of state of the State of New Jersey, do hereby certify that the forecroing is a true copy of the certificate of incorporation of " The American .Sugar Refining Company," and the indorsements thereon, as the same is taken from and compared with the original filed in my office on the 10th day of January, A. D. 1891, and now remaining on file therein. In testimony whereof I have hereunto set my hand and affixed mv official seal. at Trenton, this 19th day of August, A. D. 1S99. [SEAL.] George "Wurts. Secretary of State, APPENDIX 11. ABSTRACT FROM TESTIMONY REGARDING SUGAR BEFORE NEW YORK JOINT COMMITTEE APPOINTED TO INVESTIGATE TRUSTS, 1897. 69 IITVESTIGATION OF AMERICAN STJGAE REFINING CO., NEW YORK, 1897. Testimony of James H. Post. cost of plants. Mr. Post testified that the plant of the National Refining Co., capacity about 2.300 barrels per day, has cost approximately $1,000,000 (p. 322). Testimony or John E. Seables. Mr. Searles commented on this statement that different refineries would cost very different sums for the same output, according to the grade of the raw sugars used and of the refined products. The large refineries of the combina- tion are equipped to melt all grades of sugar and therefore represent a heavier investment per unit of output (p. 383). COMPETING REFINERIES. There was considerable evidence to show that the National and Mullenhauer refineries were not actually competing vigorously with the American Sugar Refining Co. In 1897. Mr. James H. Post testified that these two refineries were producing about 200,000 tons a year, while their capacity was about 240,000 tons. They were actually producing about the same proportion of their capacity as the American Sugar Refining Co. There is more profit for the refiner not to run at full capacity in certain seasons of the year when the produce can not be marketed. The American Refining Co. has more facilities for selling its sugar than similar concerns ; more salesmen and brokers. The prices maintained by the smaller refineries were stated to be generally the same as those of the combination, though there have been times when the price was somewhat different. Sometimes there is a heavier demand for one grade of sugar than for another, and prices have to be shaded (pp. 325-332). COST OF REFINING. Mr. John E. Searles testified that the average cost of refining sugar per pound was from one-half to three-fourths of a cent per pound. This includes the Iteni of waste, but does, not include depreciation of the plant. (Pp. 347-348.) In reply to the "statement that Mr. McCahan, of Philadelphia, had testified before the Senate committee that he could refine sugar at 56 cents per hundred pounds, including 26 cents for waste, Mr. Searles stated that the McCaUan refinery used only the highest grades of raw sugar so that its cost of refining would be at a minimum. The raw sugar used by McCahan is 96° C, while American Sugar Refining Co. uses a diversity of raw sugars, some of much lower standard. (Pp. 352-353.) COMPETING REFINERIES. Mr. Searles further testified that of the 20 refineries which had been taken into the American Sugar Refining Co. up to 1896, 12 were in operation during the busiest period of that year and only 6 during the period of lowest con- sumption. At the time of his statement, in 1897, the combination was con- templating the purchase of the United States Sugar Refining Co., at Camden, N. J. It had, in 1896, Increased its proportion of ownership in the stock of the Baltimore Refining Co. Both of these, according to Mr. Searles, were con- sidered to be good investments, particularly because of the favorable locations of the plants with reference to distribution of output. Indeed, the Baltimore 71 72 AMEEICAX SUGAE REFINING COMPANY. plant had been burned down after its purchai?e, but was in process of recon- struction. The only idle refineries, aside from those which had been dis- mantli'd, were 4. with a capacity equal to about 2() per cent of the total capacity of the trust plants. The witnei^s admitted that erery plant acquired by the combination since its origin had been a competing plant. It had built no new refineries. " We deem that the better business of the two. The desire to pet rid of these factors, however, is simply incidental ; it would be incidental, undoubtedly." (Pp. 355-305.) yiv. Seurh's also testified that the American Sugar Refining Co. owned .fa « 1, 0(10 of the stock of the Western Refining Co., of vSan Francisco. (P. 258.) f.vctor's ageeement. The president of the Wholesale Grocers" Association, Mr. Smith, submitted to the I.e.xow committee, in ISOT, a copy of the " Uniform code of rules for the s:ile of sugars under factor agreement,'' used by the wholesale grocers of the country. This was indorsed, "Approved by the refiners," One of its provi- sions was as follows: "Changes in prices of su.gar will take effect as follows: In that district known as the eastern time district the price shall take effect at the same moment the American Sugar Refining Co, makes the change in price. Factors in the central division of time shall make change of price 30 minutes later than that of points in the eastern division, etc. * * * AU reiiaed sugars must be graded and sold on the basis of refiners' New York card price for corresponding* grade." Mr. Searles testified that the refiners' "card price" referred to presumably nic.int the price of the American Sugar Refining Co. There was much discussion among the witnesses and counsel as to whether this code of rules was adopted primarily by tlie Wholesale Gi'ocers' Association and applied to the sales of all sugars, whether manufactured by the American Sugar Refining Co. or not, or whether it was simply useti by the Aiuerican Sugar Refining Co, and applic:ible only to the sale of its sugars. Mr. Searles, in his testimony, stated that those sections of the rules had been assented to by the American Sugar Refining Co., but he disclaimed responsibility for them on the ground that they were formulated by the Wholesale GrooerB' Association. " None of lliose rules are a condition under which the American Sugar Refining Co.'s sugars are sold. This witness was not aware that other refineries were under any obligation to adopt the prices of the American Co. Mr. Smith, president of the Wholesale Grocers' Association, on the other hand, expressed entire ignorance as to the manner in which this code of rules had been adopted, and implied that it was simply put out by the American Sugar Refining Co. He had had little to do with the Wholesale Grocers' Asso- cialion for several years. It had been almost impossible to get together a suHicient number of members of that association to hold a meeting, and it had taken no active steps regarding the methods of selling sugar since it was first organized in 3801. The last changes in the factor system had been made at the solicitation of western whuk'sale grocers not connected with the Wholesale Grccers' Association. This witness also did not know whether the rules re- ferred to were in any way binding upon wholesale grocers not handling the jiroduet of the refineries outside the American Sugar Refining Co. (pp. 812 -.SiG). Mr. Smith further states that the factor system was adopted In the first in- stance at the request of the wholesale grocers, and that the Wholesale Grocers' Association owed its origin chiefly to the movement to secure a profit on sugar, which constitutes about 30 per cent of the business of wholesale grocers. Prior to the adoption of the factor system there had been no profit whatever, owing to the excessive competition. This witness asserts that wherever the product becomes entirely uniform in quality the competition will become so great as to destroy profit. The rebate of three-sixteenths of 1 cent allowed by the factor system is little more than two-thirds of the cost of handling the business, so that tiere is still a loss (pp. sit)-S]s. S27). There seemed, in fact, to be general agreement among most of the witnesses that the rebate system was adopted for the benefit of the wholesale grocers and not by the desire of the combination itself, which, it was maintained, got no particular advantage from it except the continued existence of the grocers who served as machinery for distributing its products. (See also testimony of John E. Searles, p. 413.) AMERICAN SUGAR REFINING COMPANY. 73 Mr. Theodore A. Havemeyee testified that the American Sugar Refining Co. probably produced between 73 and 75 per cent of the total product of refined sugar in the United States. The most important competitors were the Jlollen- hauer and National refineries at New York, the McCahan refinery at Philadel- phia, the Henderson at New Orleans, one in Galveston, and one in California. He admitted that in June, 1894, he testified before the United States Senate committee that the product of the company's refineries was about 80 per cent of the total for the United States. The capacity of the plants in 1897 he stated to be about 25,000 or 30,000 barrels per day. Mr. Havemeyer also stated that he would not go into any business that paid less than 16 per cent on the invest- ment. There are nonmonopolistic businesses which return that rate of profit. (Pp. 69-93.) Mr. Henry O. Havemeyer, president of the company, stated that the Sugar Kefineries Co., commonly known as the Sugar Trust, was organized in October. 1887. CAPITALIZATION. Mr. Havemeyer stated that the trust certificates issued by the Sugar Trust to the respective companies entering the combination were fixed in amount by agreement between the stockholders of the different companies, who were com- paratively few in number. He never saw any schedule showing the actual capital invested in the various companies. The capital of the trust, $50,000,000, was greatly in excess of the face value of the stock of the companies entering the combination, but ttat original capital in many cases was much less than the value of the property. (Pp. 102-103.) Mr. Havemeyer further stated that of the 15 plants which entered the Sugar Trust, 7 were closed. COMPETITION. Mr. Havemeyer stated that several new refineries had been built since 1894 in competition with the American Sugar Refineries Co. Among these were the MoUenhauer, McCahan ( Philadelphia ) , and National Companies. With none of these did the American Sugar Refineries Co., in 1897, have any agreement. (P. 108.) Mr. Havemeyer stated that his company produced from 75 to 80 per cent of the refined sugar at that time. He admitted that substantially the prices fixed by It were determining for the competing concerns. " Q. And whether you do it directly or indirectly, the fixing of the price by you means the fixing of the price of every other company, whether competitive or not?— A. That is undoubtedly substantially the way it works." (Pp. 111- 115.) jTist prior to his testimony the firm of Havemeyer & Elder had bought a con- trolling interest in the Woolson Spice Co., of Toledo, Ohio, and Mr. Havemeyer stated that the American Sugar Refineries Co. was contemplating taking over its stock. The chief business of the Woolson Spice Co. was the roasting and selling of coftee. About six months prior to the date of his testimony Arbuckle & Co., the leading wholesale grocers and roasters of coffee, had ceased to purchase large quantities of sugar from the American Sugar Refining Co., as had been their previous practice. Mr. Havemeyer stated that it had been the custom for the Sugar Co. to take back the empty barrels furnished to Arbuckle Bros, at 20 cents each. The MoUenhauer refinery had offered to take them back at 22 cents each, and Arbuckle shifted his trade largely to that concern. Mr. Have- meyer asserted that the purchase of the Woolson Co. had nothing to do with this action on the part of Arbuckle Bros., nor had the fact that Arbuckle & Go. were proposing to erect a sugar refinery entered into the matter. He had sim- ply become convinced that there was a great profit in the coffee business if it could be carried on on a very large scale. "A monster monopoly, in fact, has been put upon legitimate business principles to serve the consumer at the very Slightest amount of profit consistent with fair returns on the capital invested and the brains required to run it." (Pp. 116-119.) i nnn f« The output of the Woolson spice plant had been increased from 1,000 to 8 000 bags of coffee per day, and the profit in roasting has been reduced from 3' cents to 1 cent per pound. (P. 120.) 74 AlIEEICAN SUGAR EEFIlvING COJIPAXY. factor's ageeement. Mr. Havemeyer submitted a copy of the factor's agreement used by the American Sugar Refining Co. in selling sugar to wholesale grocers. (See agreement, p. 12S..) The factor agrees that none of the sugar consigned to him shall be sold, directly or indirectly, to retail dealers for less than the daily quotations fnmihed by the company, plus freight, as per the quality rate book established by the wholesale grocers' organization. In ease this agreement Is carried out the company is to pay a commission of three-sixteenths cent per pound. A form of afiidavit is also submitted, which must be signed by the factor proving his compliance with the conditions of the agreement. Mr. John Abbuckle testified that a large part of the sugar bought by his concern from the American Sugar Refining Co. had been packed into 2-pound packages by a packing machine on which the concern had a patent. (P. 131.) Mr. James M. Jarvie. of the firm of Arbuckle Bros., stated that the American Sugar Refining Co. some time before had made a propositon for buying the patent for the sugar-packing machine referred to. Arbuckle Bros, replied that they had found so much profit in the selling of sugar in packages that they proposed to build a small refinery and manufacture their own sugar. The purchase of the Woolson Since Co. was felt to be a club adopted by the sugar company to prevent the erection of this proposed refinery. Mr. Palmer, the head of the cooperage department of a subsidiary company of the American Sugar Refinery Co.. had told Mr. Jarvie that if Arbuckle Bros, insisted on going into the sugar business the sugar company would certainly go into the coffee business, and that the latter had more millions than the Arbuckles, and that it would be a fight to the end. Mr. Havemeyer asserted that Mr. Palmer had no authority to make such a statement. (Pp. i3S-142.) ilr. Arbuckle. afterwards recalled, asserted that he believed that the Ameri- can Sugar Refining Co. was trying to destroy all competition against itself in the refining of sugar. (P. 147.) CLOSING OF REFINERIES. Mr. H. O. Havemeyer further testified that most of the refineries which were closed after the organization of the Sugar Trust had not been in constant operation prior to that time. In the Stale of New York four refineries were closed— Donner & De Castro. Oxiiard, Moller & Sierck, and the North River— but none of these were in operation immediately before the formation of the trust. The Boston Sugar Refining Co. was in operation, but was Immediately closetl when the trust was formed. The Forest City Sugar Refining Co. had not been in operation for some time. The St. Lnuis Sugar Refining Co. was continued in operation for about a year after the trust was formed, but was found Ies.< economiral than the eastern refineries, and was closed. The four refineries aoiuired in Philadelphia later were not closed, but were continueil in even fuller operation than before their combination with the American Sugar Refineries Co. (Pp. 102-105.) ClPILiilZATION. Mr. Havemeyer submitted a copy of the trust deed of the Sugar Trust, but with the omission of the amounts of stock assigned to the respective establish- ments in the combiuation (p. 172), and he later testified (p. 655) that he did not know where the original Sugar Trust deed was; that it had been produced in a previous State investigation, but that Mr. Parsons. secretaiT of the Sugar '^^Th h^^ ^^f^ ^^^ allowed to cut out that part of the deetl- showing the distribution of trust certificates. No information as to this distribution was therefore obtained by riie investigation of 1m»7. *"\^,''' S?^*^'?'?'*;''- lio"'«'^er- sub'mited copies of the contracts for the purchase of the Philadelphia refineries, which were absorbed in 1S!>2. The total amount of stock issued m the purchase of these refineries was .'^23,936,000 • for the lianklin Co.. s:iO.OOO.(«X) were paid: for the E. C. Knight Eefinerv. §2,050,000. For each share (.sLiW) of the Delaware Sugar Refinerv, the American Co. issuL^l 22J shares i.yiOO) or two and one-fourth times as much capital as formerly repiv?sen ted by the stock of this company. Total amount involved not given. (Pp. liti-]ss.) AMERICAN SUGAR REFINING COMPANY. 75 Mr. John E. Searles, secretary and treasurer of tlie American Sugar Refin- eries Co., gave evidence with regard to the capitalization of the Sugar Refinerlea Co., particularly In regard to the exchange of its stock for the North River Sugar Refining Co. All the other companies entering the trust agreed to accept trust certificates for the valuation fixed on their property. The amount assigned for the North River Co. was $700,000. but its stoclvholders were doubt- ful as to the value of the trust certificates and preferred to sell their property for cash. Mr. Searles, therefore, personally offered to buy the capital stocli of the North River Sugar Refining Co. for $350,000. The ofiler was accepted and he then turned over the property acquired to the American Sugar Refining Co. and took the trust certificates. These certificates, according to Jlr. Searles, had uo known market value, and differont persons naturally would make different estimates of their worth. The $350,000 was, in Mr. Searles's judgment, less than the real value of the North River property in cash, because the directors were very anxious to sell their property. As a matter of fact, 15 per cent of the $700,000 of trust certificates mentioned was retained in the treasury of the company for future improvements, so that only $595,000 of certificates were directly exchanged for the $350,000 of cash investment by Jlr. Searles. Mr. Searles further stated that the value of each property taken into the trust was estimated on the basis of its " property and earning capacity " — that is to say, its earning capacity at the time. The statements of the representa- tives of the various companies as to their value were generally accepted. Four of the concerns entering the combination were firms, but for convenience they were Immediately organized as corporations, but the amount of capital stock issued was nominal. Havemeyer & Elder, who possessed the largest refinery of all, incorporated with a capital of only $500,000, much less than the true value of their property. (Pp. 196-223.) COMPETING REFINEKIES. Mr. Searles testified that the American Sugar Refining Co. owned one-half of the stock of the Western Sugar Refining Co., which practically controls the refining of the product of the Hawaiian Islands. There are three beet-sugar refineries in California in competition with this establishment, and it also suffers competition from a large refinery in Hongkong. On an average through the year the American Sugar Refining Co. does not operate at more than 80 per cent of its capacity. The refineries in the country have much more capacity than is required. The 15 refineries which went into the Sugar Refineries Co. In 1SS7 were reduced to 8 in active operation : but part of the others were kept equipped In order that they might be used in case of an emergency, such as the destruc- tion of a refinery by fire. Thus the Havemeyer Sugar Refining Co.'s plant has been thoroughly remodeled and is one of the finest in the country, but is not in operation at all. Smaller plants were abandoned and the business con- centrated in the larger and more efficient plants. (Pp. 236-239, 256.) FACTOR SYSTEM. Mr Edward J. Duggan, a wholesale grocer of Albany, testified regarding the factor system that it was intended for the protection of the broker and whole- sale grocer in order that thev might get some profit out of the handling of sugar It also gives an advantage to the American Sugar Reflnmg Co., be- cause' the wholesaler, whose interests are protected by the rebate arrangement, will not question profits as he would otherwise. The only profit that the factor can get under the factor system is that which comes from the rebate granted by the manufacturer. (Pp. 2S1-2S2.) Jlr James H Post, of the firm of B. H. Howell, Son & Co., sugar brokers and sales agents for the Mollcphauer & National Refineries, testified that that concern used a factor's agreement essentially similar to that employed by the American Sugar Refining Co. (P. 318.) APPENDIX III. ANNUAL REPORTS, ETC., OF AMERICAN SUGAR REFINING CO. AMERICAN SUGAR REFINING CO. Annual Meeting, 1902. Willett & Gray's Weekly Statistical Sugar Trade Journal for January 9, 1902, gives a synopsis of President Havemeyer's annual report. He refers to tbe accomplisliment of the plan to increase the capital stock of the company by $15,000,000, which was authorized at the stockholders' meet- ing September 18, 1002. He makes the statement that with the exception of places where there was a want of authority to subscribe and a limited num- ber of exceptional cases the new stock was promptly taken up by the stock- holders. The amount of stock outstanding at the time of the report was : Pre- ferred, $44,068,300; common, $44,246,100. President Havemeyer refers to the organization recently of a New York corporation to transact the New York business, which had previously been con- ducted by the American Sugar Refining Co., and says that for many years legis- lation of New York was hostile to manufacturing enterjirises. He states that this was the situation when the company was organized and led to its organiza- tion in New Jersey ; that latterly the policy of New York was changed. " By its more recent legislation it has held out inducements to have manufacturing business in New York done by New York corporations. The company has re- organized and conformed to this as far as concerns business of its New York refineries." "This has involved the transfer to Jersey City of the residue of the busi- ness that was heretofore carried on in New York." The remainder of the synopsis of the report is devoted to an argument in favor of the removal of the duty on raw sugar. Annual Meeting, 1903. The annual meeting of the stockholders of this company was held January 14 at Jersey City. There was represented the holders of 629,466 shares of stock, either in person or by proxy. The president, Mr. Havemeyer, reported a satis- factory business last year and an expectation of an improvement this year. Mr. H. O. Havemeyer, Mr. John Meyer, and Mr. Arthur Conner, the directors whose term of oflice expire to-day, were unanimously reelected. The acts of the officers and directors up to this time were approved. It was voted that the surplus in the treasury of the company, after the payment of the dividends which have been declared, shall be transferred to the working capital. PEICES AND COST. President Havemeyer, in his annual report, says : " The president is able to report to the stockholders that during the past year business conditions relating both to purchase of raw and the sale of refined have been reasonably satisfactory. The average price at which refined has been sold is 4.45 cents a pound. This includes 1.81 cents a pound which goes to the Government. It thus appears that the net price has been reduced 2.64 cents a pound, as against a net price, which in 1887, at the time of the formation of the Sugar Refineries Co., was 3.50 cents. I refer to the matter particularly at this time because of proposed legislation, the professed object of which is to regulate business done by corjjorations as against that which is done by individuals. Any such legislation overlooks the fact that a corporation is an aggregation of individuals. We have 11,274 stockholders, every one of whom is interested in the conduct of the business, and the business is done at an economy Impossible in individual efforts. The low price leads to increased consumption, and enables the business to be done at the lowest possible margin. The natural 79 80 AMERICAN SUGAR REFINING COMPANY. increase of consumption, year by year, may be stated to be 4.75 per cent. Dur- ing the last year tlie increase was ,s.l7 per cent. This is attributed to the reduction in price brought about by combination. TRUST LEGISLATION. "It is only by Ivceping the price down that competition can be met; aad if legislators would inform themselves of the situation they would learn that in the sugar industry there is no such thing as preventing competition and the building of new refineries. The above makes it impossible to understand what reasonalik' motive there can be for much of the so-called antitrust legislation. Apparently it is solicitude for stockholders to which is due the proposed legisla- tion. Our stockholders have heretofore shown confidence in the management in a way which can not but afford gratification. They continue to do so. There is no law which compels them — and the same is true of all corporations — to buy or to retain stock. It would seem that it would be time enough to interfere in the interest of stockholders when stockholders make the request. The company h.is heretofiire given such information to stockholders as they, as a body, have asked for. but has confurmed to its rule that special informa- tion shall not be given to individual stockholders. This recognizes that busi- ness which is to be done by ccirjiorations in competition with individuals can not satisfactorily be done if the individual may withhold all information about his business anvl the corporation shall be compelled to make public information about its business. Unless instructed otherwise, the company will adhere to the pulicy hcretof(ne pursued of doiuf; business at a minimum of margin, rely- ing for its profits upon enlarged consumption. It is a curious commentary upon much of the proposed legislation that while its avowed object is to relieve, its ofl'ect is to put restr.iiuts upon trade, this being directly the reverse of the action of our great commercial rival. England, which in recent years has lieen f(^r(•cd, both in the interest of producer and consumer, to wipe from its statute Ixjoks legislation which for centuries It had been the policy of Eng- land to encourage upon the idea that it prevented restraint of trade. It is not my purpose to criticise Includes 309,070 tons Hawaiian, 66,279 tons Porto Rican, and 5,100 tons Phihppme. Note —Figures to 1901 from Monthly Summary of Commerce and Finance, November, 1902. 85 86 AMERICAN SUGAR REFINING COMPANY. Consumption of Sugae in Canada. [Willett & Gray's Weekly Statistical Sugar Trade Journal, Nov. 28, 1902.] Total consumption year ending June 30 — Tons. 1902 (370,075,447 pounds) 165,211 1901 150, 309 1900 136, Oil 1899 118, 671 Percentage of increase year — Percent 1902 10 1901 10 1900 15 APPENDIX Y. COMPETING KEFINEKIES. (Newspaper Extracts.) 87 COMPETING EEFINERIES.' Federal Susab Refining Co.'s Eefineky at Yonkers, N. T. The Federal Refining Co., incorporated for $100,000, under the laws of New Jersey, has a sugar refinery nearly completed at Yonkers with a capacity for 1,000 barrels per day, and expects to begin turning out refined early In June. This is a new-process refinery, doing away with bone black and bag filters, and Its operations will be looked for with much interest, as, if successful, it will inaugurate an entirely new system into sugar refining. The patent was issued April 22, 1902, to Mr. Clans A. Spreckels and Mr. Charles A. Kern. The selling agents are Messrs. Smith & Schipper, New York. The following is an extract from the Patent Office report regarding the process : " The object of this invention Is to economically and quickly remoTe impur- ities from sugar or sugar solutions. Our process is practiced by mixing the sugar or sugar solutions with a defecating or cleansing composition produced by the action of sulphuric acid upon bodies such as resins, rosin oil, essential oils, fats, fatty oils, and fatty acids In such proportions that there are no- injurious effects upon the sugar from the sulphuric acid, and sulphonated or sulphooleaginous bodies, such as sulphonic acid and sulphonic acid bodies, are produced which have greater affinity or absorbent properties for the earthy or metallic salts and for the invert sugar and caramel ordinarily found asso- ciated with sugar or sugar-bearing bodies than has the sugar itself, and sub- sequently separating the sugar from the defecating or cleansing composition containing the absorbed impurities." (Willett & Gray's Weekly Statistical Sugar Trade Journal, May 22, 1902.) The new sugar refinery at Yonkers has been continuing its experiments with the new process patented by C. A. Spreckels and Chas. A. Kern, and the product is expected to be put on the market next week. The company which was incorporated a few months ago In New Jersey with a capital stock of $100,000, filed a certificate yesterday Increasing the capital to $50,000,000, of which $25,000,000 is to be preferred stock, bearing 6 per cent cumulative dividends, and $25,000,000 common stock. It is provided that holders of preferred stock may at any time have their stock converted Into common stock, share for share, and that the company may redeem its preferred stocls: at $125 per share. The directors are stated as follows : C. A. Spreckels, John W. Mackay, Sir William C. Van Home, Dumont Clarke, Edwin Hawley, and William W. Cook. Mr. Spreckels Is president and Mr. Mackay vice president of the com- pany. (Willett & Gray's Weekly Statistical Sugar Trade Journal, July 3, 1902.) The notable feature of the week is the entry of the Federal Sugar Refining Co. with Its new-process sugars as the competitor of the established refiners. The first run of new-process sugars was made on Tuesday and consisted of 60 barrels, followed on Wednesday by a run of 250 barrels, to be Increased to 700 barrels per day In tlie near future. The samples shown represent a fine granulated of good color. The product should meet with ready sale, and orders were taken for 25-barrel lots at 4.40 cents net cash seven days. They stopped taking orders to-day, being oversold one week. In view of the errors of statements noticeable in recent interviews relating to matters with which ^ See also prices. 89 90 AMEEICASr SXTGAK EEFINING COMPANY. refiners have accurate knowledge, skepticism is shown regarding the matters claimed of which refiners have no knowledge, and it will require some time to demonstrate to their complete satisfaction the great advantages over the pres- ent processes. The company, however, appears to have no doubt whatever as to its ability to do this. In the meantime the country will buy the product, pass judgment upon it, and wait results with intense interest. (Willett & Gray's Weekly Statistical Sugar Trade Journal, July 10, 1902. ) The Federal Refinery's output continues to be very small, amounting to only about 250 barrels daily, reported to be due to scarcity of skilled labor, conse- quently it is oversold two weeks. Thus far the product is limited to fine and standard granulated, which is of even grain, although rather lacking in brilliancy, the price remaining at 4.40 cents net cash without rebate or discount, but guaranteed to arrival. Before long this refinery Intends to produce cubes and powdered, as well as granulated. (Willett & Gray's Weekly Statistical Sugar Trade Journal, July 17, 1902. ) The Federal Refinery are not yet taking an active part in the business, their output remaining small, but some new purchases of cane sugars here and beet sugars in Europe indicate that they will be a larger factor in the market eventually. Their prices remain unchanged, but they have no sugars for Immediate delivery. Skepticism still prevails regarding the final outcome of this refinery's plans. (Willett & Gray's Weekly Statistical Sugar Trade Journal, July 24, 1902.) The Federal Refinery have only a slight stock of raws, but is expecting fresh supplies soon. Its output is still very small, and thus it is three weeks over- sold and practically withdrawn from the marlvCt. (Willett & Gray's Weekly Statistical Sugar Trade Journal, July 31, 1902.) The Federal Refinery have made no change in their quotation. They have received a lar^e supply of raw beet sugars and report having put on a "night shift" in order to increase their production, but the output is very small and they are four weeks behind in deliveries. Sugar experts, generally, are still waiting to be convinced that this refinery will prove to be the success which is claimed for it. (Willett & Gray's Weekly Statistical Sugar Trade Journal, Aug. 14, 1902.) The Federal Refinery now report that they are producing about 300 to 400 barrels daily and are oversold two weeks. Their price remains at 4.40 cents net cash for granulated. Mr. C. A. Spreckels and parties interested in this refinery have organized a company in Canada with a capital of $6,000,000. (Willett & Gray's Weekly Statistical Sugar Trade Journal, Aug. 28, 1902.) The Federal Sugar Refining Co. have bought 300 feet frontage on the Hudfion River at Yongers, adjoining the 300 feet frontage already owned by them, and will erect on it a 3,500-ton refinery, for which the plans are already drawn. (Willett & Gray's Weekly Statistical Sugar Trade Journal, Sept. 11, 1902.) The Federal Sugar Refinery are slowly working on additions to their reflnerv at Yonkers, N. Y., and thus far have increased their capacity to 750 barrels daily. (Willett & Gray's Weekly Statistical Sugar Trade Journal, Jlay 7, 1903 ) AMERICAN SUGAR REFINING COMPANY. 91 The Federal Sugar Refining Co. are slowly working on additions to their refinery at Yonkers, N. T., and thus far have increased their capacity to 750 barrels daily. (Willett & Gray's Weekly Statistical Sugar Trade Journal, May 1 J iyuo. ) The Knickekbocker StrGAK Refinery. The erection of this new refinery at Edgewater, N. J., on the Hudson River, opposite New York City, is going on slowly, but will, no doubt, soon take on a more active phase. Estimates are now being asked for the construction of the building. (Willett & Gray's Weekly Statistical Sugar Trade Journal, Mar. 5, 1903.) This company was incorporated more than a year ago, but until lately noth- ing has been done in the way of building except the preparing of land for the foundations. The George M. Newhall Engineering Co. (Ltd.) are now at work putting up the new refinery at Edgewater, N. J., on the Hudson River, opposite One hundred and twenty-fifth Street, New York City. The plans call for a 9-story filter house, 78.9 by 80 feet ; an 8-story pan and melter house, 90 by 181.8 feet ; and a 5-story engine house, 41 by 80 feet. This is the refinery to be built under the ownership and in the interest of certain wholesale grocerv houses. (Willett & Gray's Weekly Statistical Sugar Trade Journal, Dec. 24, 1902.) PLANT AND PEESONNEL OF IMPOBTANT NEW COMPANY. A new sugar refinery is in course of construction right under the Palisades in the town of Edgewater, N. J., opposite One hundred and twenty-fifth Street, Manhattan, and a short distance above the well-known glucose factory, on the same side of the river. The new sugar refinery has created a good deal of comment among not only sugar people, but also among glucose people. There has been some doubt as to just what kind of a refinery it might ultimately become. It is an eight-story structure, 200 by 100 feet, with only the letters, " K. S. R." to indicate either its purpose or ownership. After careful investigation we find that the building has been under way about 10 months ; is a sugar refinery, and is owned by the Knickerbocker Sugar Refining Co. The real owners of the Knickerbocker Sugar Refining Co. are still a mystery. The architects of the building were at one time architects also for some of the refineries erected by the Arbuckles. From this fact it is surmised by some interests that perhaps the Arbuckles are really back of the new refinery. On the other hand the Knickerbocker Co. is officered by an entirely distinct set of men. The president of the company is George K. Ross; vice president, Robert E. Jennings ; secretary, William F. Sprague ; and treasurer, Thomas Elsmore. The capital of the company is stated to be $1,500,000, and incorporated under New Jersey laws. It is officially stated that the company has been delayed in its work by labor troubles, but that It hopes to begin operations early in the spring. The follow- ing statement is also made by one of the officials: " We do not care to talk about the company for obvious reasons. The sugar business, you know, is unlike any other. Any construction may be put upon anything a company entering the sugar business may deem it wise or expedi- ent to do. Wait until we are ready to begin refining sugar. We are making good progress now in the erection of our refinery, and the early spring will see us at work." One of the large stockholders of the company is stated to be rather largely interested in some other sugar refining enterprises, and is also interested in a company which has been actively competing with the United States Steel Cor- poration. He is also Identified with some other large industries; among them some industries supposed to be under the indirect control of certain large Standard Oil capitalists. Officials of the Corn Products Co., who have had their attention called to this new enterprise, with the intimation that its purpose is to go into the glucose business, express ignorance of the matter altogether, not even knowing that such a refinery was in process of erection. One of the largest interests in the American sugar refining business dismissed the matter as having little serious import in their business. (Wall Street Journal, Dec. 4, 1903.) 92 AMERICAN STJGAE REFINING COMPANY. Pennstxvania Sugab Refining Co. Willett & Gray's Weekly Statistical Sugar Trade Journal for October 30, 1902, meutions that a refinery is being erected on the river front at Philadel- phia for the above-named company by the Champion Construction Co. It is understood that this refinery is built and furnished in all respects with up-to-date methods and will produce granulated and soft sugar, beginning in a moderate way, not to the full extent of its 4,000 barrels daily capacity. The parties behind the enterprise are unknown except Mr. Adolph Segal, of the Champion Construction Co., who is closely identified with the enterprise. The money required for the construction has evidently been forthcoming from wealthy sources, and we understand that some of the bonds are now being placed on the market, possibly to reimburse the promoters, but as already said, there is a great deal of privacy maintained about the whole enterprise and the public will wait, with special interest, for its completion and the developments of the Influence of its competition upon the markets. The new refinery being built by this company, In a favorable location at Philadelphia, is not yet completed, and is not expected to begin operations for two or three months to come. (Willett & Gray's Weekly Statistical Sugar Trade Journal, Mar. 12, 1903.) FURTHEB FACTS. Alexander C. Thompson, manager of the bond department of the Colonial Trust Co., Pittsburg, Pa., has issued a circular giving further particulars re- garding the first-mortgage bonds recently offered at par and accrued interest with bonus of stock. The bonds are dated July 1, 1901, denomination $1,000, due July 1, 1901. Coupons payable semiannually on January 1 and July 1. The mortgage provides for an annual sinking fund of not less than $50,000, and the bonds can be drawn for redemption after July 1, 1906, at 105 and accrued interest. Authorized issue, $3,000,000; reserved for working capital, $500,000. The circular says : " The plant is practically completed and will be put in operation very shortly. It is located on the Delaware River, midway between the Camden ferry slips and the Cramp shipyard. The plant and buildings proper cover an urea of about three acres, not including the docks and piers, one of which is 600 feet long, being entirely inclosed and fireproof, with 40 feet of water, and accommo- dations for three large steamers. The tracks of the Pennsylvania Railroad run into the refinery." The refinery was built under the direct supervision of the George M. Newhall Engineering Co. (Ltd.), of Philadelphia, and has a guaranteed capacity of 4,000 barrels a dny, with space for 2,000 barrels more. The Newhall Engineering Co. has equipped the plant with the most modern money-saving machinery, such as automatic conveyers for conveying the sugar from the ships and cars to the refinery nnd for handling the coal and ashes. The entire plant is operated by the company's own electrical system. The buildings are eight stories high and are ronstructed of brick and iron, steel, concrete, and slow-combustion timbers. Wherever fire is used the buildings are fireproof. The plant has a daily capacity of 4,000 barrels, or 1,320,000 pounds. The net profit per pound is one-half cent, or $(>,ri00 per day, which for a working year of 300 days amounts to $1,980,000; the interest charge at 5 per cent on $3,000,- 000 bonds is $150,000, and the sinking fund, taxes, etc., amount to $150,000, making total fixed charges of .$300,000; which leaves applicable to dividends an annual net surplus of $1,680,000. If the profits should fall off 50 per cent, the surplus applicable to dividends would still be i?840,000. All of the $5,000,000 stock remains in a voting trust agreement which expires July 1, iriOT, the voting trustees to be selected by the bondholders of the com- pany. The executive committee so far chosen is Frank K. Hippie, president of the Real Estate Trust Co. of Philadelphia, Pa. ; Henry R. Wilson, president of the Lincoln Trust Co., of New York; James S. Swartz, treasurer of the International Navigation Co., of Philadelphia, Pa. The real estate, buildings, and machmery have cost more thaa $2,500,000. (Financial and Commercial Chronicle, May 16, 1903.) The Metropolitan Sugar Refining Co. is about to erect an extensive plant at North Bergen, N. J. Estimated cost $4,000,000. George JI. Newhall Co., Phila- delphia, have contract. (Beet Sugar Gazette, Apr. 5, 1904.) APPENDIX YI. BEET SUGAE. a. STATISTICS OP PRODUCTION. 6. LIST OF FACTORIES, 1903. c. FINANCIAL STATEMENT OF AMERICAN BEET SUGAR CO. d. MISCELLANEOUS NEWSPAPER EXTRACTS. BEET SUGAR. Statistics of Beet Suqab Production, 1892-93 to 1901-2. [Willett and Gray's Weekly Statistical Sugar Trade Journal, Jan. 2, 1902.] Tlie following statistics have been prepared by us to show the progress made by the beet-sugar industry during the pa'St 10 years. The production stated for the present season (1901-2) iteXnecessarilj^ estimated, as some factories have not yet completed their jun. ^ * "^ . _'actories^ > operatec^-^ irilv 1901-2.... 1900-1901. 189&-1900. 1897-98. Sugar, produc" ^ \....' J6,859 ^; ..\..+ , "72,944 / ..\M 32,471/ ....V-^ 40,399'* 1890-97. 1895-96. 1894-95. 1893-94. 1892-93. Sugar produced. TonsA 37, 636 29,220 20,092 19, 550 12, 018 Factories operated. 1 Tons of 2,240 pounds. Production of calendar year— Tons. 1902 148.626 1903 247,563 The statistics for 1901-2, 1902-3, and 1903-^ crops do not conform to those published by Willett and Gray in January 5, 1905, issue of Sugar Trade Jour- nal. These latter numbers are as follows: 1901-2, 163,126; 1902-3, 195,463; 1903-4, 208,135; 1904-5, 209,000. The statistics given in Appendix VI for 1902-3 and 1903^ are of the esti- mated consumption and not production. Lists of Beet Suqae Factories in the United States. [The Beet Sugar Gazette, p. 352.] It is the aim of the publishers to keep this column up to date and reliable. Factory managers will, therefore, confer a favor by promptly notifying us of any change in name or capacity. Name. Blnghamton Beet Sugar Co. Empke Beet Sugar Co Micliigan Sugar Co Bay City Sugar Co Detroit Sugar Co Peninsular Sugar Refining Co. West Bay City Sugar Co Location. Blnghamton, N. Y.. Lyons, N. Y Bay City, Mich , do Eoohester, Mich Caro, Mich West Bay City, Mich- Daily capacity. Tom. 600 600 500 600 500 1,200 500 95 96 AMEBICAlsr SUGAR REFINING COMPANY, Lists of Beet Sugar Factories ijff the United States — Continued. Name. Location. MICHIGAN— continued. Alma Sugar Co Holland Sugar Co Kalamazoo Sugar Co Marine Sugar Co Lansing Sugar Co Saginaw Sugar Co German-American Beet Sugar Co Sebewaing Sugar Re-ning Co Vallev Sugar Co The Sugar Co. ( Ltd.) Sanilac Sugar Rejning Co "WESTERN. American Beet Sugar Co National Sugar Manufacturing Co Eaton Sugar Co Greeley Sugar Co Amalgamated Sugar Co Utah Sugar Co Utah Sugar Co. (rasping station) Do Do American Beet Sugar Co Do Standard Beet Sugar Co Great Western Sugar Co Amalgamated Sugar Co MIDDLE WEST. Minnesota Sugar Co Continental Sugar Co Wisconsin Sugar Co PAaFIC COAST. Amalgamated Sugar Co Washington State Sugar Co Alameda Sugar Co Los Alamitos Sugar C« American Beet Sugar Co California & Hawaiian Refining Co Spreckels Sugar Co , American Beet Sugar Co , Union Sugar Co , CANADA. Wallaceburg Sugar Co , Dresden Sugar Co , Ontario Sugar Co , Wiarton Beet Sugar Manufacturing Co NOT IN OPERATION. Colorado Sugar Manufecturing Co Spreckels Sugar Co , NOW BUILDING FOE THE CAMPAIGN OF 1903, Cbarlevoix Sugar Co , Mount Pleasant Sugar Co Tort Collins-Colorado Sugar Manufacturmg Co Owosso Sugar Co Utah Sugar Co Knight Sugar Co , Windsor Sugar Co Longmont Sugar Co "[ Menominee River Sugar Co Tawas Sugar Co St. Louis Sugar Co Idaho Sugar Co ] . " ' Alma, Mich Holland, Mich Kalamazoo, Mich. Marine City, Mich Lansing, Mich Saginaw, Mich Salzbui^, West Bay City, Mich Sebewaing, Mich CarroUton, Mich. Mount Clements, Mich Croswell, Mich Rocky Ford, Colo Sugar City, Colo Eaton, Colo Greeley, Colo Ogden, Utah Lehi, Utah Springville, Utah Bingham Junction, Utah... Provo, Utah Grand Island, Nebr Norfolk, Nebr Leavitt, Nebr Loveland , Colo Logan, Utah St. Louis Park, Minn. - , Fremont, Ohio Menomonee Falls, Wis . La Grande, Oreg. . Waverly, Wash... Alvarado, Cal Los Alamitos, Cal. Chmo, Cal Crockett, Cal Spreckels, Cal Oxnard, Cal Betteravia, Cal Wallaceburg, Ontario. Dresden. Ontario Berlin, Ontario Wiarton, Ontario Grand Junction, Colo. Watsonville, Cal Charlevoix, Mich Mount Pleasant. Mich Fort Collins, Colo Owosso, Mich, Garland, Utali Raymond, Alta, Canada. Windsor, Colo Longmont, Colo Menominee, Mich East Tawas, Mich St. Louis, Mich Idaho Falls, Idaho AMERICAN SUGAR REFINING COMPANY. 97 The Amebioan Beet Sugab Co.'s Annttal Statement. [Willett & Gray's Weekly Statistical Sugar Trade Journal for Apr. 3, 1902.] American Beet Sugar Co. capital stock : Preferred $5, ooo, 000 Common 15, ooO, 000 The annual financial statement submitted to the stockholders at the annual meeting April 3, 1902, was as follows : CAMPAIGN STATEMENT. Sugar produced pounds— 77, 932, 500 Total credits, campaign $3,521,047 Total cost of operations 2, 667! 024 Gross profits ' 854^ OIS Cost of maintenance 362,' 710 Profits of campaign as shown by last statements 491^ 307 Deductions for general expense and interest 225^ 000 Leaving available for dividends 226^ 607 CONSOLmATION OF THE UTAH SUGAB AND BEAK EIVEE COMPANIES. Willett & Gray's Weekly Statistical Sugar Trade Journal of November 13, 1902, states, on the authority of the Salt Lake Herald, that at a meeting of the board of directors of the Utah Sugar Co. November 6. 1902, it was decided to absorb the Bear River Water Co., the latter being owned by the former, and to operate the two concerns under one head. The name of the new company to be chosen at a future meeting. The capital stock of the new company to be $6,000,000, to be divided equally into preferred and common stock. Other items are given regarding the consolidation of the companies. BEET SUGAB COST OP PEODUCTION. The Beet Sugar Gazette for June, 1901, Volume III, page S2, contains an article by Alfred Musy on " Expenses and returns in the American beet-sugar factories." 98244^11 T APPENDIX VIL BEET-SUGAR INTEREST OF AMERICAN SUGAR REFINING CO. (Newspaper Extracts.) 99 BEET-SUGAR INTEREST OF AMERICAN SUGAR REFINING CO. AXLEGED CONTBOL OF MICHIGAN AND WESTERN ReFINEEIES BT AMERICAN SUGAB Befining Co. [Louisiana Planter, July 18, 1903.] WHO CONTROLS THE BEET-SUGAE FACTORIES? The purcliase by the Sugar Trust of a considerable interest in several beet- sugar factories in Michigan has led to the report that the trust desires to entirely control the beet-sugar manufacture in the West, just as the Standard Oil Cp. is presumed to control all of the oil that comes out of the wells in the various parts of the United States without actually pumping any oil for its own account. It is said that apart from the Bay City and Michigan factories at Bay City, which were recently consolidated as under the probable control of the American Sugar Refining Co., or the Havemeyer interest, that now a half in- terest has been secured in the Sebewaing factory. The Sugar Tiust already owns a majority of the stock of the Saginaw Co. and is furnishing money for the building of a new plant at East Tawas. It is said that they have a half interest in the Alma and Sanilac plants and also in several others. As to whether the Sugar Trust now desires to destroy the beet-sugar industry in Michigan with a view of diminishing the opposition to Cuban reciprocity or desires simply to avail itself of what is naturally a legitimate source of raw sugar is unknown. It is thought by some that the purpose of the American Sugar Refining Co. is strictly legitimate and that they simply desire to make all the profit they can in the beet-sugar industry. The Wall Street Summary goes so far as to say that the Sugar Trust now controls nine-tenths of the beet- sugar output. [Chicago correspondence of Louisiana Planter, Jan. 9, 1904.] A big sugar deal is reported from Utah, where the American Sugar Refining Co. took over from the Spreckels the control of the field on the 1st of January. J. W. Heywood retired from the field on that date, taking with him the Western Sugar Refining Co., the Spreckels concern, turning the business over, according to announcement, to the Utah, Idaho and Oregon Beet Sugar Co., the Havemeyer concern. It is understood the Havemeyers also control the stock of another concern about to erect a factory in the Utah field. In Colorado also plans for new sugar enterprises are developing. A $1,000,000 plant, with a capacity of 1,000 tons every 24 hours, is being established at Las Animas by Messrs. H. B. Coleman and N. H. Stewart, of Kalamazoo, Mich., and J. R McKinnie, of Colorado Springs, who is already interested in the plants at Loveland, Grand Junction, and Rocky Ford. The citizens of the county have given valuable bonuses in the way of land and water rights, and the company will grow beets on 3,500 acres of Its ovm land in addition to the contracts it makes with farmers of the vicinity for beets. The glucose market is dull at unchanged prices. Clarifieds are strong at unchanged prices, while seconds are still scarce. C. B. Maugham. , January 7. [A Louisiana planter and sugar manufacturer, in Country Gentleman, July 25, 1903.] BEET SUGAR IN MICHIGAN. Since my last report regarding the sugar-beet industry the situation has been changed materially. During the autumn it was intimated that the 101 102 AMERICAN SUGAR REFINING COMPANY. American Sugar Refining Co. was mailing overtures designed to secure a con- trolling Interest in tlie stocli of the various sugar factories. This was confirmed in April by the consolidation of the Bay City and Michigan sugar companies, with one-half of the capital stock of $1,000,000 held by the giant Sugar Trust These factories are situated side by side, with a combined capacity of 1,600 tons; these will be under one management, materially lessening expenses. As both companies had made contracts for the season, both will be run if the supply of beets warrants it. Since that time the amalgamation of the ilichigan sugar companies has con- tinued, the Valley and Saginaw being the next to unite; the former is 1 mile south of Saginaw, the latter about the same distance north. It is con- ceded that at least .'?20,000 will be saved annually by operating the plants under one management. In this combination, as well as in that of the Owosso and Lansing factories, the trust controls half the stock. The same is true of the Sebewaing, Caro, East Tawas, Alma, and Sanilac plants, and possibly others, as I noticed recently the statement that only the Kalamazoo and one or two of lesser note remained outside of the trust influence. Naturally, in the light of such develoriments, the future of the beet-sugar industry in our State is a fruitful subject for speculation. .Although the trust agents have repeatedly affirmed that it only seeks representation in the man- agement, and that all of these plants are to be operated, no one believes»for a moment that when once this industry is fully in the iron grasp of the trust the factories will continue active iiuy longer than is profitable to the ruling power. Many people are inclined to believe, or fear, that the beet-sugar industry in Michigan will have a short career. This is based on the assumption that Cuba will be annexed shortly to the I'nited States, and then, as land there is cheap and sugar cane easily grown, that if Cuban sugar is introduced free into the United States, it will be impossible for beet sugar to compete with cane sugar. Not only are wages there very low, but after the soil is once prepared it is only necessary to stick joints of the cnne into the ground, which will sprout with the first rain, and after the first year the crop is continuous for 20 or more years ; no planting required and \ery little weeding or cultivating. In contrast is the labor and care of months to produce a crop of sugar beets, the same to be repeated each year, where wages are high and laborers difficult to secure. Beyond this is the further statement that the Sugar Trust has appropriated !flO0,CM)O.h September .815 October .725 MftV November .540 December .547 July 1895. .695 February .647 .800 April .860 May .915 1891. 1.037 July 1.100 August .945 September .940 October .927 T^y November .855 June December .910 109 110 AMERICAN SUGAR REPINING COMPANY. Monthly prices of r(Mc and refined sugar, 1881-190Jt — Continued. January February March April May June July August September October November December 1897. January February Marcb April May June July August September October November December 1898. January February March April May June July August September October November . . . . December 1899. January February March April May June July August September October November . . . . December Kaw 96° C. 3.813 4.063 4.153 4.313 4.000 3.655 3.375 3.313 3.125 3.126 3.345 3.215 3 180 3.215 3.278 3.313 3.280 3 600 3.625 3.750 3 908 3.843 3.843 4.095 4.120 4.180 4 063 4.188 4.245 4.280 4 125 4 250 4 343 4.245 4 405 4 375 4 280 4 343 4 408 4.563 4 088 4 595 4 438 4 530 4.375 4 310 4 260 4.260 Re- fined. 4.665 4.650 4.780 5.140 4.960 4.626 4.410 4.635 4.356 3.920 4.106 4.100 4 040 4.040 4 225 4.350 4.260 4 360 4 665 4.720 4 815 4 785 4 720 4 840 4 900 4 960 4 900 5 025 5.116 5.080 5 080 5115 5.145 4 780 4 840 4 840 4 685 4 720 4 780 4 900 5 080 5 145 5 210 6.086 4 895 4.795 4 795 4.795 Differ- ence. 0.842 .587 .627 .827 .960 .970 1.036 1.222 1.230 .796 .760 .947 1.037 .980 .850 1.030 .970 .907 .942 .877 .745 .780 .780 .837 .837 .870 .800 .955 .865 .802 .635 .435 .466 .405 .377 .372 .337 .392 .550 .772 .555 .620 .485 .546 .546 January. . February. . March April May June July August September. October November. December.. 1900. January.. February.. March April May June July August September. October November. ! December.. 1901. January February.. March April May June July August September. October November. December. . January February . . March April May June July August September. October November., December. . Raw Re- 96° C. fined. 4 345 4 876 4 438 5.000 4 375 4 925 4 438 4 925 4.500 5.125 4.658 6.495 4.813 5.790 4.843 5.860 4 970 5.880 4.643 5 490 4 376 5.265 4 408 5.315 4313 5.290 4 220 5.240 4 030 5.120 4125 6.100 4 265 6.220 4 250 5.220 4.220 6.170 3.985 6.095 3.750 6.000 3.780 4 800 3.720 4.70O 3.705 4610 3.633 4 440 3.658 4510 3.500 4510 3.600 4610 3.470 4 435 3.375 4430 3.343 4410 3.388 4410 3.466 4430 3.563 4 430 3.750 4366 3.938 4626 3.780 4 615 3.687 4 600 3.700 4 660 3.595 4 626 3.658 4 700 3.576 4.700 3.625 4775 3.797 4 826 3.895 4 825 3.880 4 650 3.780 4 430 3.680 4 310 Dlflei^ ence. a 530 .562 .550 .487 .625 .837 .977 1.017 .910 .847 .890 .907 .977 1.020 1.090 .975 .95S .970 .950 l.UO 1.250 1.020 .980 .997 .852 1.010 1.010 .965 1.059 1.067 1.022 .975 1.030 1.042 1.126 1.160 1.028 .930 .770 .660 .730 Sugar prices, 190^. Months. Raw, 96° centrifugal. Refined, granulated. Difler- Highest. Lowest. Average. Highest. Lowest. Average. (margin). January . . 3.31 3.35 3.44 3.64 3.73 3.84 3.94 4 06 4 26 4 22 4 41 4 76 3.47 3.376 3.67 3.70 3.95 3.95 3.94 4 26 4 31 4 29 4 75 4 875 3.390 3.362 3.656 3.620 3.840 3.896 3.940 4165 4 280 4 256 4 580 4 812 4 26 4 26 4 31 4 40 4 65 4 75 480 495 495 4 80 6.00 5.30 4 36 4 26 4 50 4 65 4 80 4 80 4 96 6.00 5.00 4 90 5.30 5.60 4 310 4 260 4 406 4 476 4 676 4 775 4 875 4 976 4975 4 850 6.150 5.460 0.920 .898 March . . .860 April .896 May .836 .880 July .935 .820 Rppt.PTTihpr, . .696 .695 November. . .570 .638 A verage 3.974 4 765 AMERICAN SXJGAE REFINING COMPANY. Sugar prices, 1906. Ill Months. Raw, 96" centrifugal. Refined, granulated. Diflet- Highest, Lowest. Average. Highest. Lowest. Average. (margin). January 3.75 3.50 3.56 3.55 3.48 3.61 3.75 4.00 4.125 4.00 3.88 3.875 3.66 3.36 3.39 3.375 3.42 3.47 3.72 3.80 4.00 4.00 3.81 3.58 3.665 3.43 3.475 3.463 3.45 3.54 3.735 3.90 4.063 4.00 3.845 3.728 4.65 4.35 4.45 4.55 4.45 4.45 4.65 4.75 4.75 4.66 4.66 4.62 4.36 4.30 4.35 4.30 4.35 4.46 4.45 4.65 4.65 4.55 4.55 4.62 4.46 4.325 4.40 4.425 4.40 4.46 4.55 4.70 4.70 4.60 4.55 4.62 0.795 .895 March .925 April .962 May .950 June - .910 July .815 .800 September .637 .600 November .705 .892 3.690 4.614 Raw, 96° centrifugal. Refined, granulated. Months. First week. Second weelf. Third week. Fourth week. Fifth week. First week. Second week. Third week. Fourth week. Fifth week. 3.625 3.60 3.39 3.55 3.48 3.47 3.75 3.80 4.00 4.00 3.88 3.84 3.75 3.36 3.44 3.48 3.48 3.50 3.72 3.875 4.09 4.00 3.81 3.875 3.625 3.36 3.62 3.42 3.42 3.50 3.72 3.876 4.125 4.00 3.81 3.875 3.56 3.30 3.56 3.375 3.42 3.61 3.75 3.94 4.06 4.00 3.81 3.58 ■■"3.56" ■■'s.'is' ""'i.'oo' ""■3.' si' 4.45 4.35 4.35 4.65 4.40 4.46 4.55 4.66 4.66 4.55 4.56 4. 02 4.55 4.35 4.J5 4.46 4.45 4.46 4.46 4.75 4.75 4.66 4.55 4.62 4.35 4.30 4.46 4.40 4.35 4.45 4.45 4.75 4.75 4.65 4.55 4.62 4.35 4.30 4.46 4.30 4.35 4.45 4.66 4.65 4.76 4.65 4.55 4.62 February 4.46 April . ... May 4.36 June July August 4.65 September . November. - . 4.55 _ APPENDIX YIII B. STATISTICS OF PRICES IN UNITED STATES, ENGLAND, AND GERMANY AS OBTAINED BY INDUSTRIAL COMMISSION FROM WILLETT & GRAY'S. 98244—11 8 113 STATISTICS OF PRICES IN UNITED STATES, ENGLAND, AND GERMANY. Industrial Combinations and Prices. [By Jeremiah W. Jenks.] The effects of the industrial comtkinations upon prices form certainly one of the best tests of their usefulness or disadvantage to society. The popular im- pression seems to be that these combinations very greatly increase prices to the consumers. On the other hand, the trust managers and their advocates are in the habit of claiming that, owing to economies of management, the trusts lower prices to consumers, while at the same time they increase the wages of their employees. It is of course comparatively easy by the selection of statistics at certain chosen periods to show either of these results. It has, in conequence, seemed wisest to secure as far as possible average monthly prices of the leading raw materials and finished products of several of the larger combinations for a series of years and to plat these on charts in such a way that the relations at all times between the two can be most readily seen. Wherever it has been practicable, European prices have been compared with American, in order that the influence of the trust itself might more clearly be brought out. The differential or " margin " between the price of the raw materials and that of the finished product should show, other things equal, the cost of manu- facture plus the profit. Unless one is somewhat guarded, however, one is likely to reach false conclusions if this assumption is made without qualification. In nearly all processes of manufacture there is a considerable element of waste of raw material. As the price of the raw material increases, the value of this waste is also correspondingly increased. In consequence, in order that the profits may be the same, the margin between the price of the raw material and that of the finished product should increase slightly with the increase in price of the raw material. Again, when the raw material has to be held in large quantities, so that it involves the investment of considerable capita], it can be readily seen that the interest charge for carrying this raw material is not a little increased as the price of the raw material rises. This, of course, is a factor of less importance than the other, but nevertheless is worthy of consideration. So far as the manufacture of wire rods and nails is concerned, the necessity of increase of margin as price rises is brought out clearly by Mr. Gates in his testimony ; ' but the same fact holds with reference to the manufacture of tin plate, of wire and nails, and of reliued sugar from raw, as well as in most other lines of business. Special attention will be called to this fact in the comment upon each individual chart. SUGAB.'^ The lines on the chart represent standard raw and refined sugars in the United States, England, and Germany. For America raw sugar is represented by 96° centrifugal and refined by granulated. The English raw sugar, Java Afloat, corresponds closely with the American 96° centrifugal; but the English refined sugar, Tate's Cubes, is a special grade, which normally brings some- what more than the regular price of granulated sugar — at times, probably, nearly half a cent more. The consequence is that we should expect the margin 1 p 1008 ^The prices from which the chart has been made were taken from Willett & Gray's Statistical Sugar Trade Journal as noted in the tables on pp. 40-44 In the Journal Enelish and German prices were given In shillings and pence per hundredweight of 112 Dounds Thev have been reduced to cents per pound In order that comparisons might be more readilv made and the chart more easily platted. The convenient rule for reduction given in the Journal of Jan. 4, 1900, from which the prices of foreign sugars are taken, has been followed. 115 116 AMERICAN SUGAB KEFINING COMPANY. between tbe raw and refined in England to be somewhat greater than the American margin between 96° centrifugal and granulated. I. — Comparative quotations of raw and refined sugars in New York, 1880-1899, [From Willett & Gray's Weekly Statistical Sugar Trad? Journal, Feb. 8, 1894, for prices through 1893; later prices from Journal of Jan. 4, 1900.) 1880 96° centrif- ugal. Granu- lated. Differ- ence. centrif- ugal. Granu- lated. Differ- ence. 96° centrif- ugal. Granu- lated. January February March April May June July August September October November December Yearly averages Net cash 8. 550 8.187 8.646 8.676 8.500 8.578 8.725 8.406 8.426 7.813 8.156 8.362 9.687 9.343 9.625 9.387 9. 3.59 9.921 10.000 10. 340 9.987 9.437 9. 37.5 9.560 1.037 1.156 1.079 .812 .869 1.343 1.275 1.934 1.562 1.624 1.219 1.188 8.421 8.297 8.420 8.062 8.234 8.600 8.550 8.600 8.676 8.768 8.760 8.187 9.515 9.187 9.250 9.250 9.875 10. 475 10.000 9.666 9.960 10.450 9.615 9.287 1.094 .890 .830 1.188 1.641 1.876 1.460 1.166 1.375 1.685 .935 1.100 7.875 7.781 7.937 8.212 8.152 8.062 8.025 8.000 8.075 8.012 7.984 7.690 9.300 9.218 9.312 9.775 9.630 9.484 9.380 9.250 9.203 9.187 8.006 8.725 8.401 8.206 9.650 9.602 1.249 1.396 8.447 8.251 9.715 9.667 1.268 1.426 7.983 7.797 9.280 9.234 January February March April May June July August September October *. November December Yearly averages Net cash 1883 96° centrif- ugal. 7.700 7.625 7.750 7.036 7.812 7.640 7.626 7.662 7.568 7.687 7.630 7.065 7.600 7.423 Granu- lated. 8.637 8.843 8.859 8.712 8.815 8.859 8.850 8.656 8.710 8.587 8.109 7.937 Differ- ence. 0.937 i.i;i8 1.109 1.077 1.003 1.219 1.224 1.094 1.142 .900 .579 .879 8.548 8.506 .948 1.083 1884 96° centrif- ugal. 6.775 6.734 6.437 6.266 6.109 5.700 6.906 6.675 5.663 5.609 5.608 6.336 5.997 5.867 Granu- lated. 7.812 7.593 7.300 6.968 7.187 6.660 6.760 6.587 6.484 6.390 6.141 5.912 6.814 6.780 Differ- ence. .703 1.087 .950 .844 .912 .921 .781 .533 .586 .817 .923 1885 centrif- ugal. 5.487 5.546 6.362 8.375 6.890 6.162 5.968 6.062 6.187 6.093 6.000 6.260 6.866 6.729 Granu- lated. 6.162 6.156 6.000 6.062 6.687 6.737 6.463 6.760 6.906 6.546 6.593 6.625 6.473 6.441 1886 96° centrif- ugal. Granu- lated. Differ- ence. 96° centrif- ugal. Granu- lated. Differ- ence. 1888 centrif- ugal. Granu- lated. January February March April May June July August September October November December Yearly averages Net cash 6.125 5.703 8.562 8.796 5.484 5.437 5.390 5.237 5.296 5.187 5.166 5.175 6.625 6.140 6.228 6.810 6.343 6.188 6.195 6.066 8.956 5.825 5.690 5.726 0.500 .437 .663 1.014 .859 .748 .795 .828 .660 .638 .524 .560 5.200 6.128 6.150 5.171 6.128 8.187 8.265 5.312 5.390 5.640 5.937 5.940 5.825 5.687 5.725 5.734 5.860 5.935 6.037 6.078 6.406 6.630 6.875 0.625 .562 .678 .518 .609 .663 .670 .775 .688 .766 .693 .935 6.960 5.613 5.435 8.800 3.480 8.500 5.893 6.246 6.490 6.187 6.240 6.200 6.760 6.760 6.760 6.808 7.628 7.550 7.656 7.490 7.260 7.250 5.463 5.336 6.147 6.117 .684 .781 5.370 5.245 6.013 .673 .768 5.886 5.749 7.150 7.007 From 1880 to 1890, inclusive, discount from 96° monthly average of 2i percent; from 1880 to 1887, inclaslve, discount from granulated monthly average of J per cent (note effect on margin); from 1887 to 1890. discount from granulated 2 per cent. AMERICAN" SUGAR REFINING COMPANY. 117 I. — Comparative quotations of ratv and refined sugars in New York, 1S80-1S99- Continued. 96° centrif- ugal. Granu- lated. Differ- ence. 96° centrlf ugal. Granu- lated. Differ- ence. 96° centrif- ugal. Granu- lated- January February March April May June July August September October November ^ . December Yearly averages Net cash 6.650 5.563 6.112 7.376 7.312 8.025 7.937 6.912 6.376 6.046 5.734 6.000 7.060 7.000 7.265 8. 40'6 8.550 9.100 9.062 8.300 8.000 7.235 6.890 6.750 1.400 1.437 1.143 1.031 1.238 1.076 1.126 1.388 1. 626 1.189 1.166 .760 6.625 5.497 5.484 5.437 5.449 5.437 5.609 5.987 5.968 6.501 6.287 6.476 6.312 6.262 6.132 6.140 6.437 6.220 6.142 6.600 6.592 6.187 6.050 0.787 .687 .766 .648 .703 .533 .613 .624 .626 .763 5.276 5.590 6.200 3.616 3.250 3.375 3.357 3.424 3.428 3.349 3.485 3.485 5.930 6.320 ■6. 968 4.500 4.326 4.137 4.265 4.164 4.337 4.233 4.137 4.072 6.586 6.433 7.799 7.640 1.213 1.207 6.687 5.451 6.296 6.171 .709 .720 3.894 3.863 1892 96° centrif- ugal. Granu- lated. Differ- ence. 96° centrif- ugal. Granu- lated. Differ- ence. 96° centrif- ugal. Granu- lated. January B'ebruary March April May June July August.. September Gfctober November iJecember Yearly averages 3.476 3.432 3.306 3.125 3.090 3.123 3.093 3.232 3.611 3.470 3.375 3.401 3.920 4.222 4.230 4.220 4.256 4.190 4.320 4.fi62 4.720 4.630 4.600 0.504 .487 .916 1.105 1.130 1.133 1.097 1.088 1.251 1. 250 1.255 1.999 3.470 3.424 3.443 .3.844 4.118 4.376 4.170 3.650 3.740 3.9S8 3.170 2.926 4.600 4.553 4.534 4.916 5.110 5.220 6.267 5. 080 5.080 5.080 4.472 4.204 1.130 1.129 1.091 1.072 .992 .846 1.087 1.430 1.340 1.142 1.302 1.279 2.876 3.237 3.083 2.828 2.844 3.094 3.136 3.437 3.750 3.625 3.500 3.250 3.933 4.114 4.102 3.978 3.905 3.930 4.148 4.544 4.597 4.313 4.034 3.765 3.311 4.346 1.035 4.842 1.153 1895 1896 1897 96° centrif- ugal. Granu- lated. Differ- ence. 96° centrif- ugal. Granu- lated. Difler- euce. 96° centrif- ugal. Granu- lated. Differ- ence. J^iTinary . . 3.024 3.064 3.000 3.000 3.281 3.311 3.260 3.280 3.327 3.578 3.377 3.562 3.740 3.720 3.835 3.S72 4.411 4.360 4.350 4.268 4.317 4.432 4.254 4.442 0.716 .666 .835 .872 1.130 1.139 1.100 .988 .990 .854 .877 .880 3.800 4.031 4.162 4.296 4.125 3.637 3.359 3.375 3.092 3.062 3.300 3.215 4.646 4.686 4. 801 5.148 4.993 4.634 4. 429 4.512 4.412 3.920 4.117 4.100 0.846 .654 .639 .852 .868 .997 1.070 1.137 1.320 .858 .817 .885 3.180 3.220 3.273 3.387 3.280 3.494 3.625 3.750 3.908 3.842 3.842 4.079 4.040 4.070 4.229 4.290 4.267 4.453 4.648 4.720 4.824 4.807 4.720 4.870 0.860 February . . .850 March .956 April.... . . .903 M&y.::::;::;:;;;;:::;;:;;:;; .977 JuTie. . . .959 July 1.023 August . .970 September .916 .965 November .878 .791 118 AMEEICAN SUGAR REFINING COMPANY. I. — Comparative quotations of raw and refined sugars in Xtit- York, lSSO-1899, — Continued. 1898 1899 96° cen- trifugal. Granu- lated. Differ- ence. 96° cen- trifugal. Granu- lated. Differ- ence. 4.120 4.107 4.087 4.156 4.230 4.2S0 4. 125 4. 275 4.342 4. 237 4.411 4.391 4.920 4.960 4.852 5.009 5.097 5.080 6.080 5.004 6.1 78 4.740 4.888 4. SI 7 0.800 .793 .765 .853 .867 .800 .965 .819 .836 .503 .477 . 420 4.290 4.331 4.384 4.541 4.656 4.617 4.454 4.530 4. 387 4.310 4.260 4.250 4.706 4.720 4.820 4.920 5.080 6.190 5.210 5.137 4.889 4.795 4.795 4.795 0.416 436 .379 May .424 July .607 .609 .483 November. ... .535 .54£ II. — English prices of sugar. RAW— JAV.A. AFLOAT, NO. 15 AND 16 D. S., UNITED KINGDOM TEEMS. [Wiilett & Gray's Weekly Statistical Sugar Trade Journal, Jan. 4, 1900.] January. .. February.. March April May June July August September October. . . Novcinl:icr. December. 1881 1882 5.78 6.72 5.72 5.51 5.61 6.56 5.72 6.67 5.97 5.78 0.11 5.72 6.16 5.61 5.89 5.66 5.83 5.78 5.83 0.61 5.96 6.45 6.95 6.40 1883 5.24 5.18 5.16 5.56 5.50 5.47 6.34 5.29 5.23 5.29 5.16 5.04 1884 1885 1886 1887 1888 3.82 4. 86 3.06 3.71 2.97 4.63 3.11 3.51 2.94 3.57 4.63 3.32 3.38 2.78 3.44 4. 36 3.32 3.27 2.94 3.40 3.82 3.38 3.38 2.97 3.38 4.03 4.09 2.94 2.92 3.35 3.76 3.98 2.97 3.02 3.46 3.65 3.66 2.89 3.02 3.43 3.49 3.98 2.89 3.11 3.60 3.16 3.87 3.00 3.05 3.49 3.44 3.76 2.86 3.24 3.49 3.16 3.87 3.00 3.79 3.71 3.73 3.67 3.71 4.15 5.13 6.13 6.46 4.80 3.66 3.33 3.16 1890 1891 1892 1893 1894 1895 1896 1 1897 1 1898 ' 1899 January.. 3.27 3.22 3.27 3.24 3.41 3.44 3.33 3.27 3.33 3.27 3.24 3.27 3.38 3.66 3.54 3.46 3.46 3.44 3.38 3.36 3.33 3.33 3.38 3.36 3.33 3.57 3.57 3.60 3.60 3.79 4.09 4.25 4.36 3.87 3.66 3.71 3.44 3.38 3.38 3.33 3.38 3.36 3.26 2.94 2.94 2.89 3.05 2.89 2.62 2.66 2.48 2.40 2.40 2.61 2.56 2.56 2.51 2.56 2.56 2.70 2.81 2.75 2.81 2.95 3.06 3.00 3.00 2.84 2.62 2.54 2.51 2.35 2.40 2.69 2.61 2.42 2.40 2.40 2.29 2.29 2.26 2.29 2.40 2.40 2.32 2.34 2.46 2.37 2.37 2.40 2.62 2.70 2.67 2.61 2.59 2.56 2.37 2.64 2.66 2.45 Mari'h-.; April _ llav 3.27 3.22 3.24 3.19 3.19 3.27 2.56 2,62 2.73 June 2.84 July 2.78 2.75 Sui)U-!nbLT Ottulirr Xoveinber DtrL-mbur 3.44 3.38 3.33 3.24 2.70 2,54 2.46 2.46 Averages 3.27 3.34 3.41 3.78 3.05 2.57 2.72 2.36 2.62 2,62 AMERICAN SXTGAE EEFINING COMPANY. 119 II. — English prices of sugar — Continued. REFINED— TATE'S CUBES. 1881 1882 1883 1884 1885 1886 1887 1888 7.20 6.76 6.05 4.47 5.02 4.14 4.85 6.87 6.65 6.00 4.47 4.75 4.14 4.64 6.87 6.76 5.78 4.53 4.58 4.09 4.53 6.92 6.98 5.78 4.47 4.68 4.14 4.47 7.03 6.92 5.45 4.63 4.69 4.09 4.53 7.14 6.76 6.45 6.23 4.36 4.09 4.47 7.09 6.54 6.23 5.02 4.41 4.20 4.58 7.09 6.66 5.18 4.80 4.36 4.14 4.58 6.98 6.43 5.02 4.85 4.36 4.26 4.73 6.98 6.32 4.68 4.80 4.36 4.20 4.68 6.92 6.32 4.68 4.80 4.36 4.36 4.58 6.76 6.21 4.47 4.91 4.26 4.80 4.80 January... February. . March April May June July August September. October November. December. 7.42 7.20 6.98 6.98 7.14 7.20 7.09 7.09 7.09 7.09 7.31 7.20 4.69 4.69 4.75 5.13 6.00 5.83 6.32 5.78 5.23 4.8e 4.47 4.58 1890 1891 1892 1893 1894 1895 1897 January February March April May June July August September October November December Average. 4.36 4.25 4.41 4.31 4.41 4.25 4.14 4.31 4.31 4.14 4.14 4.20 4.36 4.25 4.47 4.47 4.36 4.36 4.41 4.63 4.47 4.41 4.41 4.69 4.69 4.68 4 58 4.58 4.41 4.36 4.36 4.36 4.41 4.31 4.53 4.89 4.58 4.63 4.83 4.80 6.13 6.13 5.35 6.13 4.80 4.80 4.58 4.68 4.47 4.36 4.36 4.26 4.14 4.03 4.03 4.03 3.92 3.71 3.60 3.49 3.38 3.38 3.38 3.27 3.44 3.49 3.38 3.44 3.44 3.82 3.76 3.71 3.82 3.98 3.98 3.92 3.92 3.71 3.60 3.49 3.38 3.33 3.33 3.33 3.33 3.33 3.33 3.33 3.33 3.33 3.27 3.16 3.26 3.16 3.16 3.16 4.27 4.43 4.51 4.84 4.03 3.49 3.65 .26 3.33 3.22 3.22 3.22 3.38 3.38 3.33 3.27 3.33 3.33 3.38 3.46 .32 3.3S 3.33 3.27 3.33 3.54 3.52 3.49 3.48 3.46 3.44 3.44 3.38 3.42 DIFFERENCE BETWEEN TATE'S CUBES AND JAVA AFLOAT, UNITED KINGDOM. 1881 1882 1883 1884 1886 1886 1887 1888 1889 1.64 1.48 1.37 1.26 1.20 1.09 .93 1.20 1.26 1.26 1.36 1.26 1.48 1.36 1.31 1.25 1.25 1.42 1.48 1.63 1.20 1.37 1.47 1.36 1.62 1.47 1.60 1.42 1.42 1.29 1.20 1.36 1.20 1.03 1.16 1.17 1.20 1.37 1.15 1.42 1.63 1.42 1.47 1.63 1.53 1.42 1.14 1.31 1.42 1.36 1.21 1.15 1.25 1.14 1.04 1.14 .87 .93 1.04 1.04 1.31 1.24 1.20 1.31 1.31 1.42 1.44 1.47 1.47 1.36 1.60 1.26 1.17 1.20 1.31 1.20 1.12 1.17 1.18 1.12 1.15 1.15 1.12 1.01 1.03 1.07 1.09 1.07 1.15 1.12 1.12 1.15 1.13 1.09 1.09 1.09 0.96 February 1.12 1.04 April., .98 uSy.::.:.: .87 June .70 July . . .87 .98 September 1.58 1.42 November. 1.31 1.26 1890 1891 1892 1893 1894 18 95 1896 1897 1898 1899 January 1.09 1.03 1.14 1.09 1.17 1.06 .95 1.04 .87 .76 .81 .96 1.09 1.01 1.06 1.03 1.03 1.09 1.08 1.26 1.23 1.14 1.03 1.04 1.16 1.12 1.12 1.14 1.03 1.00 1.03 1.03 1.03 .96 1.20 1.12 1.01 1.03 .97 1.01 1.04 .88 .99 1.26 1.16 1.09 1.14 1.20 1.09 1.03 .98 .89 .88 1.09 1.09 1.14 .87 .82 1 .98 .93 90 98 98 76 88 93 87 88 88 12 95 96 1.01 1.03 .92 .92 .92 .87 .98 .95 .87 .98 .93 .74 0.82 .91 .93 .93 1.04 1.04 1.01 .87 .86 .76 .84 .82 0.87 .86 .85 .82 .76 .68 .66 .76 .74 .77 1.01 .82 0.82 .88 March .71 April .71 May .81 June . . .68 July .71 .74 .76 October .90 .98 December .92 Average 1.00 1.09 1.10 1.06 .98 92 .93 .90 ;80 .80 120 AMEKICAN SUGAB REFINING COMPANY. III. — Qerman and Austriam, prices of sugar. OERMAN BEET BOOT (RAW SUGAR), 88 PEE CENT ANALYSIS, PROMPT F. 0. B. HjOIBUEG- GERMAN AND AUSTRIAN GRANULATED, I'IRST MARKS QUALITY, F. O. B. HAMBURG. [From Willett & Gray's Weekly Statistical Sugar Trade Journal, Jan. 4, 3 900.] 1889 1890 1891 1892 1893 1894 1895 1896 1897 1898 1899 January: 3.65 3.01 3.11 2.52 3.30 2.70 3.60 3.22 3.68 3.12 3.22 2.74 2.21 1.87 2.78 2.34 2.46 2.01 2.40 2.04 2.40 Raw 2.06 Diflerence .64 .69 .60 .38 .66 .48 .34 .44 .45. .36 .34 February: 3.54 3.01 3.U 2.55 3.32 2.82 3.68 3.14 3.68 3.12 3.24 2.76 2.40 2.03 2.89 2.56 2.43 1.96 2.36 1.98 2.44 Raw 2.13 .53 3.65 3.22 .56 3.22 2.70 .50 3.44 2.98 .54 3.57 3.08 .66 3.67 3.05 .48 3.19 2.78 .37 2.39 2.00 .33 2.97 2.68 .47 2.29 1.92 .38 2.41 2.03 .31 March: 2.41 Raw 2.11 Difference .43 .52 3.16 2.59 .46 3,38 3.03 .49 3.41 2.89 .52 3.90 3.49 .41 3.16 2.72 .39 .29 .37 .38 .30 2.36 2.02 3.00 2.70 2.32 1.96 2.39 1.07 April: 4.22 3.79 2.90 Raw 2.31 Difference .43 .57 .35 .52 .41 .44 .34 .30 .36 .42 .29 May: 5.13 4.65 3.32 2.72 3.32 2.90 3.24 2.79 4.22 3.96 3.00 2.52 2.58 2.13 2.98 2.67 2.32 1.94 2.41 2.02 2.73 2.45 .48 5.18 4.87 .60 3.27 2.68 .42 3.27 2.89 .46 3.41 2.86 .26 4.33 3.96 .48 2.96 2.58 .45 2.63 2.18 .31 .38 .39 2.60 2.12 .28 June: Granulated 2.74 2.30 2.32 1.89 2.73 Raw 2.41 Difference '. .31 .59 .38 .65 .38 .38 .46 .44 • 43. .38 .32 July: Granulated 5.28 4.94 3.27 2.68 3.24 2.89 3.35 2.82 4.60 3.98 2.97 2.56 2.64 2.11 2.62 2.17 2.33 1.86 2.37 2.03 2.58 2.26 Difference .32 .59 .35 .63 .62 .41 .53 .45 .48 .34 .32 August: 5.02 4.28 3.38 2.97 3.30 2.93 3.41 2.81 4.36 3.63 2.96 2.46 2.88 2.16 2.59 2.16 2.30 1.85 2.40 2.04 2.73 Raw 2.37 Difference .74 .41 .37 .60 .83 .60 .72 .43 .45 .36 .36 September: Granulated .... 4.09 3.01 3.52 3.04 3.30 2.92 3.60 3.05 4.00 3. IS 3.19 2.62 2.62 2.07 2.41 1.97 2.43 1.94 2.61 2.08 2.64 2.19 Difference 1.08 .48 .38 .55 .85 .67 .65 .44 .49 .43 .45 October: Granulated 4.09 2.72 3.49 2.77 3.32 2.89 3.62 2.88 3.96 3.19 2.84 2.21 3.00 2.36 2.33 1.91 2.33 1.89 2.66 2.09 2.48 Raw 2.06 Difference 1.37 .72 .43 .64 .76 .63 .64 .42 .44 .47 .42 November: Granulated 3.16 2.55 3.44 2.72 3.35 2.89 3.68 3.08 3.38 2.88 2.62 2.17 2.69 2.29 2.36 1.99 2.29 1.85 2.62 2.09 2.56 1,98 .61 .72 .46 .60 .60 .46 .40 .37 .44 .43 ,18 ecember: 3.27 2.63 3.30 2.71 3.49 3.23 3.62 3.02 3.24 2.74 2.50 2.14 2.70 2.29 2.37 2.00 2.37 1.96 2.52 2.21 2.64 Raw . . , 1.95 Difference .64 .59 .26 .60 .60 .36 .41 .37 .41 .31 .59 A AMEEIOAN BTJGAE BEPINING COMPANY. 121 The German sugars shown, both raw and refined, are of somewhat poorer quality than the American sugars. The margin between them, other things equal, would be, perhaps, not quite so great as that between the American raw and refined. The fact that It is so much less Is due In part, doubtless, to the German bounty on the exportation of refined sugar. It is also probable that the cost of refining in Germany Is somewhat less than here, and that under normal conditions the Germans are satisfied with a somewhat smaller profit. The effect of the sugar combination ujjon prices of sugar can perhaps be most readily seen from the course of line C, which represents the perpendicular dis- tance between line B, representing 96° centrifugal sugar, and line A, represent- ing granulated sugar, both of them wholesale prices in the New York markets. The distance, then, of C from the bottom of the chart represents the cost of re- fining, including selling cost, plus the profits. The line c in the same way repre- sents the English cost of refining, plus the profits, it being remembered, however, that the English refined sugar is of a somewhat higher grade than the Ameri- can granulated. The line c, it will be noted, ran somewhat above 1 cent a pound, perhaps on an average between a cent and a quarter and a cent and a half, from 1880 to 1887, the time of the formation of the Sugar Trust in the United States. There seemed to be no lowering in this English margin during the year 1883 to 1887. From the beginning of 1888 on to 1894 this line seems to have lowered slightly, but, on the whole, to have remained about the same. From 1894 to date there seems to have been again another lowering, the line representing on the whole since that date something less than 1 cent a pound. On the other hand, line C shows that during the years fro'm 1883 to 1887 there had been a very decided lowering in this margin in the United States, owing, of course, to vigorous competition among the independent refiners. From the testimony given by the witnesses,^ this competition was so very destructive in its nature that a large percentage of the American refiners — 18 out of about 40— had failed. In 1887 the trust was formed. The margin was immediately raised more than half a cent a pound, at times even fully 1 cent a pound. During the two years 1S8S and j889, wh&n one takes into account the lessened cost of manu- facture that came from the organization of the combination, one may fairly judge that the trust made enormous profits. The margin fell again in the latter part of 1889. This was owing to the fact that large competing refineries, especially those built by Glaus Spreckels at Philadelphia, had entered the field.'' For rather more than two years, while this vigorous competition continued, the margin fell back to a point substan- tially as low as had existed before the formation of the trust. In February, 1892, the trust bought up the competing refineries, and the margin was at once put back to the noncompetitive height. From the years 1S92 to 1898 this margin remained, relatively speaking, high, with, as will be noted, a slight gradual lessening, owing presumably to the improvements in refining and the consequent lessened cost. Throughout all these years, with the exception of the time when there existed vigorous competition between the trust and the Spreckels refineries, it will be noted that, on the whole, there was a close cor- respondence between the English margin and the American, the changes in the duty upon sugars having apparently only a slight temporary efEect upon this margin, although the removal of the duty on raw sugar by the McKinley tariff affected very decidedly the price of sugar to consumers. In the latter part of "1898 vigorous competition against the American Sugar Refining Co. (the reorganized trust) began on the part of Arbuckle Bros., Claus Doscher, and others. Prices were immediately cut so that the margin between raw and refined sugar has fallen again very decidedly. Instead of standing from 75 cents to $1 per hnndred pounds, as had been the case most of the time during the three or four years preceding, it has remained during the last year at but a little above 50 cents, and at times has been even below that. This study of the chart, then, especially when we compare the American with the English and German margin, shows clearly this: The sugar combination has beyond question, had the power of determining for itself, withm consider- able limits, what the price of sugar should be, low or high, with or without competitors, although when there has been competition, it has chosen to cut ' Havemeyer, pp. 107-109 ; Atkins, p. 811 ; Post, p. 165 ; Thurber, pp. 5, 15, 22. 'HaveSlyer pp.^lOT-lOfl, 136; Doscher, pp. 88-96; Jarvie, pp. 138-142; Post, pp. 148, 149. 122 AMERICAN SUGAB EEFINIKG COMPANY. prices to drive out its rivals rather than to run the risk of letting them grad- ually take its market on account of its high prices. During about 9 of the 12 years which have passed since the organization ol the trust the margin between raw and refined sugars has been considerablf higher than it was for 3 years before the trust was organized, and than it has been during the 3 years when there has been vigorous competition. The combination forced the fighting so severely against Jlr. Spreckels as a competitor that he was apparently glad to sell out after about 2 years. The present conte.^t between the trust and its opponents has continued for about a year and a half and at present shows no sign of ending but this, that with per- haps the exception of Arbuckle Bros, the opposition refineries are run at far below their full capacity, and presumably are making practically no pi-oflts.' The chart seems to show also that the trust has had very little if any effect toward steadying prices. The fluctuations, both in the price of sugar and in the margin, seem to be fully as great since the combination was formed as before, and to be rather greater, on the whole, than the fluctuations in the English or the German market. The assertion ^ that the price of sugar would have been higher if it had not been for the formation of the trust seems to have a partial, but only a partial, justification in the chart. The chart does make it perfectly clear that during periods of the most vigorous competition the sugar refiners were doing their work on a very low margin. The large number of refineries that went iuto bankruptcy before the formation of the trust seems to show clearly that the margin was ruinouSIy low. While it is probably for the economic advantage of the country that the weakest competitors be forced out of business from time to time, it can hardly be considered for the benefit of the country that com- petitors of substantially equal strength carry competition so far that all are running at a loss, and that a large percentage of them go into bankruptcy. ^\'hen competition is so fierce, the inevitable result would be that, as Mr. Post says," the few who survive would be able, owing to the lessened supply, to put prices at considerably above normal competitive rates, and would be en- coura.^ed to do so because they could not well supply the demand. Such a course of iirocednre would thus lend inevitably to very great fluctuations in prices from tho^e abnormally, not to say ruinously low, to those abnormally high. ^ On the other baud, while there does seem to be this partial justification for tlio claim that the trust has lowered the price of sugar on the whole beyond what it would have been had the combination never been formed, the relative steadiness of the English margin at a point which, in the main, seems lower than (lurs, considering the higher grade of English refined sugar, as well as the exceedingly high margin found frequently in the United States since the organi- zation of the trust, would seora to show that the price of sugar in this country has probably, on the whole, been rather higher than it would have been under what might be called reasonable competitive rates, and certainly considerably higher than it would have been under conditions of competition such as have existed during the last two years. A still further fact which leads to the same conclusion is that Mr. Havemeyer, the president of the American Sugar Refining Co., seems unwilling to con- cede that Ihe cust of reflnin;,' is as low as his competitors assert. Mr. Jarvie' says that with a margin of frfim 50 to 60 cents sugar can be refined without loss. Mr. I>(i.scher° agrees, saying that it can be done without loss when the margin is ."lO. Jlr. Post" places the margin somewhat higher, but concedes that a large estalilishment like the trust would have an advantage of from 3 to 5 cents a hundred in refining, ilv. Havemej-er,' on the other hand, puts 50 cents a hundred as the bare cost of refining and declares that 24 cents more at least must be added on account of the waste in raising sugar from 96° to 100°, the polariscope test of the refined, thus making the margin necessary for profit some 75 cents a hundred, instead of from 50 to 60. Apparently he thinks it wise to reckon in some interest on investment with the cost, which the other witnesses seem not to have done. He admits that "no great damage is done" when the margin is at 75 cents. There is a profit if all is in good working order. Another point which is to be considered, although it is one which is scarcely noticeable, or noticeable only in certain special cases, on the chart, is this, that iPi.st, pp. 150, 153. ip. i:,0. «Pp. 150, 151. = Post, p. 166. ">Pp. 88, 93, 97. ' 'P. 112. sp. 16G. AMERICAN SUGAE, REFINING COMPANY. 123 in order to secure the same profits the margin between raw and refined sugar should be slightly greater when the price of raw sugar is high, inasmuch as the loss of weight is a more expensive waste. If, for example, with raw sugar at $3 a hundred there were a 7 per cent waste, let us say, in refining, this loss would amount to 21 cents a hundred ; while if, with the same 7 per cent waste, the price of raw sugar were $4 a hundred, the waste would amount to 28 cents. We see, therefore, that in order to make the same profit the margin should be 7 cents a hundred more in the second case than in the first. The witnesses speak of unusually vigorous competition and a consequent low margin each year from December to March while the Louisiana crop is being refined and marketed, but this does not appear with any regularity. On the whole, the chart seems to make it perfectly evident that the sugar combination has raised the price of refined sugar beyond the rates in vogue dur- ing the period of active competition before the formation of the Sugar Trust and the two competitive periods during its existence. We can perhaps hardly judge so accurately as to what might have happened had the combination not been formed, but the price has probably been somewhat raised, although there is doubtless some force in the argument of Mr. Post to the contrary. The chart does not give us any information regarding the effect of the sugar combination upon the price of raw sugar. That seems to follow in the main, as would be expected, the fluctuations in the prices of raw sugar in both England and Germany, with the decided differences that we should expect at times from the effect of our tariff. It does, however, show some remarkable fluctua- tions. The advance in prices in 1888 and 1889 was due principally to a short- age In European beet crops and in the Cuban cane crop, which led to wild specu- lation in Europe. It is probable, as several of the witnesses testifled, that owing to its peculiar strength as a buyer of raw sugar the trust is able to depress the price slightly, perhaps one-sixteenth of a cent,' but this is not enough to be clearly shown on the chart. It is probable, too, and this In fact seems to appear, that whenever there comes a decided drop in the price of raw sugar the trust has been able to delay slightly, though only for a brief time, the corresponding drop in the price of reflned ; while on the other hand, in- crease in the price of raw is attended almost immediately by an increase in the price of reflned, the trust thus being able to hold Itself for its own advantage, to a slight degree, independent of market conditions. iPost, p. 153. APPENDIX YlII C. INACCURACIES IN STATISTICS OF INDUSTRIAL . COMMISSION IN APPENDIX VIII B. 125 APPENDIX VIII C— IITACCTJEACIES IN STATISTICS OF INDUS- TEIAI COMMISSION IN APPENDIX VIII B. Average price for granulated sugar, 189S. Months. January... February. . March April May June July August September. October... November. December. Industrial Commis- sion report. .iritlimetic mean of weekly quo- tations as given by Willett & Gray. 14.936 2 4. 930 4 945 4.864 4. 993- 5.105 3 5.08 3 5.08 5.094 5. 178- 4.735 4.855 4.846 Difference. -0. 016 - .010 + .015 - .012 + .016 - .008 None. None. None. None. + .006 + .033 - .029 1 Five quotations. - Four quotations. 3 Quotations uniform through month. Average price for 96° centrifugal sugar, 1899. Months. Industrial Commission report. Arithmetic mean of weelily quo- tations as given by AVillett & Gray. Difference. 4.290 4.331 4.384 4.541 4.656 4.617 4.454 4.530 4.387 4.310 4.260 4.250 f 14.286- \ 3 4.280 4. 326+ 4.395 4. 578- 4.666+ 4.626 4. 454- 4.524 4.375 3 4.31 4.265 3 4.25 +0.004 + .010 + .006 February . March.. - .011 Anril - .037 i&y:: "":::::::::::::;.: None. June - .009 July... None. + .006 Sentember + .012 None. - .005 None. 1 Five quotations. 3 Four quotations. 3 Quotations uniform through month. Errors in Industrial Commission averages are apparently obtained by adding all differing quotations only and dividing by number of such quotations. 127 APPENDIX IX EFFECT OF COMPETITION ON PKICES. (Newspaper Extracts.) 98244—11 9 129 EFFECT OF COMPETITION ON PRICES. [The Journal of Commerce and Commercial Bulletin, Thursday, July 27, 1905.] A weak and unsettled market was reported for refined sugar. About noon Arbuckle Bros, issued the following notice to the trade: " Since our leading competitors continue rebating to the favored few, we will, on September 1, forward rebate check to all jobbers who have purchased or ordered out sugars from us on contract between the following dates, namely, July 26 and August 31. Our record as to treatment of jobbers in the past war- rants you in sending us your orders." This announcement by Arbuckle Bros, added to the already unsettled under- tone of the market, and during the afternoon the impression became general that a cut in prices was close at hand; in fact, brokers were telegraphing the . trade soliciting business at a decline in prices of 10 points. During the late afternoon Arbuckle Bros, accepted new business for prompt and delayed shipment on the basis of 5 cents less 1 per cent cash for granu- lated in bags or barrels, and the Federal allowed withdrawals on old contracts on basis of 5 cents less 1 per cent cash for granulated in bags or barrels. The National and American made no changes. The tone of the market at the close was unsettled. [Journal of Commerce and Commercial Bulletin, July 29, 1905.] An official of the National Sugar Refining Co. has authorized the following statement: "The National Sugar Refining Co. has given no special rebates to the trade, and, awaiting developments, will make no definite statement as to their action on the question of special rebating." [Journal of Commerce and Commercial Bulletin, Tuesday, Aug. 1, 1905.] Advices received from grocery jobbers up the State say : " The fact that the American has been quietly rebating some of their customers has been plainly obvious from the prices that are being made in some up-State cities by the jobbers we come In competition with. They have billed sugar as low as 20 points lower than others billed." StTMMAET OF StTGAB WAR TO DATE. [From Willett & Gray's Weekly Statistical Sugar Trade Journal, Dec. 22, 1898.] On August 9, 1898, the difference between raw and refined sugar was 0.91 cent. On August 19 the Arbuckle refinery commenced selling sugars. On October 27 the American Sugar Refining Co. reduced prices to 0.41 cent difference between raws and refined. Other refiners followed, but went no lower. October 27, Howell's refineries withdrew from competition for a while, but entered anew on November 9. November 3, American Sugar Refining Co. contracted for entire Hawaiian crop sugar for series of years. November 3-9, Arbuckle refinery captured some of the retail trade of New England for their paper-package sugars by jumping the wholesale grocers. November 9, the American Sugar Refining Co. agreed to furnish cotton-package sugars to the trade and empty paper bags for retailers' use. November 9, Doscher refinery came Into competition and sold 2,000 barrels sugar on that day. November 11, Doscher producing only granulated and in small amount. Difference between raw and refined, 0.34 cent. November 14 to 21, an advance 131 132 AMERICAN SUGAR REPINING COMPANY. in raw and refined ; difference, 0.52 cent. November 22, American Sugar Refining Co. put empty paper bags in their barrels of granalated sugar. November 23, Doscher increases production. November 25, a general reduction ol 1.16 cents; difference, 0.46 cent. November 26, Doscher produces first soft sugars. December 3, Arbuckle led reduction to 5J cents for granulated, other followed; difference, 0.40 cent. December 6 to 10, irregular market from 5J to 5i cents, ending at 5i cents. December 12 to 20, ups and downs of one-sixteenth to one- eighth cent, ending with granulated at 5 cents and raws at 4| cents ; difference, 0.34 cent, and Doscher pushing his production and sales, with Arbuckle fol- lowing at one-eighth cent under the American Sugar Refining Co.'s posted prices. December 22, American Sugar Refining Co. reduced granulated and most other grades one-sixteenth cent. Packages now 5.06 cents, being same price as granulated in barrels. Demoralization increasing. The sugar stock at $125 appears to be selling on basis of conditions as they have been, not as they are or are to be. [From WlUett & Gray's Weekly Statistical Sugar Trade Journal, May 31, 1900.] It is announced to-day that the New York Sugar Refining Co. (Doscher), together with the Mollenhauer and the National refineries are to form a new corporation under the name of the National Sugar Refining Co. of New Jersey, with a capital of $10,000,000 preferred stock and not exceeding $10,000,000 common stock, the amount of common stock not yet being fully decided. The new corporation will have seven directors, four of whom will represent the Howell interests and three the other interests. The corporation will un- doubtedly be run in harmony with the American Sugar Refining Co., although this is not definitely stated. This arrangement leaves the Arbuckle refinery still independent, as also the JlcCahan of Philadelphia and the Revere of Boston, but virtually establishes same conditions between the principal refiners as existed before the building of the independent refineries. [Willett & Gray's Weekly Statistical Sugar Trade Journal, Aug. 23, 1900.1 Howell, as well as Arbuckle, is now allowing 1 jjer cent trade discount on aU new business, and admits giving this discount (in addition to the 1 per cent for cash) on orders received since July 15. The American have not announced the allowance of a trade discount generally, and, it is said, they expressed a willingness to allow it to grocers who doubled their purchases of Lion coffee. This matter of trade discount wlU doubtless be definitely ad' justed very soon. [Willett & Gra.T's Weekly Statistical Sugar Trade Journal, Jan. 2, 1902.] Refined. — The position of the refiners at the close of the year and the be- ginning of 1902 were very much the same as at the beginning of 1901. The American Sugar Refining Co. and the National Sugar Refining Co., which con- trol nearly the entire output of sugars, although separate and independent concerns, yet work in entire harmony ; the Ai buckle refinery works independently and very often in antagonism to the other companies, but its output is com- paratively small, and whenever it reduces its prices to dispose of its surplus it succeeds in doing so within a few days, and then resumes its normal position in the market. Under this management all the refineries benefited during the year 1901, to the extent of one-fourth cent per pound more profit than the small margin of profit in 1900, and there is no reason to expect that this ratio of profit will be any less in 1902. The low price of raw sugars at the present time and in the future outlook gives promise of a continuation of low prices for refined sugars to the people of the country. PEICE CUTTING BY ABBUCKXE BBOTHERS. [Willett & Gray's Weekly Statistical Sugar Trade Journal, Apr. 2, 1903.] At the close to-day, Messrs. Arbuckle Bros, surprised the trade by issuing a circular offering their sugars to the jobbers of Ohio only at the special price of 4.60 cents basis granulated, f. o. b. New York, less 25 cents, 30 days or less 1 per cent for cash, equals 4.3065 cents net ca.?h. This is doubtless due to special competition in Ohio. AMBBICAN STJGAK EEFINING COMPANY. 133 [WlUett & Gray's Weekly Statistical Sugar Trade Journal, Apr. 9, 1903.] Since last week the Arbuckle refinery have included West Virginia in their special cut prices on the same basis as Tor Ohio, but their ability to meet the demana from these outside sources is limited by their production and makes no impression upon the general firm situation, which we must consider as on the improving side rather than on the reverse from now forward. [Willett & Gray's Statistical Sugar Trade Journal, May 28, 1903.] The Arbuckle refinery reduced their quotations 10 cents per 100 pounds, which will probably remain in force until they have disposed of their surplus stock of refined. No change, howe^'er, was made in the special prices for Ohio and West Virginia. [Journal of Commerce, Oct. 17, 1903.] ALL KBFINEBS SELLING SUGAHS AT ABOUT COST — SEVERE EIVALRT IN THE FACE OF BEET COMPETITION ALL EEFINEES ABE ALLOWING 30 DAYS' DELATED SHIPMENT AND ABE GUAKANTEBING BUYEES AGAINST DECLINES IN PEICES IN THE MEANTIME— DENIAXS OF NATIONAL AGEEEMENT NEGOTIATIONS. A report was current yesterday that negotiations looking to the renewal of an agreement for the sale of sugars through wholesale grocers as factors had been begun between representatives of the National Wholesale Grocers' Association and the refiners. Cai'eful inquiry among representative wholesale grocers and also among refiners failed to disclose any foundation for the report. In fact, all knowledge regarding it was ofiicially denied by refiners. The refined sugar situation, from the refiners' standpoint, has not for years been so demoralized as at present. Aside from New England, where the selling prices are maintained as a result of the effectiveness of the local grocers' asso- ciation, the entire country is now an open market; that is to say, grocers buy from the refinery from which they can obtain the best terms and sell to retailers at such prices as they consider necessary in their own business regardless of whether the selling prices indicate profits or actual losses. As a result of this condition refiners have reason to believe that sugar is being used as a " leader " more generally by wholesale grocers throughout the country than for years. Many wholesalers are said to be selling sugar at actual losses when their trav- elers can in that way secure the sale of a profitable bill of goods. Under these circumstances and in vifew of the advent of the beet sugar com- petition refiners do not believe any national plan of sale through factors could be Successful. All refiners are quoting 4.55 cents per pound as the net cash price for granulated ; and in West Virginia and Ohio the Arbuckles are quoting 4.45 cents in order, as they claim, to meet the cuts of the other refiners. It is reported, however, that in one way or another the refiners are in special in- stances cutting their " net figures." DifEerent subterfuges, it is stated, are being resorted to by the refiners to secure business, but the net result is always a concession that is equivalent to a cut. On the Arbuckle price in West Virginia and Ohio (taking it for granted that these prices are maintained) the dif- ference between the cost of the raw sugar and the refined article is but 57i cents per 100 pounds. This difCerence must cover cost of refining and a certain amount for transportation and packing, and represents, if not a direct loss, at any rate no appreciable profit. The difCerence is figured as follows : Cents. Net price granulated (Ohio and West Virginia) 4.45 Eaw sugar, 96° centrifugal 3. 87i Difference tb pay cost of refining ■57i Refiners are not only fighting among themselves, but they are figMing the beet-sugar manufacturers, who during the next thr«e months will become active competitors. It is generally understood that the American Sugar Refining Co. has become so extensively interested in domestic beet plants throughout the West that they are not inclined to force losses upon the beet people by reducing prices. Many beet contracts are made on the basis of a reduction of 10 points below the Sugar Trust'« list prices on the day of delivery. As, however, the Arbuckles are pushing the Sugar Trust so hard it is not possible for the latter to be particularly maintaining prices for the benefit of the beet planters. Beet 134 AMERICAN SUGAR REFINING COMPANY. sugar from Miclaigan supplies the Central West In the neighborhood of Chicago and territory tributary to that section. The beet sugars of California, Colorado, and Nebraska will supply the Missouri Elver points and as far east as the Mis- sissippi River points and up into the Northwest. Louisiana sugar will commence in November and will supply the Mississippi River points. Thus a very lim- ited territory is left for the eastern refiners at this season of the year. In Cuba the planters have marketed their crop, and supplies on the island are in the hands of merchants, refiners, and speculators. . Grinding begins in Decem- ber, however. The last open concession on prices by the refiners was last week, when the Arbnckle and the National companies allowed 30 days' delayed shipment and gave a guarantee of prices, but the American Refining Co. would only take orders on 7 days' delayed shipments and required assortments to be named with order. The American company has, however, this week followed the other refiners and now gi-auts 30 days' delayed shipment, with guarantee against any reduction la prices. Under these conditions the trade seems to be keeping prospective wants well covered, and there has been a liberal amount of contracting on this basis. BRUSSELS STTGAE CONVENTION — ETJSSIA MAY GIVE ADHESION IT MODIFICATIONS ABE ACCEPTED. Bktjssels, Oct. 16. — There seems to be good prospects of Russia giving her adhesion to the sugar convention. Domestic arrangements hitherto had inter- fered, but Russia has now volunteered modifications ^vhich she considers ought to satisfy the signatories of the convention. Baron KerfC, special representa- tive of the Russian Government, has been instructed to fully explain to the Permanent Sugar Committee, now in session, the proposals of his Government. [Louisiana Planter, Jan. 9, 1904.] CHICAGO. [Special correspondence.] EAitor Louisiana Planter: The diversion made by Arbnckle during holiday week in cutting the whole list ]0 points createil consideralile of a stir among the trade here. The cut was probably secretly in effect a day or so before it was publicly announced, and during thnt time most of the business that had been overhanging the market :iwaiting better prices was taken in. The exact quantity contracted for by the Arbuckles at the cut can not be known, but it is realized by conditions following the restoration of prices that they cleaned up this ninrket pretty thoroughly. They confined themselves to contracts for January delivery, but even on that basis they probably got hold of all they can conveniently take care of during the month. If they had offered any kind of an open contract the damage to the rest of the trade ^^•ould have been consid- erably more than it was. The other i-eflners did not attempt to meet the Arbuckles figures on their lists, but in order to protect their trade they made deliveries during the time the cut was in effect on the basis established by Arbucldes. The low figures were too much for the majority of the beet people who still have goods for deliveiy, and they went out of the market altogether during the period of the cut, and many of them are still holding out for higher figures and say they will not come back into the market till prices improve. There is a great deal of beet sugar in storage in Chicago on this basis and it is understood factories who are following this line are holding as much more as they can take care of at their plants. As a whole the new year has begun with a better tone to the market than that which prevailed during the closing weeks of 1903. Whether it is only temporary or will develop into a strength that will give the long anticipated rise in values remains to be seen. The authorities differ as usual as to pros- pects, some feeling that a rise is long overdue and others that there is nothing in the immediate future to warrant an expectation of a higher list. The ad- vance in Louisiana together with New York firming up to the full list prices helped the stronger feeling here though it did not affect prices, except perhaps to put an end to what secret cutting may have been going on. A good dis- tributive demand is looked for during the next two or three weeks and perhaps longer as the country is pretty bare of sugar at the present time, all purchases of recent date having been made on such a narrow basis and all long-time con- AMERICAN SUGAR REFINING COMPANY. 135 tracts being refused by the refiners. Tbis demand Is considered fairly cer- tain under all circumstances if tbe price lists bold, but if they waver to lower prices it is expected to have the effect of bringing about more hesitancy, while if the prices should go up it ought to make considerable of a boom in the market. The Arbuckle cut was a kind of a blessing in disguise in a sense, as it developed the strength of the situation. If the market had not been strong all the others would have met it and the old demoralized conditions would have been intensi- fied, but on the contrary the market after the cut assumed a stronger tone than it had before. With the beet people bags have advanced 5 cents, owing to the scarcity of that kind of package, and even at the higher price the deli-\'ery of them is not very free. As a whole the beet-sugar crop may be said to be rapidly exhaust- ing itself. With some houses the last shipments are already disposed of and as no more are expected the season with them is considered ended. Colorado has stopped selling in Iowa and at other western points outside the State. Utah is selling only for prompt delivery at 10 cents under the cost of Louisiana sugars in the local market. With these conditions it is expected that beets will be pretty well cleared out of the market by the end of the month. Everything left in Michigan is said to be already contracted for. INFLUENCE OF THE AMERICAN SUGAE EEFININQ CO. ON THE PRICE OF KAW SUGAR. Col. James D. Hill, president of the Poydras Planting & Manufacturing Co. of 'Louisiana, testified before the Committee on Ways and Means of 1902, that the American Sugar Refining Co. virtually control the price of raw sugar in Louisiana, and fixed it, usually, three-sixteenths of a cent per pound less than the prevailing price at New York, although the price of refined sugar in New Orleans was usually as high, or higher, than in New York. The policy was to fix the price at approximately the New York rate minus the cost of shipping the sugar to New York. The trust virtually says to the producer : " You can not move your sugar to any other market, and you have no other purchaser, therefore you must sell at the price fixed." There is only one other refinery in Louisiana outside of the American Sugar Refining Co., and this, the Hender- son refinery, does not compete actively in the buying of raw sugar. " If we have the buyer of the American Sugar Refinery bidding on our sugars, the other does not want to bid, and vice versa * * * and never so far as I know has the price given equaled the price in New York by reason of any competi- tion between the buyers for the two refineries." — (Report of Reciprocity with Cuba, 1902, pp. 263-264.) The same testimony was given by Mr. J. N. Pharr, a cane grower and sugar manufacturer of Louisiana, and by Mr. James N. Porch, representing the Board of Trade of New Orleans, pp. 289, 299. APPENDIX X. EFFECT OF BEET-SUGAR COMPETITION ON PEICES. (Newspaper Extracts.) 137 EFFECT OF BEET SUGAR COMPETITION ON PRICES. PRICE CUTTING IN REFINED SUGAR IN THE MISSOURI VALLEY AND FARTHER WEST, 1901. The Beet Sugar Gazette for August, 1901, announced that the Sugar Trust was attempting to crush the beet-sugar industry in the West by price cutting and by coercing dealers to buy most of their goods from the trust. A similar cut in price, it was said, had been made the preceding year, but did not go Into effect until about six weeks later and the reduction was less important, Willett & Gray's quotation for standard granulated July 11, 1901, being 5.50 as contrasted with 6.10 on July 26, 1900." According to Mr. Henry T. Oxnard," the American Sugar Refining Go. had a half Interest with the Spreckels in the operation of the Western Sugar Re- finery at San Francisco, their territory extending west of the Missouri River, and they had lowered the price of sugar the moment the first beet-sugar factory began operations. Willett & Gray, in their issue of October 24, 1901, comment- ing on the reduction of prices in the West, said : " The differences between refiners and the beet-sugar people, when sifted down to its source of origin, is reduced to a simple fight between the two large beet-sugar interests of California. The American Beet Sugar Co. on one side, represented by Mr. Oxnard, and the Spreckels Sugar Co. on the other side. As the influence of this competition for control of the Pacific reaches to the Mis- souri River, through shipments from California, the cutting of prices is felt in that location. Beyond that, however, we doubt if the beet-sugar industry is likely to be very seriously affected." Mr. R. M. Allen, secretary of the American Beet Sugar Manufacturers' Asso- ciation, asserted ° that the trust was trying to make arrangements with the Den- ver grocers to agree to make trust sugars 75 per cent of their distributions. He attributed this especial effort of the trust to control the Colorado market to the fact that "the vitality of bcet-susar production in Colorado promises so soon to fill the requirements of the State with her own sugar." October 3 the American Sugar Refining Co. reduced the price of granulated sugar to 34 cents a pound, delivered at points along the Missouri River, this being a reduction of more than a cent and a half a pound. The notable feature of the movement was " that the quotation of 31 cents is on a level with the parity of raw beet sugars on the present basis 3J cents for cane centrifugal sugar." " Willett & Gray took the position that " the refined sugar interests of the country" felt compelled to protect their interests to such an extent that the domestic beet-sugar industry might not make any larger profits on making refined sugar than would come to them from the manufacture and sale of raw sugar. They held that the legitimate business of the beet-sugar industry of the United States was the production of raw sugar for sale to the refineries. They say : " The thorouch refining of sugar is a business by itself. Refiners have always stated that they were quite willing and ready to purchase all domestic raw sugars offered to them at the market prices, but if the beet manufacturers entered into the refining of sugars * * * that would naturally cause keen competition in this as in every other business." ' In the issue of October 10, Willett & Gray note the advance to 4J cents for granulated at the Jlissourl River points against 3i cents for the week preced- In&T* TtiGv Sflv I "The low price caused so large a demand that it became evident that such a large cut was not necessary to hold the trade, hence the advance, which may iBeet Sugar Gazette, August, 1901, pp. 129 and 132. a lb., p. 131. * Willett & Gray's Weekly Statistical Sugar Trade Journal, Oct. 3, 1901. 139 140 AMEBIOAN STJGAK REFINING COMPANY. be still further advanced to the point at which sugars will still be found to sell readily." It was maintained by the beet-sugar manufacturers that the trust really did not propose to sell any considerable amount of sugar at 3J cents, but intended only to compel the beet-sugar men to sell at that price. It was stated that as a matter of fact the trust would sell only one carload a day to a jobber at 3i cents, and that if he took more than that he had to pay the regular price for the balance, and that as many of the large jobbers at Missouri River points were using from 5 to 8 cars a day, the action of the trust worked to their dis- advantage, inasmuch as their customers, learning of the reduction in price, claimed the same reduction all along the line, and in consequence the jobber was a very large loser.' The Omaha World-Herald, of October 15, declared that the American Sugar Refining Co. was unwilling to sell at the 3 J cents a pound price, except in small quantities, and then under a pledge of secrecy in any Nebraska, Iowa, South Dakota, or llinnesota market.'' Mr. Oxnard made the following statement : " " The facts are as follows : Raw sugar is selling for 3f cents in New York and granulated 4.85 cents, a margin of 1.10 cents between the two. The trust is selling from time to time in limited quantities in the Missouri River markets granulated sugar at Zl cents, or one-fourth cent under the cost of raw material at New York, paying in addition the freight of 35 cents a hundted from New York to the Jlissouri River. The point to be observed is that they are keeping the price of sugar high in all parts of the country except in the Missouri VaUey, where they sell it far below what they paid for the raw material at the Atlantic seaboard." Jlr. Oxnard answered the argument that the beet sugar factories had gone out of their rightful sphere in making refined sugar Instead of raw sugar by saying that independent beet-sugar producers had always made and refined beet sugar, and that it would be a blunder to perform in two operations what could be done as well in one. He al.so argued that the making of raw sugars alone would confine the beet-sugar industry to the factories near the seaboard vrhfere the sugar refineries are located, since a beet-sugar factory located inland, for example in Colorado, could not exist if its product had to pay 60 cents a tUJii- dred freight in the raw state to the coast refinery, and then 60 cents a hundred more to come back to the people of the same state in a form fit for consumption. On the same subject President Francis K. Carey, of the National Sugar Manu- facturing Co., of Sugar City, Colo., said : " The beets go into one end of our factory and go out of the other end pure standard fine granulated sugar ready for table uses, without being touched by anything but mechanical processes, and the demand that we should manufac- ture raw sugar at a loss for the purpose of keeping Mr. Havemeyer's refineries going is not a reasonable one." * The argument seems to have been made in defense of the action ot the Ameri- can Sugar Refining Co. that the beet-sugar men had " broken the market by selling beet sugar 10 points below No. 1 cane." Mr. Carey declared that thla had been a " well-recognized difCerential for several years," and that " ohe of the good effects of the present controversy would be to remove it." The Omaha World-Herald' made the statement that the system of quoting beet sugar 10 points below the open mailset price set by the trust was in- augurated the second year the beet-sugar industry started in this country. It at- tributed the attack of the runs on the beet-sugar producers to the fact that thelt business had ceased to be local, and that in 1901, for the first time, they had " invaded Kansas, Missouri, Arkansas, Indian Territory, Oklahoma, and else- where withi offers of contracts at 10 points below the price quoted by the trust on date of delivery." It was said that on October 14 the trust was sellifig sugar on the Pacific coast and in the mountain districts one-third cent a pound lower than In the Missouri River district, but that sales in that part of the country were so guarded that an Omaha jobber, for example, could not buy a quantily Of sugar in San Francisco and ship it to Omaha, though by so doing lie could malie a 1 Statement of D. C. Corbin, pre.sident Washington State Sugar Co., in Beet Sugar Gazette, NOTember, 1901, pp. 221-222. 2 Quoted In Beet Sugar Gazette, November, 1901, p. 231. »Ib., p. 225. * Beet Sugar Gazette, November, 1901, p. 227. "Issue of Oct. 15, 1901. See Beet Sugar Gazette, November, 1901, p. 231. AMERICAN SUGAR REPINING COMPANY. 141 considerable profit after paying tlie regular freiglit rate of 50 cents per 100 pounds. The Beet Sugar Gazette does not give conclusive evidence as to whether the beef-sugar manufacurers sold their sugar at the reduced price made by the American Sugar Refining Co., but probably they did not to any considerable extent, particularly- as the lowest price seems to have been quoted only for a week. Mr. Oxnard declared that the beet-sugar men would not meet the cut, when a fraction of a cent and a half a pound would move their sugar to every other market in the United States.'' The Omaha World-Herald (issue of Oct. 15) suggested that the sugar men might adopt the plan of putting their sugar in warehouse, which it said could be profitably done at SJ cents a pound, or of invading eastern markets and cut- ting the price there " providing their ten-point contract can be broken." It also made the statement that the Standard Beet Sugar Co., at Ampg, Nebr., had not met the cut, and that " the Utah and Colorado factories, which expected to do considerable business in this market this year, have withdrawn from it." The officials of the American Beet Sugar Co. were quoted as saying that they had not met " the alleged cut of the Sugar Trust " and were by no means prepared to say that they would. Willett & Gray made the statement in their issue of October 24, that the Western Sugar Refining Co. had wtihdrawn beet refined sugars from the local market. In November prices in the Missouri Valley were restored to the nonnal level. In their issue of November 7, Willett & Gray say : " It is understood that the price now at Missouri River points is 4 cents per pound for granulated during November. * * * The outlook for the refined- sugar market is somewhat uncertain for the Immediate future, owing to the fact that the beet-sugar factories generally are now at work and are under- selling the eastern refiners' prices one-eight cent per pound. This may cause further trouble in some directions." November 29 Willett & Gray note a decline of 10 points in the price of refined sugar at San Francisco, while on the Missouri River granulated advanced 13 and 25 points, "now being quoted there at 4.78 cents." The net cash quota- tion for granulated at New York was 4.65 cents. December 5 they note an advance in price of SO points at San Francisco, while granulated at the Missouri River points advanced 5 points to 4.83 cents, bringing it to a parity with New Orleans granulated, which had declined 10 points to 4.55 cents net cash. The quotation for granulated at New York at this date was 4.65 cents net cash. The Retail Grocers' Association of Denver adopted a resolution November 22 thereafter to handle only beet sugar." This evidence regarding the discrimination in prices in the Missouri Valley against the beet-sugar product was also brought out in sworn testimony before the Committee on Ways and Means in the early part of 1902. Mr. Henry T. Oxnard and Mr. N. B. Bradley, secretary of the American Beet Sugar Manu- facturers' Association, both refer to it in some detail. Mr. James H. Post, president of the National Sugar Refining Co., testified that the beet.sugar pro- ducers cut the price of sugar in the Missouri Valley one-tenth of a cent per pound below the price of the American Sugar Refining Co., binding the grocers by contract to take a certain number of barrels, thus practically tying up the valley to the beet-sugar men. The American Co. and the National Sugar Refin- ing Co. proposed to meet that competition. The American Co. cut the price from li to 2 cents per pound, and the National cut 2 cents per pound, but both companies sold as little as possible in that territory. (Report on Reciprocity with Cuba, 1902, pp. 167, 338, 345, and 346.) COMPISTITION OF BEET WITH CANE GRANULATED SUGAE IN THE NEW YOKK MARKET, 1902-3. tAU statements on the authority of Willett & Gray's Weekly Statistical Sugar Trade Journal. Dates given in parentheses refer to Issues of this ]Ournal.J In their Issue of October 16, 1902, Willett & Gray called attention to the report from California that 1,000 tons of beet granulated sugar was about to be shipped by steamer from San Francisco to New York and would be due at ' 1 Statement in the Omaha World-Herald, Oct. 15, 1901, reprinted in Beet Sugar gazette, NovembI? 190f, p 231! The Orange Judd Farmer is authority for statement that the additional cut was one-third cent. See same issue of Beet Sugar Gazette, p. Z6b. 2 Beet Sugar Gazette, November, 1901, p. 225. »Beet Sugar Gazette for December, 1901, p. 254. 142 AMERICAN SUGAR REFINING COMPANY. the latter point about the 1st of January. This, they say, will be the first time in sugar history that refined sugar has come from the Pacific coast to the Atlantic and marks a new feature in the reflued-sugar business, and the result will be awaited here with great interest. The freight is about -10 or 50 cents. October 20 telegraphic advices were received from San Francisco to the effect that the American Beet Sugar Co. was shipping beet sugar to New York via the Southern Pacific Railroad, which was due at New York about November 10; also that the Alameda refinery would ship about 1,000 tons to New York via Cape Horn, due at New York about January 1. The arrival of these shipments was awaited with great interest. Information was also received that shipments from California would bo continuous. (Oct. 23, 1902.) October 30 Willett & Gray noted the withdrawal of the 30-day privilege, for which a period of seven days was substituted, while guaranties to arrival were still given. This move, they thought, was evidently aimed at the competition: exiiected upon the arrival of beet granulated sugar in large quantities from San Francisco. Advices from that point indicated that the amount coming to New York would probably be about 7,000 tons, the Alameda refinery shipping by steamer and Oxnard by the Southern Pacific. Willett & Gray comment as follows : " It is quite an innovation for domestic beet sugars to be offered at the sea- board in competition with cane refined sugar and can not but result in a deter- mined movement for retention of the trade by the cane refineries. Hence it follows that lower prices at the seaboard will result for refined sugars when- ever the beet refined are sought to be substituted in their place. The first arrivals will be due in about 10 days, and the action of the market from thence- forward will be a matter of much moment to buyers." November 3, in anticipation of these arrivals from the Pacific coast, the Arbuckles made concessions to meet the situation aud " continued to give the 30-day privileges, while other refiners granted only seven days' delay." On the 5th the National, followed by all refiners, made a general reduction In the price list of 10 cents a hundred pounds. Arbuckles, however, continued in addition to go 5 points lower on Nos. 8, 9, and 10 soft-grade sugars. On the 6th the American and National withdrew all guaranties. The Arbuckles discontinued the 30-day privilege, but gave a guaranty to arrival on immediate shipments. The Weekly Statistical Sugar Trade Journal says : " Prices at New York are now on the basis of 4.55 cents list, or, say, 4.31 cents net cash for granulated. None of the refined from California has yet arrived, and the action thus far of the refiners can only be considered as preparatory to the actual conflict when the sugars come in. A determined effort will undoubt- edly be made to put an end to such an innovation. The Arbuckle and National refineries are at the front thus far in this instance, but all refineries are inter- ested in the result. It goes without saying that another cut in price of refined at tlie seaboard is only a question of a few days, and one of the sharpest fights in the history of the sugar trade is undoubtedly near at hand. The beet-sugar factories in California engaged in this attack purpose making continuous ship- ments to New York, but thus far have not placed their .sugars on the market, and their methods of attack are as yet undeveloped, and it is not yet known who is to handle their side of the battle. While this demoralization is going on at the East, a similar state of affairs exists throughout the South and West, aud prices at New Orleans were reduced 10 points, while at the Jllssourl River a decline was made this week of 20 cents per 100 pounds — say to 4.25 cents net cash for cane granulated and to 4.15 cents for beet granulated. Beet sugars from California are also threatened for sale in Utah and Colorado, so that the conflict is becoming general all over the country, and the final result can only be imagined ns destructive to all sugar interests for the time being. New beet- sugar factories in Canada are beginning operations, and their sugar product is coming to market, causing a decline there to-day of 5 points in refined." (Nov. 6,1902.) November 7 another reduction of 10 cents per 100 pounds was made by the Arbuckles and the National, followed by the American on the 8th, and on the 13th the same level was still maintained by all the refiners, with the exception of the Arbuckles, who were 5 cents per 100 pounds less for Nos. 8, 9, and 10. On the 13th the Sugar Trade Journal announced that the sale of the California sugars had been placed in the hands of Messrs. Gustav A. Jahn & Co., who were not offering them on the market in advance of their arrival. Willett & Gray comment on the situation in their issue of November 13 as follows : " None of the beet sugars from California ha\e yet arrived at New York or been offered for sale; hence the conditions prevailing at this port are entirely AMERICAN SUGAR REFINING COMPANY. 143 uncliaiiged from last week. It may be said, however, that the cane-sugar refiners, led by the Arbuckle and National companies, are watching the situation closely, and any attempt to dispose of the beet sugars in an underhand or indi- rect manner will be the signal for a new demonstration. For instance, should the beet sugars be passed over by the wholesale grocers and be offered for sale to the retail grocers and large department stores the wholesale grocers will undoubtedly be called upon to protect the refiners against such action in response to the protection which the wholesale grocers now enjoy from the refiners by reason of what is called the factor plan. Should the wholesale grocers not step into the gap and take the contest on their shoulders, it will undoubtedly follow that the refiners will ignore the grocers and the factor plan and ofCer their product direct to the retailers and department stores in competi- tion with the beet granulated sugar in this respect, following the example set years ago by the Standard Oil Co. in the disposal and sale of their product to the consumers of the country. " This is apparenty no idle statement, as it is well known that ever since the building of the Arbuckle refinery it has been more and more difficult to protect the wholesale grocers at certain times of competition among the cane refineries. The present conditions may result in bringing about the same result on the Atlantic as it has already been brought about on the Pacific. Consequently it will soon be up to the Wholesale Grocers' Association to say what they will do, or not do, to meet this innovation of beet sugars from the Pacific coast to the Atlantic seaboard, and upon their action may depend the life or death of the factor plan." Early in the week beginning November 16 the California beet granulated sugars began to arrive in New York, but instead of being offered on the market they were placed in storage. This action led the refiners to advance granulated 10 cents per 100 pounds and afterwards an additional 10 cents, thus restoring the price to the point at which it stood prior to the cut in anticipation of the arrival of the California sugars. These changes in price were initiated by the Arbuckles and the National, followed by the American. The managers of the beet refined sugar gave no intimation of the prices at which these sugars would be offered. The general strength of sugars throughout the world and a decided improving tendency had much to do with the decision to store their sugars for better prices for the future. The American would give no guaranties and would sell only for prompt ship- ment. The Arbuckle and Howell companies would accept orders for shipment within one week with guaranty to arrival. (Nov. 20, 1902.) In the week November 21-28 granulated sugar advanced to 4.50 cents net cash on the strength of an advancing price for raw sugars. California beet sugars at New York were "no longer a factor in the situation, having been withdrawn for higher prices in view of the strength of the whole sugar situa- tion," and it was thought they might not come on the market for some time. In the course of this week refined sugar advanced 20 cents per 100 pounds at San Francisco, the first advance on the Pacific coast since the preceding March. At this time the American would sell only for prompt shipment, while other refiners allowed one week for withdrawals and gave guaranties until arrival. (Nov. 28, 1902.) • .„„ . The following week granulated sugar advanced 10 cents, or to 4.60 cents net cash. The difference between raw and refined was still only 66 cents per 100 pounds. The market for refined did not keep pace with the advance in raw sugar, being held in check by a number of causes, principally owing to the uncertainty when or at what price the California granulated sugars would be put on the market. The latest advance in price had seemed to have no effect in this direction. At this time refiners allowed jobbers one week and manu- facturers 60 days for withdrawals and gave guaranties to arrival. (Dec. 4, 1902.) The quotation for granulated sugar December 11 was 4.70 cents net cash, an advance of 10 cents per 100 pounds having been made at the beginning of the week on the strength of the raw-sugar market, but the demand fell off and some refiners took orders at the old prices. In the ourse of this week refined sugar advanced 20 cents on the Pacific coast. (Dec 11, 1902.) December 18 the quotation for granulated had declined to 4.60 cents. Decem- ber 24 the net cash quotation was 4.55. The list remained the same, but most, if not all of the refiners save an extra rebate of 5 cents. There were no indi- cations of any further reductions in the net cash basis, " the differences between the cane and beet refined sugar producers being now pretty well eliminated from the situation." 144 AMERICAN SUGAR REFINING COMPANY. The net cash quotation for granulated remained at 4.55 cents January 8, but advanced 10 cents January 13, remaining at 4.65-4.70 cents until February 5, when it declined to 4.52-4.55 cents. A large lot of California beet granulated arrived by steamer at New York in January, and on the 29th of that month was being offered for sale at 4.55 cents net cash (10 points below the quota- tion for that day) without finding buyers, and it was thought that it might be sold at less to close out. The California sugar which had come overland was not being offered and no more was on the way. In San Francisco the refineries were receiving so few orders that prices had declined 20 points. (Jan. 29, 1903.) Early in February the accumulations at the eastern refineries were so large, owing to the lack of demand, that all the plants in the vicinity of New York, except Arbuckles's, closed down, while the Boston and Philadelphia houses continued to run throughout the first week of February at part of their capacity, (Feb. 5, 1903.) The following week there was a further decline of 15 cents in the price of granulated at San Francisco, bringing the price at that point to 4.25 cents net, against 4.52-4.55 cents net in New York. This caused a renewal of the ship- ments of granulated from San Francisco to New York, the California & Hawaiian Co. sending 2,000 to 2,500 tons by steamer due to arrive in New York about the 1st of May. Willett & Gray say, " the troubles with the refined market all emanate from the Pacific coast, where the wholesale grocers who have accumulated large stocks during the extreme low prices prevailing there during the fall and early winter made a business of not maintaining the ad- vances when made by the refiners, but always underselling them. * * * " It is unfortunate, in view of this precedent of the working of the San Francisco market, that some of our New York grocers who bought refined when the price was 4.41 to 4.50 cents in considerable quantity are following the same tactics here of underselling the price fixed by the refiners, the net result of which, if continued, may or may not be a repetition of the conditions in San Francisco." (Feb. 11, 1903.) The market for granulated began to improve about February 26, the improve- ment continuing about three weeks. March 12 Willett & Gray predicted an improvement in the price of granulated in the eastern market, " because the beet-sugar factories have so largely disposed of their product." March 19 California beet granulated in store at New York was offered at 4.60 cents, less 1 per cent cash, and it was thought " this price would probably be shaded in the case of orders for round lots." The net cash quotation at this time was 4.57-60-65. April 2 Willett & Gray noted a decline of 10 to 15 points in the price of granulated at New York, accompanied by an advance of 25 cents at San Francisco. The New York quotation was 4.47-50-60, net cash. The greater part of the California beet sugar in store in New York had been sold, and the remaining quantity was firmly held at 4.50 cents, net cash. An advance in the price of granulated at New York began about the middle of April, the quotation on April 16 being 4.62-65-70, and since that time the highest quotation has been 4.75. The price June 11 was 4.65-70-75. Early in May the 50,000 bags of granulated shipped by steamer from San Francisco in February arrived at New York, and the indications (May 14) were that it \Yas not likely to be put on the market for sale. Willett & Gray have since made no note of its being offered for sale. tKeprinted in American Sugar Industry and Beet Sugar Gazette, Dec. 20, 1904, from San Francisco Chronicle, Dec. 11, 1904.] Relative to sales of refined sugar in the Pacific Coast States: At a meeting of the Pacific Traffic and Commercial Association, President H. D. Loveland said : "It should be understood, however, that nothing in the compact prevents any man in the association buying sugar from a Honolulu refinery or any other refinery with whom I have made no agreement. The only effect would be that they would not be helping me to purchase suflicient to take advantage of the quantity price. " What the quantity price is or what volume of sugar has to be purchased from the trust and other California refineries in order to secure the concession Mr. I.oveland refuses to divulge. He says not even members of the Traffic and Commercial Association know the details of the arrangement made by him on their behalf." APPENDIX XL FACTOR SYSTEM IN SELLING SUGAR. (Newspaper Extracts.) 98244—11 10 145 FACTOEY SYSTEM IN SELLING SUGARS. SELLING TEEMS — AEBUCKLE BROTHERS AND AMERICAN SUGAR REFINING COMPANY APRIL, 1902. ' [Willett & Gray's Weekly Statistical Sugar Trade Journal, Apr. 10, 1903.] We give below a copy of notice issued by Messrs. Arbuckle Bros., stating tlie terms agreed upon by tie refiners and the Wholesale Grocers' Association : The terms for selling refined sugar will be changed. The 1 per cent trade discount and the 1 per cent special discount will be discontinued. EfCective April 14, we will bill sugars to factors and manufacturers less 15 points per pound, to be deducted from face of invoice. Terms, 30 days, or cash less 1 per cent in 7 days. An amount not exceding 5 points per pound will be paid every 60 days to those who shall have maintained the equality price and plan. The bimonthly settling days will be the first days of June, August, October, Decem- ber, February, and April. Yours, truly, Arbuckle Brothers. New York, April 7, 1902. [Willett & Gray's Weekly Statistical Sugar Trade Journal, Apr. 17, 1902.] New Orleans, April 12, 1902. — The American Sugar Refining Co. issued the following circulars to-day : EfCective Monday, the 14th instant, our present terms of selling refined sugars wiU be discontinued. On and after that date we will name a net price, subject to cash discount of 1 per cent only on all invoices paid within seven days from their date. No other discounts or concessions of any character will from this date be made by this office. Let your trade thoroughly understand these terms. Sales made prior to April 14 will be invoiced under our existing terms, namely : 1 per cent trade and 1 per cent for cash. Sales made on and after April 14 will be invoiced on the new terms, namely : Net, less 1 per cent for cash within seven days. Yours, truly, The American Sugar Refining Co. Effective Monday, April 14, our New Orleans prices will be as follows : Cubes and powdered, 4.95 cents; granulated, 4.60 cents; confectioner's candy A, 4.55 cents. Terms, net, less 1 per cent for cash on invoices paid within seven days. No further discounts or allowances will be made. For freight prepaid prices add your regular freight differential. Yours, truly. The Amemcan Sugar Refining Co. This Is practically no change in prices. abandonment of equality or factor plan and its partial restoration. [Willett & Gray's Weekly Statistical Sugar Trade Journal, Jan. 8, 1903.] The most important measure In the sugar trade that has taken place in years occurred on 3d instant, when the so-called equality or factor plan was done away with by the American Sugar Refining Co. and the National, and granu- lated was quoted at 4.65 cents per pound net, 30 days, less 1 per cent for cash, without rebate. This plan, by which the grocers of the country have for years received protection at the hands of the refiners to the extent of 25 cents per 100 pounds, although starting originally with but 15 cents per hundred pounds rebates allowed by refiners to grocers. It is because the grocers themselves have not adhered to the terms they them- selves made and sold strictly by their factor-plan terms that the refiners have 147 148 AMERICAN SUGAB EEFINING COMPANY. come to this decision. The South has never, from its initiation years ago, abided by it. The West generally has been in and out of it. New England alone has adhered strictly to its terms, with New York and New Jersey follow- ing it quite closely. But the doing away with it and selling at net-cash basis will put the entire trade of the country on the same even basis for buying and leave every jobber free to make his own selling terms. It is more than likely that part or all of the jobbing trade, through their associations, will try to make special arrangements with the American Sugar Refining Co. ; but if so, the terms will be quite different from those which have existed for so long a time. Already the New England association has arranged on a 0.15 cent rebate basis. [Willett & Gray's Weekly Statistical Sugar Trade Journal, Jan. 15, 1903.] Further progress was made in factor plan arrangements between the refiners and the grocers, prices for eastern Pennsylvania now being listed by the refiners on the basis of 4.90 cents for granulated, with rebate of 0.15 cent and 1 per cent for cash, the same as for New England points. Grocers in New York, New Jersey, and Delaware have agreed to sell on the basis of 0.15 cent above the refiners' net prices — say 4.75 cents plus 0.15 cent equals 4.90 cents for granu- lated — the same as the New England list, although they have not yet succeeded in making satisfactory arrangements with the refineries. It is thought that Ohio and West Virginia grocers will also agree to maintain this basis. The market closes quiet and steady, without special indications for the Immediate future. [Willett & Gray's Weekly Statistical Sugar Trade Journal, Feb. 19, 1903.] The Strength of the raw market and its advance further reduced the differ- ence between raw and refined to a point where it became necessary for the refiners to take some action, which they did during the week, to a moderate extent, by raising the list price of refined 5 cents per 100 pounds. This, how- ever, is inadequate to meet the situation, and, if other conditions were satis- factory, a further advance might be anticipated, but, with the Arbuckle refin- ery still quoting 5 cents per 100 pounds less than other refiners, and with a still continued unsettled condition of the grocei-y trade, there is always danger of private cutting on all sides below the posted rates, and this, wo feel, is what iB occurring now from day to day, making it extremely difficult to say exactly where the refined market stands. However, each refiner appears disposed to l)rotect his customers on the lowest basis made by any when final settlement day arrives, so that all orders are in the end treated exactly alike, from what- ever source they come or in whatever condition they may be taken. It is hopeS that eventually some way may be found out of the present refined-sugar tangle, so that all posted public prices can be relied upon, which has not lately been the case, [M'illett & Gray's Weekly Statistical Sugar Trade Journal, Mar, 12, 1903,] Denver (Colo,) Mail. March 7, 1903. — The western markets have advanced 35 cents per 100 pounds. This is evidently due to an understanding having been reached with the refiners in San Francisco, and will affect all markets west of the Missouri River. Prices now are basis -5.20 cents net cash for fine granulated at Colorado terminals. San Francisco, Cal., March 6, 1903. — The advance to-day of half a cent was wholly unexpected by the trade. Jobbers were selling at cut prices this morn- ing. The refineries recently discontinued the rebate plan and now sell at net cash. Quote: Dry granulated in bags, 4.75; barrels, 4.85 net; beet granulated, 4.65 cents net, [Willett & Gray's Weekly Statistical Sugar Trade Journal, Apr, 9, 1903,] San Fbancisco, April 3, 1903. — All the jobbers on coast have formed an asso- ciation and can not cut prices. [Willett & Gray's Weekly Statistical Sugar Trade Journal, May 28, 1903,] An important feature of the week in prospective is the probable restoration of the factor plan in cert.nin parts of the country, including several districts of Pennsylvania, Delaware, and New Jersey, but not New York State. AMERICAN SUGAR REFINING COMPANY. 149 [Willett & Gray, June 4, 1903.] "As indicated last week, the equality plan was restored, on the 1st instant, in eastern Pennsylvania, Delaware, and New Jersey, by the Philadelphia re- finers, the details of which are given in the copy of the circular printed here- with." In the circular referred to the terms are set forth as follows : Philadelphia refiners will sell at list and deduct from the bill 5 points ; wholesale grocers will sell at list on the equality plan, and at the expiration of 60 days all who have sold at list and have not violated it in any manner, directly or indirectly, will be given 10 points additional. " Should there be any who have violated this agree- ment, they will not be entitled to the 10 points and will not receive them." [Willett & Gray's Sugar Trade Journal, Sept. 15, 1898.] Refiners' agreement expired. — The understanding which has existed for so long between the American Sugar Refining Co. and the independent refiners re- garding the terms and conditions has expired, although the factor plan still remains in existence in many States and is being generally adhered to. The situation is merely changed to the extent that, with an increased number of independent refiners, there will hereafter have to be increased eflrort by each of them to secure the business. [The Journal of Commerce and Commercial Bulletin, Sept. 2, 1903.] GROCEES ABANDON ATTEMPTS TO CONTROL StTGAB PRICES — NO FURTHER RESTRICTIONS IW NEW YORK AND VICINITY AN ATTEMPT WILL BE MADE TO HOLD A SLIGHT PROFIT UP THE STATE — NEW ENGLAND NOW THE ONLY' TERRITORY WHERE LIMITED PRICES RULE ON SUGAR. Wholesale grocers of New York and vicinity will no longer attempt to main- tain an agreement to continue the limited-price plan of selling sugars. They will sell at a profit, at cost, or at a loss, according to their own idea of the best interests of their own btisiness. This decision was reached on Monday night at the executive committee meeting of the Wholesale Grocers' Association of New York and vicinity. So far as the northern part of the State is concerned there will be some attempt to continue a small profit, and the understanding is that New York grocers will not attempt to cut below these prices. But for all practical purposes the limited-price system is at an end, except in New England, where it has been in operation for many years and where grocers are loyal to it. For some months the New York City grocers have found their trade declining. They charge the Sugar Trust with having employed large retailers and a few small grocers on the east side of the city to sell sugar at refiners' net cost prices. These large retailers and small grocers have, it is asserted, been receiv- ing a special concession or rebate of at least 5 cents per 100 pounds, which enabled them to sell at retail at the net wholesale price. This practice had grown to such larg6 dimensions that some of the largest grocers in the city de- cided that they must either cut sugar prices to meet competition or lose their business in other goods ns well. The general feeling of the grocers seemed to be that they would like not to handle sugar at all, but it is necessary for them to do so in connection with their other goods. The Sugar Trust and the grocers have now both come to the conclusion that any limited-price policy is impracticable. The trust was willuig to make a new limited-price agreement with the grocers if the latter would purchase all their supplies from the older refiners — in other words, refuse to buy from the Arbuckles. But the grocers would not enter into such an agreement. It was an agreement, they declared, that could not last, since if the Arbuckles could not sell to the wholesale trade they could be depended upon to promptly place themselves In connection with the retailers — the customers of the wholesalers. The grocers have themselves been trying by agreement since the first of the year to maintain prices, but they have had very hard work and now have abandoned the attempt. The New England grocers are unanimous in mamtam- ing a profit of 15 "cents per 100 on sugar. But that seems the only part of the country where refiners are willing to help grocers secure a profit. For some years past Chicago and other western points have been selling sugar at cost with the hor>e of taking business from New York and other centers; and even with this inducement refiners claim that Chicago is gradually losing Its trade to other carload points. The cutting has gone on for so long that grocers have given up all hope of being able to arrange with refiners to help 150 AMERICAN SUGAR REFINING COMPANY. them maintam a profit of 15 cents per 100, which refiners admit is little enough for handling the product. So far as the attempt to maintain prices up the State is concerned, there seems in lower Wall Street little Inclination to take it seriously. New York grocers will not, it is argued, refuse to sell sugar at cost prices if they can sell a large bill of other goods with it. The trust is nominally quoting 5 cents for granulated sugar, less 1 per cent for cash. As a matter of fact, most of the sugar now moving is on a 4.90-cent basis, having been bought at that figure. The National Co. is on the same basis, while the Arbuckles are 4.80 cents, less 1 per cent, except for Ohio, where the quotation is 4.70 cents, less 1 per cent. The points that have been cutting sugar prices most severely, and which are chiefly responsible for the abandonment of the plan, are Albany, Utica, Syra- cuse, and Buffalo. [Journal of Commerce, Oct. 30, 1903.] GROCERS DBCLAEE STJGAB PRICES OPEN — NEW YORK JOBBERS WILL NOW INVADE NEW ENGLAND — THIS IS REGARDED AS " HAVEMF.YER " TERRITORY, AND WILL INTERFERE WITH THE BU.SINESS OF THE TRUST — GROCERS, IT IS STATED, WILL NOW SELL AS THEY PLEASE. A special meeting of the wholesale grocers of New York and vicinity was held yesterday at the rooms of the organization in the Mercantile Exchange Building, It lasted practically all day and occupied two sessions. The meeting was de- voted almost entirely to a discussion of the sugar situation, and some members were inclined to continue the fight to maintain prices by the cooperation of the members themselves and quite independent of the refiners. It was finally decided that this policy had been tried for a sufficient period to prove its abso- lute futility, and the upshot of the meeting was the removal of all restrictions as to sugar and the official declaration of a wide-open market for sugar. This means that grocers are now officially at liberty up the State as well as in New York to sell sugars at any prices they believe will best serve the interests of their individual business. It means, moreover, similar conditions in New Jersey as far south as Trenton, and similar conditions also in Connecticut. A consideralde number of members of the association of New York and vicin- ity are located in Cmmecticut. This breaks into the New England territory, which is also exclusively Havemeyer territory, being the natural territory for the trust's Boston refinery. Thus far the New England association have been able to hold together on the sugar question, and trust sugars are in that terri- tory still sold on the rebate plan. It is predicted by members of the New York as.'iiiciation, however, that within a week Boston will be selling sugars at cost prices. In this way the New York frrocers feel they can strike back at the trust. They now feel tliat the trust is attempting to make the demoralization so com- plete that the grocers will be compelled to make propositions to purchase only from the old refiners; in other words, to refuse to jmrchase from the Arbuckles. "The trust will never be able to accomplish any such thing," said a very prom- inent member of the New York association last evening. " The trust will find the grocers have quite sufficient grit to keep them from doing it; and even if they bad not sufficient grit they could not make such an arrangement, for the Arbuckles would immediately begin supplying the retail trade in the sections where the wholesalers were boycotting them." Taking the average wholesale grocer, it is estimated that sugar constitutes 25 per cent of his total business. Among the large grocers of New York it figures about 20 per cent, but in the interior it figures fully 30 per cent, so that 25 per cent is about a fair average. With the wholesale grocery trade doing such a large part of their business without profit, even if they do not cut deep enough to make an actual loss, is a most serious matter to the trade; and the officers of tly; New York association believe the refiners can well afford to adopt a policy of cooperation with the grocers if for no other reason than a desire to promote the solvency of their customers and keep the bad debts down to a minimum. There is no let-up of the competition for business among the refiners them- selves, for business and prices continue a matter of barter. As has already been pointed out in these columns, the season is naturally a dull one for the sale of cane sugars on account of the competition of beet sugar. Many beet con- t)-acts are made on the basis of a discount of 10 points from Sugar Trust list prices on the day of delivery, and as the Sugar Trust has become so largely interested in the beet industry grocers are at a loss to understand what they consider the trusfs determination to demoralize the sugar situation generally. .«(i^ APPENDIX XII. SUGAE BROKEKS ASSOCIATION. (Newspaper ExtractB.) 151 [Tie Journal of Commerce and Commercial Bulletin, Sept. 25, 1903.] SUGAE BROKEES' ASSOCIATION. StTGAB BBOKEKS WORK ONLY WITH ASSOCIATION MEMBERS — ALL OTHER CONNECTIONS TO CEASE ON OCTOBER 20 THE PURPOSE IS TO MAKE EFFECTIVE THE NATIONAL ORGANIZATION OF BROKEES IN REFINED SUGAR OFFICERS, DIRECTORS, AND COM- MITTEES OF THE ASSOCIATION. Official notice has been given on behalf of the National Association of Brokers in Refined Sugar, which was formally organized about three weeks ago, that after October 20 it will be impossible for New York brokers to work with their present correspondents unless such correspondents are elected to membership before that date. Already every refined-sugar broker in New York and Phila- delphia is on the list, and applications for membership are coming in rapidly from brokers in all parts of the country. The refiners are heartily encouraging the movement. In order to assure brokers who are not fully informed regarding the organiza- tion that all interests will be protected, the following explanation has been sent out by the special committee on new members " That you may have a better idea of the purposes of the National Association of Brokers in Refined Sugar we beg to say that it is the intention of the asso- ciation to receive, at its first annual meeting in January, suggestions from brokers all over the country for the better conserving the interests of the brokers, not only generally but locally, and the association suggests and expects amendments to be made to the constitution and by-laws at that meeting, which will perfect the workings of the association throughout the entire country. " When this association was started it was composed of all the New York and Philadelphia brokers, who as a unit entered into this matter heartily, and by so doing received the encouragement of the eastern refiners. " In framing the constitution and by-laws the committee on this work was particularly careful to regulate the subsequent distribution of its officers and directors, as indicated in Article IV, section 1, of the constitution, and as it was impossible to give representation to sections of the country other than New York and Philadelphia until members had been secured in other sections, at the first meeting of the association it was distinctly understood by all concerned that the officers and directors holding the offices until the annual meeting were temporary. "The eastern brokers have entered into this matter from the start in the proper spirit, and already It has developed a better equality and regard for each other personally and for each other's rights. "The refiners have given us their hearty encouragement, nnd we take pleasure in referring you' to them if you have any doubt as to the strength of our position. "This matter has been given the most careful consideration, and the com- mittee on constitution and by-laws were appointed with due regard to their sense of justice and equality toward all concerned, and we think a careful perusal of the constitution and by-laws will indicate to the largest as well as the smallest brother broker that his rights will be fully respected and maintained. . , „i i. 4. .^ "Already many of the most prominent brokers in the United States— outside of New York and Philadelphia— have applied for membership and are giving this matter their hearty support in their several local sections, and there is absolutely no doubt but that the proposition is on a sound foundation. " Inasmuch as it will be impossible for New York brokers to work with their present correspondents after the 20th of October, unless such correspondents are 153 154 AMERICAN SUGAR REFINING COMPANY. elected to membership before that date, it is the sincere hope of the new mem- bership committee that immediate consideration will be given to this matter and your application returned, so that it will be received by the new membership committee in New York by October 5." Following are the officers, directors, and committees of the association : Officers. — L. W. Minford, New York, president; A. F. Gray, New York, first vice president ; J. H. Huston, Philadelphia, second vice president ; E. T. Gilles- pie, Philadelphia, third vice president; W. E. Turner, New York, treasurer; L. V. B. Cameron, New York, recording secretary; William R. Bassett, cor- responding secretary. Directors. — George Taylor, Joseph B. Turner, A. H. Lambom, James C. Ens- sell, Samuel Winston, Frederick S. Green, Louis Klein, T. H. Talcott, F. H. Bidwell, Edward S. Henry, Schuyler Miller, J. D. Hegeman, jr., M. F. Prince, J. Harvey Connell, J. C. Robertson, New- York; Charles Wallace, J. P. Magee, jr., Philadelphia. Executive committee. — A. F. Gray, chairman; L. W. Minford, W. R. Bassett, W. E. Turner, A. H. Lamborn, George Taylor, James C. Russell, Joseph B. Turner, J. H. Huston. Admissions committee. — L. V. B. Cameron, chairman ; F. H. Bidwell, J. D. Hegeman, jr., Charles Wallace, Edward S. Henry. Finance committee. — Frederick S. Green, chairman; Schuyler Miller, J. 0. Robertson. Special committee on new memhers. — A. H. Lamborn, chairman; A. F. Gray, W. R. Bassett, Joseph B. Turner, J. H. Huston. [The Journal of Commerce and Commercial Bulletin, Jan. 14, 1904.] BBOKEBS IN REFINED SUGAE HOLD ANNUAL MEETING NATIONAL ASSOCIATION ELECTS OFFICERS FOE ENSUING YEAE — ADDRESS OF PRESIDENT L. W. MINFOED — HEIGHT OUTLOOK FOE THE OEOANIZATION — MEMBERSHIP NOW NUMBERS 224 HAS SUPPORT OF REFINERS — ASSOCIATION'S POLICT. Announcement was made yesterday of the officers elected for the ensuing year by the National Association of Brokers in Refined Sugar at the first annual meeting, held at the Montgomery Tea Auction rooms. The officers and directors are as follows : President, A. H. Lamborn, New York ; first vice president, A. F. Gray, New York ; second vice president, J. H. Huston, Philadelphia ; third vice president, W. R. Bassett ; treasurer, W. E. Turner ; corresponding secretary, L. V. B. Cam- eron ; recording secretary, J. D. Hegeman, jr., of New York. Directors to serve for one year. — H. E. Havemeyer, Chicago; Louis Klein, J. C. Robertson, George Taylor, M. F. Prince, Kenyon Parsons, Joseph Brown, of New York ; Fred B. Beacham, Baltimore, Md., and Harry Loy, Dayton, Ohio. Directors to serve for tieo years. — J. F. Magee, jr., Philadelphia; J. C. Rus- sell, Edward S. Henry, L. W. Minford, J. B. Turner, Schuyler Miller, J. Harvey Coimell, of New York ; Charles Wallace, Philadelphia, and Ariel Meinrath, Chicago. In his annual address. President L. W. Minford said, among other things; " With the unanimous cousent of all brokers in our line in New York and Philadelphia, a meeting was held in this city on September 2, 1903, and the ' National Association of Brokers in Refined Sugar ' was duly organized. The rapid growth of the association, the membership of which already includes 224 brokerage concerns doing business in the most important cities and dis- tributing centers throughout the United States, with their numerous branches and their large number of active partners and workers, is matter for con- gratulation ; but still more are you to be congratulated upon the harmony, the general confidence, and the good feeling that have been engendered, inasmuch as these make our business a pleasure and tend to promote an active and healthy competition among our members. " In the short period allotted to your first board of managers, who, though all engaged in active business, have sacrificed much valuable time and energy to furthering its interests, the bringing of the association to a successful com- pletion has been no small task. If, now, the members outside of New York and Philadelphia will only take the same active interest in the association and endeavor to place its merits, as well as the great benefits to be derived there- from, before brokers in their respective territories that have not yet enrolled themselves, they will greatly aid us in increasing our membership. AMERICAN SUGAR REFINING COMPANY. 155 "In founding the association we have followed the lines of the pledge or guaranty that, as is well known, has for many years been required by our lead- ing sugar refiners; so we have the active support and cooperation of several of the largest of these in the United States, together with the sympathy of them all. No organization of the kind therefore has started under more favor- able auspices, and great success has already attended our efforts. " It is our painful duty to record our first loss through death — Thomas Alton, one of the most prominent and respected members .of the sirup brokerage business. " In conclusion It may be well to remind you of our good fortune in being identified with one of the greatest industries of the United States, remarkable for the steadiness of its output and its uniform growth with the population of our great country; directed, moreover, by the ablest minds in the commercial world, by men noted for their breadth and liberality of spirit. In aiding the distribution of the product of our refineries, which, as you know, is required to be very nearly constant, we are particularly favored. Our brokerage system has stood the test of time, and has been so perfected by experience that it has become unique. We have a splendid field for the full play of brains, energy, and integrity, and it has always been our constituents' desire that our business should be sufBciently remunerative to command the services of men of that caliber. When, in due time, our association is rounded out and perfected, it will, no doubt, be deemed a great privilege, as well as an honor, to be numbered among Its members." The association has the support of all active refiners in New York and Philadelphia. [The Louisiana Planter, Oct. 17, 1903.] THE SUGAB BROKERS' TBTJST. The recent organization of the National Association of Brokers in Refined Sugar promises to bring about some rather queer conditions if the contem- plated regulations of the association are carried into effect. This national association of sugar brokers is originally founded upon an organization in New York and Philadelphia and from that has now progressed all over the country, and it is thought that it will include every active and reliable broker in the whole Union. It is intended that the control of the association shall be placed in the hands of a board of directors elected from the various parts of the coun- try so that the board will be truly representative. The close corporation char- acter of the organization, however, is announced in the fact that after the 20th of October the eastern brokers can do no business with the western brokers unless they belong to the organization. In order to overcome any difficulties in this direction all the brokers in the country have been notified of the urgency of the case and the suggestion that they should make immediate application for membership. Another feature of the situation is that it is said that the sugar refiners are encouraging this brokers organization. If the refiners will now conclude to sell their sugars only through the brokers belonging to the national association of brokers, the whole business will be tied up quite completely. We believe that it was Mark Twain who referred to the shopkeepers in Damascus as being about the only people in the world who did not want to sell their own goods, parting with them so reluctantly and censuring the buyers so obviously for buying, that it looked as though the real business of selling was the last thing the Damascus dealers had under consideration. As a rule the sugar refiners and the merchants of the land are willing to utilize the ability and energy of any young broker in permitting him to sell their goods, and while it may be said that such able and energetic men can have ready access into this associa- tion, at the same time the organization will be an impediment thrown in the way of the new men coming on the scene daily. The brokers of the United States, whether in finance, commerce, manufac- tures, real estate, insurance, or shipping, are men of a high order of ability and of great energy, and to these brokers of the land the United States to-day owe much of their recent progress. There would be no harm in the organization of the brokers for common information, but we see by the published proceedings of this new organization that one of its very first rules Is to prohibit business of the membership excepting with fellow members and the organization of those shutting out those who have not or may not join it. APPENDIX Xlir. IMPORTS OF SUGAE, BY COUNTRIES, FISCAL YEARS 1892-1902. 157 U AMERICAN SUGAR REFINING COMPANY. 159 s . >^ s> 1 O S H so (M § a S3 OD iH « oT ?> Pi < ■1 B O V g o 09 H P4 o p^ to oo OS O . 00 00 g OOOO tS QOC COTfl 00 CO SOWCD coom OOW N lO cooor-Tpo" lO CO 1-1 CO ■^ ■^ ■^ o OOI>OOS • OOlOCVl t- g-^tHCO,-) ^ t^ OS ^H CO Oot"oooco" a-toec-i t- 5i p « H 99^ S OS 0) n o o CJfi!z;PP W OS lO-^OJ . t-t>O00 ^ ^ cc ■* C loco oo .-I omm CO cot* CD :3t><(M OO ftOO" •- ^^ o «crS to CO >o lO o r— « cococoeoc . -t Of- co-r aa ' - ' ^ g u; r>i .-I (M c Q^cot-iN^ U5O00 OOM CO CO M )-. -H — < » -^Ol « CO t^ 5QOiO :3 o> c- ■* ■* '-' g fs"- '3 '^ X> ^ i-t r^ E» S lO C4 .-I "i< (L M m OCOig 6 00 CO Oco" CO a 95 3p^ ° I SSo oM.s o43« a , a s «> s'S.aa®''^" S s-M 3 = ^2 la ■S W •am* 9 °S SSsSdao fnoizirtPitin. fl « 2 « « s a a o 3 9 ■8 I i-ss AMERICAN SUGAR REFINING COMPANY. 161 I8S ■*.-l CMCC oca 00 c^ at ca CD r— lo CO-- e ■^INC ■*^^ OOCM r r-ooic nC4 IQ< sow t3 -OCM OC3i Oocoeo>-i G MCCCO t-O&O TfH CO lO CO "^-^ lO fO CO i> o ua lOGJ .04 0) 1^ _ O CO i-f L'j o ^- CO iQ OJ oo oa r^ I- "^ ■0 O 00 00 lo o6 i.t'i-Too t-^ r*CCC3i CD OJi-l iQ O lO o c^co CMOO-tJ-OOsO CO Tt" -* CM Ci] 00 00 Mic-i Oi t^ r^ oo COM •<»< c co»o W U CCiOOJ P-CSCD O of irfc^O ■*" 1> CO -^ "ti" >f3 CO iQ i-H CD 0> C^l m c-JcocD SCO t--»o CDiOO .-I coco r- CD CNOOO b£ ■§2; O CO . cf a o !> p Q, C ai fc. 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I Irn" i i '\: Oi : ; i . tc Cj .-H n 10 ■OJ .0 . ^(N , .-«it-.CO ■ ■ • .to .X ■& ■ ■* c t-- 0ai^ • cq lO-^ 11^ M 1 1 1 oa ^ ' " ' '10 i 1 ■ • • 4 M -fg I"^ -^"lO" '• i" : :^ ^ : : § i ■ i i 1 1 1 1 : 1 : c ;c J ; ^ B b * P. ;; 3 '; m i m ■ : ■ ; ; : igl 1 o O Is ■W : 1 :S :< - ■a 5 c 1 . > . c ■_! 1 am is I3 C3 003 1 §1 _0( 1 i ^ '■ S : CO . til ■a§. \ ■■■ mm « i i? :l 33 .pi .S 1 M-S^^ s-asa^H-g.g'es-aa c MBo^siJ*; s^sg^'s m al tr ■5 ZIP 03 h- S 1 AMERICAN SUGAK EEFINING COMPANY. 167 i;r ■ coo • mo ■ ino ■ss "C n nn s2 ;s tuj . :.J3~ N APPENDIX XIY. PKICES OF SUGAR IN ENGLAND AND HAMBURG. 169 PKICE^ OF SUGAR IN ENGLAND AND HAMBURG. A. — Prices of sugar at London and at Hanihurg (for export), as compiled by Industrial Commission from Willcit S O^raifs Journal, Jan. If, 1900. ENGLISH PRICES OF SUGAR. [Cents per pound.] EAW— JAVA AFLOAT, NOS. 15 AND 16 D.S., UNITED KINGDOM TEEMS. 1881 1882 1883 1884 1885 1886 1887 1888 1889 5.78 5.72 5.61 5.72 5.97 6.11 6.16 5.89 5.83 5.83 5.95 5.95 5.72 5.51 5.56 5.67 5.78 5.72 6.61 6.56 5.78 5.61 5.45 5.40 5.24 5.18 5.16 5.66 5.50 5.47 5.34 5.29 6.23 6.29 6.16 5.04 4.85 4.63 4.63 4.36 3.82 4.03 3.76 3.65 3.49 3.16 3.44 3.16 3.06 3.11 3.32 3.32 3.38 4.09 3.98 3.66 3.98 3.87 3.76 3.87 3.71 3.61 3.38 3.27 3.38 2.94 2.97 2.89 2.89 3.00 2.86 3.00 2.97 2.94 2.78 2.94 2.97 2.92 3.02 3.02 3.11 3.06 3.24 3.79 3.82 3.67 3.44 3.40 3.38 3.35 3.46 3.43 3.60 3.49 3.49 3.71 3.73 February 3.67 Maroli 3.71 April 4.15 May 5.13 5.13 July 6.45 4.80 3.65 October 3.38 3.16 December.. 3.32 ■1890 1891 1892 1893 1894 1896 1896 1897 1898 1899 .Tflnilary 3.27 3.22 3.27 3.22 3.24 3.19 3.19 3.27 3.44 3.38 3.33 3.24 3.27 3.24 3.41 3.44 3.33 3.27 3.33 3.27 3.24 3.27 3.38 3.65 3.54 3.46 3.46 3.44 3.38 3.36 3.33 3.33 3.38 3.36 3.33 3.67 3.57 3.60 3.60 3.79 4.09 4.25 4.36 3.87 3.66 3.71 3.44 3.38 3.38 3.33 3.38 3.36 3.26 2.94 " 2.94 2.89 3.05 2.89 2.62 2.56 2.48 2.40 2.40 2.51 • 2.56 2.56 2.61 2.66 2.66 2.70 2.81 2.75 2.81 2.95 3.06 3.00 3.00 2.84 2.62 2.54 2.61 2.36 2.40 2.69 2.61 2.42 2.40 2.40 2.29 2.29 2.26 2.29 2.40 2.40 2.32 2.34 2.46 2.37 2.37 2.40 2.62 2.70 2.67 2.61 2.69 2.66 2.37 2.64 2.56 February 2.45 2.56 April 2.62 May 2.73 2.84 July 2.78 2.75 September., 2.70 2.64 November., 2.46 2.46 KEFINED — TATE'S CUBES. 1881 1882 1883 1884 1885 1886 1887 1888 1889 7.42 7.20 6.98 6.98 7.14 7.20 7.09 7.09 7.09 7.09 7.31 7.20 7.20 6.87 6.87 6.92 7.03 7.14 7.09 7.09 6.98 6.98 6.92 6.76 6.76 6.65 6.76 6.98 6.92 6.76 6.54 6.li5 6.43 6.32 6.32 6.21 0.05 6.00 6.78 5.78 5.45 5.45 5.23 5.18 5.02 4.58 4.58 4.47 4.47 4.47 4.53 4.47 4.63 5.23 5.02 4.80 4.85 4.80 4.80 4.91 5.02 4.76 4.58 4.58 4.69 4.36 4.41 4.36 4.36 4.36 4.36 4.26 4.14 4.14 4.09 4.14 4.09 4.09 4.20 4.14 4.26 4.20 4.36 4.80 4.86 4.64 4.53 4.47 4.53 4.47 4.58 4.58 4.73 4.58 4.58 4.80 4.69 February. 4.69 March 4.76 6.13 May 6.00 June 6.83 July 6.32 August.. 5.78 5.23 October 4.80 4.47 4.68 171 172 AMEEICASr SUGAK HEFINING COMPANY. -Prices of sugar at London and at Mamhurg, etc. — Continued. ENGLISH PRICES OF SUGAR— Conttnued. EEFiNED — TATE'S CUBES — Continued, 1890 1891 1892 1893 1894 1895 1896 1897 1898 1899 4.36 4.25 4.41 4.31 4.41 4.25 4.14 4.31 4.31 4.14 4.14 4.20 4.36 4.25 4.47 4.47 4.36 4.36 4.41 4.53 4.47 4.41 4.41 4.69 4.69 4.58 4.58 4.58 4.41 4.36 4.36 4.30 4.41 4.31 4.53 4.89 4.58 4.63 4.53 4.80 5.13 6.13 5.35 5.13 4.80 4.80 4.58 4.58 4.47 4.36 4.36 4.25 4.14 4.03 4.03 4.03 3.92 3.71 3.60 3.49 3.38 3.38 3.38 3.27 3.44 3.49 3.38 3.44 3.44 3.82 3.76 3.71 3.82 3.98 3.98 3.92 3.92 3.71 3.60 3.49 3.38 3.33 3.33 3.33 3.33 3.33 3.33 3.33 3.33 3.33 3.27 3.16 3.26 3.16 3.16 3.16 3.33 3.22 3.22 3.22 3.38 3.38 3.33 3.27 3.33 3.33 3.38 3.46 3.38 February 3.33 March 3.27 3.33 MIv 3.54 3.52 July 3.49 August 3.48 3.46 3.44 November 3.44 3.38 DIFFERENCE BETWEEN TATE'S CUBES AND JAVA AFLOAT, UNITED KINGDOM. January... February. . March April May June July August September, October . . . November. December . 1881 1882 1883 1884 1885 1886 1887 1888 1.64 1.48 1.52 1.20 1.42 1.31 1.17 1.03 1.48 1.36 1.47 1.37 1.36 1.24 1.20 1.07 1.37 1.31 1.60 1.15 1.21 1.20 1.31 1.09 1.26 1.25 1.42 1.42 1.15 1.31 1.20 1.07 1.20 1.25 1.42 1.63 1.25 1.31 1.12 1.16 1.09 1.42 1.29 1.42 1.14 1.42 1.17 1.12 .93 1.48 1.20 1.47 1.04 1.44 1.18 1.12 1.20 1.53 1.36 1.53 1.14 1.47 1.12 1.15 1.26 1.20 1.20 1.63 .87 1.47 1.15 1.13 1.26 1.37 1.03 1.42 .93 1.36 1.15 1.09 1.36 1.47 1.16 1.14 1.04 1.60 1.12 1.09 1.25 1.36 1.17 1.31 1.04 1.26 1.01 1.09 0.96 1.12 1.04 .98 .87 .70 • .87 .98 1.5S 1.42 1.31 1.26 January. . . February . March April May June July August September October. . . November. December. 1890 1891 1.09 1.09 1.03 1.01 1.14 1.00 1.09 1.03 1.17 1.03 1.06 1.09 .9: 1.08 1.04 1.26 .87 1.23 .76 1.14 .81 1.03 .96 1.04 1892 1893 1894 18 55 1896 1897 1898 1899 1.09 90 1.01 0.82 0.87 0. 1.03 98 1.03 .91 .85 .98 98 .92 .93 .85 .89 76 .92 .93 .82 .88 88 .92 1.04 .76 1.09 93 .87 1.04 .68 1.09 87 .98 1.01 .66 1.14 88 .96 .87 .76 .87 as .87 .86 .74 .82 1 12 .98 .76 .77 .98 95 .93 .84 1.01 .93 96 .74 .82 .82 GERMAN AND AUSTRIAN PRICES OF SUGAR. GERMAN BEET ROOT (RAW SUGAR), 88 PER CENT ANALYSIS, PROMPT F. O. B. HAMBURG; GERMAN AND AUSTRIAN GRANULATED, FIRST MARKS QUALITY, F. O. B. HAMBURG. 1889 1890 1891 1892 1893 1894 1896 1896 1897 1898 1699 January: 3.65 3.01 3.11 2.52 3.30 2.70 3.60 3.22 3.68 3.12 3.22 2.74 2.21 1.87 2.78 2.34 2.46 2.01 2.40 2.04 2.40 2.06 .64 .59 .60 .38 .56 .48 .34 .44 .46 .36 34 February: 3.54 3.01 3.11 2. .55 3.32 2.82 3.68 3.14 3.68 3.12 3.24 2.76 2.40 2.03 2.89 2.56 2.43 1.96 2.36 1.98 2 44 Raw 2.13 DifFprpTice .53 .56 .50 .54 .56 .48 .37 .33 .47 .38 31 March: rirHiinlfttpH 3.65 3.22 3.22 2.70 3.44 2.98 3.67 3. OB 3.57 3.05 3.19 2.78 2.39 2.00 2.97 2.68 2.29 1.92 2.41 2.03 2.41 Raw 2.11 Difference .43 .62 .46 .49 .62 .41 .39 .29 .37 .38 AMERICAN SUGAR REFINING COMPANY. 173 A. — Prices of sugar at LoikIoii and at Hamburg, etc. — Continued. GERMAN AND AUSTRIAN PRICES OF SUGAR— Continued. QEEMAN BEET BOOT (RAW SUGAR), 88 PER CENT ANALYSIS, PROMPT F. O. B. HAMBURG, GERMAN AND AUSTRIAN GRANULATED, FIRST MARKS QUALITY, F. 0. B. HAMBURG— Continued. 1889 1890 1891 1892 1893 1894 1896 1896 1897 1898 1899 April: 4.22 3.79 3.16 2.59 3.38 3.03 3.41 2.89 3.90 3.49 3.16 2.72 2.36 2.02 3.00 2.70 2.32 1.96 2.39 1.97 2.50 Raw 2,21 Difference .43 .57 .35 .52 .41 .44 .34 .30 .36 .42 ,29 May: Granulated 5.13 4.65 3.32 2.72 3.32 2 90 3.24 2.79 4.22 3.96 3.00 2.62 2 58 2.13 2.98 2.67 2.32 1.94 2.41 2.02 2,73 2,46 Difference . .48- .60 .42 .46 .26 .48 .45 .31 .38 .39 .28 June: 5.18 4.87 3.27 2.68 3.27 2.89 3.41 2.86 4.33 3.95 2.96 2.68 2,63 2.18 2.74 2.30 2.32 1.89 2.50 2.12 2,73 2,41 .31 .59 .38 .65 .38 .38 .45 .44 .43 .38 ,32 July: Granulated 6.28 4.94 3.27 2.68 3.24 2.89 3.35 2.82 4.60 3.98 2.97 2.66 2.64 2.11 2.62 2.17 2.33 1.85 2.37. 2.03 2,68 2.26 Difference . . .32 .59 .35 .63 .62 .41 .53 .46 .48 .34 .32 Granulated . 5.02 4.28 3.38 2.97 3.30 2.93 3.41 2.81 4.36 3.53 2.96 2.46 2.88 2.16 2.59 2.16 2.30 1.86 2.40 2.04 2,73 2,37 .74 .41 .37 .60 .83 .50 .72 .43 .45 .36 .36 September: 4.09 3.01 3.52 3.04 3.30 2.92 3.60 3.05 4.00 3.15 3.19 2.62 2.62 2.07 2.41 1.97 2.43 1.94 2.51 2.08 2.64 Raw 2.19 Difference 1.08 4.09 2.72 .48 3.49 2.77 .38 3.32 2.89 .55 3.52 2.88 .85 3.95 3.19 .57 2.84 2.21 .55 3.00 2.36 .44 2.33 1.91 .49 2.33 1.89 .43 2.56 2.09 ,45 Granulated 2.48 2.06 Difference 1.37 .72 .43 .64 .76 .63 .64 .42 .44 .47 ,42 November: Granulated: 3.16 2.55 3.44 2.72 3.35 2.89 3.68 3.08 3.38 2.88 2.62 2.17 2.69 2.29 2.36 1.99 2.29 1.85 2 52 2.09 2,66 1,98 Difference .61 .72 .46 .60 .60 .45 .40 .37 .44 .43 ,58 3.27 2.63 3.30 2.71 3.49 3.23 3.62 3.02 3.24 2.74 2.50 2.14 2.70 2.29 2.37 2.00 2.37 1.96 2.52 2,21 2,54 Raw 1,95 Difference.- .64 .59 .26 .60 .50 .36 .41 .37 .41 .31 .69 [Wlllett & Gray's Weekly Statistical Sugar Trade Journal, Mar, 17, 1904,] The London market for caue sugars is now about on a parity with our market, Javas, 96° test, being quoted at 8s. lOJd. "floating landing," out of which price sellers must pay charges amounting to say 4id., making the net cash quotation 8s. 6d. per hundredweight, equal to l.m cents per pound without duty. At this price, West India sugars, 96° test, could be sold cost and freight to New York. A sale to England, however, involves au extra expense of 0.05 to 0,10 cent per pound, covering additional freight, etc., therefore, sellers can do better on centrifugals in this market at present than in the United Kingdom. In the case of molasses sugars England will pay higher than the parity of prices here. 174 AMERICAN SUGAE REFINING COMPANY. B. — CoMparalive prices of raw sugar, London, Haniburg, and New York. [Cents per pound.) Years. Java afloat, London. German and Aus- trian raw, 88 per cent-94°, Ham- burg. 96° cen- trifugal, New York. Years. Java afloat, London. German and Aus- trian raw, 88 per cent=94°, Ham- burg. 96° cen- trifugal, New York. 1890 3.27 3.34 3.41 3.78 3.05 2.57 2.72 2.67 2.95 2.97 3.35 2.49 2.13 2.29 5.45 3.86 3.31 3.69 3.24 3.26 3.63 1897 1898 . . . 2.36 2.52 2.62 2.73 2.35 1.92 2.06 2.18 2.23 1.86 3.95 4.15 4.42 4.57 4.05 3.64 3.72 1891 1892 1899 1893- 1900 1894 1901 1895 1902 1896 1903 C. — Weekly prices of sugar at London and at Hamburg (for export), 1899-1901, as compiled hy Bureau of Statistics from London Public Le'dger. (Shillings and pence per bundredweiglit of 112 pounds.! German beet root, 88 per cent— prompt, free on board. French crystals. No. 3, c. f. i. Java afloat, Nos. 15 and 16. 1900 Deo. 28 ; 9/1 J -9/0 J 1901 Jan. 4 i9/0J-9/l 11 ! 9/1 -9/3| 18 : 9131 -9/3J 25. 1. 8. 15. 22.. 1., 8. 15.. 22.. 29. 5. 12.. 19. 26.. May 3.. 10-. 17.. 24.. 31.. June 7 . , 14., 21.. Feb. Mar. Apr. July Aug. Sept, Oct. Nov. 5. 12. 19. 26. 2. 9. 10. 23. 30. 6., 13.. 20.. 27.. 4.. 11.. 18.. 25.. 1.. 15. 22. 29. Dec. 6. 13. 20. 9/31 -9/1} 9/li -9/2J 9/2i -9/3i 9/3| -9/3i 9/3} -9/24 9/2J -9/2i 9/2} -9/Oi 9/Oi -8/lli 8/lli-9/ 9/ -8/lli 8/11J-8/11 8/11 -8/lOJ 8/10J-8/10 8/10 -9/Oi 9,/Oi -9/5 9/5 -9/6 9/6 -9/7 9/7 -9/6} 9/6} -9/6 9/6 -9/4 9/4 -9/2| 9/2} -9/2j 9/25 -9/3} 9/3} -9/3} 9/3} -9/1} 9/1} -9/6} 9/6} -9/4 9/4 -S/3 9/3 -8/lOi 8/10}-8/4J 8/4} -8/3 8/3 -8/1} 8/1} -8/Oi 8/Oi -7/9} 7/9} -7/7 7/7 -7/5 7/5 -7/7} 7/7} -7/7 7/7 -7/8} 7/8} -7/4} 7/4} -7/1} 7/1} -7/2} 7/2} -7/3} 7/3} -7/4} 7/4} -7/3 7/3 -7/1 7/1 -7/li 7/li -6/10} 1899 9/2i -9/2 1900 9/2 - 9/2i 9/2i - 9/5i 9/5i - 9/7} 9/7} - 9/6} 9/6} - 9/10 9/10 -10/Oi 10/Oi -10/ 10/ - 9/9 9/9 - 9/9} 9/9} - 9/lOi 9/lOJ-lO/O} 10/0} -10/1} 10/1} -10/1} 10/1} -10/3i 10/3i -10/5 10/5 -10/4 10/4 -10/5 10/5 -10/7} 10/7} -10/5i 10/5i -10/6* 10/6* -10/8} 10/8} -10/8 J 10/8i -10/11 10/11 -10/10 10/10 -11/0} 11/0} -11/3} 11/3} -11/5 11/5 -11/7} 11/7J -12/U 12/1} -12/4} 12/4} -11/5 11/5 -11/9 11/9 -11/9} 11/9} -11/11} ll/ll}-12/4 12/4 -ll/6i ll/6i -11/8} 11/8} -12/ 12/ -10/lli 10/llJ- 9/lli 9/lli- 9/9 9/9 - 9/8i 9/8J - 9/8 9/8 - 9/5i 9/5i - 9/5 9/5 - 9/7} 9/7} - 9/8i 9/8i - 9/9 9/9 - 9/8 9/8 - 9/2} 9/2} - 9/1} 1898 9/6 -9/5i 1899 9/5i - 9/5 9/5 - 9/4i 9/4 - 9/2i 9/2i - 9/7 9/8 - 9/lOi 9/9 - 9/6 9/6 - 9/7i 9/7i - 9/7} 9/8} - 9/84 9/9| -10/0 9/11}- 9/11 9/11 - 9/11} 9/11 - 9/11} 9/ll}-10/5} 10/5} -10/11 10/11 -10/lli 10/lli-ll/li 11/14 -ll/3i 11/34 -11/ 11/ -11/3} 11/3} -11/2} 11/2} -11/14 11/14 -11/2} 11/2} -11/1} 11/1} -10/9 10/9 -10/64 10/6i -10/6} 10/6} -10/3} 10/3} -10/74 10/74 -10/8} 10/8} -11/ 11/ -10/74 10/74 -10/4} 10/4} -10/1} 10/1} -10/04 10/04 -10/li 10/14-10/ 10/ - 9/7} 9/7} - 9/44 9/4| - 9/2 9/2 - 9/14 9/li - 9/1} 9/1} - 9/1} 9/1} - 9/0} 9/0} - 9/04 9/04 - 9/1} 9/1} - 9/04 9/04 - 8/11} 8/ll^ 9/1} 9/1} - 9/2} 9/2} - 9/24 1900 10/44 1901 10/6} 10/8} 10/74 10/8J 10/8} 11/ (<") 10/9} 11/ C") 11/ 11/lJ 11/ 11/14 11/3} 11/ 10/8} 11/74 Nom. Nom. Nom.. Nom. Nom. Nom. Nom.. Nom Nom.. Nom. Nom. Nom. Nom.. Nom Nom.. Nom Nom.. Nom, Nom, Nom.. 9/3} 9/3 9/14 9/3 8/9 8/6} 8/6} 9/ 9/ 8/104 8/104 8/104 1899 10/6} 1900 10/6} 10/6} 10/6} 11/ 11/ 11/3} 11/33 ll/H 11/lJ 11/2} 11/3} 11/63 11/6} (6 6) 12/2} 12/ 12/1 12/44 12/ 12/3 12/44 12/44 12/6 12/5} 12/74 13/3 14/ 14/ 14/ 14/ 14/ 13/9 13/ 12/9} 12/9} 12/74 12/8} 12/9 12/ 11/6 11/6 11/ 11/ 11/ (66) 11/0} 11/0} 11/0} 11/0} 10/9 10/6} 1898 (»«) 1899 11/ 11/ (a,) 11/14 11/44 11/14 11/3 11/5} 11/5} ll/7i 11/6 11/74 11/74 12/14 12/6 12/74 12/74 12/9J 12/6} 12/8} 12/8} 12/8} 12/9} (be) 12/6} 12/6 12/6 12/6 12/6 12/6} 12/74 12/6} 12/3} 12/0} 12/ 11/4J (aa) 10/8} 10/44 10/44 10/6 10/5} 10/6 10/5} 10/5} 10/5} 10/5} 10/6 10/6} 10/6} 1900 1899 12/3 11/3 1901 1900 12/ 11/3 12/ 11/3 12/ 11/3 (ad) 11/44 (ad) 11/44 (ad) 12/ 11/9 12/14 11/9 1214 11/74 12/ 11/Vi 12/3 11/V4 12/3 11/74 12/3 11/74 12/44 11/74 12/6 (ad) 12/9 (ad) 12/9 (ad) 12/9 (od) 12/9 11/9 12/9 11/9 (6 0) 11/74 13/ 11/74 13/ 11/6 13/14 11/6 13/ 11/4 13/ 11/4 13/ 11/4 13/ 11/4 13/ 11/4 13/3 11/44 13/3 11/44 13/6 11/ 13/6 (<") 13/3 10/7 12/9 10/4 12/9 10/3 12/44 10/3 12/9 10/ 13/ 10/ 13/ 10/ 13/14 9/6 13/3 y/3 13/ 9/3 (6c) (6c) 9/ «/ (6 c) 9/ (6cl 8/9 56 c 8/9 I'":) 8/9 12/9 8/9 12/6 8/9 12/3 ll/7i 1899 11/6 11/6 11/3 11/6 11/6 11/6 11/6 11/9 11/9 12/ 12/14 12/14 12/1! 12/14 12/74 12/9 12/9 13/3 13/ 13/ 13/ 13/ 13/ 13/ 12/9 12/9 12/6 12/3 12/3 12/6 12/74 12/6 12/6 12/3 12/3 12/ 12/ 11/9 11/6 11/6 11/6 11/6 11/7J 11/9 11/74 11/74 11/74 11/74 11/6 11/3 11/3 al3/104 i-H/lOi C12/I1} «16/10i a6 ig/lOJ acl4/ll} adll/104 ^•lO/ll} aclo/104 '^ 11/11} 6cl2/14 Annual figures in text, table at p. 68a, for 1901 (and for 1900) for Tate's Cubes are obtained by averaging highest and lowest quotations of each month, and then averaging these. AMERICAN SUGAJR KEFINING COMPANY. 175 la so (D to ■* t^ OJ r- OS oi OS i-i ^ th ^ _ rvM-^. O C O „ O O -*lr*»-*l _ H £0 CO tH jM r-4 CO tH M t^i-(i-( ,_(,_(,^ i-H-^-rft COM ^ .-(^HOlOii— ICOCC O O O HnC" -^ -^ --- "-^ .-. ''-■ — — .^ — — ■ —■ ■ O ^^ rH jH jH gS ro Ol 0> O) Oi Ol t^ I- CO M CO CO CO M 1- MM M CO Oi 0> "* -f ■* •»* t^ gjco Smmmmmcococommm cfi'^cico^'^^^^^^^^^^^^in^^^'tS^^^^^^couS' oioa^oososososcoeocoosaioi OT^ S^^^^SS." 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COST OF REFINING SUGAR. 98244^11 ^12 177 COST OF REFINING SUGAR. Classification of Sugars. [U. S. Treasury Depai'tment Circular No. 183, Customs Division.] " Hard refined " sugars are eomuiercinlly known as loaf, cut loaf, cube, granu- lated, crushed, and powdered, testing 99.5° or over by the polariscope. All sugars testing less than 09.5° by the polariscope are " soft refined." [Report on Reciprocity witb Cuba, 1902, p. 187.] Mr. Henry T. Oxnard, president of the American Beet Sugar Association and formerly a refiner of cane sugar, testified before the Ways and Means Committee in 1902 that he believed the cost of refining cane sugar would be between 50 cents and 60 cents per 100 pounds, including the waste of about 4 per cent. He believed that in the best factories of the American Sugar Kefiuing Co. the cost would be as low as 30 cents per 100 pounds, aside from the waste, but in other factories it might run up to 50 cents per 100, aside from the waste. [Report on Reciprocity witli Cuba, 1902, p. 354.] Mr. Post, president of the National Sugar Kefiuing Co., testified thnt the cost of refining, including waste, would vary from about OS to C2J cents i)er 100 pounds, according to Ihe location of the refinery and the methods employed. 179 SUGAE INVESTIGATION. LOUISIANA PLANTATION SUGARS— DIRECT CONSUMP- TION—COMPARISON OF PRICES OF SUGAR IN NEW YORK AND NEW ORLEANS— PRICES OP RAW AND REFINED SUGARS CONTROLLED BY REFINERS— NOTES UPON THE COMPARISON OF RAW SUGAR PRICES IN NEW ORLEANS AND NEW YORK. 181 SUGAR INVESTIGATION. The Direct Consumption of Louisiana Plantation Sugaes. The direct consumption of raw sugar or of sugar in the plantation state for the years 1898 to 1904, inclusive, and the New York average monthly margins between 96° centrifugal sugar and standard granu- lated for the Louisiana crops of 1898-99 to 1904^5, inclusive, are given in the following table. The New Orleans margin is approxi- mately 0.2 to 0.25 cent per pound larger than that of New York. Consumption of plantation sugar — Price margins. Years. Sugar con- sumed in the plantar tlon state (tons, 2,240 pounds). Louisiana crop (Oct.- Jan.). Margins between raw and refined sugars in New Yorli (cents per pound). Oct. Nov. Deo. Jan. Feb. Mar 1898 141,811 53,934 55,934 51,232 44,749 70,222 144, 102 1898-99 1899-1900 1900-1901 1901-2 1902-3 1903-4 1904-5 .535 .485 .847 1.020 .867 .770 .696 .435 .645 .890 .980 .605 .660 .670 .466 .545 .907 .806 .687 .730 .638 .405 .530 .977 .907 .835 .920 .377 .662 1.020 .862 .913 .898 .372 1899 .650 1900 1.090 1901 1.010 1902 .950 1903 .860 1904 As a large part of the Louisiana crop is marketed after January 1, it should be stated that the average margins for the months of January and February, 1898, were each 0.780 cent. A sugar war began in 1898 with the opening of the Arbuckle re- finery in Brooklyn, and later the unsettled conditions were intensified by the operation of the new independent establishment now known as the New York refinery of the National Co. Eefined-sugar prices were very unsettled, and the daily variations were greater than the monthly averages in the table indicate. The margin between raw and refined sugar was at times considerably below the cost of refining and distributing the product. The fair margin in January and February, 1898, and probably con- tracts made before the sugar war began, favored the sale of plantation sugar in 1898 up to the opening of the Louisiana manufacturing season, when the margin was too small to induce the consumption of this sugar. Many factories were induced to contract with the Amer- ican Sugar Refining Co. for their entire output for some time in advance, which probably accounts in part for the small consump- tion of plantation sugar in 1900 and 1901. The large margins in February, 1901, when little sugar remained to be marketed, and in October and November, 1901, the beginning of the crop of 1901-2, apparently found the planters unprepared to market a part of their 183 184 AMERICAN SUGAB EEPINISTG COMPANY. crops for direct consumption, and probably they were also deterred by the previous unsettled conditions. It is also probable that in order to meet the large advances made by merchants in the very unfavorable crop years of 1899 and 1900, when the output of sugar was very small, the planters were compelled to market their sugar as promptly as possible and without opportunity of seeking the best markets. It is further probable that the relations between the jobbers and re- finers, which prevailed during the sugar war, reduced the number of buyers in the New Orleans Sugar Exchange. During the early part of the crop of 1902-3 the margin was again small, accounting in part for the small consumption of plantation sugar in 1902. The margin was large in January, February, and March, 1904, and in fact until August of that year, thus encouraging a larger consumption of plantation sugar, as is shown in the table. It IS the yellow plantation sugar that comes mostly into competi- tion with the refineries in the Louisiana sugar territory. This sugar polarizes between 98° and 99° and often passes 99°, thus bringing from one-sixteenth to three thirty-seconds cent above the price of 96° sugar, and probably has an additional slight advantage over the ordinary grades of centrifugal sugar on account of its good color and refining qualities. As this sugar usually competes with the yellow sugars of the refineries, the difference between the prices of which and the 96° sugar are considerably smaller than between granulated and 96° centrifugals, it is probable that the margin has not been sufficient for several years to promote large sales of this yellow sugar for direct consumption. It is also undoubtedly true that with the cheapening of white sugars and the reduction of the margin between the refined and raw sugars, through the American Co.'s competition with Arbuckle Bros, and other independent refiners, the consumer in general prefers to pur- chase the better grade at the slightly higher price, and does not readily revert to the use of yellow sugar when the margin increases. The following extract from a letter written by a Louisiana planter, who fornicrly made large quantities of very high-grade sugars for, direct consumption, is indicative of the conditions in Louisiana: " I am sorry to say that I can not give you any good reason for the fate of yellow clarified sugars. About four years ago we found the trust buying practically our entire output, and doing this practically on test. There seemed to be no other market for it. Of course, if our sugars were to sell on test it was better for us to get them as near 96 as possible, and we have since that time made nothing else. I think the vast majority of our planters followed our course, and that yellow clarified, off white, and the like are pretty nearly a thing of the past, except for the little made to supply the home market. I believe also some of these sugars when sold on the exchange, having gone on test, have been classed as raw sugars. There seems to have been no influx of buyers from the North, during grinding, on the exchange, such as there used to be. The people have been educated tip to cubes, granulated, and such, and pass our clarifieds over. I am unable to say whether the refineries have had anything to do with this or not. I am more inclined to think not than otherwise; that it has been a matter of education with the consumers. I visited forty-odd sugarhouses in Louisiana last winter, and I do not remem- ber to have seen a single strike of white or yellow clarified sugar made." (July, 1905.) AMERICAN SUGAR REFINING COMPANY. 185 The production of plantation white sugars would be stimulated by a large margin between 96° centrifugal sugar and standard granu- lated, provided they could be marketed at their value. These sugars of good quality can be readily made, and as factories can be cheaply equipped for such work it would be expected that white sugars would be manufactured whenever the margin is large enough' to more than compensate for the reduced yield and increased cost of manufacture. The increased cost of making white sugar as compared with the refining grades is difficult to estimate, since increased expense for skilled labor, waste, and fuel consumption enter into the calculation. It is probable, however, that the total increased cost to the factory wiU not exceed 35 cents per 100 pounds of sugar. Except where the factory is well equipped for making white sugar, the product is often " off color " and would not command the full price of the standard grades, and, further, even under favorable conditions, fac- tory refined sugar is liable to be somewhat irregular in quality as regards color. This is not so objectionable in the cane products as in the case of those from the beet. The beet sugars retain a slight disagreeable odor, except when thoroughly refined. The following table of quotations gives the comparative prices of sugar in New York and New Orleans at intervals of one week during the active period of sugar manufacture in the year 1904. The data are compiled from Willett & Gray's Statistical Sugar Trade Journal and the Louisiana Planter. The prices of granulated and centrifugal sugar are from the former and those of the grocery grades from the Planter. There were no quotations of " plantation granulated " or " choice white " sugar in the Planter in 1904. Comparison of prices of sugar in Kcic York and Xcic Orleans. Dates. Standard granu- lated. New York 96° centrifugal in New York and New Orleans. New York, New Orleans. Granu- lated. 96° cen- trifugal. Differ- ence. New York. New Orleans. Differ- ence. 1904. Nov. 3 Cents. 5.00 5.20 6.30 5.30 5.30 5.40 5.50 5.50 5.60 Cents. 5.05 5.20 5.30 5.30 5.30 5.40 5.50 5.50 6.55 Cents. 5.00 5.20 6.30 6.30 5.30 5.40 5.50 6.50 5.60 Cents. 4.41 4.41 4.625 4.75 4.75 4.75 4.875 4. 875 4.875 Cents. 0.590 .790 .675 .550 .650 .650 .625 .626 .725 Cents. 4.41 4.41 4.625 4.75 4.75 4.75 4.876 4 876 4.875 rente. 4.126 4.220 4.437 4.500 4.630 4.562 4.687 4.562 4.562 Cents. 0.285 10... .190 17 .188 23 . 260 Dec. 1 .220 8 . .188 15 .188 22 .313 29... .313 NEW ORLEANS PRICES. Dates. 96° cen- trifugal. Off white. Choice yellow clarified. Difference off white and 96° . centrifugal. Difference yellow clari- fied and 96° centrifugal. Difference granulated and 96° centrifugal. 1904. Nov. 3.... Cents. 4.125 4.220 4.437 4.500 4.530 4.562 * 4.687 4.662 4.662 Cents. 4.40 4.53 4.81 4.84 4.81 4.81 4.94 4.875 4.875 Cents. 4.36 4.60 4.78 4.81 4.78 4.80 4.89 4. S3 4.84 Cents. 0.275 .310 .373 .340 .280 .248 .253 .313 .313 Cents. ' 0.236 .280 .343 .310 .250 .238 .203 .268 .278 Cents. 0.925 10 .980 17... .863 23.... .800 Dec. 1 .770 8.. .838 15.... .813 22 .938 29 .988 186 AMERICAN SUGAR REFINING COMPANY. The cost of manufacturing "choice yellow clarified" sugar is nearly that of " off white." The tabulation shows that the differ- ences between the prices of centrifugal sugar in the New Orleans market and off white and choice yellow clarified were usually a little below the additional cost of making these sugars as compared with the refining grade. This difference, therefore, between the prices of the centrifugal and the grocery sugars was not of itself sufficient to justify the manufacture of the high-grade sugar. However, high- grade sugar is doubtless made to some extent to induce competition between the refiners and the outside buyers, and is possibly advan- tageous in maintaining a generally higher level of prices. A corre- spondent in New Orleans of Messrs. Willett & Gray, November 4, 1898, reported as follows: Refiners are taking the bulk of the sugar, paying 4^ cents for basis of 96° for dark sugars, and for the average are paying 43^ to 41 cents for clarified, and have taken In the fancy lots in a line with other sugars as high as 4A cents. Of course, the.'se sugars test away up. — (Willett & Gray's Statistical Sugar Trade Journal, Nov. 10, 1S98.) These prices show an increase of fully one-sixteenth of a cent per pound per degree of polarization above the basis, 96°, instead of the usual one thirty-second of a cent. Only in so far as this price exceeds one-sixteenth of a cent is there an increased profit to the producer, and unless the sale of these sugars induces grocery buyers to compete on all grades, there is no advantage gained through their manufac- ture. The price of centrifugal sugar averaged nearly a quarter of a cent per pound below the New York price. The cost of freight and in- surance to New York in sailing vessels is about 21 cents per 100 pounds. It is often claimed by planters that the New Orleans price is lower than that of New York by the amount of the freight and expenses, thus the planters would gain nothing in seeking the New York market. As the choice plantation granulated sugars are almost equal in quality to the standard grade, it Mould be expected that the large margin between 96° centrifugal and standard granulated, as shown in the table, would have encouraged the manufacture of the planta- tion gi-anulated. This apparently was not the case, as there were no quotations of either plantation granulated or choice white pub- lished in the Louisiana Planter in 1904. There were undoubtedly private sales of these white sugars, as certain factories manufacture them. It has been intimated (Hearings on Reciprocity with Cuba, 57th Cong., p. 2(;i) that the sale of plantation white sugar is pre- vented to a large extent by the competition of the refineries. Under- quoting is said to be practiced in any market in which plantation sugar appears. It is probable that contracts with the refiners for the purchase of the entire output of factories have much to do with the reduction in the direct consumption of plantation sugar. The location of refineries at the center of the Louisiana cane-sugar industry enables the refiners to compete directly with the factories and without themselves becoming manufacturers" of sugar from the cane. In the beet districts, however, the refiners have become large producers, as their refineries are distant from the sugar districts. An investigation should be made in Louisiana to determine with certainty the cause of the reduced direct consumption of plantation AMERICAN SUGAR REFINING COMPANY, 187 sugars. "With fair competitive conditions the bulk of the Louisiana product should enter directly into consumption as factory-refined sugar. (See also newspaper extracts and tabulations appended. These show the ability of the refiners to fix the prices of raw and refined sugar.) [Note in regard to local underquoting, given by Mr. G. L. Spencer.] Effect of local underquoting in discouraging small manufacturers (factories as distinguished from refineries) of refined. No matter how large margin may be, if price of sugar is met by underquoting, the manufacturer (not refiner) does not dare produce refined sugar. Appendix 1. [Willett & Gray's Weekly Statistical Sugar Trade Journal, Dec. 29, 1904.] •' The influence of the Cuban reciprocity treaty has been, in 1904, to maintain the price of centrifugal sugars below the parity of beet sugars in the European markets, with the exception of a short time in the months of August and Sep- tember, when Cuban centrifugals and foreign beet sugars were quoted at the same parity. Thus it appears that while the general advance in the price of sugar throughout the world has given the Cuban planter large returns for his crop, he has not obtained the full benefit of his reduced duties, mainly for the reason that he has not asked it. Having been so many years working at a loss with his plantations largely involved in debt, the Cuban planter has been ex- tremely happy to avail himself of the turn in the tide to free himself from former obligations. His position in 1905 should be such as to enable him to obtain full benefits of the reduced duties." [From Willett & Gray's Weekly St.itlstical Sugar Trade Journal, Nov. 10, 1898.] New Orleans, La., November 4, 1S98. — Receipts have commenced to be a little more liberal, but refiners are taking the bulk of the sugars, paying 4-h cents for basis of 96° for dark colored sugars, and for the average are paying 43^ to 4i cents for clarified, and have taken in the fancy lots in a line with the other sugars as high as 4A cents; of course these sugars test away up. I learned to-day that agents of the trust have offered to large planters to take all the clarified they will make this season. Irrespective of test, at 4i cents. This refers to what I call here first clarified, which always tests 98° and over. When it becomes generally known that they have miide these offers, the mar- ket is bound to remain at this level for refining purposes for some time, and it will prevent outside territory from buying Louisiana sugars and sell In the West and Northwest in competition with refined sugars from New York, as the parity between raws and refined will be so small that buyers will prefer refined sugars at the refined prices. Plantation granulated is selling at 4J to 4tB cents, and large shipments are being made to the western points direct from planta- tions at about these figures, with rate of freight to St. Louis of 20 cents per 100 pounds, Chicago at 25 cents, Louisville at 17 cents, Davenport, Iowa, 28 cents; Omaha, 30 cents, so I look for orders from New York to these points to fall off and come this way for sugars that are but a fraction poorer than standard grade. It looks to us as though the trust Intends to secure the bulk of the Louisiana crop and keep the prices just about -k cent higher than these same sugars could be sold for on basis of New York market delivered In New York, paying freight from here. [Willett & Gray's Weekly Statistical Sugar Trade Journal, Aug. 24, 1899.] The out.—* * * The consumption of refined sugar during the last quarter of the year is comparatively small, the local demand of several States being fully supplied by the output of the domestic beet and cane crops; hence the 188 AMEMOAN SUGAE EBFINING COMPANY. sale of refiners ahead under guaranties are much less than credited to them and will continue to fall oS to the end. It is not the policy of the American Sugar Refining Co. to encourage the growth of either of the domestic sugar industries by holding the umbrella for large profits to those industries, but rather the opposite. Looking at the future rather than the present, the course of the American Sugar Kefining Co. is consistent with its interests. The " sugar war," instead of being ended, is about to receive fresh stimulus from competition with the increasing domestic cane and beet sugar crops, which become marketable In September and later. Further cuts in refined may therefore be looked for if the prices of raws continue to recede. [Willett & Gray's Weekly Statistical Sugar Trade Jburnal, Nov. 25, 1898.] Louisiana sugars coming to New York. — Charters have been made of nine sailing vessels having a capacity of 10,000 tons for the shipment of sugar from New Orleans to New Tork at a freight of 60 cents per barrel, equal to 17 cents per 100 pounds. These sugars are coming to the American Sugar Refining Co., who have bought the greater part of the Louisiana crop thus far received. The prices paid last week at Xew Orleans were on a parity of 4J cents at the begin- ning and 4i cents at the close, basis 96° test. Adding 17 cents freight and 4 cents insurance, the cost paid down at New York will be 4.3.3 to 4.46 cents. A shipment of Louisiana sugar by schooner to Baltimore is also being made, doubtless for direct consumption. Comparison of the prices of 96° centrlf\igal sugar in Netc York with the prices of 88° analysis 'beet sugar (Barnburg) reduced to the basis of 96° centrifugal sugar. [Willett & Gray's Statistical Sugar Trade Journal for 1904.] Dates. New York price. New York equiva- lent of Ham- burg price. Dates. New York price. New York equiva- lent of Ham- burg price. Dates. New York price. New York equiva- lent of Ham- burg price. 1904. Jan. 7 Cents. 3.47 3.35 .3.31 3.31 3.36 3.36 3.36 3.38 3.44 3.44 3-60 3.00 3.67 3.67 3.61 3.54 3.70 3.73 3.76 3.88 3.95 3.95 3.875 3.84 3.94 3.94 3.94 3.94 3.94 Cents. 3.76 3.72 3.69 3 63 3.68 3.(14 3.68 3.69 3.73 3.73 3.76 3.79 3.80 3.79 3.79 ,3.82 3.88 3.89 3.96 3.96 4.01 3.97 3.93 3.91 3.96 3.96 4.01 4.04 4.06 1904. July 281 ^"Si^;;::::: Cents. 3.94 4.06 4.125 4.25 4.26 4.31 3.31 4.31 4.26 4.31 4.29 4.25 4.25 4.22 4.41 4.41 4.625 4.75 4.75 4.75 4.875 4.875 4.875 4.875 5.06 5.24 5.25 Cents. 4.00 4.16 4.22 4.22 4.24 4.28 4.28 4.26 4.33 4.38 4.37 4.29 4.36 4.36 4.68 4.86 6.12 5.04 4.96 6.08 4.99 6.00 6.06 5.21 5.41 5.49 5.41 1905. Feb 2 Cents. 5.25 4.94 4.94 6.00 6.125 6.06 4.88 4.84 4.81 4.94 4.88 4.72 4.625 4.625 4.50 4 34 4 375 4.375- 4 375 425 4 31 4 25 419 400 400 4 06 406 4125 Cents. 5.36 14 9 5.25 21 16 6.23 28 181 251 Sept. 11 8 16 22 29 Oct. 6 13 20 27 Nov. 3 23 5.29 Feb. 4 Mar 2 5.29 11 9 5.22 18 16 5.12 25 ,... 23 5.08 Mar. 3 30 5.11 10 Apr. 6 6.09 17 13 490 24 20 475 31 27 472 Apr. 7 May 4 471 14 454 21 10... 18 443 28 17 26 460 May 6 24 June 1 461 12 31. g 453 19 Dec. 8 15 460 26 16 22 461 June 2 22 29 43e 9 29 July 6 4.3t 16 1905. Jan. 5 13 404 23 20 438 30 27 436 July 7 12 Aug 3 414 141 19 10 418 211 26 I Hamburg reports shipments of raw sugar to the United States. AMERICAN SUGAR REFINING COMPANY. 189 . Comparison of the prices of refined sugar in New York and Hamburg. [Keduced to duty-paid basis, New York. Compiled (rem Willett & Gray's Statistical Trade Journal for 1904.] Dates. New York prices. Ham- burg prices. Dates. New York prices. Ham- burg prices. Dates. New York prices. Ham- burg prices.. 1904. Jan. 7 14 21 28 Feb. 4 11 18 25 Map, 3 10 17 24 31 Apr. 7 14 21 28 May 5 Cmt». 4.36 4 36 4 36 4. 26-. 31 4 26-. 36 4 26-. 36 4 26-. .36 4 26-. 30 4.31 4.41 4 60 4 60 4 50 4 60 4 40 4 40 4 55 4 55 CmUs. 4 32 4 29 4.26 4 23 4.26 4 23 426 4 26. 4.31 4 36 4.37 4 40 4 40 4 40 4 40 4 40 4 45 4 45 1904. May 12 19 26 June 2 9 161 23 30 July 7' 14 21 28 ^"^- h':::;:;; 181 26 Sept. 1 8 Cents. 4 55 4.75 4 80 4 80 4.75 4 75 4.75 4 75 4 85 4.85 4 85 4.96 5.00 5.00 4 95 4 95 6.00 5.00 Cents. 4.61 4.56 4 56 4.52 4 49 4 48 4 52 4 53 4 66 4 61 4 61 4 69 4 72 4.76 4 74 4.78 4.85 4.83 1904. Sept. 15 22 29 Oct. 6 13 20 27 Nov. 3 10 17 23 Dec. 1 8 15 221 29 Cents. 4 95 4.96 5.00 4 90 490 4.80 4.80 6.00. 5. 20-. 26 6.30 6.30 5.30 5.40 6.50 6.60 5.60' Cents. 4.82 490 4.94 4.94 4.85 4 89 4.87 6.19 5.30 8.50 5.42 5.43 8.67 ' 5. 49 5.65 5.67 I Hamburg reports shipments ol refined sugar to the United States. ABSTBACTS FROM STATEMENT OF MK. HEYWARD G. LEAVITT, OF LEAVITT, NEBE. [Hearings on Reciprocity with Cuba, 57th Cong., pp. 247, 248.] The established commetcial difference in value between 96° centrifugal cane sugar and 88° " rendement " beet raw, recognized by the American refineries in the purchase of their raw sugar, is 19 cents per 100 pounds. The value accord- ingly to-day in the New Xork market, costs and freight and duty paid, of 96° centrifugal cane sugar, based on to-day's Hamburg price — 6s. 9d. per 100 pounds avoirdupois — of 88° "rendement" (94.5 per cent polariscope test) German beet sugar is 3.69. The actual price to-day in New York of and which the Cuban planter is receiving for his 96° centrifugal cane sugar, costs, freight, and duty paid. Is 3.37J, or 31J cents per 100 pounds below the equivalent price of and which the trust would have to pay for German raw sugar, or 4i cents per 100 pounds below the entire amount of the countervailing duty. In other words, the Sugar Trust has to-day extracted from the Cuban planter more than the entire amount of the countervailing duty of 27 cents per 100 pounds, existing in his favor in our market. What more timely or conclusive proof of the trust's control of the market for Cuban raw sugar, and Louisiana sugar as well, or of both its purpose and ability to secure to the same extent for itself alone the reduction of duty asked of Congress for the benefit of Cuba (p. 247) ? Before closing this address I wish to call your attention again to the abso- lute control by the Sugar Trust of the American markets for refined sugar, to the reasons for its existence, and the only way to bring it to an end. Both are cojnpi'isedin the dfflferential, duty agplyihg on. sugars abft?e;No. 16 I5uteb standardr This has been sufficient to enable the trust to exclude pra<;ticallf every pound of foreign refined sugar from our markets, regardless of the margin maintained between raws and refined, and to enable it to pay large dividends on an enormously watered capitalization. For the practical -welfare and development of our home sugar industry, anfl in the best interests of the Cuban planter, I advocate and urge most stronglijr that this differential duty be removed from refined sugars coming from every foreign land. Such a measure would help Cuta more than any moderate re- duction on raw sugar, be of no benefit, though of no injury, to the Sugar Trust, and be of the least possible harm to the producers of American sugar. Why, then, have Mr. Atkins and other Cubans all failed to advocate a reduc- tion of the tariff on sugars above the 16 Dutch standard and asked only for a reduction on raws? Surely they can make and export "clarified yellows," 190 AMERICAN SUGAR REFINING COMPANY. if not granulated sugar, and sell these to the American consumer, if offered too little for their raws by the trust. Gentlemen, it has come to this, that this very differential duty, designed as much to aid the beet-sugar producers as the refiners of imported raw sugar, has become in the hands of the Sugar Trust the very means and instrument of compassing the ruin of its only rival. It enabled the trust last fall to sell granulated sugar on the Missouri River, in the beet-sugar markets, at 3* cents per pound, and to make up the loss incurred by maintaining at the very same time a margin in New York and other eastern markets of over IJ cents per pound between raw and refined sugars, securing thereby 5J cents per pound for its same product in those markets. The western beet-sugar producers, mean- time, are powerless to threaten to carry out retaliation, for they have neither the margin of profit to permit it, nor sufficient sugar as yet to render of any effect an invasion of the trust's present exclusive markets (p. 248). NOTES ON THE COMPARISON OF RAW StTGAR PRICES — NEW ORLEANS AND NEW YORK — POSSIBLE ARGUMENTS TO JUSTIFY A LOWER PRICE IN NEW ORLEANS THAN IN NEW YORK. I. Question of marketing refined product. (a) Greater difficulty, as compared with northern conditions, in that — (1) South more sparsely settled. (2) Southern railway rates much higher for equal distances than in Xortli. (3) South has large negro population — of low refined-sugar consuming capacity. (4) Large local production and consumption of sirups that take the place of sugars. (5) The canning industries requiring sugar are much greater in the North than in the South. (V) .\s a result of the foregoing conditions — (1) Per capita demand in South is much less than in North. (2) The cost of marketing per pound is greater in the South than iu the North. (c) As. however, if the price of sugar is too hi.gh to the conusmer he will go without or use substitutes, there are certain limits to the price that can be charged. Therefore all of the increased cost of marketing refined sugar in the South over the northern cost can not be shifted to the consumer ; it must either be borne by the refiner or by the producer of raw sugar. The price at present paid by the southern consumer — somewhat, but not much, higher than .in the North — is as high a price as he can be made to pay. II. Cost of refinin^r in the South. It is a question whether tlie cost is or can be made as low as in New York. The proposed new refinery to be built in New Orleans is not necessarily proof that sugar can be refined as cheaply there as in New York, or rather that tliis has been the condition up to the late period of cheap fuel in New Orleans, ^^abor cost forms but a small part of the refining expense, It does indicate that nnder conditions as at present (cheap fuel and the lower cost of raw sugar) the enterprise would be profitable. If the New York price had to be paid for raw sugar it might not be as profitable. III. The cost of refining being a somewhat inelastic quantity, and the demand for the refined product being more or less rigidly limited by price conditions in the South — due to the fact that substitutes can readily be found if the price to the consumer is too high — it is therefore likely that a cpnstderable portion of the higher cost of marketing refined sugar in the Soiith as compared to the North will have to be borne by the producer of raw sugar. In so far as the refiners in the South make a greater profit per pound of sugar refined than the refiner.^ in the North, to th.it extent js this profit made by depressing the price of Louisiana raw sugar. If the price of Louisiana raw is still lower, after the deduction of such a profit, than the price of raw sugar in New York, the difference logically should be borne by the producer of raw sugar, since it represents the disadvantages, natural and not artificial, which attach to the article he produces. The consumer's, demand being one which will not stand prices above a certain level, and hence being an elastic demand, and the refiner being entitled to the cost of refining and a' fair profit, makes it necessary that the raw material- should bear a greater proportion of the tost of marketing thnn would be necessary in other and more favorable conditions. Could the total supply be sold at proportionately higher prices to consumers the burden would be shifted to them. AMEKICAlSr SUGAR EEFINING COMPANY. 191 rV. The higher price paid for Cuba raw sugar delivered at New Orleans than for Louisiana raw sugar. (a) Under certain conditions and within certain limits this might be justifiable. (1) If Louisiana does not produce enough sugar to supply her market and hold her trade, it will be necessary to Import raw sugar from Cuba. But this raw sugar must be bought at the price it would commapd- in New York, less the very slight difference in ocean freight between New Orleans and New York. The higher cost of marketing refined sugar in the South can not be shifted on the Cuban producer of raw sugar. , , (2) In order to refine most economically, it must be done on a large scale; therefore the greater the amount of sugar refined the cheaper it can be refined per pound. (6) To a certain extent, therefore, the importation of Cuban raw sugar into New Orleans, even at a higher price than for Louisiana, raw sugar, might Indi- rectly benefit Louisiana raw sugar by enabling the refiners to hold their mar- kets and by cheapening the cost of refining per pound. If the increased profits due to the cheaper cost of refining are retained by the refiner, the Louisiana raw-sugar producer is not benefited; otherwise they would go to removing somewhat the natural disabilities which rest on the Louisiana raw-sugar pro- (Jucer, either showing directly in the form of a higher price for his raw sugar or, more probably, indirectly in a lower price to the consumer, and hence in- creased consumption and a resulting demand, for more raw sugar. This argu- ment justifies the importation only of a relatively small amount of Cuban sugar as compared to Louisiana sugar. It does not justify importations of large amounts of Cuban sugar. In conclusion, the foregoing argument may be summed up : It is assumed that conditions in the South are as follows: 1. There is a much higher cost of marketing the refined sugar In the South than in the North. . 2. That the demand for sugar in the South is confined to certain price limits, beyond which it will not advance, owing to the easy use of substitutes, and therefore that the higher cost of marketing can not be shifted on the consumer. 3. That since the costs of refining are a somewhat fixed quantity, the in- creased cost of marketing will not be borne by the refiner. 4. Therefore the increased costs will have to be borne by the producer of raw sugar in the shape of a lower price for his product. No one else can be made to bear it. 5. In so far as the foregoing are the actual conditions, it will be seen that it is the natural conditions in the South which are responsible for a lower price for raw sugar in New Orleans than in New York and not artificial ones imposed by the refiners. Raw sugar would be worth more in New York than New Orleans. 6. In so far as the refiners make a greater profit per pound of sugar in New Orleans refigeries than in New York the difference in that profit is an artificial discrimination which operates to the disadvantage of the producer of raw sugar in Louisiana and to the direct advantage of the refiner. It is the undue de- pression of the Louisiana price. 7. Under the principle of " joint costs " of refining the higher price paid for Cuban raw sugar in New Orleans may under certain conditions raise the price of Xouisiana raw sugar. REM.A.RES ON MB. WING'S "NOTES ON THE, COMPARISON OF RAW SUGAR PRICES IN NEW YORK. AND NEW. ORLEANS." ' I. Question of marketing the refined product.^The territory tributary to the touisiaha and Texas refineries, as defined by railway freight rates, has a popula- tion probably in excess of 25,000,000. This does not include much territory that may be considered debatable. At the average per capita consumption of the country; this territory would require more than 837,000 tons (tons of 2,240 pounds) of suga'r. This territory includes a great area that is sparsely settled and whose population is a large consumer of cane and sorghum sirup, thus probably reducing its sugar consumption, and, further, it includes a large Negro popula; tion, which presumably, on account of moderate wealth, is not a large sugar consumer. The territory tributary to the southern refineries also includes the groat Stales of Illinois. Missoiiri, and Texas, which doubtless consume more 1 Mr. Wing's notes are attached herewith. 192 AMERICAN SUGAR REFINING COMPANY. than the average amount of sugar. Assuming that this territory consumes but 70 pet- cent of the average for the United States, which is probably far below the true quantitv, its consumption in 1904 was about 586,000 long tons of sugar, or 53,000 tons" more than the output of the fields and refineries of Louisiana and Texas. It is thus evident that the territory, as defined, easily absorbs the sugar pro- duced in the South and imported through southern ports and that no price concessions are necessary in order to dispose of the output of the soutliem ip'i'^eries and plantations. The market reports indicate that sugar is sold In this territory upon the same basis as in other parts of the country. li. 6'o.sf of refining in the South. — There is no condition in the sugar industry of the South to increase the cost of refining as compared with that in the refineries of the North. The refineries are large and well equipped, and for many years the cost of labor and fuel have not been excessive. In view of the very high grade of the Louisiana raw sugar, it is probable that the average cost of refining in New Orleans is even lower than in New York and vicinity. III. As the cost of refining is probably no greater in the South than in the North and as the territory tributary to the southern refineries easily absorbs all the sugar they produce without price concessions, the assumed extra cost of lefining and distribution do not justify a relatively low price for raw sugar. IV^ The payment of the New York price for Cuban sugar is necessary In order to divert sufficient of this sugar to the New Orleans market. The use of Cuban raw sugar undoubtedly prevents the shutting down of the refineries at times when there is little Louisiana sugar in the market, and to this extent reduces the average cost of refining. The ] ayuieut of the New York price for Cuban sugar is fully justified by the conditions. Conclusions. — ^The larger cost of marketing the products of the southern refineries as compafed with those of New York and vicinity is not sufllcient to increase the price of sugar more than a very small fraction of a cent per pound and probably does not average one-fourth of the difference between the prices of raw sugar in New York and New Orleans. This cost is borne by the consumer and not by the refiner and is not large enough to perceptibly affect the quantity of sugar sold. The cost of refining in the North and the South is probably, within narrow- limits, the same. The refining companies dominate the sugar markets and by reason of their large capital and the distribution of their manufacturing plants, and the finan- cial struggles of the Louisiana planters during the past few years, they are able to almost entirely eliminate competition with the southern cane producer and force him to accept prices from three-sixteenths to one-fourth of a cent below those paid in New York. To meet foreign competition and the great reductions in sugar prices of the past 15 years, Louisiana has been compelled to go into debt to rebuild her sugar houses, and the burden of debt has forced the planters to seek a prompt sugar market In New Orleans. These conditions have aided the refiners to their discrimination against Louisiana sugars. Comparison of prices of 96° centrifugal sugar in New York and Jfew Orleans during the Louisiana crop of 190 Jf (per 100 pounds). Weeks. New York. New Or- leans. Dtfler- \6Bee. Oct 22-28 $4.22 4.41 4.41 4.625 4.75 4.75 4.75 4.875 4.875 4.875 J4.06 4.08 4.20 4.44 4.50 4.56 4.53 4.68 4.68 4.56 $0.14 .38 .2? Nov. 5-11 Nov. 12-18 .185 Nov. 19-25 , .25 Nov 26-Dec. 2 .19 Dec. 3-9 .22 Dec 10-16 .105 .195 Dec 24-30 .3)5 SUGAR INVESTIGATION. GENERAL SUMMARY— SUGAR INDUSTRY. PRELIMINARY WORK. 98244—11 13 193 THE SUGAR INDUSTRY. The sugar industry is divided into two distinct branches — the manufacture of sugar from the raw materials in factories and the manufacture of the various grades of refined sugar in refineries from the product of the factories. The raw material used in sugar manufacture is an agricultural product, and this leads to the location of the factories in rural dis- tricts, and exclusive of that for transportation facilities compara- tively little capital is required. The manufacture of refined sugar is conducted upon an enormous scale in seaport cities and employs very large capital. The considerations that apply in other industries in building up large combinations and large establishments also apply in the sugar industry in general. In the raw -sugar branch of the industry, how- ever, it is solely an improvement in manufacturing conditions and not a combination of manufacturing and market conditions that influences the concentration of the production into few establish- ments. Notwithstanding an enormous increase in raw-sugar production, there are few more factories active, if not even less, than formerljr. A very small number of refineries has been added in the white- sugar branch of the industry to meet the requirements through largely increased raw-sugar production. Sugar factories are of two classes, viz, those restricting their out- put to raw sugar and factories equipped for the production of certain refined grades suitable for direct consumption. For brevity, these latter sugars may be termed " factory -refined." The raw-sugar factories receive their crude material direct from the fanners and extract the sugar in a state suitable only for refining. The cheapening of the price of sugar, resulting in the necessity of more economy in manufacture, has led to the establishment ot great central factories, which almost exclusively purchase their raw materials and often draw it from farms located many miles distant. Labor conditions have also had an influence m centralizing manufac- ture since where the raw material is purchased, many very small farmers will produce it who would otherwise exercise their energies in other lines of agricultural production. The centralizing of manufacture has made rail transportation ot cane and fuel an important item in the cost of sugar. Many factories, especially in the American beet -sugar industry, are equipped for the manufacture of granulated sugar directly from the ^ *^^ 195 196 AMERICAN SUGAR REFIKIKG COMPANY. raw materials. Of the total quantitj' of beet sugar made in this coun- try in the season of 1899-1900 ' over 70 per cent was for immediate consumption. In 1904-5 crops the proportion of the output of gran- ulated sugar by the factories was probably much larger than in 1899. In view of the large extent of the United States and the dis- tance of many distributing points from the refining centers, it ap- pears probable that the beet-sugar districts will continue the produc- tion of refined sugar. The manufacture of factory-refined sugar also appears to be a natural extension of the business of the refining companies. Prior to the organization of the Sugar Refineries Co. in 1887, afterwards reorganized as the American Sugar Refining Co., and to a limited extent since, factory-refined and other grades of sugar suitable for direct consumption were made from the cane in Louisiana. Such sugar has practically disappeared from the market. As to whether the reduced production of factory-refined sugars in Louisiana is due to decreased demand, to methods of competition, or to the payment of nearly or quite the full analysis value of the raw sugar by the refineries," combined with reduced prices for refined sugar, should be investigated. In view of the importance of this matter of the Louisiana sugar, it is well to briefly compare the manufacturing processes used in making cane sugar for direct consumption and for melting by the refineries : In the manufacture of raw sugar the juice is expressed from the cane by powerful mills, and as it leaves them is heavily charged with impurities, both organic and mineral. It is next pumped to tanks provided with steam-hen ting surface, where it is limed, usually to slight alkalinity, and is then heated to near its boiling point. This process removes from the juice a large part of the impurities, which separate as a scum and a sediment. After the removal of a part of the impurities, as described, there is often a further purification ef- fected by boiling, skimming, and decantation. These processes are called the defecation and clarification. After the clarification, the clear juice is concentrated to a sirupby evaporation, and during this operation there is a further separation of impuritieSj which are removed by decantation. The clean sirup is drawn into a vacuum pan where it is cojicentrated to supersaturation, when microscopic crystals of sugar separate in the liquid. The pan boiler now draws sirup into the pan from time to time, as the liquid evaporates, being careful not to concentrate the mass to such a degree that there would be a further separation of crystals, but only sufficient to force the sugar in solution to deposit itself on the crystals already present. When the pan is filled, the mass of crystals and liquid are concentrated to a water content of about 7 to 8 per cent and are then termed " massecuite." The liquid surrounding the crystals is molasses, as, in sugar-house parlance, liquids that have been deprived of a part of their sugar receive this name. The mas-ecuite is run into centrifugal machines which are revolved at a very high speed, and the molasses is thrown off, the crystals re- 1 Bulletin 59, Twelfth Census, p. 15. AMEMCAN SUGAE REFINING COMPANY. 197 maining in the machine by reason of the metal sieves. This sugar is the 96° centrifugal of the markets. The molasses is reboiled one or more times, or until it will no longer yield sugar in paying quanti- ties, and then forms the commercial molasses. This molasses con- sists of a part of the impurities of the juice and the sugar that they prevent from crystallizing. In a modern factory, under certain market conditions, all of the sugar is of the 96° centrifugal grade ; when sugar is in large demand, the value of the low grades approaches more nearly the actual refin- ing value of the sugar, and then molasses sugars may be produced. The manufacturing process described is occasionally somewhat modified, but in general the method outlined applies to the manufac- ture of raw cane sugar in all producing countries. In making factory-refined sugar the above process is but slightly modified. The juice as it leaves the mills is passed through an appa- ratus where it is saturated with sulphurous acid — the fumes of burn- ing sulphur. The sulphurous acid bleaches the coloring matter of the juice and increases its acidity. The defecation process as de- scribed for raw sugar, except as regards the quantity of lime, is now- applied. The juice is worked slightly acid instead of alkaline. The subsequent processes, except in matters of detail, are the same as with raw sugar, until the massecuite is ready for purging in the centrifugals. At this stage as soon as the greater part of the molasses is thrown off from the crystals the latter are washed with water in the rapidly revolving machine, producing a white sugar. This white sugar is now passed through a drier, termed a " granulator," and is ready for the market as granulated sugar. Instead of drying the sugar in a granulator it may be molded, while yet moist, to form cubes. These two are the usual grades of factory refined, though little of the cube sugar is usually made. Owing to the need of more skillful supervision, to the melting of a part of the sugar in washing it in the centrifugals, to a slight loss through decomposition, to loss in remelting the low grades, and the requirement of better packages, there is a small increase in the cost of manufacture over that of producing raw sugar. In a factory originally designed for making raw sugar and with a present equipment no better than a raw-sugar factory should have the writer has conducted the manufacture, producing only a good quality of plantation granulated sugar and no molasses sugars. The processes as shown do not differ greatly in the necessary mechanical appliances. The manufacture of white sugar demands more skillful supervision, somewhat increased fuel consumption, and a better package for the product. The increased cost of the latter is offset to some extent by a smaller number of packages being required. The refining of sugar is the second branch of the industry. The purpose of the refineries is to convert the raw or plantation sugars into products suitable for consumption. These establishments are usually of very large capacity, in some instances sufficient to refine the entire crop of the average Cuban raw-sugar factory in a single fortnight. The distinction between a factory and a refinery is a very sharp one. The former produces raw sugar or refined directly from the crude 198 AMERICAN SUGAR REFINING COMPANY. material, and the latter begins where the factory leaves off and melts raw sugar to produce refined. The local distribution of sugar factories depends largely upon climatic conditions. The sugar beet, from which the greater part of the world's supply is obtained, thrives in the north. It is only oTOwn in a very few localities in southern countries. The beet dis- tricts of the United States are well north of the Ohio River, except in California. Many States are adapted both in soil and climate to beet production. As vast areas are suitable to the beet, some naturally more so than others, local conditions of soil, climate, labor, and sugar supply have been largely and in the future will be the determining factors in locating establishments. Notably in the States of Colo- rado, Michigan, California, and Utah the conditions have been favorable, and the relative development of manufacture in these States is in the order in which they are named. ' The total produc- tion of sugar in those States in 1904 was nearly 170,000 tons of 2,240 pounds, and nearlv all of this sugar was factory refined. The manufacture of white sugar by the factories has brought them into competition with the refineries. In order to meet this competi- tion the American Sugar Refining Co. has obtained control of fac- tories producing a large proportion of the output of Michigan, Colorado, and probably Utah and California. The output of beet sugar in the United States amounted to 40,399 tons in 1897.' to 72,944 tons in 1899,^ and to 209,722 tons in 1904,^ all tons of 2,240 pounds. Probably nearly 90 per cent of this sugar was ready for immediate consumption. Thus, it appears that domestic beet sugar has become a very impor- tant factor in the refined-sugar market. Beet -sugar manufacture begins the latter part of September, ex- cept in California, and continues until in January. Manufacture begins in July in California and lasts about five months. The beet- sugar competition is therefore during the autumn and early winter months. The cane industry is limited by climatic conditions to tropical and subtropical regions, and within the United States cane sugar is only produced in Louisiana and Texas. Manufacture begins about the middle of October and continues until in January. The greater part of the crop is bought \>y the refineries. There are but three sources of domestic sugar production — the cane, the sugar beet, and the maple tree. Sugar refineries are usually located on the seaboard and in large cities. Exceptions to the location in cities are the Hawaiian refinery, California, and the Cunningham, in Texas. The facilities for procuring and handling raw sugar and for the distribution of the refined products determine the location of the refineries. The cost of freight forms such a large part of the price of sugar at a distance from the refineries that the American Sugar Refin- ing Co. necessarily takes this into account in its meltings of raw sugar. 1 Willett & Oray's Sugar Trade Journal, Jan. 2, 1902. 2Will(>lt & Grays Sugar Trade Journal, June 7, 1905. AMERICAN SUGAR REPINING COMPANY. 199 The following list shows the location and nominal capacity of the sugar refineries : ^ Names. Location. Daily capacity of sugar. Barrels. Do . ...y. " Philnrtfilphifl. Do Boston i 40,000 Do Do San Francisco 10,000 Brooklyn, N. Y 4,000 McCifliaii Refinery Philadelpliia 3,000 1,000 HflTldftl^OP "Rpfi^nftry ,..."• Nftw Orlpans 1,000 1,000 Hawaiian Refinery i Near San Francisco 1,500 fllTnT|Tnghfl.-ni T?.fiflfrflry Texas 500 Total 62,000 1 Leased to American Sugar Reflning Co. Emnored that when lease expires, September, 1905, the Sugar Factors' Co. will assume control of the refinery and melt Hawaiian sugar. Befineries built since the "Cuban reciprocity hearings" im 1902. Barrels. Federal Refining Co., Tonkers, N. Y.'' 1, 000 Knickerbocker Refinery, Bdgewater, N. J 2,000 Pennsylvania Sugar Refining Co., Philadelphia (with space for increase to 6,000 barrels) 4,000 New York and immediate vicinity stand first in regard to the quantity of sugar refined and New Orleans is second. Raw materials are purchased in the beet-sugar industry on test, e. g., a certain price is paid for beets containing 12 per cent of pure sugar, with 3-| cents increase per ton for each one-tenth per cent above 12 and a corresponding decrease below 12. Beets containing less sugar than a certain minimum are rejected. There are variations in the details of the methods of fixing the pur- chase price on test, the object in all cases being to secure as rich beets as possible for the factory, thus reducing the cost of manufacture. The most difficult problem in the beet-sugar industry is that of obtaining a sufficient supply of raw materials. Several factories have been compelled to abandon manufacture through lack of beets. In most cases the deficiency in raw material has been due to a preference on the part of the farmers, for one reason or another, to grow other crops. In determining the reasonableness of prices of sugar the fact should not be overlooked that there are seasons of very deficient beet supply, and that the years of bountiful harvest must carry the factories over these. From the manufacturing point of view there are few impediments in the way of the beet industry, but this is not true of the agriculture. The question will naturally arise as to whether the areas devoted to the beet, in localities where factories have failed through lack of raw material, have been restricted by other than the usual agricultural and social causes. This would include the payment of prices for beets 1 House Doc, 57th Cong., Hearing on Reciprocity with Cuba, p. 341. 2 Now being enlarged. 200 AMERICAN SUGAR REFINING COMPANY. beyond their sugar value, and the depression of sugar prices in order to end competition. The following are the average prices paid for beets per ton of 2,000 pounds during the year ending Julj', 1900, as reported by the Twelfth Census :i The United States $4.39 California 4.47 Michigan 4. 38 All other States 4.26 The table includes but one factory in Colorado, which is now one of the largest beet-sugar producing States. The price paid by a few factories approximated $5 per ton. Judging from the investigations of the Department of Agroculture '"■ the average quaHty of the sugar beets has improved in the past four years, consequently the price per ton has increased. In addition to an increase on account of improved quality Mr. Saylor's report shows a somewhat higher base price than in 1899. Assuming $5 to be the average price paid the farmer, as is probable from the data in the report quoted, and the yield of sugar 234.8 pounds per ton, as reported, then the average cost of the raw material per pound of product was 2.129 cents in 1904.^ This cost in the census year was 2.102 cents. The reduction in cost is probably due to better beets and improved manufacture. The manufacture and farming are usually entirely separated in the beet-sugar industry, the factory purchasing all of its raw materials. This is not the case in the cane districts of the South, where fre- quently_ a large proportion of the cane is grown by the factory. There is, however, a strong tendency toward centralization of the manufacture in Louisiana and its separation from farming. iBul. 59, Twelfth Census, p. 4. 2 Progress of the Beet-Sugar Industry, C. F. Saylor, 1904, pp. 145, 146. ' The figures for 1905 will probably show a considerable Increase over ttiose for 1904. SECURITIES— INDUSTEIALS— LISTING STATEMENTS, NEW YORK STOCK EXCHANGE. SUGAR COMPANIES. GEAMERCY SUGAR CO. AMERICAN SUGAR REFINING CO. SOUTH PORTO RICO SUGAR CO. FEDERAL SUGAR REFINING CO. CUBAN-AMERICAN SUGAR CO. 201 [Francis E. Fitch, 47 Broad Street, New York. A — 3588. Committee on stock list, New York Stock Exchange.] THE AMERICAN SUGAR REFINING CO. Seven Per Cent CuMTTr.ATivE Preferred Stock — Common Stock. New York, Janvary 7, 1909. Application is hereby made to the New York Stock Exchange to transfer from the unlisted department to the regular list the fol- lowing : Forty-five million dollars of preferred stock of the American Sugar Refining Co. and $45,000,000 of common stock of the said company. The par value of the shares, preferred and common, is $100. The American Sugar Refining Co. was incorporated under the laws of the State of New Jersey on January 10, 1891, for the purpose of the purchase, manufacture, refining, and sale of sugar, molasses, and melada, and all lawful business incidental thereto. The authorized capital is $45,000,000 7 per cent cumulative pre- ferred stock and $45,000,000 common stock, all of which is issued and outstanding. The stock is fully paid. There is no personal liability attached to the ownership of the stock. Tbe preferred stock is entitled in preference and priority over the common stock to quarterly dividends, to be paid out of the net prolits of the company on the second days of January, April, July, and October in each year at the rate of 7 per cent per annum. Such dividends are to be cumulative, and tile preferred stock is entitled to no other or further share of the profits. The holders of the preferred stock are entitled to vote at all meetings of the stockholders and at all elections of the company in the same manner as the holders of the common stock. The American Sugar Refining Co. owns in fee and operates the following sugar refineries, all of which are equi^jped with the most modem machinery and appliances : At Jersey City, N. J. — The Matthiessen & Wiechers Refinery, at Washington and Essex Streets, comprising about 8 acres of city land, with deep water frontage on the Morris Canal Basin, and railroad facilities. At Boston, Mass. — The Standard Reflneiy, in Granite Street. South Boston, about four city blocks, with 800 feet of water front, dock, and railroad facilities. At New Orleans, La.— The Louisiana Refinery, in North Peters Street, about four city blocks; railroad facilities. The Chalmette Refinery (near New Orleans), in course of construction; will be completed the early part of the year 1909 ; comprises about 30 acres of land ; 1,400 feet water front, with the best obtainable dock facilities and railroad accommodations; capacity about 9,000 barrels per day. 203 204 AMERICAJSr SUGAE EEFINING COMPANY. The American Sugar Eefining Co. also operates as owner of the whole capital stock of the American Sugar Refining Co. of New York (a New York corporation) : At Brooklyn. iT. r. — The Havemeyers & Elder Refinery, and the Brooklyn Refinery adjoining, 'in Kent Avenue and extending to the East River ; comprise four city blocks and four piers, with docks and wharfage facilities along the river ; also two blocks on the opposite side of Kent Avenue. The American Sugar Refining Co. also operates as owner of the whole capital stock of the Spreckels Sugar Refining Co. (a Pennsyl- vania corporation) : At PhiladelpJiiu, Pa. — The Spreckels Sugar Refining Oo.'s Refinery, foot of Reed Street; about 12 acres of land, with railroad connections and extensive wharfage facilities and three docks. The American. Sugar Refining Co. also operates as owner of the whole capital stock of the Franklin Sugar Refining Co. (a Pennsyl- vania corporation) : At Philadelphia, Pa. — The Franklin Sugar Refining Oo.'s Refinery, South Front Street (which, however, is not in operation at present). It comprises about six blocks of city land, with railroad facilities and two docks. The American Sugar Refining Co. also owns a warehouse at Chi- cago, 111., on Fourteenth Street (not used by the company at present, but leased to other parties) ; a warehouse at St. Louis, Mo., on Lewis Street, used for the storage of refined sugar. The American Sugar Refining Co., as owner of the total capital stock of the Brooklyn Cooperage Co. (a New York corporation), owns and operates the property of that company : Cooper shops and large storehouses at Brooklyn, Boston, and New Orleans, and m con- nection with the refineries ; stave mills in the Adirondacks, in Penn- sylvania and Missouri, and timber lands. The American Sugar Refining Co., as owner of the total capital stock of the Brooklyn Transportation Co. (a New York corpora- tion) , owns and operates the property of that company : Stables and equipments in Brooklyn and Jersey City. The American Sugar Refining Co., as owner of the total capital stock of the Brooklyn Distilling Co. (a New York corporation), owns the distilling property of that company in Brooklyn. (The distillery is not in operation.) The American Sugar Refining Co^ as owner of the total capital stock of the Insular Improvement Co. (a California corporation), owns real estate in San Francisco. All the property of the American Sugar Refining Co. is located in the United States. The dock and warehouse property in Cuba which it formerly owned was sold last year. The profit and loss account on December 28, 1907, showed : Xet earnings of year ending Dec. 28, 1907 $8,749,291.62 Seven jier cent dividend paid on capital stock. Including that of Jan. 2, 1908 6,299,930.00 Surplus of year_ 2,449,361.62 AMERICAN SUGAB REFINING COMPANY. 205 CO c! OS 00 (M ^1 a> a s »2 fl 3 oj ^ D rt 35 .■y ^^ =^ § O -^ 5 4),>; 05 O ZJ aj a t» CO XI .. a 50 ■I- O K O O c ai ?. » S 3 B ^-i=i o P o a) m u o3 'Mg i.S3 R .S III- I o a g M.H rt ft Mo ^ >.3'0 o d K 03 .S ft M frH 3 a OJ >3 ^2 ftg 3J S ft 42 o « O ^ ^ .£ S S a) "■a 3+j tfl o oj 2 -I-' iS fl Jj d n TL o c > a u o p ^ 206 AMEBICAN STJGAK REFINING COMPANY. The American Sugar Kefining Co. agrees with the New York Stock Exchange to publish an annual report to its stockholders and to give at least 10 days' notice of the closing of the transfer books of the company for any purpose. The company's fiscal year ends at the close of business on the Saturday nearest to December 31. The annual meeting of stockholders is held on the second Wednes- day of January, at the office of the company in Jersey City, N. J. The principal office of the American Sugar Refining Co. is at the corner of Essex and Washington Streets, in Jersey City N. J. The company has established at 117 Wall Street, in the city of New York, an office for the receiving of stock certificates for transfer, and will maintain an office in New York City for that purpose. The registrar of the company's stock in New York is the Central Trust Co. The directors of the company, nine in number, are elected for three years. They are divided into three classes of three members each, and it has been so arranged that the term of office of one class expires in each year. Their successors are elected at the annual meeting of the stockholders. The directors are at present: W. B. Thomas,^ Arthur Donner, Charles H. Senff, John E. Parsons, John Mayer, George H. Frazier, Horace R. Havemeyer, Henry E. Niese, and Henry C. Mott. The officers are : W. B. Thomas, president ; Arthur Donner, vice president and treasurer; Charles R. Heike, secretary. C. R. Heike, Secretary. This committee recommends that the above-mentioned $45,000,000 7 per cent cumulative preferred stock and $45,000,000 common stock be admitted to the list. Wm. W. Heaton, Chairman. Adopted by the governing committee, January 27, 1909. Geoege W. Ely, Secretary. SUGAR INVESTIGATION. BEET-SUGAR FACTORIES CONTROLLED BY AMERICAN SUGAR REFINING CO.— LIST OF BEET SUGAR FACTORIES OF THE UNITED STATES. (American Sugar and Beet-Sugar Gazette, June 20, 1906.) 207 No. 26 HEARINGS HELD BEFORE THE SPECIAL COMMITTEE ON THE INVESTIGATION OF THE AMERICAN SUGAR REFINING CO. AND OTHERS FRIDAY, JUI.Y 21, 1911 HOUSE OF REPEESENTATIVES WASHINGTON GOVERNMENT PRINTING OPPIOE 1911 SPECIAL COMMITTEE ON THE INVESTIGATION OF THE AMERICAN SUGAR REFINING CO. House of Repkesbntatives. THOMAS W. HAEDWICK, Chairman. FIOT8 J GABEETT, QEOEGE R. MALBY. WILLIAM SULZEE. J. W. FORDNEY. JOHN E. RAKER. E. H. MADISON. H. M. JACOWAY, Je. A. C. HINDS. n AMERICAN SUGAE EEFINING CO. Special Commiitee on the Investigation OF THE American Sugar Refining Co. and Others, House of Representatives, New York, July M, 1911. The committee this day met, Hon. Thomas W. Hardwick (chair- man) presiding. The Chairman. Mr. Parsons, before you resume your evidence, there is a formal matter about which we want to ask Mr. Heike. It will probably take about five minutes, after which we will hear you further. Mr. Heike, please take the stand now. TESTIMONY OF MR. CHARLES HEIKE. (The witness was duly sworn by the chairman.) The Chairman. You have been sworn before during this investi- gation ? Mr. Heike. Yes, sir ; I have been. The Chairman. At what time did you become secretary of the American Sugar Refining Co. ? Mr. Heike. In January, 1899. The Chairman. And you remained secretary until you were suc- ceeded by Mr. Joseph E. Freeman ? Mr. Heike. Yes. The Chairman. And during that time were you in charge of the records, minutes, resolutions, and other documents of that chai-acter of the company? Mr. Heike. I was. The Chairman. Well, let me invite your attention to a certain ex- tract from the minutes, so as to see what you have to say about it. I notice this extract from the irliniites of the American Sugar Refin- ing Co. on September 6, 1892. Of course, that was before you were secretary ? Mr. Heike. Yes. The Chairman. And John E. Searles was secretary of the com- pany at that time, was he ? Mr. Heike. Yes. The Chapman. He is now dead ? Mr. Heike. He died ; yes. The Chairman. When you succeeded him as secretary, he is at least supposed to have turned over to you the records, minutes, and resolutions, and such things as that, of the company ? Mr. Heike. Yes, sir. (2145) 2146 AMERICAN SUGAR REFINING CO. The Chaikjiam. In 1892 what connection did you have with the company? Were you assistant secretary, or anything like that? Mr. Heike. My chief business was the transfer of stock. The Chairman. In that capacity yould you have had to do with the resolutions passed by the board of directors ? Mr. Heike. No. The Chairman. Let me invite your attention to this statement from the records of the date I have just given you, September 6, 1892 : The president having referred to the necessity of protecting the company and Its interests froro injurious litigation and other hurtful actions, and to appeals by each of the political parties for campaign expenses, it was resolved. Now, this is in brackets : [Vide resolution as authenticated by the secretary.] Translating the Latin, it means: See the resolution as authenti- cated by the secretary. Did you ever see that resolution ? Mr. Heikb. No. The Chairman. When Mr. Searles turned over to you the records and minutes of the company — that is, so far as they related to its board of directors, its executive board, and so forth — was this paper among them ? Mr. Heike. I do not remember it at all; no. He did not turn over things in a formal manner. The Chairman. When you took over these records was that reso- lution among them ? Mr. Heike. No ; I never saw that record. I did not read the books back seven years. The Chairman. I mean the resolution — this paper containing the resolution. Mr. Heike. No, sir ; I never saw it at all. The Chairman. You are satisfied that during the time of your custody of the records there was no such paper among them? Mr. Heike. No ; I am quite sure of that. The Chairman. And you do not know what became of the reso- lution ? Mr. Heike. No. The Chairman. When did Searles die? Mr. Heike. Three or four years ago. He left the company in 1898. The Chairman. He died since 1898 ? Mr. Heike. Yes. The Chairman. He died before you were made secretary? Mr. Heike. No ; long after. The Chairman. Long after you were made secretary ? Mr. Heike. Yes. The Chairman. You know nothing whatever of this authenticated resolution referred to ? Mr. Heike. No, sir. The Chairman. And this is the first time that you have ever heard of it? Mr. Heike. Precisely. The Chairman. When I read it to you that was the first time you heard of it ? Mr. Heike. Yes, sir. I never looked back and read the book over. AMERICAN SUGAR REFINING CO. 2147 The Chairman. A resolution of that character would have been in your possession, if among the records of the company, would it not ? Mr. Heike. Possibly. But I did not see it. The Chairman. You did not see it ? Mr. Heike. No, sir. The Chairman. And did you turn over to Mr. Freeman, when he succeeded you as secretary of the company, all records of that char- acter? Mr. Heike. There was no such resolution among the papers that I turned over. The Chairman. You did not take that resolution out yourself? Mr. Heike. No; I never saw it . The Chairman. You did not take it out of the records of the company yourself? Mr. Heike. No. The Chairman. And you Imow nothing yourself about it? Mr. Heike. No ; I know nothing about it at all ; that is correct. Mr. Eaker. There was some information that we asked you about, Mr. Heike, and which you were to furnish us, I think. Have you those memorandums ready? Mr. Hj;ike. I do not remember, sir, that you asked me to furnish anything. The Chairman. What was it? Mr. Raker. We asked all of those men to furnish some statements. The Chairman. I do not think he was one of the men. You do not remember any request being made of you to supply something additional for the record, do you? Mr. Heike. No. The Chairman. You are pretty sure about that? Mr. Heike. Yes. The Chairman. There was no request made of you to prepare something for the record and supply it later? Mr. Heike. No. TESTIMONY OF MR. JOHN E. PARSONS— Continued. The Chairman. I believe Judge Malby had finished his examina- tion yesterday? Mr. Malby. Yes. The Chairman. Mr. Hinds says he has one or two questions which he would like to submit to Mr. Parsons, and he may now proceed. Mr. Hinds. Mr. Parsons, was that trust deed which you drew in 1887 — I believe that was the date of it Mr. Parsons. That is the date of the trust deed ; but the trust deed was the outcome of what was going on for years before that time. Mr. Hinds. In other words, that was not the first deed of that kind drawn ? Mr. Parsons. It was the first consummated deed of that kind. Anything preceding that was in the nature of a draft; but it put in- writing what had been the subject of consideration all around, and I can not remember for exactly how long. Mr. Hinds. Had any other trust been formed in this country at that time? 2148 AMERICAN STJGAB EEFINING CO. Mr. Parsons. I stated, Mr. Hinds, that I thought there was some- thing of that kind in the case of the Standard Oil Co., and I also stated that I thought there was something of that kind in respect of some cotton organization. Mr. Hinds. You had those before you when you Mr. Parsons (interposing). No; I did not have those before me, but I knew, in a general way, that that idea was in the minds of the people as it was in mine. Mr. Hinds. But probably that is the first definite carrying out of that idea in a definite legal form? That trust deed was the first, was it not? Mr. Parsons. Unless what had been done by the Standard Oil Co. preceded, and about that I am not very clear. Mr. Crawford. I can give you the date if you want it. Mr. Hinds. What I wished to find out was whether Mr. Parsons was the one who rubbed the lamp and produced the first of the race of Genii. Mr. Parsons. I would like to stand for the credit of having in- augurated and initiated that idea and principle, but I am afraid I should have to share the credit with some others; Mr. Hinds. But you were an early pioneer? Mr. Parsons. Yes. Mr. Hinds. That, perhaps, is all I wanted to get at. Why I have asked you these few questions was to see if, perhaps, on reflection and thought you would not be willing to amplify for the committee the point of how far the sovereignty of the Government may inter- vene in the establishment of these great and almost monopolistic corporations. Mr. Parsons. I recognize, Mr. Hinds, that any organization of- labor or of capital creates a situation which is grave, but that it is monopolistic I do not for one moment think, because ■ Mr. Hinds (interposing). Well, I qualified that. Mr. Parsons. I do not think a monopoly is possible at this period of the world's history. Mr. Hinds. Well, from my standpoint the Sugar Trust, or the American Sugar Eefining Corporation as it started out, controlling 75 or 80 or perhaps 90 per cent of the output, was too large to be economically profitable on the whole and too large for the proper play of those ancient forces which have governed our markets. Now, if you are willing for a minute to asume that my theory is right, would you be willing to give us out of your experience and as, per- haps, the greatest of all experts on this subject, an idea of what in- tervention of the sovereign power might take place to prevent future extravagances of organization in these great corporations, and I mean by extravagances what I would say was the abnormal devel- opment or aggrandizement of them. Mr. Parsoxs. Mr. Hinds, in my professional career I had my at- tention drawn to a great many of these organizations capitalized upon what would be called conservative principles, or, if you please, with the introduction of what has here been called water, to a large extent my experience is that in the end invariably those things right themselves. I have been called upon frequently, for example, to de- fend persons who have been sued because they were participants in what I would regard as an injurious or pernicious organization ; that AMEBICAlSr StJGAB REFINING CO. 2149 is to say, where the capitalization bore no relation, no suitable rela- tion, to that which was contributed to the organization, and the out- come of reflection, of experience, and of observation is, I think, that so far as possible the question is of leaving the American citizen, one or ninety millions, to take care of himself. The very moment there is any attempt to interfere, then who is going to suffer? In the end it is the American citizen, because the American citizen is weak, by comparison; they constitute the many as against the few who are more capable and who are more intelligent and who can, in the long run, better take care of themselves than is the case with the gen- eral public. Now, in the consideration which I have given to this subject, and more particularly since the matter assumed public importance and notoriety recently, I have invariably and exclusively, as I thinkj put myself on the side of the public. I am a member of the public; I want to have my sugar as cheaply as possible; I want every com- modity for which I have to pay furnished to me as cheaply as may be, and the problem in my mind is : How are you going to accomplish that purpose? Now, I recognize that I can not be furnished with oil, or sugar, or tobacco, or anything of that kind unless the persons who do it can make money out of it. It goes without saying that capital will not be employed unless it can be profitably employed. Now, I am in favor of organized labor, with the limitation that there shall be no violence. I believe whenever a labor organization re- sorts to violence they hurt themselves every time, but I think that there is the same right on the part of labor to organize as on the part of capital to organize, but it all comes down to this, that, I think, it is better to let everybody make as much money as is suitable rather than put any limitations upon it, because we are all suffer alike, the greater sufferer being the weaker man. Mr. Hinds. You spoke of the matter of watered stock righting itself. You mean by that that the properly conceived combination of capital, properly carried on, will soon so increase the assets that there will be real value against even something of water ? Mr. Parsons. That is so, Mr. Hinds, with this qualification: If you are going to limit capitalization to what is represented in bricks and mortar you are going to have no corporations, and we are to lose the benefit which comes from the aggregation of capital. To invite capital into a large interest, either by a number of stockholders or otherwise, you have got to make some provision for it. However, I do not want to stand in this record as in favor of water; I am not. I should repudiate as strongly as anybody what I understand to be meant by water. That is to say, water which represents nothing. I am just as much opposed to water as I am to wind; neither means anything. But when you come down to that which is substantial, I mean to say capitalization to a certain extent of the future, the gains which may be fairly expected from legitimate business, then I think there has to be a license or liberty which can not be controlled by a mere consideration of what we have all called here " bricks and mortar." You have to go beyond that. Mr. Hinds. But, passing away from this and taking an illustration which we will assume the popular mind has formed on the investiga- tion of another committee of this House — that is, the Steel Trust — the testimony, so far as given there, seems to indicate that the steel 2150 AMERICAN SUGAK REFINING CO. business was syndicated, and therefrom there arose a swarm of million- aires whose millions came, to a large extent, from the anticipations of about 15 years of future; that is to say, what the steel business would get to be in the future. We will accept that as an illustra- tion, that that thing did happen, that those great magnates, who emanated from the Steel Trust when it was formed, made many millions by anticipating the business growth of that corporation for 15 years ahead. Now, if that premise is true, you would not think that the sovereignty ought to permit that on the part of the great corporation that dominates that great industry? Mr. Parsons. May I answer it in this way? Entertaining the views which I have entertained, they were without change until, being in Europe on one occasion, I learned that the United States Steel Co. had been capitalized on the basis, I think, of a thousand millions — was not that it? Mr. Hinds. Well, it is beyond my imagination. Mr. Parsons. And then I began to wonder whether my theory did not need to have some stop-cock put upon it, and the problem is how you gentlemen can do that; and although I deprecate any such outcome as that, yet I think the matter ought to be within the re- straint of what I regard as reasonable. The difficulty is how to bring about any help m that line from legislation. Mr. Hinds. That is why we asked you, as possibly the first of and greatest of experts on that subject, for a little light. Mr. Parsons. It took, in New York State many years ago, the form that there should be no limit of capitalization so long as it was not fraudulent. Now, if you can draw anything from that I can not, because I think, without any reference to the law, that Mr. Hinds (interposing). Well, to draw an illustration, which would be an analogy and possibly misleading. When a man and woman decide to marry, in modern governments it is conceded that there should be the least possible supervision, yet the State does intervene at that moment and say, " We will have a voice as to the terms of this marriage." Now, the State intervenes Mr. Parsons. Does the State intervene? Mr. Hinds. Does it not? Mr. Parsons. As between husband and wife? Mr. Hinds. When they form the contract, the State has to do with that contract, has it not? I am not a lawyer and may not be using the correct legal terms, but there must be a license, there must be certain facts ascertained and sworn to, I think, before a public official; there must be certain proofs as to residence and age, and all of those things. Mr. Parsons. Mr. Hinds, let me tell you that is all a matter in this State of very recent legislation, and during the whole history of this country, down to within a very few years, there was no restric- tion whatever. I suppose the legislation to which you refer was rather to strike a blow at a system that was growing up most per- niciously, of what was called common-law marriage, where a man was subjected to claims on the part of a woman, or vice versa, that there had been a marriage when there was no marriage. Mr. Raker. To add to that, is it not a fact that a number of the States have assumed the power and the right under the law of this country to make a physical examination both of the man and of AMERICAN SUGAR REFINING CO. 2151 the woman, and also a mental examination, in order to determine whether thej^ ought to be married, and that is a power which the States are using? Mr. Parsons. Judge Eaker, I am the president of two hospitals that have some relation to questions of that kind,. hospitals carrying on a very important business in this city, and it is no very long period ago since my attention was called to a suggestion that was raade that in the interest of the future, and in the interest of our citizens, there should be put some restraint, the outcome of which would be that we should have a healthy community growing up as against a diseased community. But I am not aware that up to now the legislature of any State has dealt with the subject. If it has I think it will be found that there will pretty serious difficulties in the way. Mr. Hinds. I did not intend to divert this examination, but to come back to my analogy I will say that in the State of Maine when either of the contracting parties is a pauper or has received public help the police power of the sovereignty intervenes and prevents that contract of marriage. That is sufficient for the analogy. I think the police power of the sovereignty intervenes even in a matter which we all recognize the sovereignty should keep its hands off of as much as possible. Mr. Parsons. I am very much interested to learn that Maine has taken this action, but I am thinking for a moment how it would work if I were one who had received public help and some woman who had some money was willing to be married to me, and whether the State would then come in, using the police regulations, and say, "That shall not happen." That opens a pretty broad line. Mr. Hinds. I will qualify my statement. I am speaking, loerhaps, from inference. I had in mind a case where the town clerk — and I think they generally do it — refused a license in that sort of a case; I know of a case of that kind being refused, and I think there must be a law back of it. Now, would it be . possible for the national sovereignty, recognizing these great corporations to be beyond the sovereignty of the States — that is, peyond a practical exercise of their sovereignty — to intervene in some such way in the formation of these big corporations, to safeguard their formation in behalf of the public as well as of investors and even of the incorporators them- selves ? Mr. Parsons. Mr. Hinds, you asked me substantially that ques- tion yesterday and I assented to the idea of a Federal incorporation law, provided it was voluntary in its operation — that is to say, pro- vided those desiring to organize a corporation might or might not put themselves within the authority of the Federal Government. I have thought over that matter since ji-esterday. I had given it some very crude and general consideration, but it seems to me that the points which you gentlemen have got to consider now — the conclusion to which they lead it is for you to say, as I am not very clear on it in my own mind — are, in brief, perhaps, among others, these : I have in mind the State of Maine. Now, the State of Maine has special- ties in the way of business and of manufacture. I have in mind the State of Georgia. I know the State of Georgia is a Southern State which is growing up to be a great manufacturing State, and 1 regard that it win be the manufactures of that State which will make the 2152 AMERICAN SUGAR REFINING 00. prosperity of that State. In the State of California the manufac- tures which aid in the prosperity of California are local in their character. Now. the scheme is whether these organizations, in so far as they are local and as their sucjcess bears upon local circum- Ftances, are to be brought in any way under the control of the Gen- eral Government. That leads to this consideration : AVliat does Cali- fornia know about !Maine, and what does Maine know about Califor- nia ? The same is true as regards Maine, California, New York, and Washington, in so far as this bears upon the general subject of trade commodities. Now, leaving out of view public-service corporations, as I am not dealing with them, but with organizations that are local in their character, I have come to the conclusion that it is not desirable that there should even be a Federal incorporation act, for the reason that the outcome will be that you will have organisations on the part of persons who accept the Federal incorporation and those who do not. Xow, just in so far as that results unsatisfactorily I think the ultimate sufferer — and I think the ultimate sufferer is always that great body of American citizens, that great body of the public of whom I am one, and from whose interest I like to consider this mat- ter. And you are going to consider it, and must consider it, because you are the trustees, not of the trust — and yet, if I may say it, it is a pretty important trust — ^but for the great American people; and wlaat is desired is that you shall consider how these questions bear — T do not care anything about organized capital — but how they bear on me fis n member of the community. Mr. Hinds. I think there is great force in what you say about local corporations, and that Federal interference would be liable to be ver\' vexatious; but is there not some line of demarcation? For in- stance, I will make this suggestion : Would it be constitutional if, for instance, the ^sovereignty should assume an arbitrary standard, make an arbitrary classification of corporations engaged in inter- state commerce, putting those above a certain size within a restric- tion as to the capital stock — that is. recognizing that when a corpora- tion got up to a certain size it had a tendency to be monopolistic — might they, make a classification of that sort? Mr. Parsons. I am verv glad to have vou ask that question, be- cause I have been considering that identical subject. And what would it lead to? If a particular organization was to be under Federal control or keep out of Federal control, the line has to be drawn on its capitalization. Mr. Hinds. Well. I will admit you would have to take a different line than that ; vou would have to bring in the bonds, and perhaps some of the book accounts, the volume of business, or something of that sort. Of course, the capitalization is the mere outward sem- blance. Mr. Pabsons. I merely took that as illustrating one of the elements in respect of which you have got to draw the line. Now, if a per- son desired Federal control or did not desire to be on one side or the other side of the line, according to the statement of value upon which that question would depend, who would determine that question of ^'alue? They would come forward and say, "We represent this amount or represent some other amount," and I do not believe there is any practical line upon which you can discriminate on one side or the other unless you subject the business of the country to the AMEEICAliJ- SUGAR BEPINING CO. 2135 determination of some public body, commission, or whatever it may be; and I do not think that the American citizen, I do not think that the people, in whose interest we are all here, want their business to be exposed to the scrutiny of investigation or the determination of a public body. I think the American citizen is big enough to take care of himself and wants to manage his own business in his own way. Mr. Hinds. I will call your attention to the fact that at the present time, if I am correct in my inference from what has happened, there is on file in Washington a fairly complete business statement of every corporation of the United States, is there not, as an incident of the corporation tax? Mr. Parsons. I am not aware of it. Mr. Hinds. I think I am right, am I not? And possibly as a re- sult of the Bureau of Corporations. I think it is on file and sup- posed to be confidential. Mr. Parsons. You mean interestate commerce organizations, or organizations generally ? Mr. Hinds. I mean every corporation. Mr. SuLZER. I will say that the annual reports of the corporations in the United States are filed with the internal- revenue collectors. Mr. Hinds. Yes. I think all of the corporations of the United States, even little stores in local communities. I think a small store was used as an illustration in a strong editorial in the New York Sun on that subject. So a corporation in the smallest town in Vermont has its balance sheet filed with the Government. Therefore, the Gov- ernment is ready to make an inspection and to know what corpora- tions would fall within a classification that it might deem of such size that they should come under Government regulations. For in- stance, I will draw another analogy, that of navigation on the com- mon waters. The Government recognizes that when a large vessel goes abroad it should be under certain regulations, and we have a law, I think, that a steam vessel over 65 feet must carry a licensed pilot and conform to all regulations governing seagoing vessels; un- der 65 feet they may go almost at will. Now, might there not be some such Federal distinction as to these great cruising corporations, so to speak, that go all over our country in their business affairs ? Mr. Parsons. Of course when you come to the qne'^tion of inter- state organizations I recognize both the right and propriety of Federal control. We are dealing with subjects that are short of that, because it is in them that the general public is interested. But I wonder whether I am a fair judge, through the fact that my early teaching, confirmed by my subsequent observations and experience, leads me to adhere to the fact, from which I started, of being an old- fashioned Democrat. I believe the Constitution has conferred upon the Federal Government only such express authority as can be spelled out of it. I believe it is against the public interests that it shall be enlarged. I believe, in other words, that the Government is made up of the congregation of States, but that the States are su- preme and not the Federal Government, in so far as a matter may be within State regulation. I want to leave it there. Mr. Hinds. Now, let me ask you to disassociate in your mind all thought of Federal incorporation or of Federal meddling with the business direction of these corporations. It is not that at all I want 2154 AMERICAN SUGAR REFINING CO. to ask you about. I simply wanted to ask you the question whethei the Federal sovereignty might not, when one of these great business entities embarks on its career, exercise its sovereignty to see that the fundamental conditions of its organization, which must govern its operation to a large extent, are right and proper for the safety and well-being of the public and the safety and well-being of the investors ? Mr. Paesoks. It would not be my opinion that that came within any constitutional right of the Government, and that if it is the policy of this country that any such course shall be pursued the first course would be to refer to the States the question whether they care to have substituted for what is now within their control this Federal control. Mr. Hinds. For instance, under the sanction of New Jersey, you equipped and manned the Sugar Trust, but almost immediately you ])assed beyond all power of New Jersey to control you; you became a sovereignty, almost, in the business world of America. Now, there must be control somewhere; and if New Jersey can not do it, there must be some sovereignty that can, must there not? Mr. Parsons. I can not admit your premise to the effect that the company immediately got outside of the control of New Jersey; it never got outside of the control of New Jersey. New Jersey could repeal its charter at any time or hear any complaints that were made against it as a corporation, and deal accordingly; and when we reach, if we are to reach, the question of action that was taken with respect to publicit}^, I shall be very glad to let you know what can be or, perhaps, should be done, and not done by New Jersey as the home State of the American Sugar Refining Co. Mr. Hinds. Well, to go to another analogy. I recognize the vici- ousness of analogies in arguments, and yet, they sometimes express very much. To go to another'one : Is New Jersey to be permitted to let her cows graze on the public highways at will without some inter- vention from the sovereignty which considers the rights of the other 45 States on those highways? Mr. Parsons. I think if the cows of New Jersey can get hay from Maine, the New Jersey cows had better get hay from Maine; and that if the milk from New Jersey cows can be sold in the State of New York, they had better sell it here. But the New Jersey cow remains in the State of New Jersey; and New Jersey undoubtedly has a tuberculosis law, as is the case with Massachusetts. I am some- thing of a farmer and know about it there, and it is for Massachu- setts, in respect of my cows, to say what shall be done with them, even to the point of cutting their throats if they may prove in- jurious. Mr. Hinds. "Well, either my analogy is unfortunate or else you per- vert it a little. ]Mr. Parsons. You said an analogy misleads, and I think it does. ]Mr. Hinds. Yes; I will admit that. But the great central fact must be that there must be a sovereignty in this country that may oversee these vast aggregations of capital. ]Mr. Parson. Well, I see to what that leads, and I am opposed to the result to which that leads. Now, this is a pretty broad subject wjth which you gentlemen are going to deal. Take the case of the New Orleans Italians. A State itself is a sovereignty superior to the AMERICAN SUGAR REFINING CO. 2155 General Government in certain respects, and yet it can not deal with outsiders. These are difficulties which grew out of the Govern- ment as it was established at the beginning. Mr. Hinds. Well, that was an inadvertence ; either an inadvertence or a case where the fathers of the Constitution felt they could not help themselves, because Mr. Randolph protested on that very point, did he not? Mr. Parsons. Undoubtedly ; and I am with the compromise out of which came the United States of America and without which there would have been no United States of America. Mr. Hinds. In other words, then, as an expert on the subject of the formation of great corporations, you do not see any way in which the sovereignty may intervene as to the terms of their formation? Mr. Parsons. Pardon me, but I must say that I am not an expert in respect to the organization of great corporations. I do not happen to remember at the present time that I ever had to do with the or^ , ganization of aiiy great corporation except this one company. I have observed the situation, and I can tell you from observation what I think, but not from relation to the organization of great companies. My business has been that of a hand-to-hand fighter in the courts, so far as anybody wanted me to act in that capacity. Mr. Hinds. I may have been misled in the modern Arabian Nights. Where we read of these great corporations, it would seem to me that you were the Aladdin of them. Mr. Parsons. Well, I think everybody has stolen my thunder. They may benefit by it, and I do not object. Mr. Hinds. I do not know but that I have wearied the committee ah-eady, and yet I have not gotten the results I hoped to get. Mr. Parsons. This subject interests me greatly. If at any time I have any views which can help the committee — ^because I recognize that what the committee wishes to do is to benefit the community, and I am a member of the community— they are at the command of the committee. Mr." SuLZER. Mr. Parsons, you drew the original trust agreement for the Sugar Eefineries Co. ? Mr. Parsons. In a sense, Mr. Sulzer, yes. That is to say, it waa the outcome of work and views of others, but in the form in which it is, it is my handiwork. Mr. Stjlzer. And after the court of appeals had declared that to be against public policy, you went to New Jersey and organized under the laws of that State ? Mr. Parsons. I do not think the court of appeals held that, that it was against public policy. That was the contention before the court of appeals, but it put its decision solely upon the right ot a corporation to become a partner. We never claimed a corporation could become a partner. It was very obvious fi;om the passage which Mr. Garrett read from the opinion of the court that the North iiiver Co. was not in any sense a corporation, that it was held in a single ownership by a single individual. What led the company to go to New Jersey was a recognition that at that time New York— and when I say New York I mean one political party the same as another; I am not discriminating against either of them—thought it suitable to go against organizations and New Jersey thought ]ust the opposite. In other words. New Jersey invited, while New York repelled. 2156 AMERICAN SUGAR REFINING CO. After it became a public fact that we were going to do so, then some wise gentlemen connected with New York reaTized that they were sending across the river an organization which meant the employ- ment of a great many operatives here and the employment of a great deal of capital here, and one gentleman came to me — I cannot re- member the individual — and said, "Do n.ot go to New Jersey; come back." I can remember the answer which I gave ; it was this : "If New York will change its attitude and become friendly, yes, but as long as it remains hostile, no." And T judge from what Mr. Malby has said that the tenor oi' recent legislative action in New York recognizes that, and that it is not wise to antagonize capital so as to send capital to benefit other communities. Do I answer your question as it is in your mind ? Mr. SuLZER. Yes, sir. In other words, you organized the American Sugar Kefining Co. under the laws of the State of New Jersey, be- cause in your opinion at +hat time those laws were more liberal? Mr. Parsons. I think that that states the proposition. Mr. SuLZER. After the organization of the American Sugar Refin- ing Co. the Knight case was brought? Mr. Parsons. Yes, sir. Mr. SuLZER. Do you consider that the decision of the Supreme Court in the Knight case was helpful or hurtful to the general wel- fare of the country? Mr. Parsons. I think it was helpful. I think it recognized that manufactures and general trade were legal, and that the General Government was only to interfere when it became a question which was absolutely interstate ; not interstate as a mere incident, but inter- state as a substantial thing ; and the result of the Knight case was a feeling of security on the part of everybody concerned m the employ- ment of capital that there was not, as a stop guard or as a difficulty to be met, the interpretation to be put upon the Sherman so-called antitrust law, and I agree with what I\Ir. Judson Harmon said in his opinion, and what has been said by every Attorney Genera.1 of whom I know, that the community had the right to rely upon the Knight case as the interpretation of the Sherman law. And when instances were raised about that I could only see one outcome, and that was that if you were going to create an uncertainty, and in re- spect of a particular transaction the question arose whether it did or did not comply with the law, you would be met face to face with the refrain of some doggeral verse which I have seen at one time or another, " You will be damned if you do, and you will be damned if you do not." Now, can trade go on under those conditions? Will persons with capital embark in business under those circumstances; and if capital is not embarked and trade does not go on, who is the sufferer? Why, the poor man, the operative, the many as against the few. Mr. StTLZEE. Will you tell us very briefly, especially for the benefit of the Members of Congress who are not lawyers, what the decision of the Supreme Court was in the Knight case ? Mr. Parsons. The decision of the court was that, although, accord- ing to the proof, the Philadelphia transaction had consolidated over 90 per cent of the sugar industry and although it did distribute its sugars out of the State of Pennsylvania, none the less that was not a monopoly in interstate commerce. And in this connection, Mr. AMERICAN SUGAR REPINING CO. 2157 Sulzer, may I say that I do not think there is anything more mis- leading than the use that is made of this term "monopoly." May I illustrate it? Mr. SuLZEE. Certainly. Mr. Parsons. Take the case of a small community, in which com- munity there is a capable lawyer ; you know and I know that shortly he will have all of the law business in that community. Is he a mo- nopolist? He is not a monopolist so long as all of the world can send its lawyers there and take his practice away from him if they are better men. Take the case of physicians. I think that at one time there was a rule of some medical society which limited the amount which a doctor could charge, or, in other words, the medical profession got together and combined — if you see fit to use that ex- pression — and I suppose it meant that there should be no monopoly in a small community by one good doctor having the right to cure or kill patients. Well, do you know of any lawyer — I do not — who was ■willmg to have that sort of supervision, whether by State of Federal Government? And what is true of the law is true of trade, because the lawyer is, I suppose, dependent upon his relations to the com- munity — each depends upon its relations to the community. Now I am very glad that you gentlemen have asked these questions, which show how intelligently you are considering the matter and how care- ful you intend to be with reference to your suggesions, but please keep in mind what you have got to look after. It is not I, or Mr. A, or Mr. B, but it is the great body of the people who want to buy cheaply, and who also want the right, if they see fit, to sell dear. Mr. Stjlzer. Is it your contention that the remedy for the evils of monopoly is more monopoly? Mr. Parsons. That has been the experience of every community of which I know. How easily, when the wheels are greased, every- thing goes, but when you grease only one set of wheels and the others can not move, what is going to happen ? Mr. Stjlzer. You were a director of the American Sugar Refin- ing Co. from its incorporation practically down to recent times, were you not? Mr. Parsons. Down to when? Mr. Sulzer. Recent times. Mr. Parsons. Well, you may call it recent. I resigned some time ago. I have the date, if you desire it. Mr. Sulzer. You negotiated the acquisition of the Philadelphia refineries and thought that was a good thing for the American Sugar Refining Co.? Mr. Parsons. Yes, Mr. Sulzer, in the view in which I suppose you ask the question. That is to say, I had to do with it, but I am satisfied that for several years prior to the matter reaching me it was under consideration, and probably under treaty, and I partic- ularly infer that from the resolution which has been read here, which was based upon a report of what had been done by Mr. Have- meyer in that regard. There is no doubt but what in the etid I went to Philadelphia and had a conference with Mr. Charles Harri- son, and he has told you what happened. The arrangement then was made for the acquisition of the Harrison refineries. With the acquisition of the Spreckels or the other Philadelphia refineries I had nothing to do. In fact, I do not think I knew anything about 2158 AMERICAN SUGAR REFINING CO. the Spreckels transaction until it was consummated and was public property. Mr. SuLZEE. In the acquisition of all these constituent companies, you acted in harmony and in concert with Mr. Henry O. Havemeyer, did you not ? Mr. Parsons. When I agreed with him ; yes ; and when I disagreed with him. absolutely no. Mr. Stjlzee. You differed, then, from Mr. Henry O. Havemeyer at times? Mr. Parsons. I want to say as emphatically as I can, Mr. Sulzer, that when I was a member of that board, I was there to give the stockholders of that company the benefit of any contribution of service which I could, and not to stand by the ipse dixit of any man, I do not care who he was, and I do not think that was true of the large men who participated in organizing that company, and I would not like to think it has been true down to now, that here \Aere a lot of boys doing what they were told to do by a grown man. That was not the situation. In my opinion, the men who participated wei-e capable men, and had their own views, and I hope the situation is the same down to now. I am rather unwilling to think it is not the situation down to now. But it is my recollection that Mr. Have- meyer was most deferential to the views of others, willing to listen, but if in the end he had views, of course he expressed them, and if they were right, others agreed. If they did not correspond with what was thought by others, they did not agree, and I have in mind several cases where the most earnest difference existed, and sometimes Mr. Havemeyer yielded to mj' views, and sometimes I to his. Mr. SuijZer. Did you agree or differ from Mr. Hepry O. Have- meyer regarding the acquisition of interest in the beet-sugar com- panies ? Mr. Parsons. I think I may answer that — generally, yes. I think that when that subject first was started it was rather novel to me, and then I was under the idea, not having had much experience with beet sugar, that cane sugar suited the American public better. But here was this wise man, with an intimate knowledge of the subject, as I think, the most capable man to deal with it, who had given great consideration to the subject, who had studied it here and abroad, who went through the beet-producing country, who made up his mind what the American public in the end would prefer would be to de- pend on home as against foreign industry. He talked these matters over with me. I was in Europe on occasion and saw what beets were doing for France and for Belgium and for Austria and for other countries, and if I needed to be converted — I do not think I did — I became converted to the belief that in the long run, in the ultimate future, what the United States would wish would be to help this country as against helping Java. Mr. StTLZER. You went West with Mr. Henry O. Havemeyer at one time to look over the beet-sugar industry? Mr. Parsons. He invited me to do so. I did not go. I always re- gretted I did not ; but I was not able to leave my work. Mr. Sulzer. But you agreed finally with Mr. Henry O. Havemeyer that it would be a good thing for the American Sugar Refining Co. to own a substantial interest in the beet-sugar companies of the West? Mr. Parsons. I think, Mr. Sulzer, I can answer yes ; but that would AMERICAN SUGAR EEFINING CO. 2159 not be a complete answer. I think I came to. the conclusion that it was in the interest of the American Co. that it should be able to meet both situations; that is to say, if the future meant beets, it should be in beets ; if the future meant cane, it should also be in cane. In other words, it should not abandon either and take the contingency of the other ; and I think that is the policy which was adopted. Mr. SuLZER. In that connection, and as a matter of public policy, do you think it an advisable thing for one big corporation, practi- cally controlling 40 or 50 or 60 per cent of the product of the coun- try, to own a majority or a substantial minority of the stock of com- peting companies? Mr. Parsons. Well, that is a very broad question, which can not be answered yes or no. Merely for the purpose of suppressing compe- tition, if that was the sole object, no; but if for the purpose of pro- inoting the good of both sides, of benefiting each competing interest, yes ; consistently with what the public have a right to expect, because, as you will see, I believe that the result of these organizations, hands off, the usual laws of trade prevailing, to be in the interest of the consumer. Suppose the consumer says, " I won't consume ;" where are they? I am among those who can remember a time when, for sweetening your coffee, if you please, you depended upon perhaps molasses or upon raw sugar; and, as I believe, under the influence and only under the influence and the outworking of these great organizations, there came a time, I think to-day, when, if the Gov- ernment duty is left off, refined white sugar — cane sugar — is selling for a little over $60 a ton; and I have seen hay in the city of New York sell for over $40 a ton. Now, if you can have sugar cheaper than that, I want it cheaper ; but I do not want to have anything done that is going to put the price up. Mr. Stjlzer. Then we are to understand by that that if it is in the interest of the consumer for one large company to practically control the product of an industry, to own a majority or a substantial minor- ity of the stock of competing companies, it would be a good thing. Mr. Parsons. Yes; with the qualifications I have endeavored to adduce. Mr. SmzER. I think I stated the qualification— if it were in the interest of the consumer. Mr. Parsons. If it were in the interest of the consumer. Now, you take the organization of the Sugar Refineries Co., the general idea was that what it meant was that the price should be put up ; that the American public should pay more; and that thereby would be made a great profit to those concerned in the organization. If Mr. Have- meyer or the wise gentlemen, Mr. Thomas, and others, who partici- pated, entertained that idea, I have changed my mind in reference to their conduct. Their interest needed to be with the public. Mr. Stjlzer. You never entertained such an idea, Mr. Parsons ? Mr. Parsons. Never. And look at the facts — enlarged the output, enlarged the number of persons who could use refined sugar, reduced the price. But it is an application of a principle which we all have heard in some shape or other, " many mickles make a muckle." Mr. SuLZER. Quite true ; and it was your idea from the very incep- tion of the sugar combination that it was a good thing for the people, 99220— No. 26—13 2 2160 AMERICAN SUGAR REFINING CO. because it would have a tendency to bring about the maximum effi- ciency and hence cheapen the cost of the product to the consumer? Mr. Paesons. I think that was the ultimate outcome, and I think as bearing upon it is what is illustrated by the Spreckels and Arbuckle wars, that the moment the price is put up, then some strong person comes in, and then there is a war of competition. If that is in the interest of the public,, they get the benefit of it, but the outcome of it is that when peace comes, it comes on the basis of a price that will not tempt another war. Mr. Stjlzee. Hence the final analysis of the good or the evil of a combination in the nature of a monopoly, in your judgment, depends wholly or very largely upon the moral conduct of the men who con- trol the combination. Mr. Parsons. Of course, the moral conduct of the men is always a factor to be considered. A community will not trust men unless they are worthy of trust. Mr. SuLZEE. And if they want to operate the combination in the interest of the people, they can do so, and materially cheapen the product to the consumer. Mr. Parsons. I think the interests are identical. I do not see any difference between them. Mr. SuLZEE. And of course if they were avaricious and exceedingly selfish, they could operate the combination in such a way as to in- crease the price of the commodity to the consumer. Mr. Paesons. Possibly, temporarily, but the outcome would very quickly teach them a lesson. Mr. Sulzer. You think public clamor would bring them to their senses ? Mr. Parsons. Not only that, but an increased price is a temptation to persons to come and fight them, and in the end, loss and not gain. I am not expressing my individual views. All the economists through this line of argument reach a result to the effect that aggre- gation of capital and aggregation of labor are in the public interest. Mr. Sulzer. The tendency of all business within the past quarter of a century has been along the line of better organization, combina- tion, cooperation, with a view entirely to keeping down the expense to the minimum. Mr. Parsons. I think that has been a very important, and I think a controlling factor. Mr. Sulzer. And keeping the efficiency up to the maximum. Mr. Parsons. I think that is a very important factor. Mr. Sulzer. And this process of cooperation, instead of competi- tion, has practically brought about in the United States an industrial revolution ? Mr. Paesons. I think I can say yes. Mr. Sulzer. And revolutions, as you know, from a purely economic view, never go backwards. Mr. Parsons. I won't quite say that. I remember the French Rev- olution. Mr. Sulzer. Do you think the French Revolution went backward? Mr. Parsons. I think the French people suffered a great deal from the French Revolution. Mr. Sulzer. Temporarily. AMERICAN SUGAR REFINING CO. 2161 Mr. Parsons. That is the point, temporarily. Now you have hit upon the right point. Temporarily, yes; but these things right themselves. ^ Mr. Stjlzee. I am a great believer in the consensus of opinion of the world that the French Eevolution did about as much for human liberty as anything that ever occurred. However, you believe that this industrial process ^■vhich has been worked out by yourself, and many others in this country, by which competition is passing in the shadow and cooperation is becoming the policy of the day, is a good thing, take it all in all ? Mr. Parsons. I won't quite acquiesce in your suggestions, but I think that the situation is in the interest of the public. Mr. SuLZER. And so far as the public is concerned of course every- thing will depend, more or less upon the character and the broad- mindedness of the men who are in control of the combinations. Mr. Parsons. I think so. Mr. Stjlzer. Then it is your opinion that the remedy for the evils of combination is more combination ? Mr. Parsons. Not at all. I think it is to leave persons free to do as they choose and to recognize that immediately, if there is any abuse, there will be competition which will correct it. Mr. SuLZER. In other words, you are in favor of the widest public- ity regarding the conduct of great corporations in the United States? Mr. Parsons. Oh, no. I am in favor of the largest liberty. Mr. Stjlzer. Are you not in favor of publicity in regard to the con- duct of great corperations ? Mr. Parsons. Within certain lines; yes. That is a very wide sub- ject, as to which I do not care to speak. I am in favor, Mr. Sulzer, of the action which was ta ken b}^ the American Sugar Refining Co.'s stockholders at an annual meeting, the minutes of which have been referred to here. I do not believe that that action has been changed, and inasmuch as at some time or other I want to explain that, if I may, I will do so now. Who is it that wants to know about the in- ternal affairs of any organization? L Mr. Sdlzee. The people. Mr. Parsons (continuing). In the first place, competitors. Now, can any business be carried on when on one side you have an organ- ization which is compelled to tell its competitors all about its business, and on the other side the competitor is not compelled to do so ? And you and I, who are in New York, know that the persons who want information of that character are the persons who want points for the stock exchange ; or, in other words, if any one man can say, " I have information about the American Sugar Refining Co. which constitutes a point," it affects a biisiness. which I have nothing to say against, which is conducted on Wall Street; but I think it is the duty of the board of directors of every corporation to see to it that no individual has favored or special information, and that what is given to one is given to all, and what is not given to all is not to be communicated to one. When you come down to details, the State of Massachusetts pro\'ides that in the month of March every year there shall be a sworn statement of the assets and liabilities of every corporation doing business in that State. It is what has for years been called the March statement. It is a sworn statement and gives to the public the very information that you wish. 2162 AMERICAN SITGAE REFINING CO. ?ilr. SuLZEE. ^Ye have a Federal law now Avhich also requires that, ]Mr. Parsons. ]Mr. Parsons. It may be. With that I am not familiar. But I am perfectly familiar with the ^Massachusetts statement, and that is what is relied upon. To that extent I say yes, but when you get beyond that — information which is to help some malign pur- pose, then you have got to consider what can be the effect. And, Mr. Sulzer, all this leads back to the valuation which is to be put upon property, and the fact that the public can be misled by state- ments of this kind, given out in the most absolute good faith, because as we have discussed before here, Avhat is the rule of value you are going ti) apply? Mr. SiLzEE. Do not misunderstand me, ]Mr. Parsons, the reason I ask you tlie-^e (juestions is because ever since I have been a Member of Congress I have been a great advocate of publicity, and T believe, and a gi'eat many others I think agree with my contention, that if there was more publicity regarding the conduct of these great corporations there would be less prejudice, to use no harsher word, against their management. Mr. Parsons. "\Vou1c1 you draw the line between individuals and corporations where the amount of business done is precisely the same? Ml-. Sulzer. Xo; you can hardly draw the line between the indi- vidual and the corporation, because an individual is a person and a corporation is a creature of law, and the law shoidd control its own creatures. Mr. Parsons. I know, but this is a question of conduct of business. I thank you for letting me say what I have. Mr. Sulzer. Xow, ]\Ir. Parsons, you conferred and cooperated with Mr. Henry O. Havemeyer in regard to the acquisition of practically all of the companies that were bought up by the American Sugar Eefining Co., or in which you acquired an interest, did you not? jNIr. Parsons. When he spoke to me on the subject, yes; otherwise, no. But in very few cases did he have occasion to speak to me. ilr. Sulzer. E\ ery one of these acquisitions came befoie the board of directors, directly or indirectly, did they not? ]\[r. Parsons. I can not answer as to that. I know that there was a meeting of the board at which I was not present, when there was considered this beet subject in some aspect or other, but as it was a rare thing for me to ;ittend the meetings, and only when there was to be considered some general question ^fr. Sulzer (interposing). Do you ever remember a meeting of the board of directors of the American Sugar Refining Co. in which there was a substantial division of o])inion among the directors as to the policy of Mr. Havemeyer and those associated with him, re- garding the acquisition of competitors or the acquisition of an in- terest in competitors? Mr. Parsons. I do not remember such a case. I think perhaps I ought to ex]3lain this: There was an executive committee consisting of the UK st capable men, and I suppose these questions were con- sidered by them, and it was only when formal action, corporate action, was required, that the board of directors met, and I very rarely attended their meetings. AMERICAN SUGAR BEFINIIN'G CO. 2163 Mr. SuLZEE. You gave some testimony yesterday regarding the factor's agreement between the American beet Sugar Co. and the American Sugar Eefining Co. As I understand, that agreement was drawn up by Mr. Murray and was submitted to you and ap- proved by you. Now, can you tell us why, in that factor's agree- ment, the New England States were eliminated ? Mr. Parsons. Mr. Sulzer, you have unintentionally confused two transactions; a factor's agreement, which is one thing, and the con- tract vvith the American Beet Sugar Co., which is quite a different thing. I have told Mr. Hardwick that I do not recall what was the reason for omitting from the Beet Sugar Co. operation the ^'ew England States. When you come to the factor's agreement, I shall be very glad to answe'.- questions about that, for I know all about that situation. Mr. Si'i-ZEE. AVilJ you tell us very briefly, Air. Parsons, why, in the factor's agreement, the New England States were eliminated ? xMr. Parsons. They were not, that I remember. Mr. Sulzer. They were not eliminated in the factor's agreement? 5Ir. Parsons. No; I think not. Mr. Sulzer. That agreement took in the whole country ? Mr. Parsons. May I explain the factor's agreement ? Is not that the better way ? Mr. Sulzer. Yes ; I wish you would, Mr. Parsons. The Chairman. Mr. Parsons, I think if you can do so, it would be better for you to answer this other question first, and then explain it. When Mr. Sulzer refers to the factor's agreement, he means the agreement between the American Beet Sugar Co. and the American Sugar Eefining Co., relative to the handling of the product of the former by the latter. Mr. Parsons. I said yesterday I could not recall what the explana- tion was. When the contract was brought to me it was in that form, and I did not ask any questions about it. I simply looked to see whether it bore upon any question of restraining output or prevent- ing competition or anything of that kind; or in ether words, whether it violated the Sherman law, and in the view I entertained of the Sherman law, it did not. Mr. Sulzer. Was it asserted at that time, that by eliminating the New England States, that would substantially evade the provisions of the antitrust act of 1890 ? Mr. Parsons. I do not think so. I do not think I ever had any such idea. Mr. Sulzer. Now, will you be good enough to tell us what you know about the factor's agreement, which has been referred to here ? Mr. Parsons. I understand the factor's agreement to have been an arrangement by an organization which was called the American Wholesale Grocers' Association. It has been thought that it was a scheme of the American Sugar Eefining Co., but just the reverse is the case. So far as I have ever learned, the American Sugar Kefinmg Co., if it had any wish in regard to the matter, would have been opposed. But here was this American Wholesale Grocers' Asso- ciation, which was represented throughout the vihole country, and the first I heard about the matter, so far as I can recall, was when, for some reason, there had come an end to the business being done under the factor's agreement, and the outcome was that I was on 2164 AMERICAN SUGAR EEFINIXG CO. one occasion called upon by some gentlemen connected with the American Wholesale Grocers' Association. I can not remember their names, but, Mr. Hardwick, I do remember that one of th? gentleman came from the State of Georgia, if I lemember correctly. The Chairman. Do you remember his name ? Mr. Parsons. I can not remember his name. All I know is that he was a wholesale grocer and held some official relation, as I think, with this Wholesale Grocers' Association. The Chairman. Was Mr. Thurber one of them^ Mr. Parsons. I would not remember the name if I heard it. The Chairman. He was the president of the association ? Mr. Parsons. I do not remember the names at all. I only met them once. What they said to me was that sugar was a very close article, that the retailer wanted to make what profit there was in the disposition of the sugar, and that there had been an arrangement under which the wholesale grocers got some small benefit, the 15 cents which is referred to, and that it had been suggested that that arrangement violated the Sherman law, and that in consequence the arrangement was at an end. They asked me what I thought about it, and if I can recall correctly, I do not think I expressed any views. I think if the Sherman law hampers trade, you may say unpleasant things about it, and evidently these gentlemen thought that it was interfering with their business throughout the whole United States. I think it is a very good test of the operation of that law, because here were the wholesale grocers of the country who were complain- ing, not that it helped, but that it hurt their business. The Chairman. Because it kept them from making a profit on what everyone of them had agreed to charge. Mr. Parsons. Whatever it may have been. I think ]\Ir. Hardwick proliably knows mf)re about it than T do. Whatlknow isthis: AVlicn tlu'v came to me, tlii'V said, and they satisfied me that the agreement was in the interest of (his large body of people ; that there was no com- plaint except on the part of retail grocers, if I got at it correctly, and T ratlicj- intimated to them th;;t ii was a fight they had better cnrry on between them ■-elves. They said no; that tliev had come to me, and that if we would not give them the benefit of the factor's agreement, would T not draw a contract that woiiUl keep within the Sherman law? If T had known as miirji about the Sherman law then as I do now, I would recognize that I would not know 1k>w to draw sucli a contract, but what I did say to these gentlemen was : " You know all aljout the matter. You ha\'e counsel, have you not?" They said •' Yes." " Counsel in whom you have confidence? " " Yes." " You go to him and get him to draw a contract, and bring it to me and I will iiass upon it."' They left, and I never say them afterwards. ^Ir. Sri.zER. ]\rr. Par-oiis, do you consider that the American Sugar Eefining Co. at the present time is carrying on business in restraint of interstate commerce? Mr. Parsons. Perhaps I ought to say, to begin with, exactly how, in detail, the American Co. is carrying on its bu-iness I do not know. But, if it is carrying on business as it did — as shown by the testimony in the Knight case — then you know what the court held in the Knight case. And let me say here that the Knight case involved the original organization of the American Co. as effected by the purchase of the Philadelphia refineries. The whole situation was AMERICAN SUGAR REPINING CO. 2165 before the Supreme Court of the United States, and I think that the Knight decision was enormously in the interest of the country, and operated and worked out so. Mr. SuLZER. And you think that is a precedent that controls the conduct of the American Sugar Eefining Co. at the present time ? Mr. Parsons. I think the Government ought to stand by it. Mr. SuLZER. And that the American Sugar Eefining Co. at the present time, or within recent times, is not carrying on business in restraint of trade? Mr. Parsons. Not so far as I know. I think they want to enlarge trade just as much as they can. I know I should. Mr. SuLZER. You do not consider the American Sugar Eefining Co. a trust, do you? Mr. Parsons. A trust? Mr. Sulzer. Yes. Mr. Parsons. Not if you and I mean the same thing by the term "trust." Mr. Sulzer. Well, we will take a trust as defined by the recent decisions of the United States Supreme Court in the Standard Oil case and in the tobacco case. Mr. Parsons. I do not remember what those decisions say on that particular point. It was originally a trust, as Judge Madison and others have said. There were trustees. Mr. SuLZER. I am not referring to that. I am referring to the corporation organized under and by virtue of the laws of the State of New Jersey and known as the American Sugar Eefining Co. I am asking you now if, in your opinion as an eminent lawyer, you believe that the corporation is in violation of the antitrust act of 1890? Mr. Parsons. I do not think that it is. I think that it is a cor- poration which is not a trust, and I think that the term " trust '' as applicable to it is a misnomer, and as applicable to all other similar organizations. Mr. SuLZER. And, of course, you do not believe it is a monopoly ? Mr. Parsons. Certainly not. Anybody in the world can start the business of sugar refining, here and elsewhere. And, you know, the history of the business from 1887 down has been a growth of com- petitors, and it will go on, if you will let things alone. Mr. Sulzer. Why is the American Sugar Eefining Co. now sell- ing the stock it owns in the beet-sugar companies ? Mr. Parsons. I think you will have to ask the gentlemen who are responsible for that action. Mr. Sulzer. You do not know? Mr. Parsons. I do not loiow. I am not connected with the com-' pany. Mr. Sulzer. Do you think it would be a good thing, in the inter- est of the people and the consumers of the country, if Congress would eliminate the sugar differential? Mr. Parsons. You mean in our tariff? Mr. Sulzer. Yes ; in the tariff law at the present time. Mr. Parsons. I do not think I have any opinion on that subject worth anything. Mr. Sulzer. Do you think it would be a good thing for the people and in the interest of the consumers of the United States if Congress 2166 AMEKICAN SUGAE REFINING CO. would materially reduce the tariff upon raw sugar and upon refined sugar ? Mr. Parsoxs. That, I suppose, is a question of home and foreign production. Mr. SuT^zEE. Have you given the subject any attention at all from an economic standpoint? Mr. Parsons. Only on the lines I have referred to. I think we ought to encourage a" home industry and help it while it is weak, and gradually it will draw the help as it gets to be strong. Mr. SiLZEE. Do you consider the beet-sugar industry at the present time in the United States weak or strong? Mr. Parsons. I think it is capable of being enormously increased. Mr. Stjlzer. Do you think it needs any protection ? Mr. Parsons. I do not think my opinion ui?on that subject is worth anything, by comparison with what you have heard from gentlemen from Utah and from Colorado, and so on, who say you will kill it if you deprive it of protection. Mr. SuLZEE. That is all I have to ask. The Chairman. Gentlemen, we promised to excuse this witness at 1 o'clock, and we have an hour and a half more, and I suggest that we divide up the time a little, and I will ask the gentlemen who have not examined the witness — I think there are three of us who have not examined him — to try and keep within a third of the time left. Mr. INIadison. I will try and do so, and I will ask my questions as quickly as I can and will ask the witness to make his replies just as brief as he can. I am going to keep off the economic ground. Mr. Parsons. I will. Judge Madison, but you can not say yes or no to complicated questions. ilr. ^Iadison. "Well, I will try not to ask complicated questions, if I can avoid doing so. Going back to 1887, you formed your original trust then. In 1891, as a result of the North River Refining Co. case, you formed the corporation known as the American Sugar Refining Co.. incorporated under the laws of New Jersey? Mr. Parsons. It was formed, and to a certain extent the decision of the court of appeals bore upon it. Mr. Madison. Well, I was making that statement for the purpose of getting on common ground, so we could get the continuity of thought. Now. then, as a result of that combination, which has been gone into very thoroughly, you brought in under one business management 17 companies, embracing a company at St. Louis, practically every- thing at New Orleans, and practically everything on the Atlantic coast, except Pennsylvania. The Pennsylvania refineries vou did not then get in under the American Sugar Refining Co. Now," then, later, beginning about 1891, and lasting through 1892, the company, as I understand, purchased the stock of practically every single one of the Pennsylvania or Philadelphia refineries; that is true, is it not? i\Ir. Parsoks. If you say so. The details are not within my mem- orv', and about many of them I had no knowledge. IMr. ^Madison. You had nothing to do with them, except in the Harrison case? Mr. Parsons. That is the only case in which I personally partici- pated. Mr. ^Madison. But, historically, that is correct, is it not ? AMERICAN SUGAR REFINING CO. 2167 Mr. Paesons. You say 17 refineries. I do not remember whether ■ the number was 17, or what it may have been, but I assume what you say to be so. Mr. Madison. You made a very interesting statement yesterday, and I do not want to get into the economic proposition, and I am simply going to agree with you that if you combined every single sugar refinery in the United States to-day that to-morrow you would find competition. I am going to agree with you on that, because of the fact that somebody else would go in the business; whether it would be competition that would be potential or not, I am not going to express any opinion about that. You and I would probably differ. Now, then, after you had succeeded in 1891 — and by "you " I mean the American Sugar Refining Co. — in getting practically all the re- fineries in under the one management, there did spring up, in response to the economic law which you refer to, certain independent refineries right here in New York under the shadow of the American Sugar Kefining Co.'s refineries. Possibly some of them had existed for some time. One was the National Sugar Refining Co., was it not ? Mr. Paesons. There were several companies which eventually went into the National. Mr. Madison. I know. First, there was the old National — the Na- tional Sugar Refining Co., organized under the laws of New York, was there not? Mr. Parsons. Judge Madison, I only remember individual names, Mollenhauer is the name in my mind in regard to the matter, but cor- porate names I do not recall. I do remember there were corpora- tions the stock of which was acquired by what became the National, and with that transaction I had to do. Mr. Madison. There were three companies that in 1900 were ojDer- ating here in New York in competition with the American Sugar Refining Co. after you had succeeded, in 1891 and 1892, in bringing in the Philadelphia companies and practically all the refineries of the country — there were three refineries here in New York and Brooklyn that were operating in competition with you in 1900? Mr. Parsons. Yes. Mr. Madison. Now, there was the Mollenhauer organization. Mr. Paesons. I remember that name. Mr. Madison. And McCahan. Mr. Paesons. I had forgotten that name. Mr. Crawford. McCahan was in Philadelphia. Mr. Madison. Yes; that is true. And the New York Sugar Re- fining Co. Mr. Parsons. I think so. Mr. Madison. And the old National, which was the Post-Howell prganization, as I remember it? Mr. Paesons. I remember Post-Howell. Mr. Madison. Now, those refineries were operating in competition with you in 1900. Were there any conversations or any conferences held between those interested in the American Sugar Refining Co. — Mr. Havemeyer, yourself, and others — as to bringing these organiza- tipns together, combining them, and getting control of them' by the American Sugar Refining Co. ? 2168 AMERICAN SUGAR EEPINING GO. Mr. Parsons. Never, of which I heard. The whole of that trans- action was exactly the reverse, that there should be no combination between these outside refineries and the American Co. Mr. Madison. I will ask vou if, as a matter of fact, these three companies, which had grown up since your original combination, and to which I have referred, were not actually combined together under the name of the National Sugar Refining Co. of New Jersey ? Mr. Parsons. Practically ; I think that is so. Mr. Madison. Wlio was it that brought about and managed that combination of those companies? Mr. Parsons. I think that Mr. Havemeyer had to do with it. I think he conspicuously had to do with it, and Mr. James H. Post, who has been examined as a witness, and among others I was spoken to upon the subject and took part. Mr. Madison. Mr. Havemeyer at that time was the president of the American Sugar Refining Co.? Mr. Parsons. He was. Mr. Madison. I will ask you if it was not a fact that the plan was this: That the new company was to be organized as the National Sugar Refining Co. of New Jersej^, with a capital stock of $10,000,000 of preferred and $10,000,000 of common, and that the stockholders of these corporations to which I have referred were to exchange all of their stock for the preferred stock of the National ? ]Mr. Parsons. You mean the preferred stock of the American ? Mr. Madison. No ; of the National. Mr. Parsons. Then I have lost the thread of your question. Mr. Madison. I will repeat my question. Was not the plaif to combine these three companies substantially as follows: That there was to be a company organized, laiown as the National Sugar Refining Co. of New Jersey, with a capital stock of $20,000,000; $10,000,000 of preferred and $10,000,000 of common, and that the stock of these three original companies was to be exchanged for pre- ferred stock of the National Sugar Refining Co. ? Mr. Parsons. No. 'Mv. Madison. Well, what was the plan? ^Ir. Parson. The transaction meant a union of the three refineries concerned into the National Sugar Refining Co., absolutely independ- ent, to be under the management of Mr. James H. Post, who was a very capable sugar man, and who would manage the business of the National Co. in the interest of the National Co. So far as I at that time learned, the question of the acquisition of preferred stock of the National Co. by the American Co. came afterwards. The orig- inal plan was that Mr. Havemeyer, Mr. Post, and other persons asso- ciated should acquire the other companies by their own means and by the use of their own securities, and the matter seemed to me as desirable, and I happened to have some securities and some cash on hand, and I was asked whether I would participate, and I did put up such securities as I could to aid Avhat I regarded as a desirable arrangement, but never with any expectation that there should be a union with the American Co., and always with the most earnest purpose that there should be no such union, and it was simply in the exercise of the right which everybody had to engage in this business, whether they were in or out of the American Co. AMERICAN SUGAR REFINING CO. 2169 Mr. Madison. Well, is it not true that the stock of the old com- panies -nas to be exchanged for preferred stock of the new, and in that way the combination was to be effected; that they were all to be brought in — they all had to get into the new company, and was not the modus operandi there to be an exchange of the stock of these old companies for stock of the new, and in that way they were all brought in under the new company, and that afterwards the American bought the stock, or acquired the preferred stock that these three companies had exchanged their stock for? Mr. Parsons. I can not say yes or no to that question. I can tell you what the fact was. Mr. Madison. Just answer what the fact was. Mr. Parsons. I never knew until after Mr. Havemeyer's death what interest he or his estate had in the common stock of the Na- tional Sugar Refining Co. Mr. Madison. I did not ask for comment; I am keeping oil' that now. Mr. Parsons. Well, I can only tell you what the facts were. Mr. Madison. I beg your pardon; if that is the case, I will not interrupt you. Mr. Parsons. I never knew until after Mr. Havemeyer's death what his interest or the interest of his estate was in the common stock of the National. I assumed that he and anybody else asso- ciated with him — and who they might have been it had never be- come necessary for me to know — were making this arrangement on the basis of common and preferred, and that out of the common stock they would get any advantage or be subject to any disadvantage which came from that transaction, but that there never was any union of the two. Later on came the question, as I supposed, and it might have been talked of at the time, whether the American Co. should acquire an interest in the preferred stock. Mr. Madison. That is, of the new National? Mr. Parsons. Of the new National. It was assumed to be a good 6 per cent investment, and it has proved so. It was assume4 to be desirable and fairly in the common interest, because here were per- sons on the National side who knew how to carry on the business, were willing to engage in creating competition under no restraint at all ; and following the idea I have always entertained that the Ameri- can Co. was justified in acquiring what I supposed was a minority interest at that time with no responsibility of control, it acquired that preferred stock. Mr. Madison. In other words, it bought it outright, after these old stockholders had exchanged their stock in their old companies for the preferred stock of the new. Mr. Parsons. I do not remember the exact order of time. Mr. Madison. But they did get possession of all that preferred stock which wiis issued, in exchange for the National stock, or prac- tically all? Mr. Parsons. The American Co.? Mr. Madison. Yes ; 61 per cent of it. Mr. Parsons. Fifty-one per cent. Mr. Madison. They purchased that ? Mr. Parsons. That is my idea. 2170 AMERICAN ST:GAR EEFINIIsG CO. Mr. ilADisoN. Xow, then, they did not acquire any of the common, did they? Mr. Parsons. No; the utmost care was to be taken that they should have no relation to that transaction, because at that time had begun these questions about the Sherman law, and the way proposed was that there should be no conflict with the Sherman law. Mr. Madison. Xow, then, the stock of the old companies was ex- changed entirely for preferred stock, but ten millions of common stock was in fact issued. Now, do you know what the basis of that issue was, the ten millions of common? They had united all the companies, acquired all the properties for the preferred stock; con- sequently the combination was effected and everything was adjusted for the ten millions of preferred. Xow, then, notwithstanding that, ten millions of common was issued, and Mr. Havemeyer obtained po!-ses.sion of it. Xow, can you tell what the consideration was for that ten millions of common and how ^Ir. Havemeyer came to get po.-se^sion of it? Mr. Parsons. I can not acquiesce in your assumption of facts, Judge Madison. Mr. Madison. Then correct them, because my statements are to be taken rather as interrogative than otherwise. Mr. Parsons. About the details of the transaction I had some, but not complete, knowledge. What I assumed was that a lot of gentle- men got together — Mr. Havemeyer was one, iMr. Post was another, and the other persons who were concerned — and they made an ar- rangement by which they controlled the three refineries. Then they, being the parties in interest, determined what should be the capitaliza- tion, how much of it should be preferred, and how much should be common, it being their facttu-y and the American Co. having nothing to do with it, absolutely. Then there being the jireferred and the common was made the arrangement by which the American CV). acquired 51 per cent of the preferred stock. Xow, I heard you express a very positive opinion a day or two ago, to the effect that in this suit which has been l)rought the American Co. — in whatever name the suit may be brought — would certainly suc- ceed. If it succeeds, it will succeed upon an assumption of fact which is exactly the reverse of what took place. The interests were those of ^Ir. Havemeyer and the others cooperating with him. As it appears now, Mr. Havemeyer and those associated with him brought about the arrangement. The American Co. had noth- ing to do with it, and I do not believe, if you wish me to state my view, that by any process of reasoning that transaction is going to be decided in tl^e interests of the Amerincan Co., which is in the situation of claiming no, it did not have anything to do with it, and yes, it had something to do with it. ''We did not have any- thing to do with it in so far as it bore upon restraint and competi- tion, and we did have something to do with it in so far as getting the results of it." Mr. jMadison. I was only making the assumption that the Ameri- can would then be in control, because if the $10,000,000 of common stock was canceled, it would leave the American Co. in possession of 51 per cent of the only legal, valid stock. Now, that is the reason I assumed that the American Co. would be in control. iMr. Parsons. You are quite right about that. AMERICAN SUGAR EEFINING CO. 2171 Mr. Madison. We will not follow that phase of the matter any further, because I am somewhat limited with regard to time al- though otherwise I would like to go into it very thoroughly. You have not yet answered my question as to what the basis was for the issuance of the conmion stock. Was there any money paid for it- was there any property exchanged for it; or was it exchanged in consideration of the value of the promotion services of Mr. Have- meyer and those associated with him ? Mr. Parsons. I am not able to say. Mr. Madison. You received a part of that $10,000,000 of stock? Mr. Parsons. I answer yes ; and I have told you 1 participated to a certain extent, and I rendered the legal service which bore upon that transaction, and when it was all over, I was given to understand that I should receive for my services some of the common stock. Now, that meant my assistance in the transaction ; it meant the law service rendered by myself and my firm, and it meant what 1 did. Mr. Madison. How many shares of stock did you receive ? Mr. Parsons. I did not receive them. The amount talked about was 4,000 shares ; but if you care to know the history of the transac- tion, later on 1 will tell you. Mr. Madison. Well, go ahead and give it briefly. Mr. Parsons. There came a time, I remember — I had forgotten about it, but I do now remember that something was said about 4,000 shares. Now, I have said before that I would have preferred to receive whatever I was entitled to in money ; and you have used the expression " water," and I recognize the difference between coin of the realm and water; and there came a time when Mr. Havemeyer said to me, " For all you have done, for all your firm has done, for all you have contributed, and for your help in the transaction you shall have 1,000 shares of the preferred stock." I received it and paid the interest of my firm in cash, and as an investment I held it. Mr. Madison. Then you did not get any of the common stock? Mr. Parsons. I did not. It was talked of; but I did not get it. Mr. Madison. Did I understand you to say that you recognized the difference between water and coin of the realm, and that that stock looked of such an aqueous nature that you rather shunned it ? Mr. Parsons. Not at all. I was dealing with honorable gentlemen. I was perfectly willing to trust them. I believed in Mr. Havemeyer. I believed in Mr. Post. Mr. Post was a most efficient sugar man, and I knew that under his management the National Co. would be a success ; and whether it was a question of common stock or preferred stock, there would be value in it. But when the gentlemen said to me " You may have preferred," I took what they said. And, if you will pardon me, I want to say here, because there has been talk about Mr. Havemeyer, and I have said that I am not here to eulo- gize him, but I am here most indignantly to remonstrate against aspersions put upon him, whether he is living or dead. Mr. Madison. And particularly by those who were the bene- ficiaries of his bounty ? Mr. Parsons. Precisely that. I have no sympathy with that mode of doing things. There came a time when it looked as if the common stock was going to be worth more than the preferred, and this gen- tleman came to me and said, " Now, if you want to have that common stock instead of your preferred, you shall have it." I said, "Mr. 2172 AMERICAN SUGAE REFINING CO. Havemeyer, I am satisfied with the outcome of the transaction; let it go," and Havemeyer benefited by the common stock ; I did not. ^Ir. Madi,S(jx. Xow, Mr. Parsons, testimony was given here the other day about a meeting between Mr. Arbuckle and Mr. Havemeyer; that after considerable competition, in which the American had gone into the coffee roasting and selling business, that ultimately both of them became tired, apparently, of the competition, and that there was a foregathering of the two gentlemen here in the city of New York; and that, whatever occurred at that time, the fact was that afterwards there was fjeace where war had before raised its dread head. Now, will you tell us whether you knew anything about that meeting? Mr. Parsons. About the meeting? I Imew something about the transaction. Mr. Madison. Will you tell the committee wliat it was? Mr. Parsons. With great pleasure. I learned on one occasion that Mr. John Arbuckle, with whom I had a very slight personal acquaint- ance, hud had a talk with Mr. Havemeyer, and it was in my mind that it had taken place at Mr. Ilavemeyer's 1i()ii>l'. I think there is some testimony here to that efl'ect. In si^me way I li'arned that Mr. John Arbuckle proposed to call upon me. He did call. I understood from him that he called by the suggestion of Mr. Havemeyer; that he had been to see Mr. Havemeyer, and Mr. Havemeyer- had said, " See Mr. Parsons." I had a little talk with Mr. Arbuckle. I think there was a second interview, and then there was a little more talk, but it amounted absolutely to nothing. In the first place, I was op- posed to any arrangement, because arrangements of that kind are never carried out. It immediately becomes a question of whether one side or the other can gain something of tlie other, and except in the case of the beet companies and other coiiiitariics, I have never been willing to favor arrangements of that kind. I heard what Mr. Ar- buckle had to say. He was a very worthy gentleman, and I had re- spect for him ; but at the moment he touched upon the matter I found out there was to be no agreement between Arbuckles and the Amer- ican Co. He earne a second time, and the re-irlt was the same, and I can tell you what the outcome was. Mr. Arbuckle, I have no doubt, said, " AVell, we will go ahead and fight sugar," and I know very well that I said, " Go ahead, and we will fight coffee," and so far as there being peace, it will be found that the war was more animated after that time than it had been before, and continued so for a year or more, until, as Mr. Arbuckle would say, the American Co. carne to its senses, and as the xVmerican Co. woidd say. Mr. Arburkle came to his senses. And then there resuUed the situation which en^ueil. and T do remember that in Mr. Arbuckle's mind was an idea — he said some- thing to that effect, that he did want to end it, but he wanted to end it and gain by it. He wanted to end it becairse he had a sort of idea that John Arbuckle was a person who was the sufferer. ]Mr. ^Mamsox. John Arbuckle? Mr. Parsons. He was the gentleman who came to see me. I do not suppose he liked to lose John Arbuckle's money. So the outcome was that there was no agreement, but it was war until there resulted what the natural rules of trade alwavs lead to, a recognition that each party must take his fair share of the trade at a fair price, and you may call it armed neutrality or armistice, or any other expres- AMERICAN SUGAR REFINING CO. 2173 sioii that has been used here, but I call it the outcome of the natural laws of trade. Mr. Madison. I think I have heard it stated that when Mr. Ar- buckle came to see you, he came with a proposition, and that he was somewhat docile, and that you looked out of the window and could see him coming up the street with an olive branch as big as a tree. Is there anything in that — that he came to you with a proposition for peace? Mr. Parsons. I do not like to dispute anything that you tell me you have learned. Mr. Madison. No ; I said I had heard it. I am asking for confir- mation of these things. I do not know them at all. It is pure hear- say with us. Mr. Parsons. I should say that if you wanted to find a parallel for that statement you had better read the Arabian Nights tales. Mr. Madison. What was the proposition, then, that Mr. Arbuckle came to you with ? Mr. Parsons. It was the biggest thing in the world. What he said to me was about this : " Why is this fight ? " I do not remember the language, and I am putting the idea, not the language. " Here is this fight. Isn't it a pity? " I said, " Yes." " Can't we do some- thing 'i " " Wliat, Mr. Arbuckle?" "Can't you make some sugges- tion?" "No. Can't you make some suggestion?" "No. I agree that it is too bad." That is the sort of talk. Is that coming to an agreement ? Mr. Madison. I am just asking for the facts. Mr. Parsons. There never was anything in the nature of an agree- ment. I suppose Mr. Arbuckle might have thought the talk will show where is the weak point about sugar. I was willing to talk, because I thought it might show where was the weak point about coffee, and I think that is where the matter ended. I came to the con- dnsion that coffee was a weak point with Arbuckle, and he may have thought that sugar was with the sugar company, and so they went ahead to fight it out until they fought to peace. Mr. Madison. And the first man to throw up his hands and quit was Havemeyer or Arbuckle ? Mr. Parsons. I don't know about that. I would have supposed they both came to the conclusion that the fight, if it went on forever, would be like some fights of which I have read in Irish history- there would not be any combatants left. Mr. Madison. Did they arrive at that conclusion about the same time? Mr. Parsons. I do not know. Those things are not done by agree- ment. I have heard it said that the outcome was, I think, that they got the territory of Ohio and West Virginia. Is not that so? If ftey did get it, I suppose they got it and suppose they were satisfied, aad what happened so far as the American Sugar Kefining Co. is concerned has been testified to here. They went on with coffee, and one of the circumstances of the fight Mr. Madison. And you went out of coffee? Mr. Parsons. 1 think that happened long afterwards; but one of the coffee incidents seemed to me to be rather amusing and to about correspond with what I think will happen every time if you will leave people alone. The Arbuckles got good advice and under that 2174 AMEEICAN STJGAK REFINING CO. advice bought some few shares of stock of the Worcester Spice Co., which was the comiDany in which the American Sugar Refining Co. was interested, and there was all sorts of fights in Ohio, and we had very iible counsel, the American Sugar Eefining Co. had, in Ohio, and I remember one of those gentlemen came to see me about some procedure in the history of the fight. Mr. Madison. That is interesting, but I am encroaching upon the time of the other gentlemen. IMr. Parsuxs. It resulted in nothing. That was the end of it. ]\Ir. iLvDisox. It did result, as a matter of fact, in the war ceasing and after that time a general level of price was maintained between you and the Arbuckles. Mr. Parsons. I do not think there was a level of price maintained at all. I think it was just about as it looked. Mr. Madison. But as a matter of fact, the general level has been maintained as a fact, whether by agreement or otherwise. Since that time there h:is been no ruinous competition, at least between you. Mr. Parsons. I can only surmise that that is so; I do not know. Mr. Madison. Of course, if they did not, and if that was not the result of the fight, the fight would still be on. Mr. Parsons. I think the fight is still on. Mr. Madison. I am glad to learn it, because there are so many peo- ple wb.o vire consuming sugar that- have not as yet received any physi- cal demonstralioii of it. jNIr. Parsons. "Why are two armies against each other? Does a fight mean they are actually shooting at each other, or just ready? Mr. Garrett. The innocent bystander is now getting hit. [Laugh- ter.] Mr. Parsons. The innocent bystander is the fellow whose sugar is reduced to nothing, and who buys his sugar without paying for it. Mr. Madison. It ii- a fact ihnt durinir the time of the Arbuckle sugar war, the general price of sugar was lower than it was when the condition of pence cauic, and it is a fnct, as shown by the record, that the margin between refined and raw sugar was much smaller then than it has been since that time. That is true, is it not ? Mr. Parsons. I do not know ; I do not know anything about that. JNIr. Madison. The records show that. I shall not take any further time on that, however. Testimony was given here the other. day to the effect that Mr. At- kins was performing a labor, perhaps not of love, but, no doubt, a patriotic service, and we were impressed with the service that Mr. Atkins is rendering, and the fact that he has so very much interest in the American Sugar Eefining Co. He has some stock in it and his neighbors are interested. At the present time he is working like the father of his country did, without salary. Do you know of any rea- son why he should do that ? "We want to get all these facts. I will make a suggestion, and it is right along the line of our inquiry: Is ^h . Atkins intore^tcd in CnJnii sugar lands? 2ilr. Parsons. I know nothing upon the subject. Mr. ^Iadison. You do not know about that? Mr. Parsons. Xothing whatever. iSIr. Madison. Do you know any reason why he should be working at the present time without pay ? Mr. Parsons. I do not know of any reason. AMEMCAN SUGAR REFINING 00. 2175 Mr. Madison. Do you have any inference which you can reason- ably draw from facts within your knowledge? Mr. Parsons. I do not care to testify to inferences or guesses or surmises. Mr. Madison. I did not ask for any inferences that were mere guesses. I only ask for inferences that are based upon fact and are logical deductions. I want to say this: This is a committee of in- vestigation. We are not held down to strict rules of evidence, be- cause a suggestion which comes by hearsay from a witness may lead to a line that will develop important facts. Mr. Parsons. Judge Madison, I have no knowledge and I have no information upon the subject. I have nothing upon which even an opinion could be based. Mr. Madison. During the time you were connected with the Ameri- can Sugar Refining Co. it was prosecuted for receiving railroad re- bates, was it not? Mr. Parsons. Prosecuted, yes. It was sued. Mr. Madison. It plead guilty, did it not, to receiving railroad re- bates ? Mr. Parsons. I could not answer that yes. I can tell you what occurred. Mr. Madison. Answer the question whether or not it plead guilty to receiving railroad rebates? Mr. Parsons. There was a settlement, but what form that took so far as the indictments are concerned perhaps I do not just remem- ber, but I can tell the transaction. Mr. Madison. Did you represent the company in that matter? Mr. Parsons. I did — that is, I did with associated counsel. Mr. Madison. Just briefly give the story, just as briefly as you can. Mr. Parsons. The American Co. was sued for having received re- bates, and the time was immediately after the passage of the Elldns amendment to the interstate-commerce law. It turned out that there was an Edgar transaction. I think that has been testified to here. The details of it I do not recall, but I think that under some either correct or incorrect idea of the law, and some theory in regard to a particular transaction which involved water and railroad navigation, there was a question whether that did not come within the Elkins law. Back of that were cases where the American Co. had received payment — if you call them rebates — which were the results of satis- lactory arrangements that were perfectly legal prior to the Elkins amendment; but the payment coming subsequently, upon that state of facts the Government brought a suit which came to be tried before Judge Holt. The American Co. was represented by able counsel — Judge Alton B. Parker and Mr. Choate. I was there and associated with them, and we all were of the most persistent opinion that receiv- ing monejr that was due when it was lawful after a law had been passed did not justify the prosecution. Judge Holt held otherwise, and held that the receipt of the money was part of the transaction, and if that came after the passage of the Elkins law it brought the company within the purview of the law. Thereupon there was a direction of a verdict and a fine. I think the fine was $18,000. Then, there were seven other cases, as, I recall it, and the total amount re- ceived by the company subsequent to the passage of the Elkins 99220— No. 26—11 3 2176 AMERICAN SUGAR REFINING CO. amendment was, if my memory seryes me correctly, $626. I think the amomit was less than $90 in each case, and those amounts had been received in different places before it became recognized that the Elkins amendment applied. Now, Judge Madison, I believe there was a most earnest wish on the part of the company and its subordinates the moment it was known about the working of the Elkins amendment to comply, but there were these cases where money had been earned previously and the payment came afterwards, and the question was whether they were within that law. Under those circumstances I learned — I do not remember how — ^that the Government had said, " We will settle if you will pay $150,000." I protested. There were a great many con- siderations — I do not remember exactly what they were — bearing upon the matter; but I insisted upon the position that 1 did not believe there was any liability in those cases. None the less, I was instructed to bring about a settlement, and the outcome was that for those seven transactions, involving, as I think, $626, there was a fine of $70,000, but not with my consent and not with my acquiescence, as I do not believe anybody gains by that sort of use of legislation of Congress. That situation continued along until the $29,000,000 fine in the case of the Standard Oil. I have always believed that it was fortunate for the general interest that there was that $29,000,000 fine, because it was carrying to an extreme this, what 1 call, vicious legislation. But the misfortune of the $29,000,000 situation was to confirm the judgment of Judge Holt, under which payment, after the law came into effect, was part of the transaction and therefore exposed to liability. Mr. Madison. Mr. Parsons, in running through the books of the company, Judge Eaker and I found the resolution which was re- ferred to here in 1892 which referred to campaign contributions, wherein it was stated, in effect, that both parties had solicited cam- paign contributions in 1892. The word " both " is not used. The word " each " is used. Were you present when Mr. Havemeyer made his statement at that time to the board of directors with regard to that matter, when this resolution was passed ? Mr. Parsons. If the minutes say so, yes; otherwise, no. Mr. Madison. Do you remember it as a fact ? Mr. Parsons. Oh, no. i\rr. Madison. Do you know, from any means of information which you may have had, what Mr. Havemeyer did state at that time about the necessity of protecting the company against injurious litigation and other matters, and that both parties, or each of the parties, had asked for contributions? Mr. Parsons. I can guess. I can give you my opinion, and I think that it is probably accurate ; but I can not state it as a matter of knowledge. Mr. Madison. State what you heard with regard to it as given to you by your associates at the time. Mr. Parsons. I remember at one time there arose a question whether the company could make campaign contributions, and I think I was asked whether a corporation could make campaign contributions. That was at a time when there was. no law against it, and the only question was whether there was a right of' the board to use the money of the stockholders for campaign contributions. I was of AMERICAN SUGAR EEFINING CO. 2177 the opinion that for legitimate purposes, yes. I was of the opinion that if the company, meaning the stockholders of the company, were concerned in the question of whether there should be a tariff House of Eepresentatives or adverse to tariff, it was the right of those shareholders of the company to do what they as individuals would do, much as I would deprecate campaign contributions from a corpora- tion. I have a sort of indistinct recollection that I did say, and I myself questioned the right of the board of directors to use money in that way, and I can see by reading that resolution — and I do not think I ever had anything to do with it and I think I should not have re- called anything about it except as it was read — I can say there seems to have been the question of whether, if the company were being persecuted by either or both parties unfairly, the board would be justified in making a contribution to campaign expenses. I do not believe anything ever came from it, because' all I know is that I persistently, from the beginning to end, stood against yielding, whether the persecution came from one political party or the other. Mr. Madison. Do you know whether or not — and I will ask you whether or not you know it directly or by hearsay — in 1892 the com- pany did make a contribution to either of the political parties, either directly or indirectly? Mr. Parsons. I never have known of but one case where the com- pany made a political contribution. What may have been done by the company through others I do not know ; but I have no knowledge of a political contribution except in one case. Mr. Madison. I will ask you about what that was, but I want to know now as to the 1892 matter. Mr. Parsons. I can do nothing in the way of adding to what I have said. The rest you can draw conclusions about, just as I have. Mr. Madison. Did you ever hear Havemeyer say, or anybody say, whether or not any campaign contributions were paid that year to either of the parties ? Mr. Parsons. I never heard him say so, so far as I can recall. I never heard anybody say so, so far as I can recall. I am very clear that whatever the suggestion wsls, from one or the other, for campaign contributions, any such suggestion as is in that resolution would only continue to confirm me in my determination that under those circum- stances I never would participate in a campaign contribution. Mr. Madison. I will ask you if you knew of anybody soliciting campaign contributions at that time ? Mr. Parsons. No. Mr. Madison. Did you ever hear from a reliable source, from peo- ple connected with your company, as to whether or not either of the political parties in 1892 solicited any campaign contributions? Mr. Parsons. Here is one thing: I have not any doubt that both political parties wanted from the sugar company and from every other corporation and individual to get all the money they could for campaign purposes. Mr. Madison. Has that been your experience? Is that true that each of the political parties has solicited campaign contributions from you? Mr. Parsons. I have no knowledge on the subject. There are certain facts which are historical. How do political parties live 2178 AMERICAN SUGAB REFINING CO. but by campaign contributions ? It is perfectly legitimate for legit- imate purposes. Do not think I am intimating anything against the system of supporting a political campaign. I have contributed money, and I wish it was in my pocket at the present time, indi- vidually. Mr. Madison. To both the political parties ? Mr. Paesons. That depends upon what the platform was at the particular time. I am an outsider and I am ready to go for the best, and if your party can give it to me I will go to the best, whatever my relations to your party may be ; and if the other party gives it to me, am for the other party. I am for the best thing in the interest of the country. Mr. Madison. As the platforms have varied in accordance with your ideas, you have contributed to each? Mr. Parsons. I have contributed on occasions. I would not say I have always contributed. I was a member of the Parker com- mittee and I was earnestly in hope that Judge Alton B. Parker, an able and upright man, should become President of the United States. The campaign would not run itself and I was glad to con- tribute. Why not? Mr. Madison. I am not criticizing the matter; I am only asking for the fact. Mr. Parsons. That is the fact. Mr. Madison. You also contributed to the Republican Party at times when their platforms and candidates met with your approval? Mr. Parsons. That is a personal equation. I have a son who does not agree with me and I do not agree with him. I am the father of my son and he is the son of his father, but I did not think he might, in the House of Eepresentatives, be a better fellow than some other fellow, and for that reason, and from family and personal consid- erations, I have been willing to help his personal campaign. Am I to be condemned for that? Mr. Madison. Criticisms are not being offered by the committee. Mr. Parsons. I think I will say nothing about political contribu- tions. Mr. Madison. But you did state a moment ago you knew about one political contribution. Mr. Parsons. I knew of but one. Mr. Madison. And whoever it may have been or whatever it may have been, we want to get all the facts. Mr. Parsons. I do not care to answer about that. I know of only that case. Mr. ^Madison. You may state whiit it wa;-. Mr. Parsons. I do not care to do so. Mr. Madison. I think it ought to be answered, Mr. Chairman. The Chairman. Yes; it seems to me it is proper. We were in- structed to examine into the matter. Mr. Parsons. My recollection is — about the year I can not recall, and about the particular campaign I can not recall, but I think it was the Harrison campaign, when there was made a contribution to the Republican party of $10,000. Mr. Madison. By the American Sugar Refining Co. ? Mr. Parsons. By the American Sugar Refining Co. Mr. Madison. That was in 1892? AMERICAN SUGAR REFINING CO. 2179 Mr. Parsons. I can not remember when it was. Mr. Madison. Or in 1888? Was that it? Mr. Parsons. I can not remember the date. Mr. Garrett. The American Sugar Eefining Co. did not exist in 1888. Mr. Madison. No; but the Sugar Eefineries Co. did. Do you re- member whether it was the first or second Harrison campaign ? Mr. Parsons. I can not remember that. I only associate it with the Harrison campaign. Mr. Harrison. Do you remember who was chairman of the Eepub- Ucan central committee at that time ? Mr. Parsons. I do not. Mr. Madison. Whether it was Mr. Clay or Mr. Carter ? Mr. Parsons. I do not remember it. Mr. Madison. Do you remember to whom the money was paid ? Mr. Parsons. To the treasurer of the Republican central committee, if that is the name, as I suppose. Mr. Madison. Who was he? Mr. Parsons. Was a Mr. Armour ever treasurer ? Mr. Madison. I do not know ; I never heard of the man. Mr. Parsons. That would rather be it, in my mind. Mr. Madison. Do you know of any other political contributions that were made by the American Sugar Refining Co., either directly or indirectly, beside the one you have just testified to ? Mr. Parsons. I do not. Mr. Madison. You do not know of any others? Mr. Parsons. I do not know, of any others. I know that the mat- ter was mentioned, and I have a sort of memory that just comes back to me on the subject that there may have been a difference of opinion. I think the one man who could give information on that was Mr. John E. Searles, because he was at that time treasurer, and I know he rather interested himself in such things. I remember he used to go to Washington. Mr. Madison. We must all pause at the portal of the grave. Mr. Parsons. Unfortunately, he lived to be over 80 years of age, and then, as you or somebody else said, death claimed his own. I do not think that the mere fact of death makes very much difference in its application to this organization, because when people die some- body comes along afterwards. Mr. Madison. There are a number of other interesting matters con- nected with the work of this corporation which I would like to go through, but it is not fair to my colleagues. That is all, Mr. Chair- man. Mr. Raker. I have just one or two questions, if you please, Mr. Chairman. The Chairman. Very well. Judge Eaker. Mr. Raker. How long did you know Mr. Havemeyer before the American Sugar Refining Co. was organized in 1887? Mr. Parsons. I have testified my acquaintance began with him in Mr. Raker. Were you his attorney in 1887? Mr. Parsons. Yes, in respect of his personal matters. Mr. Raker. And his corporate matters as well ? Mr. Parsons. Only in special cases. 2180 AMEBIOAN SUGAB EEFINING CX>. Mr. Eaker. Employed bv corporations in which he was interested ? Mr. Parsons. I do not remember any such case except that of the American Co. Mr. Raker. You had a high opinion of Mr. Havemeyer's word? Mr. Parsoxs. I would take his word for anything. Mr. Eaker. And when he stated a thing, you believed it to be so? Mr. Parsons. Absolutely. If your question implies this — whether, if he desired an answer from me, he told me anything that was not in the question involved, probably not. When Mr. Havemeyer made a statement to me, I believed it always. Mr. Eaker. That was his way in testifying and talking — ^but testi- fying in particular? Mr. Parsons. He testified right to the point. Mr. Eaker. And if he testified, you would believe he would testify to the truth? Mr. Parsons. Certainly. If he did not testify, I would believe it. Mr. Eaker. What do you think of this as coming from Mr. Have- meyer ? — Q. When you sell in this country, you control the price? — A. Yes, sir. Q. And it was organized, as I understand it, with a view of controlling the price and output to the people of this country? — A. That was one of the objects of consolidation. Q. And you hare succeeded in doing it? — ^A. Yes, sir. Q. That was the principal object in organizing the American Sugar Refin- ing Co.? — A. It may be said that was the principal object. You said if Mr. Havemeyer thus testified, it would be true? Mr. Parsons. If he gave that testimony, he stated what he thought, and what he said he believed to be trufe, and I believe what he said — not as my judgment, but as my belief as to anything that he would say. Mr. Eaker. Mr. Havemeyer being president of the corporation Mr. Parsons (interposing). He was. Mr. Eaker. And being practically the father of this organization, and stating that the corporation was organized for the purpose of controlling the price and the output, you would say that, then, was the object and purpose of the corporation? Mr. Parsons. Not speaking for myself. Mr. Eaker. If Mr. Havemeyer, being the president and being the originator, and being the man that conceived the idea, testified that that was the purpose of the organization of the company, and testi- fied that when it was fresh in his mind — i — Mr. Parsons (interposing). I can not accept your- Mr. Eaker (interposing). You now would be willing to state he was testifying about what he believed and as he conceived to be the purpose, and that that was the purpose of the corporation. Mr. Parsons. I believe when he gave that testimony he testified according to what he understood to be the truth. Mr. Eaker. You do not answer my question. Mr. Paesons. Because I am not willing to substitute my opinion for his, or to accept your preamble. Mr. Crawford. What is the date of that ? Give him the date. Mr. Eaker. I will get to that in just a moment. If Mr. Havemeyer testified that that was the main object and the main purpose of the incorporation, you would believe that it was true, would you not ? AMERICAN SUGAB EEFINING 00. 2181 Mr. Parsons. I would believe that he believed it was true. That is all I can say. Don't you see this is not like asking whether a per- son was met on a particular day, and one person says yes and the other person says no. This is a question of judgment. Mr. Raker. If he believed it was true Mr. PARsbNS (interposing). I think he did believe it was true, and that would greatly influence my opinion. Mr. Rakjer. And the testimony shows that he controlled the situa- tion by virtue of his dominating policy and great character and personnel; and if that is so, then as a matter of fact, it did have that effect? Mr. Parsons. He never controlled me or dominated me, or domi- nated anybody else I know of. Mr. Raker. Then, your statement would be that the testimony fiven by practically all the witnesses that he did thus control and omineer and dominate would not be a fact ? Mr. Parsons. I do not know what all the witnesses have testified to. Mr. Raker. If they did ? Mr. Parsons. I can not testify. Mr. Raker. But you can answer a hypothetical question. If they testified that way, then that testimony would not be a fact? Mr. Parsons. I will not testify in answer to a hypothesis unless I know the hypothesis is justified, on a question of whether I believe what is said by somebody or not. Mr. Raker. You can answer that question just like you have asked a hundred or a thousand times of witnesses upon the stand — if the conditions are so and so and so, then the result would be so and so. Is not that right? Mr. Parsons. If the conditions were so and so and so and they lead to such a result, the result would be so and so. Mr. Crawford. What was the date of that testimony, Mr. Raker? Mr. Raker. It was supposed to be given the 6th day of February, 1897. Mr. Parsons. Where was that? The Chairman. That was before the Lexow committee. Mr. Raker. That testimony was given before the Ways and Means Committee of the House. This is a reprint, and the questions were put to him as being answered before the committee, and Senator Allen was questioning him. If the witnesses did testify that Mr. Havemeyer did dominate and did control the corporation and did not consult with the directors — and he stated that the purpose and object of forming the corporation was to control the price as well as the output — ^you would say that he testified to the truth, would you not ? Mr. Parsons. I can not accept the statement that Mr. Havemeyer dominated the company or dominated the board. He never domi- nated me, and I do not believe he ever dominated any of the other important men who were there. Mr. Raker. Then, if Mr. Heike and the other witnesses testified that he did dominate the board, their testimony would not be a fact, would it? Mr. Parsons. I think they are mistaken if they say so. Mr. Raker. Then, they were mistaken ? 2182 AMERICAN SITGAE REFINING CO. Mr. Parsons. I think if any gentleman has said he was dominated by Mr. Havemeyer I will accept his statement that he, that particular person, was dominated ; but if he says that I was dominated, then he tells what is not so. Mr. Rakee. You would qualify by stating that the other fellow was dominated ? Mr. Paesons. If he says so. I might believe it or might not be- lieve it. Mr. E.AKER. I understand you would not agree to this state- ment Mr. Parsons (interposing). About domination? No. Mr. Raker. No; I am going on to another matter — the matter as to the effect of the act of 1891. Mr. Parsons. I have not any doubt whatever and I have tried to make it plain that there must have been in the organization the ques- tion of the operation of the price. I have not any doubt whatever that if it had been thought that by raising the price, it was wise to do that, that the company ought to have considered that, but I think the factors considered were the factors that I am willing to give you if you want to hear them. Mr. Eaker. What were they ? Mr. Parsons. Economy of administration; control of refineries in various points, so as to be in touch with consumption; the benefit of the combination of the best ability for the transaction of the business ; the possibility of eliminating a particular refinery which could only be run at a disadvantage and concentrating upon refineries which could be run to advantage ; the benefit of giving to the united interests the most important skill and best ability and the best knowledge of the situation which existed in the general interest. Mr. Raker. That you have — — Mr. Parsons. There are other considerations, if I may state them. Mr. Raker. Go ahead. Mr. Parsons. You have heard them talk about failures during the preceding 20 years — avoiding that would be another consideration. Every once in a while, prior to the organization, according to the history which was communicated to me, a refinery might burn ; and if one big refinery burned then all the other fellows took advantage of the reduction of capacity to put up prices ; and here was an oppor- tunity of combining in their interests so that if that happened the other refineries could carry on the business in an even and rational way, and the ultimate outcome corresponded with what I believe to have been the purpose, and that was that this company became a company in which it was safe for the American people to put their money as an investment; and there came a time, as you know, when it became an important investment corporation. Mr. Raker. Then, as I understand you from your answer, by this organization and the method and manner of its organizing, it would give it the power of controlling the business in any particular State, in output and in price? Mr. Parsons. If you think that I said so Mr. Rakef (interposing). I am asking you. Mr. Parsons. Oh, no; I have tried all through this examination to say otherwise. AMEEICAN SUGAR REFINING CO. 2183 Mr. Eakeb. You can answer that question, yes or no, can you not? Mr. Parsons. If you ask whether that is my opinion, I say no. Mr. Eakee. They had no control, then, of that particular matter? Mr. Parsons. I do not think so. You or anybody could go to that particular State and do the business if you wished. You could do that. How could they control it? Mr. Kaker. It had the effect of shutting up the factories in va- rious places that were running, didn't it? Mr. Parsons. Possibly. Mr. Eaker. It had the effect of closing down some of the best fac- tories that were in existence before the combination, did it not? Mr. Parsons. Not so far as I know. Mr. Eaker. It closed down the Watsonville Sugar Eefinery after- wards, did it not? Mr. Parsons. I know nothing upon that matter. Mr. Eaker. It closed up the refinery in San Francisco that had been running profitably? Mr. Parsons. I have said that about the situation in San Fran- cisco and the beet situation I have no personal knowledge. Mr. Eaker. But if it had that effect, it then to some extent would control ? Mr. Parsons. If it would have that effect, then it did have that effect, and that is all I can say. Mr. Eaker. If it had the effect, it had the effect? Mr. Parsons. That is as far as I can go. Mr. Eaker. And it would leave the other men to draw their own deductions from those facts? Mr. Parsons. If that is the proposition, yes. If you ask me about a subject about which I absolutely know nothing, I can not answer, and you are asking what other men would do. How do I know what other men would do ? I would like to answer, but don't you see I can not? Mr, Eaker. I am not saying anything. You are talking and I am keeping still. Mr. Parsons. Then I will keep still, and good-bye. [Eising in his seat.] Mr. Eaker. No; just a moment. Mr. Parsons. Oh, I thought you were through. The Chairman. No, indeed, Mr. Parsons. Mr. Eaker. On the question of the effect in the case of the 121 New York, you have given us your opinion that the court passed upon the question only as to whether corporations could enter into partnerships. That is your interpretation of the decision ? Mr. Parsons. Of the decision; not of what may have been said by the judge. . . Mr. Eaker. That is your interpretation of the decision, and, in other words, that is all the court did decide? Mr. Parsons. So the court said. Mr. Eaker. Your opinion was, before that decision, that the ar. rangement of the various corporations holding the property was not a combination in restraint of trade. Is that right? Mr. Parsons. That was my contention. Mr. Eaker. And it was not so arranged that they could control the output. It was not organized for that purpose? 2184 AMERICAN SUGAR REFINING CO. Mr. Parsons. It was my contention that it did not violate the com- mon-law rules in reference to restraint of trade or preventing com- petition. Mr. Raker. And that same opinion of yours that you had then has continued on down to the present time? Mr. Parsons. Precisely; except as legislation may have created a different situation. Mr. Eaker. There has not been any legislation materially to affect the act of 1891, has there? Mr. Parsons. Not so far as concerns- Mr. Raker (interposing). Interstate commerce? Mr. Parsons. Not by the Federal Government. Mr. Raker. I am talking about that. Mr. Parsons. Not so far as I know. Mr. Raker. You have considered right along that the American Sugar Refining Co., which was organized at that time after this de- cision by a different method of handling its property before they issued trust certificates and the corporation was still m existence — that is, the corporations that formed this main body — and after that decision they simply turned over all the property to the main cor- poration, and one corporation held all the physical property? Mr. Parsons. To a new corporation. Mr. Raker. Holding it all? Mr. Parsons. Not the physical property at the beginning, but the stock at the beginning, and then the stock transferred into physical property. Mr. Raker. Originally all the corporations still existed as identi- ties up to 1891 ? Mr. Parsons. It was not a corporation. Mr. Raker. All the other corporations? Mr. Parsons. Yes. ]Mr. Raker. And this main institution simply held the voting power ? Mr. Parsons. Held the stock in trust. Mr. Raker. Then, when this new corporation was formed, these other corporations were dissolved? Mr. Parsons. That came later. Mr. Raker. I know it came later. Mr. Parsons. There came a time when, so far as the laws of the particular States permitted, the corporations were dissolved and the property actually transferred? Mr. Raker. That applied to all of them? Mr. Parsons. It did not apply to Pennsylvania. Mr. Raker. Did it not apply "to all held by the original agreement? ]\Ir. Parsons. On that I can not answer ; but in the main, yes. New York, yes; New Jersey; yes; Boston, yes. Mr. Raicer. This change was a simple change of legal conditions? Instead of holding by separate corporations and then the voting power being in a voting body, all the property was turned into one corporation ? Mr. Parsons. In effect. Mr. Raker. But the same policy, the same method of doing busi- ness, was continued ? AMERICAN SUGAR REFINING CO. 2185 Mr. Parsons. About that I do not know. As a general proposition, I should think yes. Mr. Rakee. It had the same purpose — the new corporation — in 1891? Mr. Parsons. For aught that I know. Mr. Raker. And it practically handled the business in the various States in the same method and in the same way as it handled it before ? Mr. Parsons. That would be my general inference. Mr. Raker. Has there ever been a change in that from the be- ginning, in 1887, down to the present time that you know of? Mr. Parsons. Not of which I know ; but if what you have in mind is the details, about the details I know nothing. Mr. Rakee. I do not want to go into little details. You were a member of the board of directors for a great many years ? Mr. Parsons. I was a member of the board of directors for a great many years, but that simply meant that on occasion when it was sup- posed I could be of service by attending a meeting, I was there. As a rule, I was not there. Mr. Rakee. There was no change in the handling of the business in the various States ? Mr. Parsons. I understand what you mean. I agree entirely with you. The change from the original so-called trust to the American Sugar Refining Co. was a change in form. Mr. Raker. That is right. Mr. Parsons. That was a change in form. We promoted and aided and encouraged the North River case after we saw what was to be the effect of it. The effect of it was to be that the court of appeals would tell us what could not be done and what could be done, and after we learned from the court of appeals what was thought about the previous situation, then we learned something; but there was no substantial change. That is what you want to know? Mr. Rakee. That is what I wanted to know. Mr. Parsons. There was no substantial change of which I know. Mr. Raker. Your contention is, Mr. Parsons, that the original arrangement was legal under the law, but the court having held that it was illegal, you changed the form ? Mr. Parsons. I did not change my mind. Mr. Rakee. I know you did not ; that is what I am trying to get in the record ; and for your benefit, too. You did not change your mind on that question, did you ? Mr. Parsons. May I state what the fact was? Mr. Rakee. Yes. Mr. Paesons. I do not believe this was a partnership of corpora- tions. Mr. Rakee. I know you do not. Mr. Paesons. It was a partnership of individuals, but the court said, "It is a partnership of corporations," and referred to some testimony in the record about the North River case in support of that. All I want to say is this Mr. Raker (interposing). After the court had thus held, oi course you had to bow to the judgment of the court that it was a partner- ship and could not then exist. 2186 AMERICAN SUGAR REFINING OO. Mr. Parsons. I think that only concerned forfeiture of the North Eiver Co. Mr. Raker. But it had that effect of changing, did it not ? Mr. Parsons. The company made up its mmd that it could not follow that lead. Mr. Eaker. From the method of doing business from the begin- ning, in 1887, up to the time of the decision of the case in New York and the change of the form, and from the change of the form by virtue of that decision until your connection ended, you contended then it was a legitimate way to do business ? Mr. Parsons. Yes. Mr. Eaker. And, as I understood from your testimony — and if I am wrong I want you to correct me — ^you believe that is legal to-day ? Mr. Parsons. I believe that is legal to-day. Mr. Eaker. And that the courts to-day have not passed upon that particular subject? Mr. Parsons. Oh, I think the court has passed upon it and passed upon it favorable to my contention, in the Knight case. Mr. Eaker. I see. Mr. Parsons. Please remember that in the Knight case was con- cerned the original organization or acquisition of the Philadelphia refineries, and the whole subject was before the Supreme Court of the United States when it made its decision and the companies acted upon it. I do not believe the Governmgnt has any right to go back on it. Mr. Eaker. Is it not a fact that in the Kiiight case, the case really went off upon the proposition that there was no evidence before the court that the Knight Co. was engaged in interstate commerce, and that really as a matter of fact the decision covered that point, and not the question of Mr. Parsons (interposing). The court said that being a manufac- turing corporation to distribute its product to other States was not interstate commerce. That is, the business is a local manufactory. That is the doctrine for which we contended and for which I stand now, and it is to the interest of the country that the Knight case shall be the law and business shall pursue its ordinary channels. Mr. Eaker. And that is the same position you take to-day ? Mr. Parsons. Now, I am out of it. I am giving attention to other matters. Mr. Eaker. Up until the time your connection with the company ceased ? Mr. Parsons. Oh, yes. As a lawyer always, and as an American citizen always, and as a witness before this committee now, as em- phatically as I can say it, yes. Mr. Eaker. The organization had the effect, did it not, of giving the American Sugar Eefining Co. an interest in Michigan? Mr. Parsons. Do you refer to beets? Mr. Eaker. Yes. Mr. Parsons. I have said that about the beet situation in Michigan I have never had any knowledge. Mr. Eaker. But you have a general knowledge that they did have an interest? Mr. Parsons. Yes. Mr. Eaker. And they had in Utah and Idaho ? Mr. Parsons. T have heard the testimony in this investigation. AMEBIOAN SUGAR EEFINING CO. 2187 Mr. Rakee. And in California which took up the cane and beets too? ' Mr. Parsons. I have told the extent of my knoAvledge. Mr. Eaker. And in Louisiana? That is right, is it not? Mr. Parsons. I do not happen to remember just what has been testified as to the situation in Louisiana, but I knew something about that situation outside of this testimony. Mr. Raker. Do you not know anything about the original taking up and handling of the Louisiana refineries and the handling of their business there at all ? Mr. Parsons. In a general way ; yes. Mr. Raker. You knew it as a general condition ? Mr. Parsons. In a general way ; yes. Mr. Raker. That took up all the States that handled sugar, raw or refined, or that produced beets and manufactured them into sugar, did it not? Mr. Parsons. I have no knowledge on that subject, but I think not. I think New York produces beets. Mr. Raker. But to any extent and to manufacture them in any quantity, that is right, is it not ? Mr. Parsons. I do not think so. I think, as an actual fact or possible fact — — ■ Mr. Raker (interposing) . It has been testified that is the prac- tical effect, and I wanted to then ask you Mr. Parsons (interposing). I know nothing to the contrary. Mr. Raker. Would it not be possible for a corporation, organized and existing here in New York, to control the condition of the sugar business in Michigan, if that was the fact? It would be a control from New York and not from Michigan ? Mr. Parsons. I would not think so. Mr. Raker. Wouldn't it apply the same to California ? Mr. Parsons. Not at all. Either State is open to everybody — you, me, everybody. Mr. Raker. But I mean this — I mean all who are in the business. As to the business in which the American Sugar Refining Co. is in- terested, it would practically handle and supervise this business, would it not ? Mr. Parsons. I am not competent to speak upon the matter, as a matter of fact. I do not think so, as a matter of theory. You can not make me believe that any body of inteligent Americans is going to be controlled by any other body of intelligent Americans if they are in their senses and have some money. Mr. Raker. You have come to that conclusion quite definitely, and that is your opinion of the situation ? Mr. Parsons. I have never had any different opinion. I had it in the beginning, and I will stick to it to the end. Mr. Raker. You would not agree to this statement, then : The combination may not reduce the price to the grower of raw material, may not increase the price charged to consumers, may not seek to exclude all others from the field, may be free from coercion or opposition, and yet if it restricts competition, if it restricts trade, reasonably or unreasonably, It falls within the statute. That is the act of 1891. You do not believe in that statement, do you? 2188 AMBETCAN SUGAR REFINING GO. Mr. Parsons. That is a complicated question. I can not say yes or no to that. Mr. Rakee. That is all, Mr. Chairman. Mr. Hinds. May I ask one question ? The Chairman. Yes. Mr. Hinds. Mr. Parsons, in the minutes of the American Sugar Refining Co., under date of March 10, 1894, there is this entry : Resolved, That all matters pertaining to tariff legislation be and the same are hereby referred to the president, the treasurer, and Mr. John E. Parsons, with full power to take, in their discretion, such action as they may think best for the interest of the company. May I ask you what action was taken in response to that resolu- tion? Mr. Parsons. What I remember is that the whole tariff situation was discussed, and I think I have already said that at some time or other, I assume then, Mr. Searles went to Washington to see what was going on with respect to changes in the tariff laws. Mr. Hinds. He was the treasurer? Mr. Parsons. He was not only the treasurer, but a member of the board, and a very intelligent and capable man. Mr. Hinds. He was the treasurer referred to in this resolution ? Mr. Parsons. In 1894? Yes, I think so. Mr. Jacoway. May I ask a question or two, Mr. Chairman? The Chairman. Yes, sir. Mr. Jacoway. You have answered, if I have followed your rea- soning — and I know 3'ou have given great research to the matter, and while, with respect, I differ with you on many of the conclu- sions you reach, I would like to have you state to the committee what is your idea of the efficacy of the Sherman antitrust law? Mr. Parsons. Mr. Jacoway, if you will tell me what the Sherman antitrust law means, I can answer your question. Mr. Jacoway. I know, but I want you to answer that in the light of what you think it means. Mr. Raker. If the Sherman antitrust law means what the Govern- ment contends for, and what in effect was held by Mr. Justice La- combe here, that two persons who are competing can not become partners, and in that way prevent competition between themselves, without violating the Sherman antitrust law — if they are selling a barrel of flour across the Hudson River, that is called engaged in in- terstate commerce — if that is what the Sherman antitrust law means, it is ruin ; it means ruin for the industries of this country. I do not think that was what was intended. You have to enforce the Sher- man law as the extremists on one side claim, or you have to recog- nize it as interpreted by the Supreme Court of the United States by reading into it what you and others say is not there — the rule of reason. I think the Sherman law goes upon the idea we are not reasonable beings. Mr. Jacoway. You have made a specialty of corporate law all 3'our life, have you not? Mr. Parsons. Just the reverse. Ihave had as little to do with it as possible, because I prefer the individual against corporate clients. If I have an individual client, he and I have the whole situation. I do not want clients where there are 18,000 or 20,000 people to write in and demand this or that and condemn and complain. AMERICAN SUGAR REFINING CO. 2189 Mr. jACowAr. I have an illustration which I want to present to you to get at your idea of what is " watered stock." For instance take the Hartford Fire Insurance Co., of this city and this State' the only money that was ever paid in by the stockholders was 10 cents on the dollar. I understand that that stock is worth some $200 at the present time. Your idea of stock that is not watered— in other words, if it would pay a fair dividend or fair return on the amount invested, or bring a fair return to those interested in it, your idea of stock that is not watered is that none of the stock then is water notwithstanding they have paid but 5 or 10 cents on the dollar for it? Mr. Paksons. In a general way, yes ; of course with certain qualifi- cations. You may easily exaggerate earning capacity or undervalue it, but it IS an important factor to be taken into consideration Mr. Jacgway. That is all, Mr. Chairman. Mr. Parsons. I want to say one thing, if I may, upon a subject which has been mentioned here— publicity ; and it comes right down to what I have said, that my idea upon this subject is in the action that was taken by the stockholders at a meeting from which some- thing has been read, and I hope that that action will form a part of your proceedings. The Chairman. That is in the record already. Mr. Parsons. Because if to-day— I am no longer on the board— an individual came to the board or its officers and said> " I want to see into your internal affairs," and the board permitted, if I had my chance, I would turn the board out. Then there is this other fact: We were periodically — and when I say " we " I mean the American Sugar Refining Co. — met at annual meetings by the suggestion or movement for information, and we were on occasions sued in New Jersey because we did not give information, and it was always for some purpose injurious to the stockholders, and it was, if my mem- ory serves me correctly, in order to tell the court what the stock- holders wished that that action was taken, and the result was it stopped that litigation. Mr. Jacoway. That is all, Mr. Chairman. Mr. Chairman. Mr. Parsons, we are going to let you off as we have promised, although I very much regret that I can not carry out in full the examination which I had hoped to go through. Do not regard this question as impertinent from a personal stand- point, because it is not. There are grave reasons of a public character that make it necessary for us to submit these questions to you. Tell us the present extent of your holdings in the American Sugar Ee- fining Co. — substantially, I mean, but not literally. Mr. Parsons. I rather remonstrate against such an inquiry. If you will tell me any public interest is concerned, I will answer ; otherwise not. The Chairman. It is concerned to this extent — and I will modify the question to this extent, because I recognize the propriety if you occupied a position only as a private citizen who had invested, al- though even from that standpoint the evidence would be pertinent, because it affects the question, as I see it, and the questions may bear upon the interest of the witness- — not for the purpose of impeaching him at all, but every man who has given the subject any considera- tion will appreciate the standpoint of the question. 2190 AMEBICAN SUGAE KEFINING OO. As I understood your testimony up to this point, most of this hold- ing is the result of professional compensation ? Mr. Paksons. The whole of it. The Chaikman. For that reason I must rule that it is pertinent as affecting the question. Mr. Paesons. I received at the beginning, as I have said, compen- sation in what has been denominated to be here water. The Chairman. That was for organizing the Sugar Refineries Co., $250,000 in par value? Mr. Parsons. Yes; but that does not represent what I thought I was entitled to. I thought I was entitled to reasonable pay for several years services. That went through several years, but in the end I was better off than if I had had what I wished. The Chairman. When the American Sugar Refining Co. was or- ganized to succeed the Sugar Refineries Co., what compensation did you get for that work? Mr. Parsons. I do not remember anything about that. The Chairman. There is some statement in the minutes that it is $70,000. Mr. Parsons. I could give you no information on the subject. The Chairman. The minutes will probably state that correctly? Mr. Parsons. What do the minutes say? If I were present, I would, of course The Chairman (interposing). I presume the statement of the minutes as to the amount allowed for that service is correct, and there is some statement to that effect. My recollection is it is some- thing like $70,000. Mr. Parsons. I have no recollection on the subject, but I know there are circumstances, if you take the whole of that situation and the successful launching of a $50,000,000 corporation, that would make that a reasonable compensation. The Chairman. It might be. As a result of that professional serv- ice at various times, I suppose you got an annual salary besides this stock ? Mr. Parsons. That is what I did get. I got annual compensation from beginning to end. The Chairman. In cash? Mr. Parsons. In cash. The Chairman. Besides that, how much stock have you finally wound up with in this corporation? Mr. Parsons. Do you wish to know how much I got by way of annual compensation? The Chairman. Yes ; you may tell us that. Mr. Parsons. Because I have been credited with receiving amounts I would like to have in my pocket. The Chairman. Svippose you tell us what your annual salary was ? Mr. Parsons. My annual salary was about one-half of what I should have had. It netted perhaps $8,000 or $10,000 a year. It was not myself; it was my successive firms that got that, and we were practically the law department of this great corporation, and paid our rent and paid our clerk hire, and you know about what was left to me. I would have received very much larger compensation but for the reasons I have stated. AMEBICAISr SUGAK REFINING CO. 2191 The Chairman. Just to refresh your memory, I read from the minutes of a meeting of the board of directors of the American Sugar Kefining Co. on January 16, 1891 : The president presented a communication from Mr. Parsons relating to the expenses of reorganization, and on motion the treasurer was directed to pay the amount in accordance with the statements named, $77,250, and also to pay Messrs. Kidder, Peabody & Co. the amount due them under the resolution, $250,000. Mr. Parsons. Are you assuming that I got that $77,000 ? I wish I had. The Chairman. Did you remember what the amount was under that reorganization ? Mr. Parsons. No; I do not; but I remember there were a large number of counsel concerned and very valuable services rendered, and in the end they all sent their bills, and I sent them to the com- pany, and if that says that was the amount — I wish I had gotten it, but I did not. The Chairman. Have you any idea what amount your firm did get? Mr. Parsons. I have not at the present time. I am rather sur- prised to be informed that all the important lawyers concerned re- ceived only such a total as that sum. The Chairman. Who were Kidder, Peabody & Co. ? Mr. Parsons. They are bankers of Boston. What they did I do not know. The Chairman. That was their commission for something? Mr. Parsons. I do not know anything about it. The Chairman. You do not know what they did ? Mr. Parsons. I do not know anything about it. The Chairman. You do not recall it? Mr. Parsons. No. The Chairman. Tell me in a general way what your stock hold- ings are as the result of professional services rendered at various times to this corporation ? Mr. Parsons. I understand the committtee instructs me to answer? The Chairman. Yes, sir. Mr. Parsons. I hold at the present time 240 shares of preferred and 240 shares of common. The Chairman. I will put the question differently. How much have you received in all in stock ? Mr. Parsons. You have heard how much I have received The Chairman (interposing). Was that all you ever got in stock? Mr. Parsons. Yeg. It was what has been called " water." The Chairman. At no other time did you receive any stock com- pensation for your services? Mr. Parsons. Nothing I remember, and I am very sure I never did. The Chairman. There is a statement in the bill, and it has been testified to by another witness, that you received 4,000 shares of Na- tional common stock when that company was organized for some sort of service. Mr, Parsons. I testified at length in regard to that this morning. The Chairman. Did you ever have that common stock? Mr. Parsons. Never to my recollection. 99220— No. 26—11 i 2192 AMEEICAN SUGAR REFINING CO. The Chairman. Did you ever sell it back to Mr. Havemeyer? Mr. Parsons. I do not know how he regarded it. Eventually I did receive 1,000 shares of preferred stock of the National Co. The Chairman. Did you pay money for that or render services ? Mr. Parsons. It was the compensation to my firm and to myself for services and for my contribution in bringing about that trans- action. The Chairman. In other words, a contribution in services rather than in money? Mr. Parsons. I made available to Mr. Havemeyer, if it had been used — Mr. Havemeyer and Mr. Post and the rest of them — -what I could put up. The Chairman. My colleague directs my attention to this part of the minutes of the board of directors of the American Sugar Refining Co. on Tuesday, March 22, 1892: Present : Messrs. H. O. Havemeyer, T. A. Havemeyer, Senrles, James B. Thomas, and George C. Magoon. Apparently, you were not present. This resolution was passed : A further communication veas received from Mr. Parsons, containing a bill of Parsons, Shepard & Ogden for services, $40,000, and John E. Parsons for special services in connection with Franklin refinery, $50,000. On motion, the treasurer was authorized to pay the amounts named. Were those paid ? Mr. Parsons. I think very likely. The Chairman. In cash ? Mr. Parsons. Oh, yes. The Chairman. There is one transaction that no member of this committee has yet touched upon, that you must have very intimate knowledge of. I will touch on it in a way that I hope will not be embarrassing to you. It is about this Franklin Sugar Refining Co. in Pennsylvania. Are you under indictment in connection with the transaction yourself? Mr. Parsons. The American Sugar Refining Co., its board of directors, and I, as a lawyer and director, are under indictment. The Chairman. Here in the circuit court ? Mr. Parsons. Here in the circuit court, yes, at the instigation of the Government of the United States of America. The Chairman. And that prosecution is now pending? Mr. Parsons. It has been pending for two years. The Chairman. Of course every member of this committee recog- nized, and we have recognized it with every witness, the question of propriety that hedges about our own line of conduct and the rule of protection that the United States Constitution throws about its citizens when they are charged with crime, and we will not ask any questions about that matter, although it is a question in which we have been intensely interested; but if you care to volunteer any infor- mation, I will be very glad to have you do it. Mr. Parsons. I have been instructed by the company that what 1 know in regard to that matter is in my capacity as a lawyer dealing with a client, and I am not at liberty to speak, and therefore I must abstain from saying anything. The Chairman. Even if we did not agree, the reason you put it on is good ; we will not press it. AMERICAN SUGAR REFINING CO. 2193 Now about this matter of capitalization. I am reading now from a report that has been furnished to this committee in reference to the capitalization of this original Sugar Refineries Co. in 1887 Mr. Paesons. $50,000,000. The Chairman. It was capitalized originally at $50,000,000? Mr. Parsons. Yes. The Chairman. $25,000,000 common and $25,000,000 preferred ? Mr. Parsons. Precisely. The Chairman. I find this statement is made, and we have had some evidence in our record that corroborates it— that the capital of the 17 companies that went into it was $6,590,000. Do you know whether that is right or not? Mr. Parsons. I do not Imow whether it is right or not, but the capital of the constituent companies had not any relation to value. The Chairman. No relation to value? Mr. Parsons. Absolutely no relation to value. May I say this — that those were mainly partnerships or family organisations, and they were merely incorporated for convenience, and the small capital at which they were incorporated had reference to the matter of taxa- tion. Am I not right about that, Mr. Malby ? Mr. Malby. Absolutely so. The Chairman. I call your attention to the fact that in 1897 Mr. John E. Searles, now dead, and we can not therefore get his testimony now, and I do not know whether we will get it hereafter or not Mr. Parsons. I have great confidence in the powers of a congres- sional committee. [Laughter.] The Chairman. Mr. Searles testified in 1897 that the properties coming to the trust were valued on the basis of their earning capacity at that time. That is correct, is it not ? Mr. Parsons. That was one of the factors. The Chairman. He testified that was the way it was determined. Would he know ? Mr. Parsons. I would accept his testimony as to a matter of fact. As to a matter of opinion The Chairman (interposing). As I understand it, this was not his opinion, whether the valuation was too much or not, but his testi- mony as to the fact as to how the valuation was arrived at. Mr. Parsons. Did he ignore the fact of the bricks and mortar? The whole thing was taken into view. The Chairman. Their value was taken into view as going con- cerns ? Mr. Parsons. Yes. The Chairman. And among them at that time were many in a bankrupt condition or almost so. Mr. Parsons. I only know what has been testified to by Mr. Ox- nard. I saw him shake his head. You can not make me believe Mr. Atkins was in a bankrupt condition at that time. The Chairman. No; but he said his company had not paid divi- dends in many years. Mr. Parsons. I can understand that, too. To pay dividends you have to know how to conduct the business. The Chairman. Do you think he did not know how to do it ? Mr. Parsons. Apparently not. 2194 AMERICAN SUGAR REFINING CO. The Chairman. Was it cutthroat competition that rendered this Mr. Parsons. I do not know anything about it. What I know is that the men in touch with whom I was — Capt. Thomas, the father of Mr. Washington Thomas, and Searles, and the two Havemeyers, and so on — were getting dividends. Please to understand that this whole plant was the outcome of a successful business. The Chairman. Mr. Searles testified before the Lexow committee in 1897, that he bought all the stock of the North Eiver Sugar Re- fining Co. for $350,000, and immediately thereafter received in ex- change therefor $700,000 of trust certificates. Do you regard that as water ? Mr. Parsons. No: I think that there was a question of whether there was a good bargain or not, and upon that subject I have noth- ing to say. After that transaction, one or the other of the two who had owned the property, denounced the other because they had let their property go for that price, thinking it was worth so much more. The Chairman. It was under condemnation proceedings at that time, was it not, or about that time ? Mr. Parsons. I can not speak about the dates. I want to answer what I understand you wish to get out. It is in my mind that there were either pending or in prospect condemnation proceedings. The Chairman. For park purposes ? Mr. Parsons. Yes. I can not remember the exact status of that particular moment. The Ci-iairman. That affected its value considerably, did it not? Mr. Parsons. Which way? The Chairman. It could not be considered as a going concern if it was about to be condemned, could it ? Mr. Parsons. Not a going refinery, but when propert}' is taken it is paid for, and it might be worth a great deal more, not as a going concern, but otherwise. The Chairman. How much did the city pay for it, do you Imow? Mr. Parsons. I do not know anything about it. The Chairman. Do you remember when the American Co. ab- sorbed the Spreckles plant down in Philadelphia ? Mr. Parsons. I have said a good many times about that transac- tion that I know nothing. The Chairman. You know nothing whatever about it? Mr. Parsons. Nothing whatever. I do not think I heard of it. I may have heard of something about it. The Chairman. You were the attorney that advised the company at the organization of the Sugar Refineries Co. and at its reorganiza- tion in the form of the American Sugar Refining Co., were you not? Mr. Parsons. One of the attorneys. The Chairman. The leading counsel? Mr. Parsons. When it came to the question of reorganization, as I am reminded by that $77,000 payment, there were important other lawyers concerned. I take the responsibility. In fact, I remember- I differed with some of them and stood out for my opinion, and it prevailed. The Chairman. You also advised the company in its Philadel- phia transactions with all those people that it bought out, did you not? AMERICAN SUGAR KEFINING CO. 2195 Mr. Parsons. Only so far as concerned the Harrison refinery. I went to Philadelphia about that, saw Mr. Harrison, and I was greatly pleased in reading his testimony to see that that was con- summated by his giving his word of honor to me and me giving my word of honor to him. The Chairman. And you both stuck to it? Mr. Parsons. But before we closed, I was referred to Mr. John G. Johnson, so the Harrisons and John G. Johnson were on one side, and the American Co. and myself on the other side. The Chairman. You advised about the legal aspects of that trans- action ? Mr. Parsons. I do not think there was any legal question in it. The Chairman. As to whether it was in violation of the law ? Mr. Parsons. I do not think there was in the minds of either Mr. Johnson or myself the question of the Sherman law at that time. The Chairman. It soon got in there afterwards ? Mr. Parsons. Oh, yes ; the Government took a hand. The Chairman. Did you advise about this Spreckels transaction? Mr. Parsons. I do not think I heard of the transaction until after, it was consummated, but it was along the same line. Any opinion I had as to the Harrison investment would follow in the Spreckels case. The Chairman. You acted as counsel in the matter of rendering a legal opinion or giving legal advice in reference to the National of New Jersey, did you not ? Mr. Parsons. No; the American Sugar Eefining Co. had nothing to do with it. The Chairman. For whom did you act as counsel in that matter? Mr. Parsons. I merely acted for myself individually, so far as I had an individual interest, and for Mr. Havemeyer and for Mr. Post and whoever the others were. The Chairman. You have already said during this examination that in that particular transaction you were careful to consider the legal effect of the Sherman antitrust law. Mr. Parsons. Very careful, indeed ; because at that time there had been considerable agitation of this question. The Chairman. And you advised them on that question in this transaction ? Mr. Parsons. I did not advise them, because the American Sugar Eefining Co. had nothing to do with it. The Chairman. I mean the people who did have to do with it? Mr. Parsons. I told the people who had to do with the acquisition of these interests that they must not have any arrangement with the American Sugar Eefining Co. and that the American Sugar Refining Co. must have nothing to do with it. The Chairman. And yet here is what happened: You know inti- mately, of your own loiowledge, the facts of this transaction, do you not? Mr. Parsons. What facts do you refer to ? The Chairman. I will detail them. Mr. Post, acting through B. H. Howell & Co., put up a certain proportion of money to get these three or four refineries combined into the National, did he not? Mr. Parsons. So I have heard. 2196 AMERICAN SUGAR REFIXING CO. The Chairjiax. That money was furnished by JMr. HaA^emeyer, was it not? Mr. Parsons. Xot that I know of. I think ]Mr. Post said it was his own money. The Chairman. Havemeyer assisted in that ? Mr. Parsons. Havemeyer put up his money, and I know I put up mine. I put up some money, because I thought it was going to go through, but all I got in the end was what I told you. The Chairman. How much did you put up ? Mr. Parsons. I do not remember ; whatever I happened to have in the way of securities and cash. It was a substantial amount, and the National got the benefit of it. The Chairman. As soon as these people put up the money that went to the constituent companies that formed the National, then these same parties who put up the money to back that stock turned around and sold it to the American Sugar Refining Co. in a short period of time, did they not? Mr. Parsons. Not that I know of. The American Sugar Eefin- ing Co. purchased 51 per cent of the preferred stock. The Chairman. Did they not purchase from those individuals you were working for? Mr. Parsons. I do not know from whom they purchased it. The Chairman. Did you read Mr. Post's evidence ? Mr. Parsons. I read it. Whatever he said in regard to that, he knows; 1 do not. The Chairman. How did you get your money back? Mr. Parsons. In the end, my money was not used ; and there was some change in the situation, and I lost the benefit of the trade. The Chairman. What change was there in the situation? Mr. Parsons. They did not have occasion to use my money. I went to the country, and I left the situation The Chairman (interposing). With whom did you leave it? Mr. Peabson. Never mind, but I left it ; never mind who I left it with. I went abroad, my son tells nie, and when I came back The Chairman (interposing). You found you did not have a share of the pie ? Mr. Parsons. Yes, I was out ; I was out. The Chairman. Except that they gave you 1,000 shares of the pre- ferred for services? Mr. Parsons. For services and for what I was ready to do. The Chairman. What you were ready to do but did not do? Mr. Parsons. My securities were on hand, but do you suppose that I got 1,000 shares? I told you it went to my firm, in a very large measure. There is a great difference between me and my firm. The Chairman. When we speak of this question of fees, and when I say " you," I mean your firm. Mr. Parsons. It was not a question of fees; it was the whole thing. The Chairman. What was your firm doing? Mr. Paesons (interposing). The whole firm had to do with that transaction. The Chairman. In a minor way ? Mr. Parsons. Certainly. It involved obtaining a charter from the State of New Jersey, drawing most of the papers, and I do not know what the scale of compensation may be elsewhere, but here I do AMERICAN SUGAR REFINING CO. 2197 not think we got overpaid. I know very well I would not go through the same transaction again on the same terms. The Chairman. Did you ever advise the American Sugar Re- fining Co. that those factor agreements which it had with these grocers and merchants were not in violation of the law ? Mr. Crawford. Wait a moment, Mr. Parsons. On behalf of the American Sugar Refining Co. I must object to the witness testi- fying as to any advice he gave to the company, as being prohibited by the rule against confidential communications, and which the company alone can waive and does not waive. The Chairman. I suppose we are up against this question; we might as well rule on it, although possibly Mr. Parsons (interposing). I never did. Mr. Crawford. The witness said he never did; so I waive the objection. The Chairman. Did you pass on this question at all involved in that matter ? Mr. Parsons. I have told you everything that occurred in refer- ence to it. "When this Wholesale Grocers' Association came to me and I looked at this contract, I read into it what the Supreme Court read into the Tobacco and Standard Oil cases, the rule of reason, and in. the opinion I gave. It was the opinion of the Grocers' Associa- tion, in which I acquiesced, that there was a transaction in which were interested a very large number of persons, and in my opinion it was absolutely free from any legal prohibitions. The Chairman. Did you regard it in the interest of the consumer ; the great mass of the people of whom you have been talking? Mr. Parsons. The mere question of whether a certain percentage of profit should go to the wholesaler or the retailer was involved. The Chairman. The retailer might add aftother per cent to it. Mr. Parsons. For aught I know. I do not know anything about it. The Chairman. Is not that an ordinary rule of trade, that each man that handles the product in the process of distribution usually gets a profit? Mr. Parsons. I think that was the question. The wholesalers said the retailers were getting it all, and that they thought they ought to have some, and I thought so, too. I said, "All right, this question has been raised, but I will not advise you about it. Go and get your own lawyers." The Chairman. In point of fact, you did not advise the American on this subject, and never really advised them? Mr. Parsons. I declined to advise them, and told them to go to their own lawyers. The Chairman. You told them to submit a new agreement to you ? Mr. Parsons. They never got to the point of doing that, and I never got to the point of advising the American. The Chairman. Did you advise the American in reference to its proceedings in connection with the Cuban-American Sugar Co.? Mr. Parsons. Never. The Chairman. Did you advise them on the legal aspects of the ibeet-sugar question? Mr. Parsons. I do not remember that any question arose with ref- erence to that. 2198 AMERICAN SUG.iK REFITTING CO. The Chaikman. As to whether or not it was legal or illegal to ac- quire the competing beet-sugar companies ? Mr. Parsons. Never ; I do not remember any such. The Chairman. You do not remember advising them on that ? Mr. Parsons. No. I think that was connected with the Denver transaction, and very able lawyers in Denver represented that beet interest, so far as I had anything to do with it. I had nothing to do with the Michigan situation or Utah or Idaho. I never heard of it, so far as Utah and Idaho are concerned. There were very able law- yers in Denver to cover that matter. The Chairman. This is a question which is not so much a question of fact ; but we have been theorizing a good deal with you. Do you recall ex-President Roosevelt's opinion of the Knight case, publicly expressed ? Mr. Parsons. I do not. The Chairman. You do not remember what it was? Mr. Parsons. No. Expressed how — on the platform or in a mes- sage or in what way ? The Chairman. In speeches throughout the country — from the stump, so to speak. Mr. Parsons. Did he always express the same opinion? [Laugh- ter.] The Chairman. You are a little too hard for me on that question. [Laughter.] Let us see just how you understand the Knight case ruled in joxjir favor — I mean in favor of the sugar company. Every material ques- tion of law that could be involved in this situation, so far as it is affected by the Sherman antitrust law, you said was resolved in your favor. Did you not say that, or what amounted in substance to that ? Mr. Parsons. Very much that; as a general proposition; yes. The Chajuman. Of course, the case speaks for itself, and that is another thing we need not argue about. The decision was based on the pro])osition that the whole thing complained of in a direct way was manufacturing entirely within a State, which was exclu- sively an intrastate matter, and that the bill of the Government was not based on anj' combination or plan or plot or agreement, if you please, affecting the interstate commerce, was it not f Mr. Parsons. I do not think so. The facts were it was a local factory or refinery for the production of a large amount of sugar, and that it was distributed everywhere, and the mode in which the distributing was done was constituted by reason of the original organization plus the Knight and other companies. The Chairman. I think we have been over all the ground, and it is now my pleasure to excuse you, with the thanks of the com- mittee for your attendance and courteous response to the many ques- tions of the committee. Mr. Parsons. I want to thank the committee for their courtesy and I want them to understand I am with them in anything which, as the outcome of this, will help the community. The Chairman. The committee will take an adjournment until to-morrow morning at 10 o'clock, at which time we will proceed with the examination of Mr. T. A. Spreckels as a witness. (Thereupon, at 1.25 o'clock p. m., the committee adjourned until to-morrow, Saturday, July 22, 1911, at 10 o'clock a. m.) No. 30 HEARINGS HELD BEFORE THE SPECIAL COMMITTEE ON THE INVESTIGATION OF THE AMERICAN SUGAR REFINING CO. AND OTHERS TUESDAY, JULY 25, 1911 HOUSE OF EEPEESENTATIVES WASHINGTON GOVERNMENT FEINTING OmOE IQU SPECIAL COMMITTEE ON THE INVESTIGATION OP THE AMERICAN SUGAR REPINING CO. House of Repeesentatives. THOMAS W. HARDWICE, Chairman. FINIS J. GARRETT. GEORGE R. MALBY. WILLIAM SULZER. J. W. FORDNEY. JOHN E, RAKER. E. H. MADISON. H. M. JACOWAY, Je. A. C. HINDS. II AMEEIOAN SUGAE REFINING 00. Special Committee on the Investigation OF TPiE American Sugar Refining Co. and Others, New York City, Tuesday, July '25, 1911. The committee met at 10 o'clock a. m., Hon. Thomas W. Hardwick (chairman) presiding. The Chairman. I will ask Mr. Mott to take the stand. TESTIMONY OF MR. HENRY C. MOTT. (The witness was duly sworn by the chairman.) The Chairman. Mr. Mott, give the stenographer your name. Mr. Mott. Henry C. Mott. The Chairman. Your address? Mr. Mott. 117 Wall Street. The Chairman. Your business? Mr. Mott. Buyer of raw sugar for the American Sugar Refin- ing Co. The Chairman. Are you a director in the American Sugar Refin- ing Co. ? Mr. Mott. I am. The Chairman. How long have you been a director in the Ameri- can Sugar Refining Co. ? Mr. Mott. Since the latter part of February, 1908. The Chairman. In other words, you became a director soon after Mr. Henry O. Havemeyer's death ? Mr. Mott. Yes, sir. The Chairman. When the company was reorganized in a way? Mr. Mott. Yes, sir. The Chairman. How long have you been in the employ of the American Sugar Refining Co.? Mr. Mott. Since its inception. The Chairman. Since 1887? Mr. Mott. Yes. The Chairman. The American Sugar Refining Co. was organized in January, 1891, was it not? Mr. MoiT. Yes. .! The Chairman. Were you in the employment of the Sugar Re- fineries Co., which was formed in 1887? Mr. Mott. I was in the employment of one of the companies that went into that concern. The Chairman. Which one of the companies? Mr. MoiT. The Decastro & Donner Sugar Refining Co. 2429 2430 AMERICAN SX7GAB EEFINING CO. The Chairman. Were you a partner in the Decastro & Donner Sugar Eefining Co. ? Mr. MoTT. No, sir. The Chairman. What position did you hold with the Decastro & Donner? Mr. MoTT. A clerical one. The Chairman. Bookkeeper? Mr. MoTT. Yes. The Chairman. You were a bookkeeper with them ? Mr. MoTT. A clerk ; yes. The Chairman. What was the character of your duties with them? Mr. MoTT. It was bookkeeping. The Chairman. Now, Decastro & Donner had three factories, did they not ? Mr. MoTT. Yes ; they had three factories. The Chairman. At Brooklyn, N. Y. ? Mr. MoTT. Yes. The Chairman. With a total daily refining capacity of about how many pounds? Mr. MoTT. I could not tell you that. ' The Chairman. Well, the statement in the bill filed by Mr. Wise is 1,200,000. Is that about right, or do you know ? Mr. MoTT. I do not know. The Chairman. Were you the head bookkeeper? Mr. MoTT. Oh, no. The Chairman. Was your position of enough responsibility to give you a knowledge of the big part of the business ? Mr. MoTT. No, sir ; I started as a bill clerk. The Chairman. I mean at the time of this combination. Mr. MoTT. No ; I was employed as a general clerk. The Chairman. Well, were you somewhere near the top of the cleri- cal force at that time, in 1887? Mr. MoTT. No, sir. The Chair jiAN. You were not the head bookkeeper? Mr. MoTT. No, indeed. The Chairman. Or the head clerk? Mr. MoTT. No, indeed. The Chairman. Nor any way near the top — not even the first assistant in those things? Mr. MoTT. No, sir. The Chairman. Have you any idea of the value of the Decastro & Donner plant at that time? Mr. MoTi-. Not the slightest. The Chairman. And you do not know what they got for it when they put it into the Sugar Refineries Co. ? Mr. MoTT. I do not. The Chairman. Now. after the Sugar Eefineries Co. was formed in 1887, you say vou still stayed with Decastro & Donner or with the Sugar Refineries Co.? Mr. MoTT. The Decastro & Donner Sugar Refining Co. was at that time under the management of Havemeyers & Elder Sugar Refining Co. The Chairman. It was consolidated with the Havemeyers & Elder plant, was it not? AMEEICASr SUGAE KEFINING CO. 2431 Mr. MoTT. They got control of it or they managed it. The Chairman. Did you not then go into the Havemeyers & Elder office? Mr. MoTT. We were together— the Decastro & Donner clerks and the Havemeyers & Elder clerks. The Chaikman. Therefore after the consolidation of 1887 you were working with Havemeyers & Elder, were you not ? Mr. MoTT. With the Havemeyers & Elder Sugar Kefining Co., I believe it was. The Chairman. It was the Havemeyers & Elder Sugar Refining Co. after they incorporated the partnership ? Mr. MoTT. Yes. The Chairman. Who was at the head of that concern? Mr. MoTT. Henry O. Havemeyer. The Chairman. Did you know Henry O. Havemeyer personally? Mr. MoTT. I did. The Chairman. Did you know him well? Mr. MoTT. I should say so. The Chairman. In a social way? Mr. MoTT. No; not at all. The Chairman. In a business way? Mr. MoTT. In a business way. The Chairman. Were your business duties with the Havemeyers & Elder Sugar Refining Co. such as to bring you in close and inti- mate contact with Henry O. Havemeyer ? Mr. MoTT. Well, I should not say " intimate contact." He was there daily, and he was the head of the business. The Chairman. What did you have to do with him? Give us in a general way a sketch of how you were brought in contact with him in a business way. Mr. MoTT. Well, he ran the business and the office, and I was one of the subordinates there who, from time to time, got instructions which came from him. The Chairman. From time to time your instructions came direct from him. Now, you say you were one of the subordinates in the office. What was the particular nature of your duties as a subordi- nate in that office ? Mr. MoTT. They were clerical. The Chairman. Bookkeeping? Mr. MoTT. Bookkeeping; yes. The Chairman. And letter writing? Mr. MoTT. To some extent. The Chairman. Did you write letters to various people at the sug- gestion of Mr. Havemeyer, by his direction and by his order? Mr. MoTT. I did. The Chairman. Now, did you do any of that sort of wopk for Mr. Havemeyer prior to the formation of the Sugar Refineries Co. in 1887? Mr. MoTT. I could not say positively as to that; very likely. The Chairman. Are you acquainted in a way with the various steps taken by Mr. Havemeyer to consolidate the sugar interests of the country ? Mr. MoTT. No, sir. 2432 AMERICAN SUGAR REPINING CO. The Chaikman. Did you, at his dictation, write letters relating to shutting down some refineries and limiting the output of other refineries and fixing the prices for all refineries? Mr. MoTT. Never. The Chairjian. Do you remember when the Sugar Kefineries Co. acquired the Philadelphia plant? Mr. MoTT. I remember hearing of it at some time, either at that time or subsequently. The. Chairjian. Now, did you not conduct any correspondence relative to that matter for Mr. Havemeyer ? Mr. MoTT. I have no recollection of having done so. The Chairman. And you had no knowledge of it growing out of your connection with Havemeyer & Elder ? Mr. MoTT. I think not. The Chairjian. Do you remember when the Sugar Refineries Co. or the .Vmerican, which was its .successor, made its Baltimore venture ? Mr. MoTT. No. The Chair.aiak. Bou"efi. The Chairman. How did you hear of it in the office? Mr. MoTT. Well, I may have had something to do with some of the papers connected with the beet sugar companies. The Chairman. If you had to do with the papers connected with that business, could you not tell us what it was you had to do with it? i\Ir. MoTT. I think I recollect tabulating some of these papers and putting them in the compartments of the safe. The Chairman. Some of what papers? Mr. jNIott. Papers relating to beet-sugar factories in the West. The Chairman. What kind of papers? ]Mr. jMott. I can not say now what they were, really ; correspond- ence, perhaps. The Chairman. Correspondence on the subject of stock in these beet sugar companies? Mr. MoiT. Yes ; I think so. The Chairman. And the advisability of investing in the beet sugar campanies? Mr. MoTT. I presume that is so. AMERICAN STJGAB REFINING CO. 2433 The C^AIRMAN. And a plan for extending the beet sugar interests of the American Co. ? Mr. MoTT. I do not think I knew anything of that. The Chairmais'. It was just relative to acquiring stock in the beet sugar business that you remember something about? Mr. MoTT. That is all, I think. The Chairman. And that was in a very indefinite way ? Mr. MoTi'. Very indefinite. The Chairman. But that correspondence is there yet, is it? Mr. MoTi. I do not know. The Chair3ian. "\Miat did you do Avith it, when you got through with it, if you handled it? Mr. MoTT. It was left in Mr. Havemeyer's charge. The Chairman. That was a part of the office records of the con- cern, was it not ? Mr. MoTT. They were iix his hands. The Chairman. How is that, Mr. Mott? Mr. Mott. They were in his hands. The Chairman. Well, was Mr. Havemeyer's correspondence of the kind you managed for him, a part of the office records of the company? Where did you keep the copies and the originals, and so forth, at the company's office? Mr. MoTT. Yes. The Chairman. In Mr. Havemeyer's private office? Mr. Mott. In Mr. Havemeyer's private office. The Chairman. And they were a part of the company's records? Mr. Morr. Such as was the company's business. The Chairman. That is what I say; about the company's invest- ment in beet sugar, all that was a part of the company's records, was it not ? Mr. Mott. I think so; yes. The Chairman. Now, do you know anything about the conduct of the American Sugar Kefining Co., so far as concerns the acquisi- tion either of cane refineries or stocks of beet-sugar companies, other than what you have told me already ? Mr. Mott. I do not. The Chairman. Did you ever occupy, Mr. Mott, somewhat the position of confidential secretary to Henry O. Havemeyer? Mr. Mott. No, sir ; I do not think I did. The Chairman. You do not think you did? Mr. Mott. No, sir. The Chairman. Don't you know ? Mr. Mott. Yes ; I did not. The Chairman. Were you his private secretary? Mr. Mott. He had none that I ever knew of. The Chairman. Were you the nearest to it that he had ? Mr. Mott. I think he used many people to do his correspondence. The Chairman. Did you generally go through his mail firSt? Mr. Mott. No, sir. , j: -j. i. The Chairman. Did he turn over his mail to you, such o± it as he did not want to answer himself, for you to answer under his direc- tion? , • n TT ^ Mr. Mott. Specific letters from time to time, that is ail. Me ran his own affairs. 2434 AMERICAN SUGAR REFINING CO. The Chairman. Do you remember handling the correspondence in the case of the Pennsylvania Sugar Refining Co.? Mr. MoTT. I never saw anything of such correspondence, that I am aware of, or recollect. The Chairman. So far as you are now aware, you recall nothing about the correspondence in relation to that? Mr. MoTT. Absolutely nothing. The Chairman. Do you remember handling any of the corre- spondence in reference to the Spreckels combination or agreement or consolidation or composition, or whatever it was? Mr. MoTT. I do not. The Chairman. Do you remember the facts, from your business connection with this concern, that Havemeyer and Claus Spreckels, elder, finally composed and compromised their differences, the American finally becoming the owner of one-half and eventually all of the Spreckels Sugar Refining Co. of Philadelphia, and a half interest on the coast? Mr. MoTT. I do not know it of my own knowledge. The Chairman. I mean do you know it from your connection with that business? Did you handle any of that correspondence? Mr. MoTT. I have no recollection of it. The Chairman. What is your present position with the American Sugar Refining Co. ? Mr. MoTT. I have charge of the buying and distribution of the raw sugar. The Chairman. By that you mean you buy raw sugar for all the different plants of the American Sugar Refining Co. and allot to them their proportion? Mr. MoTT. Yes. The Chairman. How long have you been doing that ? Mr. MoTT. Since 1897. The Chairman. Do you buy raw sugar in Louisiana ? Mr. MoTT. I do not. The Chairman. I mean, have you got control of that matter ? Mr. MoTT. It is done under my direction ; through me. The Chairman. Under directions; through you? Mr. MoTT. Yes, sir. The Chairman. In buying sugar from Louisiana — of course I mean raw sugar, because thart is what you handle — you have nothing to do with refined sugar? Mr. MoTT. Nothing. The Chairman. In buying raw sugar in Louisiana, do you subtract anything from the New York market price of raw sugar? Mr. MoTT. There is a reduction from that price. The Chairman. How much reduction from that price ? Mr. MoTT. It varies. The Chairman. "Well, give us an average. For instance, what is it now ? Mr. MoTT. Well, there is no Louisiana sugar for sale now. The Chairman. When the last sugar campaign was on in Louisi- ana, and the planters were selling you their raw sugar, tell us what that difference averaged then. Mr. MoTT. Fifteen cents a hundred. AMERICAN SUGAE REFINING CO. 2435 The Chaikman. Now average it through five years ^Dast and what would it average, substantially? Mr. MoTT. Not very much greater than that; perhaps 18 cents The Chairman. What is the freight rate from New York to New Orleans on raw sugar? Mr. MoTT. About 15 cents. The Chairman. Have you any competition in the Louisiana mar- ket for the purchase of raw sugar ? Mr. MoTT. Yes. The Chairman. Who? Mr. MoTT. The Arbuckle Sugar Eefinery. The Chairman. Do Arbuckle Bros, buy sugar in the New Orleans market or anywhere in Louisiana ? Mr. MoTT. They have bought it. The Chairman. They have gone down to New Orleans and bought it ? Mr. MoTT. They have. The Chairman. Can you give me the day and year ? Mr. MoTT. I have not got it in my memory now. The Chairman. Well, come as near as you can to it. Press your memory a little, because there has been some testimony different from that. Mr. Crawford. Mr. Arbuckle so testified yesterday, Mr. Chair- man, I am informed. The Chairman. Was not this the way Arbuckle bought that sugar : Did not a man named Burguieres and some of his associates sell Arbuckle sugar for the last two or three campaigns, and sell it to him f. o. b. New York? Is that what you refer to? Mr. MoTT. No; I do not refer to that. I refer to cases where Arbuckle has bought through a representative in New Orleans, in the market there, raw sugar ; say three or four years ago, perhaps. . 'The Chairman. Do you know the name of that representative? Mr. MoTT. I would not be certain, but I think it was John Bar- clay & Co. The Chairman. John Barclay & Co., of New Orleans, La.? Mr. MoTT. Yes ; but I would not be certain of that. The Chairman. Well, we will take that answer and if you want to correct it after you look it up, Ave will allow you to do so. Now, that is the only instance you can think of where he has bought di- rectly on the New Orleans market? Mr. MoTT. The other buying amounts to the same thing. The Chairman. I am not asking you about that. We will come to that in a minxite. I am perfectly willing you should tell about that, and I think it is proper you should do so. I am speaking now of going to New Orleans and through some agent or broker buying at New Orleans on the market there. Can you recall any other instance ? Mr. MoTT. The Federal, I believe, have done it. . The Chairman. Mr. Claus Spreckels testified about that. Did you read or hear his testimony ? Mr. MoTT. I heard a portion of it, but not regarding that point, and I read some of it in the papers. 2436 AMERICAN' SUGAR REFINING CO. Tlie Chairman, llv. Spreckels said he had a great deal of trouble buying down there. Of course you do not know anything about that, one way or the other? ^Ir. MoTT. Xo ; I do not. The Chairman. And that a man named Mr. Burguieres, an impor- tant man in Xew Orleans in the sugar business evidently — vou know him? Mr. MoTT. I had the pleasure of meeting him yesterday for the first time. The Chairman. Is he in the city now ? Mr. MoTT. He called at my office yesterday. The Chairman. He told us about the diificultj' that he had had in getting the planters down there to sell to anybody except the Ameri- can, and particularly to the Federal, and it appears from the evidence so far submitted to us that with all the influence of those influential men who were willing to deal with the Federal that they could not get more than a third or a half of a steamer load. Can you add any- thing to what we have already heard on that subject? Mr. MoTT. I can not conceive of the possibility of a man going down there to buy sugar and not being able to get what he wants. The Chair.man. Particularly if he will give more than the market ? Mr. MoTT. Exactly. I was just going to say that. The Chairjian. X^ow, they all agree that they offered one thirty- second of a cent more than the American, and every time the Ameri- can price went up he went up one thirty-second of a cent over it. ]Mr. JIoTT. I would guarantee to go to Xew Orleans or any other place with authority to pay one thirty-second more than the market, and if I had the cash or the credit t would guarantee to buy all I wanted to. The Chairman. Mr. Burguieres, who undertook to do that, found it a very difficult matter to carry out such a guarantee — if he is to be believed in this matter, and. of course, I do not ask you to express- any opinion on a subject like that — but here was a man who actually tried that. Do yon know why he failed? He said he had the actual cash at a time when most of the banks were using clearing-house certificates. Mr. ]MoTT. There may have been conditions connected with their method of purchase that was not as satisfactory as ours were. That may be. I know nothing of it. The Chairman. The only condition he mentioned was the dis- pleasure of the American, if they did sell it. Mr. MoTT. I know nothing of that. The Chairman. Xow, he makes the statement that after he under- took to get up this cargo — this steamer load of sugar down there on the Xew Orleans market — that for some time thereafter he was boy- cotted by the local buyer of the American Sugar Refining Co., or the local manager, who told him in so many words that the reason for boycotting him was because he had undertaken to sell to the Federal and to get his friends to sell to the Federal. Do you know anything about that? Mr. iloTT. I do not. The Chairman. So that you are not familiar with the conduct and actions of yonr local manager in Xew Orleans? Mr. MoTT. Xo ; not as to details. AMERICAN SUGAR REI'INING CO. 2437 The Chairman. You leave the details to him ? Mr. MoTT. Very much. ' The Chairman. And you can not say whether he adopted that de- tail, or what he did as to that situation ? Mr. MoTT. I can not believe it is possible he did that. The Chairman. What is his name? Mr. MoTi'. Mr. Witherspoon. The Chairman. Is he your manager there now ? Mr. MoTT. He is. The Chairman. And was he, at the time Mr. Spreckels undertook to buy this sugar for the Federal Co. ? Mr. MoTT. He was. The Chairman. And he is the gentleman to whom Mr. Burguieres refers as having passed his table by and told him he did it for that reason ? Mr. MoTT. Undoubtedly. The Chairman. My colleague very properly suggests this ques- tion. What sort of a system do you adopt in buying sugars in Loui- siana ? Do you give these agents instructions what price to pay ? Mr. MoTT. Usually, yes. The Chairman. Are there exceptions to that rule ? Mr. MoTT. Yes ; there are times when it is left to his discretion what he shall do. The Chairman. Do you ever leave it to his discretion to exceed the limit you give him? Mr. MoTT. Yes, sir. The Chairman. Of course, it is always within his discretion to buy it as much under the price as he can ? Mr. MoTT. That goes without saying. The Chairman. Why do you give him that authority, and when do you do so? Mr. MoTT. Well, at times when the market conditions should war- rant it, or we desire to accumulate a larger quantity than v.'e are getting. ■ The Chairman. When your stock is short, or when the market con- ditions of the world seem to indicate to you that sugar is going up, at such times he has authority, if necessary, to go over the limit you have given him ? Mr. MoTT. That would be the case. The Chairman. But the rule is, he follows the instructions you give him as to the prices ? Mr. MoTT. As a rule. The Chairman. And when he is authorized to go over that figure which you have given him, you give him such authority at the sam.e time you give the instructions, do you not ? Mr. MoTT. Yes. The Chairman. In other words, he has no general authority to do that, except when such authority is specifically given? Mr. MoTT. At times he has had authority to buy what we needed there, and pay what he had to pay for it. The Chairjian. But whenever that authority was given to him, it was expressly given ? Mr. MoTT. Undoubtedly. 2438 AMEEICAN SUGAE REFINING CO. The Chaieman. Are there any competitive buyers in that market other than the instances you have specified ? Mr. MoTT. There are. The Chair.aian. AATio are they? Mr. MoTT. There is the Henderson Sugar Refining Co. The Chairman. That is a small concern? Mr. MoTT. That is a rather small concern. The Chairman. Can you give me substantially its capacity in barrels ? Mr. MoTT. I think not over 1,000 barrels per day. The CHAii!?irAN. ^^^lat is the capacity of the Chalmette refinery? Mr. MoTT. Between 8,000 and 9,000 barrels. The Chairman. What is the total combined capacity of the Ameri- can cane refineries everywhere? Mr. MoTT. I have not that in my head just at the moment. The Chairman. Well, figure it out for us a moment, substantially, and read them out as you write them down. Mr. MoTT. In barrels of refined sugar ? The Chairman. Yes; per day. Mr. MoTT. Havemeyers & Elder, 14,000 barrels per day; Jersey City, 5,000. Mr. SuLZER. "What is the name of the company in Jersey City? Mr. MoTT. Matthiessen & Wiechers Sugar Refining Co. ; Spreckels, Philadelphia, 9,000 barrels; Boston, 3,000 barrels; New Orleans, 9,000 barrels, making a total of 40,000 barrels. Mr. SuLZER. Is that the Chalmette Refiner j' in New Orleans? Mr. MoTT. That is the Chalmette I have referred to. The Chairman. We have those figures given as 12,000 or 15,000 barrels. Mr. IMoTT. I think 15,000 is excessive. ' The Chairjian. These figures you have given us are the actual refining capacities? Mr. MoTT. I am giving you, for instance, the capacity of the Have- meyers & Elder plant, I mean roughly, in outturn of barrels, 14,000, and that refinery is not running at full capacity now. The CHAiRjfAN. It is not running at full capacity? Mr. MoTT. It is not now ; I am giving you its full capacity. They are at present engaged in a great deal of work in removal of boilers, and they are not running full capacity by any means now. The Chairsian. The figures you have just given to the reporter are the full capacities of the plants, according to your estimate? Mr. MoTT. Yes. The CHAiRiMAN. And they sometimes run at full capacity and sometimes they do not ; is that the way of it ? Mr. MoTT. Exactly. The Chairman. Do y^u have any rule of action or rule of conduct with reference to your buyers, as to holding them responsible for keeping out competitors or keeping down competitive buying in Louisiana or elsewhere ? Mr. MoTT. No ; I never did. The Chairman. Mr. Mott, I am going to return just a moment to a branch of this inquiry which I had left temporarily. I want you to tell the committee, frankly and fully, if you have any such knowl- AMBKICAN SXJGAE REPINING CO. 2439 edge, what knowledge you acquired by reason of your intimate asso- ciation with Henry O. Havemeyer of his plans and conduct with reference to the various steps in his attempted consolidation of the sugar industries of this country. Now, if you have no knowledge at all, just say so ; but if you have any, I would like to know it. Mr. MoTT. I have no knowledge. The Chairman. None whatever? Mr. MoTT. He made no confidant of me. The Chairman. I mean knowledge that could have been acquired by you from the directions he gave you as to writing various letters, and as to various business matters committed to your charge while you were under him. Mr. MoTT. I do not believe I ever was instructed to write any letter in regard to the subject of your question. The Chairman. Did you have any conferences with him of a busi- ness nature, or did he give you any directions of a business char- acter, which could have given you any knowledge of any of these subjects? Mr. MoTT. No, sir. The Chairman. None whatever? Mr. MoTT. No, sir. The Chairman. At any time, from the time you went in, in 1887, until he died — during the whole 20 years — you knew nothing aboiit the way the thing was being planned and operated? Mr. MoTT. No. The Chairman. No details even? Mr. MoTT. Nothing. The Chairman. And you were as near his confidential man as anybody he had ? Mr. MoTT. I do not say so ; I think not. The Chairman. You say not? Mr. MoTT. I think not. The Chairman. Who was his nearest confidential man? He must have had somebody he trusted his private and most particular affairs to. Mr. MoTT. I think he used many people for that. The Chairman. Well, were you as close to him as any of them, in a business way, I mean? I do not mean that you ^Yere his social companion. Mr. MoTT. I suppose he placed confidence m me, ot course, in my position there as a buyer since 1897. The Chairman. You have been a buyer since 1897 « The Chairman. Now, you said iust now that you allotted to the various refineries their share of this raw sugar, did you not? Mr. MoTT. Distributed it as needs required. . The Chairman. Well, that is practically the same thing, is it not? Mr. MoTT. Yes, sir. -,■ ^ ■■, 4.- i The Chairman. How do you determine that distribution « Mr. MoTT. By the meltings which they maintain and the stocks they have on hand. . • „j- The Chairman. Now, when these refineries are not running at full capacity, as they often are not. who decides to what capacity each one shall be run ? 2440 AMEEICAN SUGAB, BEFINIISTG CO. ^Nlr. ]MoTT. The president of the company would decide that. The Chairman. Does he give you your directions on that subject? Mr. MoTT. I get no directions as to the meltings of the various refineries; that is, they are given to the superintendents of the vari- ous refineries. The Chair:\ian. As to whiit extent to lieep their factory going? ilr. [NIoTT. Yes. The Chairmax. And thev notify you how much raw sugar they need to keep the factory running in that way; Is Ihafc the .-ystcm? Mr. MoTT. Yes, sir. The Chairjian. And then you undertake to furni'^h them with the amount of raw sugar they liave made requisition on you for: is that the idea ? Mr, MoiT. That is substantially correct. The C'liAiKMAx. You then fill the requisitions of these local super- hitendents; is that correct? ilr. MoTT. To a large extent. The Chair jr AN. Well, do you undertake to change them? Mr. ]\'iiTT. No. The CiiAiRjiAK. "Well, then you follow the requisitions to the en- tire extent, do yon not ? Mr. MoTT. They can not carry more sugar than they have capacity for. The Chairman. Well, the managers knoAv that as well as you, do they not? Mr. MoTT. Yes, sir. The Chairman. In other words, yon supply them with such raw sugar as they require of you. or you undertake to do that? Mr. MoTT. They have to take what I send them, if they are able to handle it; but from time to time they may advise what is more desirable for them, or notify me that they can not take care of as much cargo, not having the room for it. The Chairjian. Now, you say they have to take what you send them. What you send them is determined by the policy agreed on by the company's directors and president as to what capacity each one of them shall be run at, is it not? Mr. MoTT. That would be it. The Chairjfan. '\Miere do you buy your sugar, Mr. Mott? ilr. MoTT. Mostly in New York. The Chairjian. You buy practically the entire Louisiana crop, do you not? Mr. MoTT. By no means. The Chairman. Do you not buy 80 per cent of it? Mr. MoTT. A little over 60 per cent. The Chair:man. Substantially, about how much over 60 per cent. Mr. ]\IoTT. Very little over 60 per cent. It may be 63 or 64 per cent. The Chairman. You buy 63 or 64 per cent of the Louisiana raw crop? Mr. MoTT. Yes. sir. The Chairman. "Who buys the balance? Mr. ]MoTT. A large quantity of it goes into direct consumption. The Chairman. They call that plantation sugar? Mr. Mott. Clarified and grocery grades. AMERICAN SX7GAE UEFINING CO. 2441 , . The Chaiman. Would 20 per cent of it be your estimate as to the f amount that goes into direct consumption from your knowledge of the situation? Mr. MoTT. I dare say. The Chairman. I think we have had that estimate submitted to us. Mr. MoTT. I dare say. The Chairman. Who gets the other 16 or 17 per cent? Mr. MoTT. Well, for instance, the sugar that has been bought by Arbuckle, the Henderson refinery, and the Colonial Sugar Eefinery down there in Louisiana. The Chairman. The Colonial Sugar Refinery is a very small re- finery, is it not ? Mr. MoTT. It is not so small. They have enlarged it considerably. The Chairman. Is it larger than the Henderson refinery? Mr. MoTT. Yes, sir. The Chairman. How much larger? Mr. MoTT. I think their capacity is something like double that of the Henderson refinery. The Chairman. So the Colonial and Henderson and Arbuckle re- fineries for the last year or tAvo have gotten that amount, Arbuckle having the raw sugar shipped up here to Xew York and delivered to him f . o. b. New York ? They have got the balance of it ? Mr. MoTT. That is about right, I think. The Chairman. What is the object of making this deduction of 15 or 18 points, the difiference between New York and New Orleans raw sugar? Mr. MoTT. The conditions that surround the making and market- ing of the Louisiana crop are these : Their sugar is commenced to be made, say, in the last 10 days of October, in a small way, and by the 15th of January it is entirely over. In fact, by the first of January, probably 80 per cent of the production is through with, and has been marketed. Now, as I have told yon, we buy some sixty-odd per cent of their crop, the average crop being 300,000 tons. Of course it varies, but that is a very good average. The Chairman. Then you buy something like 200,000 tons? Mr. MoTT. We buy from 180,000 tons upwards. The Chairman. Well, 62 or 63 per cent would be about 200,000 tons. Mr. MoTT. Very nearly. This is bought on the Ncav York price prevailing on the day or on the day before, as may be agreed upon. The sugars are delivered to us and we take them and pay for the sugars in five days, cpsh. The capacity of the Chalmette refinery to work these pugars np from th^ 1st of November, which is about the earliest date when there is sufficient sugar in sight to be able to start a plant, to the 31st of December, is 75,000 tons. I think not to exceed that amount. During that time we would have delivered to us 150,000 tons, perhaps more, of this sugar, so that on 31st of December, after having melted 75,000 tons of the sugar during the two months, and marketed it at a very bad time, at a very slack time for refined sugar — it is not the consuming season of the year, and also it is the tim? when the beet sugar is coming in. We have then on hand 75.000 tons of sugar that we have jiaid for during the month? of November and December piled up, taking all the risk of decline in the market or deterioration, and the risk of the loss in weight. 2442 AMERICAN SUGAR REFINING CO. The Chairman. You have had, though, at the same time the ad- vantage of any possible advance in the market ? Mr. MoTT. Of course. But there is a rather strange condition which prevails during the last three months of the year. It is the hiatus between crops. The old crops of the West Indies, from which we derive our greatest supply, are over, practically, although there may be some very small amounts left, and the new crops have not begun. They do not begin to come in until after the 1st of January, after the holidays, and at that period of the year there is, so to speak, more or less scarcity of raw sugar. The trade in refined sugar at that period being so slack, there is no incentive to carry any very enormous stock. The Chairman. What month of the year is that ? Mr. MoTT. That is during November and December. The Chairman. How is it in August and September and July? Mr. MoTT. Those are the good sugar-consuming months. The Chairman. You mean the price goes down to the consumer or goes up to the producer, which? Mr. MoTT. It depends entirely upon the general condition of the market. The Chairman. Raw sugar has advanced very much within the last few days. Mr. MoTT. Yes. May I just continue? The Chairman. Yes. Mr. MoTT. Since the first of July, about three weeks ago, there has been an advance in Europe of two shillings per hundredweight in the price of beet sugar, which is approximately half a cent a pound, due no doubt to speculation to a great extent, but the basis for it is a long continued drought and very severe, almost unprecedented heat, I believe, on the Continent of Europe, which they believe has injured the beet sugar crop of Continental Europe to such an extent that they are not going to get anything like the usual results. The Chair:man. Therefore raw sugar has gone up? Mr. MoTT. Yes. The Chairman. And the Cuban crop is supposed to be short this year ? Mr. MoTT. It is short some 300,000 tons, compared with last year. The Chairman. And that adds to the advance of raw sugar, does it not? Mr. MoTT. Very greatly. The Chairjian. So that very recently, since July 1, there has been quite a marked advance in raw sugar in this country, and all over the world, in fact? Mr. MoTT. There has been. The Chairman. About how much advance, half a cent, you say ? Mr. MoTT. In Europe the advance since the first of July has been two shillings per hundredweight, which is about half a cent a pound. The Chairman. Does the American advance correspond with that? Mr. iloTT. 'l^he price of ra'^vs or refined ? The Chairman. The price of raws. Mr. MoTT. The price of raws has advanced probably about to the same extent. The Chairman. What effect has that had on refined sugar, both here and in Europe? AMERICAN SUGAR REFINING CO. 2443 Mr. iloTT. In Europe the price of raw sugar follows almost exacUy the raw Kuenr market. The Chaiemax. How is it hei'e? Mr. ilo.T. Here, the advtuicc \v.\s been, I think, not over p <|ir licr of a cent, instead of a half a cent. The Chairmax. In other words, half of the advance of raAv« Mr. MoTT. I believe I am correct in saying that. The Chairmax. Of course, I understand it is a mere estimate, but you think it is accurate? Mr. MoT-r. Yes. The Chairman. Mr. Mott, in marketing your cane sugar at the period of the year when beet sugar is going' on the market, do you have any regard for that in determining the territory in which "you market your cane ? Mr. Mott. I am not conversant with that part of the business. The Chairman. Well, who is ? Mr. Mott. The refined sugar salesmen. The Chairman. Who are they? Do you mean the brokers or the wholesale grocers, or do you mean the manager ? Mr. Mott. I thought you meant what we had to do with it. The Chairman. You do not handle the disposition of the refined sugar ? Mr. Mott. No ; I do not. The Chairman. That is done by another officer of your company ? Mr. Mott. Yes. The Chairman. My colleague suggests that you give us, if you can, your explanation of why the American market did not follow the European market in this respect, that whereas, since July 1 of this year raw sugar in Europe has advanced half a cent a pound, and re- fined, sugar has followed it, you say, to about the same extent, that in America Mr. Mott (interposing). No; I said refined had not followed it. ; The Chairman. I thought you said it had practically followed it in Euroi^e. Mr. MoT-r. In Europe; yes. The Chaii«ian. That is what I said. Now, in America the half a cent advance, in raw was followed by an advance of only a quarter of a cent in refined. Now, why that difference? Mr. Mott. Well, we have had a pretty fair stock of raw sugar, bought at lower prices. The Chairman. In other words, you have been pretty well stocked up here ? Mr. Mott. I think so ; yes. Mr. SuLZER. This investigation has had nothing to do with that? Mr. Mott. No, sir; not so far as I am concerned. . The ChaIrjian. My colleague suggests that in Europe the refined is made out of the stock of local raw, whereas in our country we go all over the earth in getting our raws, and we Avould like to know whether you think that makes any difference. Mr. Morr. In Europe they have got a combination and that is why they keep up their prices. The Chairman. And America, having no combination, we have been unable to keep up the' refined price; is that the idea? 90220— X(i. .SO— 11 2 2444 AMERICAN SUGAR REFINING CO. Mr. MoTT. There is very little of a combination here. There is pretty good competition. The Chairman. Well, you have got two-thirds of the interests under your own little wing, have you not? Do you know of any European combination that has got two-thirds of the sugar industry in one organization of Europe? Mr. MoTT. I think in Germany they probably have them all. The Chairman. Suppose they were all together, would that be two-thirds of the European interests? Mr. MoTT. "Well, it is a smaller country. The Chairman. Do you know of any European combination, can you name it, that refines as many pounds of sugar, as many barrels of sugar, or that has as potent an effect on trade conditions as the American Sugar Eefining Co., of which you are a director? Mr. MoTT. I think conditions are different in other countries. The Chairman. Now, you have just said that this was because they had a combination in Eqrope, and I want to see what those combina- tions are and where they are to which you refer. Mr. MoTT. Well, they have a cartel, I believe, as they call it, in Aus- tria, for instance, which pretty well regulates prices. The Chairman. Have you any knowledge about that cartel in Austria ? Mr. MoTT. Personally I have no knowledge of it. The Chairman. Well, have you any knowledge of it which comes from reading ? Of course, you have not been over there, have you ? Mr. MoTT. I have never been on the Continent of Europe. The Chairman. Have you any knowledge as to the refining ca- pacity of all the plants in the Austrian cartel ? Mr. MoTT. No ; I have not. The Chairman. Have you any knowledge of the refining capacity of all the plants in the German cartel ? Mr. MoTT. No ; I have not. The Chairman. Do you know to what extent the German and Austrian cartels have been curtailed in their activities by the Brus- sels convention or by the local laws in those countries since the Brus- sels convention ? Mr. MoTT. All I know is from my reading that in Europe they maintain a very good market at home for flieir sugar and find a market for export of their surplus. The Chairman. Could you compare the extent of combination in America and in Europe ? Can you give us any idea about that ? Mr. MoTT. About the extent of combination ? The Chairman. Yes ; in the sugar business. In other words, give us some one combination, whether it is German or Austrian, that has anything like the control of sugar refining in either Austria or Germany or England which the American Sugar Eefining Co. has in the United States of America. Mr. MotT. I think in Germany they undoubtedly have, and also in Russia. The Chairman. Well, I want to get something definite and specific, if you know. Mr. INIoiT. In Russia, for instance, we know very little of that, because it is very hard to get any facts, but the Government there The Chairman (interposing). The Government fixes the prices by law there, do they not? AMERICAN SUGAE EEFINING CO. 2445 Mr. MoTT. Yes; the Governmeiit is very paternal -n-ith reference to the sugar industry there, and they tie up a large amount of sugar which is not available except under certain conditions- a certain part for the home market and a certain part for export, and a certain part I think they call the inviolable reserve, which they hold onto. The Chaikmak. While that may be true, they regulate the price by statute and say how 'much and how little the refiner shall charge the people there ? Mr. MoTT. I do not think so. The Chaikman. You do not think they have any law in Russia fixing the price of sugar ? Mr. MoTT. They fix a price below which it shall not be sold. The Chairman. Do they not also fix a price above which it shall not be sold ? Mr. MoTT. That I am: not certain of. The Chairman. So you can not give jis any names on this propo- sition as to a sugar combination m Europe more potent than ir^ America ? Mr. MoTT. I think the combination, whatever it is, which exists in Germany is more potent. The Chairman. Could you give us any figures as to the melting capacity or production? Mr. MoTT. Their sugar is altogether beet sugar, and it is a con- tinuous process, you know, in those factories, but the German crop is two million and a half tones, a pretty large quantity. The Chairman. The American refining output is three and a quarter millions. Mr. MoTT. No ; the total consumption of sugar in this country is approaching three and a half million tons. The Chairman. Well, we import none of it, practically, do we ? Mr. MoTT. No; but that includes all of the domestic sugars, both beet and cane. The Chairjian. I understand that, but when it comes to refined sugar, we refine practically what this country uses, do we not? Mr. MoTT. Yes. The Chairman. Can you give us any more precise and specific in- formation on the subject of combinations in Germany and Austria than you have given already? Mr. MoTT. No; I can not give you any precise and particular in- formation about them. The Chairman. No figures? Mr. MoTT. No ; I think not. The Chairman. And no names? Mr. MoTT. No. The Chairman. Where do you buy most of your sugar for the American Sugar Refining Co. ? Mr. MoTT. In New York. The Chairman. On board ship New York? Mr. MoTT. No. „ . ^^ _ , . The Chairman. Delivered at your factory m New York? Mr. MoTT. No ; cost and freight from the country of production, for the most part. 24-46 AMERICAN SUGAR REFINING CO. The CiiAiEJiAX. You do not buy any of the beet sugar for your cane refineries, do you ? Mr. MoTT. You speal?: of domestic beet sugar? The Chairman. Yes. Mr. MoTT. Xo. The Chaiemax. You do not do like they do in Eurojae — one day refine beets and one day cane in the same refinery ? ]Mr. MoTT. It has been done. The Chaiejiax. But that is not the practice? Mr. ildTT. Beet sugar from Europe, of course, lias been in the l>ast imported into this country. The Chaiem.\x. You do not take American beet sugar and do it that way? Mr. MoTT. Oh, no. The CiiAiEMAx. You never have done it tliat way in this country? Mr. MdTT. Xo. The Ciiaiesfax. You get your own sugar then from Louisiana — I am speaking of your company — about two-thirds of the crop, some- thing like 200.000 tons? You get it from Cuba largely, do you not, also ? Mr. MoTT. Very largel}'. The CiiAiEjiAx. 8()!)ie from Porto Rico? Mr. Mori. Yes. The CiiAiE.-\iAx. A little from HaAvaii? ilr. ]\IoTT. Yes; a great deal from Hawaii. The CiiAiEMAx. And some from the Philippines? Mr. ^lorr. And from the Philippines. The CiiAiiiJiAN. And some from Java? Mr. ^loTT. Some from Java. The Chaibmax. And some from Europe? ]Mr. M(jiT. Yes; and many other places, too. The CiiAiEJiAx. "What other places except those? Mr. ]\l(iiT. The various West India Islands, British Guiana, Surinam, Brazil; in fact, at some time or another from almost every country in the world that produces sugar. The CiiAUiJiAx. I want tn !:n(.\v whether in addition to these countries we lia/e just named there are any other coimtries that pro- duce a considerable amount of sugar that we buy? ?.lr. MoTT. There are other countries that produce a great deal of sugar that has come here from time to time and may come here again. The CiiAiEJiAX. Is Peru one of them? Mr. Mo 11. Peru is one of them: not.vi^ry largely. I think their crop is I'lrifiOO tons. ]jeihapSj but most of it goes.to England. Tlie CiiAiiiJiAx. ]\lost of it goes to England? ^Ir. MoTT. Yes. The CiiAiRMAX. It i^ cane sugar, is it? ^Ir. ^loTT. Yes. The Ctiaikmax. Do yon l>now the total production of sugar in Peru ? The export is 125,000 tons. Mr. ]Morr. Their home consumption is probably very small. The Chaiemax. You could not give us the figures in detail of the production ? I\Ir. iloiT. I think not over 1.50,000 tons. AMERICAN SUGAR REFINING CO. 2447 The Chairman. Probably something like that — 150,000 tons? Mr. MoTT. Yes. The Chairman. Are the possibilities for the industry down there great, or do you know? Mr. MoTT. I really do not know anything about it. The Chairman. Let us see how you fix the price. The bulk of this sugar that you import comes from Cuba, does it not? Mr. MoTT. Yes ; we do not fix the price. The Chairman. I mean arrive at the price, to use a word that will suit you better. I presume the price is fixed by the number of buyers and things of that sort. "What price do you have to pay for raw sugar in New York? How do you arrive at the price you have to pay for raw sugar in New York ? Mr. MoTT. There are some dozen brokers and commission houses who have their offices in New York, and who represent the sellers or planters in these various sugar-producing countries or represent agents of -them in London or elsewhere. They come to us — to our office — every day, and many times a da)'. I see them in their offices and on the street, and they have what are known as firm offers of sugar from all these different places — that is, they offer me and everyone else who is a bu3'er of raw sugar what they have to put before us day by day. If we want to pay the price at which they offer we simply accept their offer and they send us the product. If we do not want to The Chairman (interposing). Is that price duty paid or not that they offer you ? Mr. MoTT. No ; that price is cost and freight. The Chairman. In other words they say, " Our price is so much, and you must pay the freight and you must pay the duty." Mr. MoTT. The freight is deducted, and we pay the freight here. The Chairman. In other words, they pay the freight ? Mr. MoTT. We pay the freight ; we deduct the freight. The Chairman. They give it back to you if you do pay it ? Mr. MoT-r. The idea is this: That, for instance, what they asked yesterday— cost and freight for sugar from Cuba— was 3] cents, basis 96 test. That means the freight is included in their price. The Chairman. They pay the freight and charge 3i cents for it ? Mr. MoTT. Yes. The Chairman. They finally pay it? Mr. MoTT. Yes; we simply adjust it in that way. The Chairman. To that 31 cents, leaving out the freight question, because even if you do pay it you get it back ; what do you pay ? Mr. MoTT. We add the Cuban duty on the 96 test, which is 1.348. The Chairman. What is that ? . i i i ^.u Mr. MoTT. That is 4.598, and to that has to be added also the marine insurance, which is somewhere between 0.3 and 0.5 per cent. It would be about li cents. In other words, the 3^ cents would be equal to 4.613 duty paid, laid down here in New \ork The Chairman. Under what circumstances is the l.b8o aaaea « Mr MoTT. Only on such sugar as pays the full duty which now. adays with the sugar that comes in free from Cuba, is relatively a very small part; so that practically the Cuban rate, which is 1.348, should be reckoned as the duty, and not 1.685. 2448 AMERICAN SUGAR REFINING CO. The Chairman. Here is what I have in mind on which I want enlightenment, and it seems to me you can do it better than anybody else: Are the Cubans ever able to say to the American producer of raw sugar, " If you get your raw sugar from Java or from Europe or from any other sugar-producing country except your own island possessions," which usually will not take advantage of the duty themselves, I imagine? Mr. MoTT. No, sir. The Chairman. They want to get under it and do add it? Mr. MoTT. They get it always. The Chairman. Cuba says, "You must pay 1.685 to get this outside sugar, and therefore we demand that much more for it." Does that ever happen? Mr. MoTT. They could always get it if they could handle their crop as Europe does its beet crops, for instance. The Chairman. The Cuban reciprocity agreement went into effect January 1, 1904, and they have gotten the benefit of it since that time, or have the American consumers gotten it? Mr. MoTT. In the main the American consumer has got it. Of Course, there have been periods when the Cuban price has had the advantage. The Chairman. Sometimes one would get it and sometimes the other? Mr. MoTT. For instance, when the bulk of the Cuban crop has been marketed — in other words, when they have not a great deal of it left, comparatively — it may be a good deal in tons, like to-day, when they may have 250,000 tons — they may be well able to hold onto that sugar and they can demand the full equivalent price at which other sugars could be bought. The Chairman. I want to illustrate that principle. You say that yesterday they asked 3 J cents ? Mr. MoTT. Yes. The Chairman. In that 3.25 was any higher price asked for Cuban sugar on account of the fact it paid a smaller duty? Mr. MoTT. Decidedly. The Chairman. Yesterday, if you had been buying sugar from Java, was there any here? Mr. MoTT. There are sugars on the way from Java that will not arrive here before September or October. The Chairman. Are there any sugars from any full duty paying country here now offering for sale ? Mr. MoTT. Yes, sir; there is a little from time to time. I think yesterday there was some Surinam sugar. The Chairman. Yesterday, if you liad started to buy that sugar, what would have been their price — 3.25 ? Mr. MoTT. No; their price would be exactly the same as the 3.25 and the Cuban duty figures. Their sugar would be 4.613 less 1.685. The Chairman. Yesterday the Cuban planters were getting the full 20 per cent reduction instead of the consumer getting it ? Mr. MoTT. They are getting part of it. They always have that much to give away if they want a difference between the 1.348 and the 1.685. The Chairman. They did not give it away yesterday according to what you say. did they ? AMERICAN SUGAR REPINING CO. 2449 Mr. MoTT. They have raised their price on the general advance in the markets of the world. The Chairman. They have advanced that much more, as they are able to advance on account of their lower duty ? Mr. MoTT. Yes ; their price of 3 cents, of course, gives them the benefit The Chairman (interposing) . The Surinam price would have been 3.25 less the difference in duty ? Mr. MoTT. Yes; in other words, they would only have to get about 2.93, cost and freight, for their sugar against 3.25 which the Cuban people got. The Chairman. So on yesterday the amount of duty on raw sugar that we are buying is 1.685 ? Mr. MoTT. Yes, sir, always so ; it must be always so. The Chairman. In other words, do you always have to add the 1.685 when you buy raw sugars? In determining what the actual price is that you pay for raw sugars, is the real basis of the duty addition 1.685 or 1.348? Mr. MoTT. The full duty paying countries have got to make their price exactly come to what the Cuban price is. , The Chairman. Let us take it the other way. In other words, the Cuban people can add the duty .to their price, can they not ? Mr. ]\^OTT. Yes. The Chairman. That is what they did do yesterday, according to what you say? Mr. MoTT. Yes. The Chairman. In other words, Cuba has got, or was getting yesterday, coming to them 3.25, and these other people 2.93? Mr. MoTT. Yes, that is it exactl;^ — that is, about the difference between the duties. It should be exactly the difference. The Chairman. On what basis is the price of raw sugar deter- mined ? Is it the in-bond price plus the duty ? Mr. MoTT. Yes. The Chairman. Which duty, the 1.685 or the 1.348? You say the Cuban price is the same as the Surinam price to you. Mr. MoTT. In result it is, yes. Suppose they sell their sugars duty paid instead of in-bond, they would be absolutely the same price. For instance, if Cuba, at 3.25, cost and freight, figures 4.61, Porto Eico sugars of the same quality would sell for 4.61 and Surinam sugars of the same quality would sell for 4.61 to anyone else. You can not buy one sugar cheaper than you can another. The Chairman. What I want to know is whether the Cuban sugar goes up to meet the other, or whether the other sugar comes down to meet the Cuban sugar ? Mr. MoTT. I should say the full duty paying sugar comes down on the other, because the Cuban sugar is the larger part of the supply and more likely to make the price. The Chairman. In other words, you think they make the price, the Cuban sugars ? Mr. MoTT. I think so. , . , t -i xi. The Chairman. And for that reason you think ordinarily the 1.348 is a proper tariff that we are paying? Mr. MoTT. Surely. We should not say 1.685, because we pay it on such a very small proportion, and at the tail end of the year. 2450 AMERICAN SUGAR REFINING CO. The Chairman. '\Aliile we do not actually pay it, it looks to me like they get it anyhow, from your illustration. Mr. MoTT. ^A^lo gets it? The Chairjian. Cuba gets it in figuring the price the Cuban planter gets. Mr. MoTT. Yes, because the price of sugar of the world is made, not by Cuba, even though it ships to this country; it is made by the price of ftS analysis beet sugar from the port of Hamburg as quoted in London by shillings and pounds for 112 pounds. The' Chairman. That is very interesting. Could you give us about what the world's j^rice was at Hamburg yesterday ? Mr. jNIott. The world's price was a fraction below 13 shillings. The Ciiairjian. Eeduce it to American equivalent, like you have been figuring there. Mr. MoTT. It is about 4. .IT. The Chatrjian. That is refined sugar? Mr. jNIott. Xo, that is raw sugar; 88 net analysis beet sugar, first running beet sugar. The Chairman. Is that equivalent to 96 degree test here? ^ Mr. MoTT. No. Mr. Crawford. You are not counting the duty in, are you? Mr. MoTT. Oh, of course. The Chairman. I mean to leave out the duty. I want the Ham- burg price of yesterday. Mr. MoTT. The Hamburg price was 2.86 f. o. b. The CiiAimiAN. The Sherman sugar then got the world's price yesterday, did it not ? They added 7 points to that 2.86 and got 2.93. Mr. MoTT. Yes. The Chairman. How much dilTereoce is there between 88 degree sugar and our 96 degree test? Mr. MoTT. It is generally figured about -^j^ of a cent in this country. In London they do not make any such difference. They pay very little more for 96 cane than they do for 88. It is 6 instead of 18. ■ Tlie CnAiKjrAN. It is 18 points here? Mr. MoTT. That is what it is usually figured. The CiiAiK.MAN. So it seems the price of cane yesterday by the Cubans and tliese "Surinam people — the Cuban price was somewhat above the world's price, but the beet price was a little under the world's jjrice, was it not? Mr. MoTT. Just a little. > The Chairman. The Dutch price was nearly up to the world's price, e\ en allowing for difference in grade and for cost of transpor- tation — no, I believe they pay that anyhow ? Mr. MoTT. Yes. The Chairman. 2.93 is pretty near the world's price? ilr. jNIott. Yes. You see the beet figures at 2.86. The Chairman. And 2.93 they got here for this Dutch sugar yes- terday i Mr. MoTT. Yes. Mr. Crawford. That is not the insurance? ]\lr. iSIoTT. That is very small. The Chairman. They got substantially the world's price? Mr. MoTT. Yes. AMEEICAN SUGAE REFINING CO. 2451 The Chaiejiax. Then on yesterday the Cubans got the benefit of the full 20 per cent, did they not ? Mr. MoTT. Yes. The Chaiemaj^. Therefore the two figures to add on yesterday would have been the full duty of 1.682— the cost to the refinery and finally to the American consumer being iust the same Mr. Morr. Yes. The Chairman. When you pay the duty, you get it back out of the consumer of refined sugar, do you not ? Mr. MoTT. The consumer pays it ; certainly. Mr. Hinds. That is due to a shortage in Ciiba, is it? The Chairman. What is the cause of that ? Why were the Cubans able yesterday to get all the duty, when yon say tliey do not always doit? ■ ' • ■ ■^ Mr MoTT. They have got a very small quantity, comparatively. left of their crop. The CiiAiRjiAN. In other words, the Cuban crop has been pretty well marketed? Mr. MoTT. It is held in strong hands. The CiiAiRMAN. And they are ^ble to take advantage of the market and to get the deduction that Cuba got in this treaty? Mr. Mo'iT. Yes, sir. The Chairman. Mr. Mott, is it your judgment that the duty on sugar adds to the cost that the consumer of sugar pays for refined sugar ? Mr. Mott. Surely. The Chairman. To what extent? Mr. Mott. The full extent, I should say. The Chairman. The full extent of the duty? Mr. Mott. Yes. The CiiAutJiAN. Do you believe that if they made free sugar it would be as much cheaper to the consuni'er as the duty is? Mr. Mcrr. I think it was. The Chairman. Which rate would it reduce, the 1.C85 or the 1.348? I mean would it be 1.G85 cheaper or would it be 1.348 cheaper, or would, it be 1.90 chieaper? Mr. Mott. It would depend entirely on the market price of the world. The Chairman. I understand that, but even if we had free sugar to-morrow, and sugar day after to-morrow went up, it 23robably would have gone up still more if it had not been for the removal of the duty, would it not ? Mr. Mott. The duty being a fixed amount, I do not see why that should affect it. Perhaps I do not catch your question. The Chairman. Probably you do not. Suppose to-day we have a duty on sugar of 2 cents a pound — taking that for illustration. To-morrow we wipe out the duty entirely, and day after to-morrow, on account of crop shortages or world conditions, the laws of supply and demand, and the great laws of trade, sugar goes up 3 cents a pound. The probabilities are it would have gone up 5 cents if we had not wiped out the duty? Mr. Mott. The 2 cents a pound would surely be included. The Chairman. In other words, it is a question of reduction, whether we appear to get it or not ? 2452 AMERICAN SUGAR BEFINING CO. Mr. MoTT. Surely. You can not control the laws of trade. The Chairman. And in spite of the tariff, that will operate ? Mr. MoTT. Absolutely. The Chaikman. Whether your tariff is sky-high or does not exist Ht all? Mr. MoTT. Yes, indeed. The Chairman. Are you pretty familiar with the world's produc- tion of sugar ? Mr. MoTT. Yes. The Chairman. What is the present world's production of sugar, about ? Mr. MoTT. Well, to take in everything, it is probably 17,000,000 or 18,000,000 tons. That includes some very large productions in British India which is frequently not taken into the statistics, because it js almost all consumed there. The Chairman. What is made over there? Mr. MoTT. In what respect ? The Chairman. From what is the sugar made there ? Mr. MoTT. Both from cane and from palm. The Chairman. You say the ordinary statistics do not include that sugar, because that enters entirely into local consumption ? Mr. MoTT. No. I have seen different estimates of what is made there, and it is consumed all there, and probably there is no record kept of it. The Chairman. Taking the authentic figures or the nearest we can that are authoritative, what are the figures, leaving out for the moment that Indian production? Mr. MoTT. Some 14,000,000 or 15,000,000 tons. The Chairman. How is that divided between cane and beet ? Mr. MoTT. The beet of Europe now is about 8,000,000 and the rest of it is cane. The Chairman. We have some beets here in America. You counted that in with the European beets? Mr. MoTT. No; you will have to add that. There are about 450,000 to 500,000 tons of domestic American beets. The Chairman. Are there any other beet sugars except in Europe and America that you know of — any considerable supply.? Mr. Morr. No. The culture of the beet has been attempted and is being attempted in a great many countries, but I think it has not made any very great headway except on the continent of Europe. The Chairman. And in this country? Mr. MoTT. In this country, of course. The Chairman. Where is cane grown? Where is this cane sugar produced which is practically half of it? Mr. MoTT. In all the countries. It is grown in all the West In- dian Islands, more or less — British and French and Dutch and Spanish. It is grown in South America, in a number of countries. It is grown in Mexico, and it is grown in Asia and Java and the Philippines, and so on. The Chairman. In other words, in tropical countries? Mr. MoTT. Formosa — that is an island, a Japanese dependency — has gone into cane and is growing to a very large extent and is going to be a factor. The Chairman. It is adapted to a tropical climate and soil? AMERICAN SUGAR REFINING CO. 2453 Mr. MoTT. It is. The Chairman. Have you visited Louisiana ? Mr. MoTT. I have never had that pleasure. The Chairman. Have you been in Cuba? Mr. MoTT. I never have. The Chairman. You could not give us any information as to whether Louisiana is adapted in climate and soil to the cultivation of cane sugar, in comparison with more tropical lands ? Mr. MoTT. I should say it was not. The Chairman. Why? Mr. MoTT. Because the climatic conditions make it an exotic. It is not a natural crop there, at any rate. It is liable to be destroyed by frost. It has been to a great extent sometimes. The Chairman. Is there any refined sugar exported from this country ? Mr. MoTT. Yes. The Chairman. Where to? Mr. MoTT. To South American and Central American and West Indian places, and last year we exported a large amount of American granulated sugar to Great Britain. The Chairman. Can you give me substantially the amount you exported last year to Great Britain ? Itir. MoTT. I think somewhere between 50,000 and 75,000 tons — 50,000 anyway. The Chairman. At. least 50,000, and possibly as high as 75,000 tons? Mr. MoTT. Yes. The Chairman. What would your exportations to other countries than Great Britain amount to, in round numbers, last year? Mr. MoTT. It is not a very large amount. The Chairman. Would it be half that? Mr. MoTT. No. The Chairman. Ten thousand tons, do you reckon? Give us an estimate in round numbers. Mr. MoTT. I think 10,000 tons would very likely cover it. The Chairman. Everything except Great Britain last year? Mr. MoTT. Yes. . The Chairman. That is just the American Sugar Refining Co. you are giving us, as I understand it ? . Mr. MoTT. Yes. When I speak of export to Great Britain, 1 think I was including what the others have done when I said 76,000. The Chairman. Do you think the American would be as high as 50,000? Mr. MoTT. I think so. -,. , no The Chairman. And probably 75,000, including them all i Mr. MoTT. I think so. The Chairman. You say the conditions were unusual. What were the conditions that led to that ? Mr MoTT A short beet crop in Europe. The Chairman. If there is another short beet crop m Europe, you may repeat that performance even on a larger scale this next year? Mr MoTT. They have already had a crop since then that has been a very large one, a bumper crop. I am speaking of the early part of 2454 AMEKICAN SUGAE REFINING CO. this last year. It is more than a year ago now, and after that they marketed a bumper crop, the biggest the people ever made. The Chairman. That might hold them up for a year or more? 'Sh. :SimT. Except that they look forward to a very short crop again now. It is constantly changing, this sugar situation. The Chairman. When you export to England, you sell f. o. b. London about 3.60, do you not? Mr. MoTT. I think that is something like it. Tlie Chairman. And you get how much drawback? Mr. MoTT. I have forgotten what the drawback is. It differs whether it is based on the Cuban duty or the whole duty. Tlie CiiAiRjiAN. It is 09 per cent of what you paid on raw sugar? 'Sir. 'SloTT. Yes. In other words, if this sugar exported was made out of the Cuban .sugar, vshich most likely it was. the Government retained 1 per cent for the cost. The Chairman. The Government was returning back to vou prac- tically 1.348? Mr. ^foTT. Yes ; it is figured out on that basis. The Chairiman. You were getting 3.60, so that netted you about 5 cents t ]\Ir. iloTi'. That is approximately right. The CiiAiR^.iAN. A\l"iich was approximately near the American price? Mr. Mutt. Yes. The Chairman. My colleague suggests I ask this question: Whether or not the drop in sugar has been facilitated by the Payne tariff bill, either in administrative features or in any other way? Air. ]\Io'rr. Whether it has been facilitated? Mr. Hinds, ilade easier and less cumbersome and complicated? jNIi-. ^h)TT. I am not aware of it. The Chairman. You have not seen any change since the Payne law went into effect? Mr. MoTT. No; I think not. The Chair:man. It is the same way now as it has always been? Mr. MoTT. I think so; yes. The Chairman. Is it fairly easy or is it complicated and difficult? What about that ? j\Ir. ^loTT. I think there is considerable difficulty about it. The Chairman. In what respect '. Mr. MoTT. Very particidarly when it is applied to sirups. The Chairman. Is it less difficult when applied to sugar? Mr. ]MoTT. I think so. The Chairjian. When it comes to sugar alone, is it very difficult njid cumbersome to get a drawback or not? 'Sir. jIoti. You mean in collection from the Government? The CiiAUiMAN. Yes. Mr. Mott. There is no difficulty. The Chairman. I mean the business operation by which you turn that claim into money. jNlr. Mott. I think there is no particular difficulty about it. We have to carry the drawback until we collect it from the Government. You have to give them back proof that the exported article has been landed in the country to which it went. AMERICAN SUGAR REFIKING CO. 2455 The Chaihjiax. Let me see if I catch the proposition. You would show where you paid the revenue on the raw sugar « Mr. MoTT. Yes. The Chairman. And prove by some of your employees that that particular sugar was manufactured into this sugar which vou finally export ? '' •' Mr. MoTT. Yes. The Chairman. And show the bills or invoices for it« Mr. MoTT. Yes. The Chairman. And then that would make your case ? Mr. MoTT. Xo; more than that. You have to return, duly certified before a United States consular officer, a certificate sworn to by the captain and mates of the vessel that landed it, that they landed it there. The Chairman. That is one of the details of proof showing you really paid the duty ? Mr. MoTT. And that it really went out of the country and was not brought back again ; that it was really landed. The Chairman. Some one of this committee suggested that this process was so difficult and expensive that it cost more than you got back out of it when you tried to get a drawback. Mr. Crawford. Mr. Claus A. Spreckels suggested that. Mr. MoTT. If that \vere so, we c(!uld not do any export business. The Chairman. If it cost any considerable amount you could not afford to do it ? , Mr. jMoit. It can not be so. AVe would not, usually speaking — I do not say there might not be exceptions, but usually speaking we would tot sell sugar for export unless we got as good a price there as we get here. • The Chairman. And at the price you sold in England last year,, you would have to get practically the entire drawback to make it up ? Mr. MoTT. Undoubtedly. Mr. Garrett. What I understood Mr. Spreckels to say was that where the sugar was carried in the manufacture of other products, to follow it all the way through was difficult and complicated — where it went into a glass of jelly or jam or something of that sort, it would become quite complicated. Mr. Mo'iT. That is another matter. It may get so far away from the original source that you could not trace it at all, but I think that does not apply to any very large industry. The Chairman. Gentlemen, I believe that concludes the examina- tion of the witness so far as I am concerned. , Mr. Madison. Suggestion was made to me to ask whether the cul- ture of beets has made any headway in England. I understand it has not done so. Do you know why ? Mr. Moi'T. England is a very small country. I really do not know very much about it. What I give you is only my own idea about it. It is a small country and I suppose it is perhaps difficult to get farmers to grow a crop of beets as an experiment. They would probably rather raise hay or corn or oats or something or other of that sort. Mr. Madison. It is not a profitable crop for them. 2456 AMERICAN SUGAR EEFINIXG CO. Jlr. 3,IoTT. And possibly the great moisture in the English climate generally made against it. I do not know. I am not sufficiently versed in that to state. Mr. Madison. Mr. Mott, did the Louisiana planters at any time attempt to contract with you or with the American Sugar Refining Co. for practically their entire product ? Mr. MoTT. No, I think not — up to the present time. Mr. Madison. Was there not a time when an association of Louisi- ana planters attempted to contract with you for practically the entire product of their association? Mr. MoTT. I do not remember such a thing. There are a good many sellers down there. The details of those contracts are made or handled in New Orleans. We do not have those contracts come up here. I know about the terms and conditions. I know we pay them five days after they deliver the goods, and so on ; but I think there are a considerable number of sellers there. I have heard of efforts to bring about a combination of the planters there, but so far I have not seen any results. Mr. Madison. Then, do you testify, as a matter of fact, so far as your purchases of raw sugar are concerned, that you purchase from the individual planter and only for his present-day output? Mr. MoTT. Oh, no — ^how do you mean — his from-day-to-day out- put? Mr. Madison. What he has to offer for the time being ; that is, you do not contract ahead for two or three years. Mr. MoTT. Oh, no ; but we do contract for a season. They want to do it. They insist on our taking it. They will not sell part of it. They want us to contract for the whole crop of one season, but never beyond that. Mr. Madison. Then you make a contract with the individual planter to take all of his output for the current year ? Mr. MoTT. The current crop, yes. I do not mean to say all con- tracts are so, but a very large majority of them, I think, are contracts for the entire crop of the planter. Mr. Madison. In other words, assuming I were a large sugar planter in Louisiana, I could go to you and offer to sell to you all of my output for the current year. Mr. Morr. Surely. Mr. JIadison. And you would buy it? Mr. Mott. Yes, sir. , Mr. Madison. Paying me what? Mr. MoTT. Paying you such price as agreed upon by the buyer and seller. It might be a fixed price, although that is doubtful, because on the delivery of such a contract extending over so long a period of time, nobody could tell what the price was. To begin with, the seller would not be satisfied with a fixed price. He wants to take advantage of the possible advances in the market. Mr. Madison. What is the custom then? Do you pay usually a fixed price — that is, you contract in advance that you will pay so much a pound for the sugar when it is delivered, or that you will pay the market price at the time the sugar is delivered? What is your general custom in that respect? Mr. Moi-T. We pay the New York price at the time the goods are delivered to us, less whatever allowance has been agreed upon. AMEBICAN SUGAR REFINING CO. 2457 Mr. Madison. Why is any allowance or deduction made « Mr. MoTT. I tried to explain that before. Mr. Madison. State it briefly again. Possibly I did not catch it. Mr. MoTT. In the first place, we have to receive the sugar a great deal faster than we can melt and market it, and consequently we have to take upon ourselves all the risks of market declines, to say noth- ing of the storage and interest and whatever deterioration and shrinkage there may be in the goods. As I say Mr. Madison (interposing). That is sufficient. As I understand you, when the sugar is going on to the market in great quantities, you buy it at the current price and then store the sugar and later melt it and put it on the market ? Mr. MoTT. Yes. Mr. Madison. Supposing a large quantity of sugar is coming in during the Cuban sale of sugar, and you buy Mr. Mott (interposing). In Louisiana? Mr. Madison. No, I am away from that for the time being. As- suming a large quantity of sugar is coming in, and there are many cargoes being offered, in that event of course the price of raw sugar goes down. Mr. MoTT. It is entirely a matter of the necessities of both buyer and seller; in other words, supply and demand. Mr. Madison. And the price of raw sugar goes down ? Mr. Mott. If there are Mr. Madison (interposing). You take that sugar and put it in storage, do you not? Mr. MoTT. Or the owner of the sugar puts it in storage. Mr. Madison. Assuming that you buy it because there are large quantities offered, and you buy it at a low price, you take it and put it in storage ? Mr. MoTT. Yes. Mr. Madison. The raw sugar? Mr. Mott. Yes. Mr. Madison. And hold it until you can refine it and put it on the market ? Mr. Mott. Yes. Mr. Madison. Of course, when it comes to putting it on the market as refined sugar, you put it on at the current price? Mr. Mott. Yes. Mr. Madison. Then very often you buy a large quantity of sugar at a low price and put it on the market at a time when there is a scarcity of raw sugar, and you make a considerable profit in that transaction, do you not? Mr. Mott. That might very well be. Mr. Madison. That is correct, is it not, as a matter of natural order? Mr. Mott. I think it is. .^ . ^t. a • q t? « Mr Madison. So that it is true that the American Sugar Kehn- ing Co is the one that obtains the benefit largely from the low price of sugar caused by large quantities of sugar coming on to the market during the time when the raw sugar is being marketed ? Mr Mott You have to take the average cost of your purchases. You can not take any particular lots that may be bought at a lower 2458 AMERICAN SUGAK REFINING CO. price and stored. Besides, the mere fact of storing and carrying adds to the cost of that. In other words, you might perhaps buy to much better advantage a month or two later and pay a higher price, because j'ou have eaten up your benefit in the expenses. Mr. ^Madisox. Do you undertake to say all the benefit is eaten up ? Mr. MoTT. It is a very expensive process to store and carry raw sugar. ilr. Madison. Yes; but do you undertake to say, as a matter of fact, that all the benefit is eaten up ? Mr. MoTT. I think it undoubtedly is in many cases. Mr. Madison. Is it not a fact that as a general proposition it is not, and that, as stated by you a moment ago, 3'ou make a considerable profit by reason of the fact you are able to buy at a low price, when the sugar is being rushed on to the market by the planter, storing and holding it over until a better price can be obtained. Mr. Mott. No; because the price for the refined is based on the market ]5rice prevailing at a given date. If the nuirket declined the price of refined sugar would decline with it. Mr. Madison. 'I'es; but at that particular time .you sell only the amount of raw sugar that is demanded by the needs of the market at that time, do you not? Mr. Mott. That is all that can be sold at any time. Ml'. jNIadison. Certainly; that follows as a matter of course. Hav- ing purchased a large amount of sugar and stored it, and having jour- chased at a low price and carried it to the time when you can get a considerable price for it. when the market is at the top price, you make by reason of that transaction, do you not? Mr. Mott. You have to take the average cost of your raws during a long period. You can not take any particular cargoes that happen to be bought cheap and say you carried them for three months and melted them when the market was higher, and that you made that much on the projDosition. Those jDarticular cargoes may show that profit, but you have to take the average cost of your raws from week to week and from month to month. Mr. Madison. True ; but is it not a fact that during the time refined sugar is high, and at the same time raw sugar is high, there is but very little raw sugar on the marl;et and your purchases are small, and for tlie purpose of your meltings, you are drawing from the sugar you haxo stored — that you purchased during the time the market \\'as low ? Mr. Mott. That is so at times. Of course, it all dejDends upon the market fluctuations. AVe may have stored them when the market was low, and it turns out to have been high, and that we could have bought a good deal cheaper afterwards. AVe have to run those risks. Mr. Maimson. I was interested in the statement that has been made here that the consumer gets the benefit of the low price that you pay for this sugar when it is being rnshed onto the market, by reason of the fact that the planter must, like everybody else who produces agri- cultural products, sell largely at the time of harvest, if you please; and it struck me that at that time you take the sugar at the low price and store it and afterwards refine it and sell it at the higher price, or a large quantity of it at the higher price, when sugar went up. AMEEIGAN SUGAK KEFINING CO. 2459 Mr. MoTT. We have to carry large supplies of sugar for our stocks, and we have not the capacity at our refineries to carry it. We have to carry sugars in store all the time, you might say Mr. Madison (interposing). In order to meet demands of your trade ? Mr. MoTT. So as to have a sufficient stock not to be forced on the market. Mr. Madison. But the situation is simply this, that the man who has the capital and who can buy when the product is low and hold it until it is high is the man who makes the money. There is no crit- icism involved in that proposition. It is simply a natural and ordi- nary proposition of the trade. Mr. MoTT. But that is really speculation. The man has to judge and know when the price is low. He may be wrong about that. In other words, I think the men with the smaller capital and the smaller business, and who have not got to take these chances, are probably a good deal better off. Mr. Madison. That is a matter of opinion. Mr. MoTT. He does not make the big losses that the bigger man has to often take. Mr. Madison. That is a matter of opinion, perhaps. Mr. MoTT. Take this Louisiana situation, for instance. I have known sugar we have bought there to decline in value, or, in other words, we could supply their sugar there. It has been known to de- cline half a cent a pound between the first of December and the mid- dle of January, say. Mr. Madison. Yes ; but there ultimately comes the time when the sugar does go up. Mr. MoTT. Oh, but that does not make the difference. You buy your sugar on the market. If you are carrying sugars for which you paid 4^ cents a pound, and if the market goes down and you could buy them at 4 cents, you have lost half a cent. Mr. Madison. But suppose the time of scarcity comes, when it goes up to 5 cents, then you are a winner. If you are the fellow who has the sugar and is holding it in storage, you are the winner. Mr. Mott. We aim not to speculate, but to keep a proper supply. Mr. Madison. I do not say you speculate. I can see, or I think I can, where in an economic sense there is a benefit to a certain degree — whether counterbalanced by disadvantages is a matter merely to be weighed and determined. But there may be a benefit. I can see where there can be a benefit from there being in the sugar refining business a large institution, with great capital, that can take the raw sugar as it comes onto the market and store it and hold it against the time when there will be no raw sugar coming onto the market, and then letting it out to the trade as the trade needs it. I am not criticizing that. 1,^111 Mr. MoTT. It is a great benefit to the producer and to the seller, undoubtedly, that there is such. , , _ , , , ^ ^^ Mr. Madison. Take the same old Cuban planter and Hawaiian planter and the Louisiana planter, and it is difficult for him to store his product and hold it. 99220— No. 30—11 3 2460 AMERICAN SUGAR REFINING CO. Mr. MoTT. It is, but- Mr. Madison (interposing). It is a benefit to him to have some one who has large capital who can take the sugar at that time and store it and hold it. Mr. MoTT. Decidedly. Mr. Madison. Some one to sell to at that time ? Mr. MoTT. Decidedly. Mr. Madison. I can realize that. Of course, it is probable at that time, when they are all offering to sell, when they are competing with each other, that very naturally you would buy that sugar at as low a price as you can. That is natural. Mr. MoiT. I think so. Mr. Madison. Having bought the large quantity, the great bulk of your sugar, at a low price ; having the capital to store it and to hold it and refine it as the demands of the trade are made upon it, you are able to make a profit out of the fact that you have the capital to buy when it is low and hold until the time comes when it is higher. It seems to me that a frank answer to that proposition would be yes, that you had. Mr. MoTT. Yes; always provided you can ^iiess right. Mr. Madison. And as a matter of fact, isn't it through a long series of years a fact that it has been a profitable proposition to the American Sugar Refining Co. and that is the reason why they have done that? Mr. MoTT. I think it is. Mr. Madison. They are the people who have won by reason of that sort of transaction ? I wanted to bring out at that point that proposition, because as a fact we have been told here that it was the American consumer who got the benefit, and I think that is true at the time that the sugars are coming onto the market, but later the sugar wliich you buy and store — I doubt whether the American consumer gets a profit there. It would naturally go to the man who had capital and had invested it and was able to hold it and let it go at a time when the better price became. There are one or two other matters and then I will close. The American Sugar Refining Co., I see, bouglit the Union Pacific Tea Co. Do you know anything about that ? Mr. MoTT. I have heard of the Union Pacific Tea Co. I do not know that I know anything of the purchase. Mr. Madison. You know as a matter of fact that in addition to going into the coffee business and into the cooperage business and into the lighterage business, in a sense, and being interested in rail- roads at different places, the American Sugar Refining Co. actually went into the tea business and bought out the Union Pacific Tea Co. Did you not know that? Mr. MoTT. I do not know that they bought it. I believe they had some interest in some concern, some concern that failed or some- thing. I think that was the reason for their getting into it. Mr. Madison. They did get into it? Mr. Mott. However, you are right. Mr. Madison. And put that business on its feet and actually en- faged in the sale of tea through its subsidiary company, the Union 'acific Tea Co., did it not? AMERICAN SUGAR KBFINING CO. 2461 _ Mr. Mo'i'r. I do not know anything about the sale of tea. It was for the selling of refined sugar, I should imagine. Mr. Madison. The Union Pacific Tea Co. was in the tea business? Mr. MoTT. I suppose they sold tea as well as other things. Mr. Madison. And had tea houses located all over the country had they not? ' Mr. MoTT. I only have heard of it. I believe they had a number of shops. Mr. Madison. I see on page 144 of the minutes of the executive committee an interesting statement — and I will ask this question because I think you are the first person connected with the company that has come on the stand since I have found this — I want you to explain this if you can and tell us about it. On Tuesday, December 15, 1903, this proceeding seems to have taken place: On motion, the officers of the company were authorized to execute the agree- ment with the Sugar Syndicate of Mexico, which was presented by the president and which had been drawn by the counsel of the company. Do you know anything about that? Mr. Mott. I was not a director at that time, but I think I can explain what that was. Some gentlemen came up here from Mexico, where they had accumulated a large surplus of sugar. They had it tied up. I think it was nearly 100,000 tons. They had it tied up in warehouses there. They had borrowed money on it, probably. Mr. CEAwroiiD. Raw or refined? Mr. MoTT. Both. They came up to New York with a view of see- ing if they could not realize on it. They came to us. They had an interview with Mr. Havemeyer, which, I think, T knew of. Isothing came of it, however. Their sugars Avere disposed of elsewhere; I think largely in Great Britain. Mr. Madison. It says here he was authorized to execute the agree- ment? Mr. MoTT. So he was, undoubtedly, because these people came and thought they were going to undoubtedly sell us this sugar, and that we were to advance them all or a large part of the money they re- quired, but it fell through. Mr. Madison. In any event, it was only one transaction? Mr. MoTT. Yes ; and it fell through. Mr. Madison. It was not any general agreement? Mr. MoTT. No, sir; I remember the man's name— a man by the name of McManus, I think. Mr. Madison. Do you know anything about the Hawaiian contract for the purchase of sugar? Mr. Mott. Yes. Mr. Madison. You had to do with that by reason of the fact you were the purchaser of the raw sugar? Mr. Mott. Yes. Mr. Madison. You made contracts with the Hawaiians for their output for three years at a time, did you not? Mr. Mott. That was the contract. Mr. Madison. For three years at a fime? Mr. Mott. Yes. 2462 AMERICAN SUGAR REFINING CO. Mr. Madisox. What was the substance of that contract ? Just give it briefly. On what terms did yon take their sugar for three years? Mr. MoTT. We took their sugar as they shipped it from Hawaii, as rapidly as they shipped it from Hawaii, at a price based on the price ruling at New York the day before the arrival of the sugar. Mr. Madison. Less any amount? Mr. Mott. Yes. Mr. Madison. Less how much ? Mr. Mott. One-tenth of a cent a pound. Mr. Madison. That allowance was made for what purpose? Mr. Mott. For the purpose of making the contract. The allow- ance was made, I suppose, in consideration of making such a large contract and taking all the risks that were involved, and besides that the sugar made in Hawaii is not of as good a quality as other cane sugars — that is, it is not of as good quality for refining purposes however it may be in test. Mr. Madison. I notice it is in the minutes of this executive com- mittee as follows : On motion, the president was authorized to allow a special trade discount of 1 per cent on sales of refined sugar at his discretion and to such parties as he may select. That was in September, 1900. Do you know anything about that ? Mr. Mott. I was not a director then. I explained that Mexican matter because I did happen to have some knowledge of what that was. Mr. Madison. You do not know anything, then, about him being authorized to allow a special trade discount of 1 per cent to whoever he might select ? Mr. Mott. I do not. Mr. Madison. Is it not a fact that the president did dictate to you as to the price you should pay for raw sugar, and that your company, by reason of being the principal purchaser of this country, did fix the price at which raw sugar should be sold in this country and at which it was sold? Mr. Mott. No ; neither of those propositions is correct. Mr. ^Iadison. There were some very interesting things in these minutes of the executive committee which seem to indicate that at least they thought he could. Here is one with regard to refined sugar : On motion the inrsident wns authorized to revise tlie selling price of refined sugar, 18 cents per 100 pounds, to commence ou August 17, 1899. He is also authorized, in liis di)=cretiou, to enter into business relations with the trade, and in such manner as shall appear to him best for the interest of the company. Then there were others in which he was instructed to fix or name a price for raw sugar, and the intimation that is made here or the language that is used indicates the feeling that they were in fact fixing the ruling price. I want to ask you if you understood that by reason of the dominating position which your company held in the sugar business of the country, that price which you would offer would be in fact the ruling price for raw sugar? Mr. Mott. It would not be. Mr. Madison. How is that? ^Ir. Mott. Undoubtedly, that is not so. AMEKICAN SUGAK REFINING 00. 2463 Mr. Madison. You did not have such a position that you could do anything of that kind ? Mr. Morr. I should have been invaluable if I could have done it, and would be to-day if I could accomplish such a thing. Mr. Madison. I am simply asking the question. Mr. MoTT. There are many buyers. The brokers and commission houses are certainly very careful to see that they have gone to every possible buyer. In fact, while I do not think any of them do anything that is not honorable, it is only human that they probably try very hard to find out what we will pay, and go to other people to see if they can not better it. It is all trading. A man has something to sell and he asks a little more than he is willing to take. The man that wants to buy generally offers a little less than he is willing to give,_ and between the two some sort of a compromise is arrived at. I think that is the basis of all buying and selling transactions. I know of no instance where I could take any seller or sellers by the throat and say, " You have to make a contract with us on our terms." On the contrary, in my experience — and I have had quite sc large one — the seller usually imposes his terms on the buyer. That is my experience. Mr. Madison. Another very interesting thing I have learned on reading the minutes of the executive committee and also of the directors has been the practice of shutting down refineries, closing that refinery here, and shutting down another there for a time, or limiting the output. Briefly, and to sum the matter up, in order not to encroach too much on the others' time, I gained the impression from reading this that you were very careful to gauge the amount of sugar that was passing on to the market, apparently for the pur- poses of maintaining your prices. As a purchaser of raw sugar, the man who purchased the raw sugar and distributed it among the different refineries, you certainly had knowledge on that subject. Tell us what about the limitation of output for the maintenance of the price. Mr. MoTT. I never knew of any such thing. I never knew of the shutting down of refineries or the limit of production in any par- ticular refinery, save for one reason, and that was that there was not demand enough to take their full output. The capacity of the sugar refineries is very largely beyond the requirements and always 'has been, I think. Mr. Madison. Another matter of some interest to me has been the character of voluntary contributions that were made by the company. They impartially contribute to labor unions and military organizations alike, as, for instance, I read from the minutes of September, 1900: On motion, a payment of $500 to the Forty-seventh Regiment, National Guard New York, for the improvement of their armory, as stated in Col. Eddy's letter to Mr. H. O. Havemeyer, of September 21, 1900, was authorized. Do you know about contributions of that kind ? Mr. MoTT. I know nothing of that one. I do not see any harm in it, though. Mr. Madison. I am not cnticizmg it. Mr. MoTT. You will find also contributions have been made to hospitals, and are to-day, probably. 2464 AMEEICAN SUGAE REFINING CO. Mr. Madison. And contributions were made to labor unions, I find, and here is an instance of such a donation where $50 was donated to the Central Federation of Labor, I think, of New Jersey, and different labor unions at different places round about New York City. Mr. MoiT. I know nothing of this particular instance that you cite, sir, but if you Imew the number of people that go to such a con- cern as we are, and doubtless to thousands and thousands of other concerns in the country, and beg for a subscription or contribution to this, that, and the other, you would not be surprised at such tri- fling things as a $50 contribution to a labor organization or $500 to the armory fund of a regiment over there. They will probably be called upon some day to protect the property. Mr. Madison. That is one of the reasons why they contributed ? Mr. MoTT. I do not know that. I just guessed it. Mr. Madison. Another thing. I notice that you had a beer con- tract each year; that each year you made a contract for beer for the different refineries? What was that and the purpose of that? Each year you made a contract with a certain brewery to furnish beer to the Havemeyer & Elder refinery and different refineries? Mr. MoTT. I believe it was the custom to furnish beer for the workmen over there. I think the custom has been abolished. I do not believe it is in effect now anywhere in our refineries. Mr. Madison. For the purpose of learning how desirable it may have been to work there, I would like to know if it was free beer? [Laughter.] Mr. Mott. I think not. Mr. Madison. It was not free beer? Mr. Mott. I think not. I have no knowledge about it, really. That would be something that would go under the control of the superintendent of refineries. There are a great many Germans em- ployed in those sugar refineries, and they are fond of beer and have been used to having it. Mr. Madison (reading) : The presidput reported .1 (■(nitriict nuide with the Paul Weediiiiiii for beer required by the Brooklyn and .Jers;'y City refineries for ye;ir ending October .5, 1904, at $4.25 per b:irrel of ,31 i gallons. Details per contract. That was made in 1903. Did you make a contract by the year for that beer? Mr. Mott. I do not know anything about it. Mr. Madison. Was it following a custom said to exist in Germany of furnishing beer to the workmen as they were engaged there? Were your men largely Germans ? Mr. Mott. I think a good percentage of them were. They cer- tainly were in the past, but not to such an extent to-day, perhaps. Mr. Madison. There are no beer contracts made now? Mr. Mott. I believe not. Mr. Madison. What are your workmen to-day, so far as national- ity is concerned ? Mr. Mott. They are largely Polacks and Bohemians, and so on. Mr. Madison. Do you furnish them with their peculiar national drink? Mr. Mott. I do not know. AMERICAN SUGAR REFINING CO. 2465 Mr. Madison. You don't know anything about that? Mr. MoTT. I do not know anything about it. They are probably better off without it. ^ c j Mr. Madison. I want to ask this question, if you have information upon it, Is the production of sugar increasing in Cuba generally I Mr. MoTT. Largely. Mr. Madison. I mean generally ? Mr. Mott. Yes, largely. Mr. Madison. Is the method of treating the cane improved '. Are improvements being made in that direction ? Mr. Mott. Constantly, I believe. Mr. Madison. And in the agricultural methods pursued also ? Mr. Mott. Undoubtedly. Mr. Madison. There is then a prospect of a very largely increasing supply of raw sugar from Cuba? Mr. Mott. A 2,000,000-ton crop is talked of for next season. It is a little early to tell about it yet, though. Mr. Madison. At the time that Cuban independence was secured, what was the total output of raw sugar from Cuba ? Mr. Mott. I do not know exactly what year that was, but the pro- duction had got down very low on account of their fighting, and so on. It got down very low, I think, to 300,000 or 400,000 tons for one year, about 1898 or 1899. Mr. Madison. Immediately previous to the war, when normal con- ditions prevailed, what was the total output in Cuba ? Mr. Mott. I think about 1,200,000 tons was the largest they had made prior to that. ■Mr. Madison. What was their average? Mr. Mott. Say around 800,000 to 1,000,000 tons. Mr. Madison. Not over a million? Mr. Mott. No ; I think not. Mr. Madison. Then it is true that if your figures are correct for this year they will have doubled their output? Mr. Mott. The coming year I spoke of. Mr. Madison. Under the impetus of reciprocal trade with this country ? Mr. Mott. Yes, sir; that is the result, I think. Increased capital- has gone in there, you know. Mr. Madison. Is there any probability that they will, in future, be able by reason of the great amount of their output, furnishing a large percentage of the sugar that we use to exact an unreasonable price from America or American refineries? Mr. Mott. I think not, because the production of sugar is going on increasing in other countries, all over the world. Mr. Madison. There is one question I want to ask you, if you have any information on it. Is the general stock of sugar in the world increasing? In other words, is the consumption of sugar greater than the supply, or otherwise? Does the world carry over a stock of sugar from one year to the other, or does it consume annually the amount of sugar produced in that year ? Mr. Mott. There always is, as a whole, a considerable stock car- ried over ; but consumption is growing very rapidly all over the world. As civilization goes into countries that have been wild and 2466 AMEEICAN SUGAB REFINING CO. unreachable, sugar goes with it, and the supply has to be increased probably to keep up with the increased consumption. Mr. Madison. At the present time you would say the production is greater than the consumption ? Mr. MoTT. Yes. Mr. Madison. But that consumption is fast catching up with the production ? Mr. MoTT. That is about the condition. Mr. Madison. That is the situation ? Mr. MoTT. That is the situation. Mr. Madison. Is Formosa increasing its output of sugar? Mr. Mott. At a very rapid rate. Mr. Madison. What about other countries? Are they increasing also? Mr. MoTT. Java, for instance, is going on increasing. Mr. Madison. Will Formosa have an added advantage because of the completion of the Panama Canal to lay down sugar in this country very cheaply ? Mr. MoTT. So far, I believe, Japan is exercising some paternal arrangement with Formosa and taking care of their sugar; but if they go on increasing they will have to find other markets, no doubt. Japan has taken the sugar from Formosa, instead of sugar from Java, as I understand it, of which they had hitherto been taking large quantities. Mr. Madison. Where is the Formosa sugar refined? Mr. MoTT. In Japan. Mr. Madison. In Japan or on the island of Formosa ? Mr. MoTT. I do ncft think it is done on the island of Formosa ? Mr. Madison. You think it is refined in Japan ? Mr. MoTT. I think so. Mr. Madison. They are as a matter of fact causing some trouble with tlse Hongkong- refineries as the result of their increased output, are they not? Mr. MoTT. I do not know of it, but I should not be surprised. Mr. Madison. Our consul so reports, my colleague (Mr. Hinds) advises me. ' That is all, Mr. Chairman. The Chairman. I have just another question or two. Do you buy raw sugar for the Western Sugar Eefining Co. ? Mr. MoTT. No, sir. The Chairman. Have you ever done it ? Mr. MoTT. I have. The Chairman. When did you do that, and for how long? Mr. MoiT. Several years ago— I can not state the exact date. At their request to me by telegraph, I think I bought them some Java sugar. The Chairman. Did you keep that up for any length of time? Mr. Mott. No. The CHAimrAN. Did not you for a number of years regularly buy for the Western Sugar Eefining Co. the raw sugar that they used ? Mr. MoTT. No, sir. The Chaiemax. Did not you regularly Ijiiy all the Java sugars they used and all except the Hawaiian sugars they used ? AMERICAN SU(JAE REPINING CO. 2467 Mr. MoTT. Xo, sir. The Chairman. Do you know a man named Horace Howard? Mr. MoTT. I do not. The Chairman. No. 90 Clay Street, San Francisco ? Mr. MoTT. I do not know him. The Chairman. He is the head office man of the Western Sugar Refining Co., is he not, or do you know ? Mr. MoTT. I do not know him. I think I have heard the name. I do not recognize the " Horace," however. The Chairman. Don't you happen to know that for quite a period of years he declined to trade with anybody in New York when it came to the purchase of raw sugars for the Western, stating that Mr. Mott, of the American, bought his sugars in New York ? Mr. MoTT. I do not know it ; no. I never heard it before. The Chairman. You did not do that except now and then ? Mr. Mott. I only recall one instance when they asked me to buy a cargo or two cargoes of Java sugar for them, or to tell them what price I could buy it for. The Chairman. Can you tell the date of that transaction? Mr. Mott. I do not have it in my mind at the moment. The Chairman. Suppose you supply that later? Did you ever buy any raw sugar for the California-Hawaiian ? Mr. MoTT. No, sir. The Chairman. Never? Mr. Mott. No, sir. The Chairman. At no period? Mr. Mott, No, sir. The Chairman. Or for Warner? Mr. Mott. No, sir. The Chairman. Or Arbuckle? Mr. Mott. No, sir. The Chairman. Or the Federal? Mr. Mott. No, sir. They have their own buyers. Mr. SuLZER. Mr. Mott, you are a director of the American Sugar Refining Co., are you not? Mr. Mott. Yes, sir. Mr. StTLZER. How long have you been a director ? Mr. Mott. Since the latter part of February, 1908. Mr. StTLZER. What is your official position with the American Sugar Refining Co. at the present time? Mr. MoTT. Buyer of raw sugar. Mr. SxTLZER. How long have you been occupying that position? Mr. MoTT. Since 1897. Mr. SuLZER. What were you before that? Mr. MoTT. I was employed in various clerical positions there. Mr. SuLZER. Were you one of the auditors? Mr. MoTT. No, sir. Mr. Stjlzer. Bookkeeper.? Mr. Mott. Not head bookkeeper. I have worked on the books. Mr. SuLZER. Who was the head bookkeeper during the time you were employed on the books ? Mr; Morr. A man by the name of Anderson. Mr SuLZER. Is he in the employ of the company now? 2468 AMERICAN StTGAE BEFINING CO. Mr. MoTT. He is not. Mr. SuLzEE. When did he leave the company? Mr. Myn'. A number of years ago — a good many years ago. Mr. SuLzEE. Are all the books and papers of the company at the office of the company in Wall Street ? Mr. MoTT. I have not charge of them. Mr. SuLZEE. I did not ask A^hether you had charge of them. I asked whether you knew as a director of the company that all the books and papers of the company are at the company's office in Wall Street? Mr. MoTT. I do not know. Mr. SuLZEB. If they ^\ ere not there, where in your opinion would they be? Mr. MoTT. A good many of the books have been taken away. There are some of them here. Here [indicating] is one of the minute books. Mr. SxTLZEB. Those are in the custody of the committee tempo- rarily. They belong to the company and came here from the com- pany's office in Wall Street. If all the books and papers of the American Sugar Kefining Co. are not at the company s office, where would they be? Mr. MoTT. I do not know. Mr. SuLZEE. You do not know? Mr. Ceawtoed. Mr. Wise has a good many of them, which he has had for several years, and will not return. Mr. SuiiZEE. I suppose we could see them ? Mr. Ceawfoed. I have no doubt he will allow you to. We would be very glad to get them back, but he will not return them. Mr. Stjlzee. The purpose of the question is to find out, so we can look over these books and papers if we desire to do so. If they were not in the possession of the company or in the possession of the Government, do you know of any other office of the company that it has where these papers and books might be kept ? Mr. MoTT. Some naturally at the refineries, I suppose, that pertain to that part of the business, and at the offices of the refineries. Mr. SuiiZEE. You keep books at the refineries, do you ? Mr. ^IiiTT. Undoubtedly ; I should think we do. Mr. SuLZEE. The records you have at the refineries regarding the production, and so forth, and pay rolls and labor accounts, and those things, are all checked up by the superintendent there, and then sent over to the main office to be tabulated and checked up and entered in the books at the main office, are they not? Mr. MoTT. I think that is the procedure ; yes, sir. Mr. SmLZEE. During Mr. Havemeyer's life you were very closely associated with him, were you not? Mr. MoTT. In a business way. jNIi'. Sulzee. And you wrote letters at his suggestion and signed H. O. Havemeyer's name " per H. C. Mott, secretary." Ml'. MoTT. Never "secretary." Mr. SuLZEE. "Per H. C. Mott." Mr. MoTT. Yes, sir. Mr. Stjlzee. You kept copies of those letters? Mr. MoTT. I should say, always. AMERICAN SUGAE REFINING CO. 2469 Mr. SuLZEE. Did you keep copies? If so, how? Bv entering them in a letter book ? ' Mr. MoTT. By copying them in a letterpress book. Mr. SuLZER. You have those letterpress books i Mr. MoTT. If they were books that pertained to Mr. Havemeyer's business they were kept in his book. Perhaps some of them may have been copied in a book of my own. Mr. SuLZER. They were letters in regard to matters in connection with the company's affairs? Mr. MoTT. No, very rarely. They were usually letters of the most formal kind ; simply, " I am directed by Mr. H. O. Havemeyer to acknowledge receipt of yours and say he is not interested in the subject," or whatever it might be. That is about the extent of the letter writing I did for him. Mr. Stjlzee. Those letters were copied in the letterpress book ''. Mr. MoTT. They were copied in the letterpress book, yes. Mr. SuLZEE. And they were in Mr. Havemej'er's possession? Mr. MoTT. They were in his possession. Mr. SuLZER. After Mr. Havemeyer died do you know whut became of them ? Mr. MoTi'. I do not. Mr. Sin:^zER. Do you know whether those books were taken by his executors or whether they were left with the company ? Mr. MoTT. I do not know ; I have no knowledge. Mr. SuLZEE. Are you quite sure, Mr. Mott, that you did not sign letters for Mr. Havemeyer, " per H. C. Mott, secretary " ? Mr. Mott. I am quite sure I never did. Mr. SiTiiZER. You just signed them, to the best of your recollection, "Per H. C. Mott"? Mr. Mott. That is all. Mr. SuLZER. You testified, Mr. Mott, that you are the buyer for the American Sugar Rejfining Co. of raw sugar? Mr. Mott. Yes, sir. Mr. Stjlzer. And as such buyer you distribute that raw sugar to the various plants owned and controlled by the American Sugar Refining Co. ? Mr. Mott. Yes, sir. Mr. Sttlzee. Ajid that you do that under the direction of the board of directors? Mr. Mott. Practically. Mr. SrrLZER. Of whom you are one? Mr. Mott. Yes. Mr. Sttlzer. So that as a matter of fact you can regulate and con- trol the output of any sugar factory controlled by the American Sugar Refining Co.? Mr. Mott. I can not control the output. Mr. StJLZER. You can control the output by limiting the product you send to that mill, can you not? Mr. Mott. That would do it. If I stopped sending, I suppose they would stop working. Mr. Sttlzbr. So you can absolutely control the product of any plant owned by the American Sugar Refining Co. ? Mr. Mott. I do not admit that at all. I only said that, of course, if I refused to send sugar there and they had no sugar, they could 2470 AMEBICABT SUGAH REFINING CO. not melt. That would be a stoppage, but what would become of me if I did that? Mr. SuLZER. Suppose the board of directors of the American Sugar Refining Co. should instruct you not to send any raw sugar to one of its mills, you would not send any sugar under those circumstances to thatmUl? Mr. MoTT. I should obey my instructions. Mr. SuLZEK. And as a matter of fact the board of directors can regulate absolutely the product of any one of its mills ? That is so, is it not? Mr. MoTT. Yes, sir ; the curtailment of melt or increase of melt, of course, is controlled by the board of directors, naturally. Mr. Stjlzek. So if the American Sugar Refining Co. wanted to do it, it could close every one of its mills with the exception of the Havemeyer & Elder plant, could it not? Mr. MoTT. It could do so. Mr. Stjlzer. Wliat salary do you receive? Mr. MoTT. $20,000 a year. Mr. Stjlzer. How much salary does the seller of refined product receive ? Mr. MoTT. I do not know. Mr. SuLZER. What is his name? Mr. MoTT. Judson Lownsbury. Mr. SuLZER. Does he live in New York ? Mr. MoTT. In Brooklyn, I think. Mr. SuLZEK. Plow long has he been the seller? Mr. MoTT. Less than a year. Mr. SuLZER. Do you buy any beet sugar? Mr. MoTT. At times. Mr. SuLZER. From whom do you buy the beet sugar? Mr. MoTT. Either in London, from sellers there, or in New York, through the representative of the sellers. Mr. Stjlzer. Have you bought any beet sugar during the past year? Mr. MoTT. No, I have not. Mr. SuLZER. As a matter of fact, you do not buy very much beet sugar for the American Sugar Refining Co. ? Mr. iMoTi'. I have done it in the past, but there has been no require- ments for it for a considerable time. Mr. StTLZER. When did you last buy beet sugar? Mr. MoTT. Oh, probably three or lour years ago, I think. Mr. Stilzer. Do you consider the cane sugar better than the beet sugar ? Mr. MoTT. It is better. Mr. SuLZER. As a matter of fact, cane sugar is more wholesome and better than beet sugar, in your opinion? Mr. MoTT. I do not say it is more wholesome. Mr. SuLZEK. What do you mean when you say cane sugar is better than beet sugar ? Mr. MoTT. The cane sugar is usually a higher product than the beet sugar, I think — the raw-beet sugar. Mr. StTLZEB. You think it has more ingredients of saccharine matter ? Mr. MoTT. The cane sugar ? AMEEICAK SUGAE EEPINING CO. 2471 Mr. SuiiZEE. Yes. Mr. MoTT. It all depends upon the polarization of it. Mr. SuLZER. Is the American Sugar Refining Co. engaged in the tea business at the present time ? Mr. MoTT. Not that I know of. Mr. SuLZEK. And has no interest in any tea company ? Mr. MoTT. I am not aware of any. Mr. SuLZEE. You would know, would you not, as a director? Mr. MoTT. I think I should. Mr. SuLZER. Has the American Sugar Refining Co. any interests at the present time in the coffee business? Mr. MoTT. None that I know of. Mr. SuiiZEE. As a director you would know it if it was so, would you not? Mr. MoTT. I think so. Mr. SuLZEE. Has the American Sugar Refining Co. at the present time any interest in the spice business? Mr. MoTT. I think not. Mr. SuLZEE. Has the American Sugar Refining Co. any interest in any sugar plantation? Mr. MoTT. Not that I know of. Mr. SuLZEE. Has the American Sugar Refining Co. any interest in the lighterage business at the present time ? Mr. MoTT. I think not. Mr. SuLZEE. And, as a matter of fact, at the present time the Ameri- can Sugar Refining Co. is not engaged directly or indirectly in any other business except the buying of raw sugar, the refining of the same, and the selling of the product ? Mr. MoTi'. I think that is correct. Mr. CeiVWfoed. I do not wish to misunderstand you, because they have a very extensive cooperage business, you understand. Mr. Sulzee. I did not ask about that. Mr. Ceawfoed. You asked if they had any other business. Mr. MoTT. They own a very large cooperage business. Mr. Stjlzee. I will ask the question, to put that upon the record; Is the American Sugar Refining Co. at the present interested in the cooperage business? Mr. MoTT. Yes; it is. Mr. SuLZEE. They own the cooperage business, do they not ? Mr. MoTT. The Brooklyn Cooperage Co. ; yes, sir. Mr. SuLZEE. What is the capitalization of their cooperage com- pany? Mr. MoTT. I really do not recollect. Mr. Sulzee. But all the stock is owned by the American Sugar Refining Co. ? Mr. MoTT. I think that is the fact. Mr. Sulzee. You told us a little while ago that Mr. Burguieres, of Louisiana, called to see you. When did he call ? Mr. MoiT. Yesterday. . Mr. Sulzee. Have you any objection to telling us the subject of the call and the conversation? ,. „ ..... Mr. MoTT. It was entirely a friendly visit, just to become acquainted with us, and I do not think I had ever had the pleasure of meeting him before. We spoke in a general way over the situation 2472 AMERICAN SUGAK REFINING CO. of sugar in the world. There was nothing particularly specific about it. Mr. Stilzer. Did he make any complaint to you or to any other officer of the company regarding the ability of the Louisiana planters to market their crop ? Mr. MoTT. None to me or in my hearing. Mr. SuLZEE. You buy most of the product, as I understand it, of the Louisiana cane planters ? Mv. Mo'iT. Some sixty-odd per cent of it. Mi: Sui,zEB. And Mr. Burgiiieres had no fault to find in hit con- versation with you during this recent fall regarding the American Sugar Eefining Co.? Mr. ^loTT. At all events, he expressed none. Mr. SuLZER. "\A1ien did you first enter the employment of the American Sugar IJefiniug Co.? Mr. MoTT. When tliey commenced operating as that company. Mr. Stilzer. Wliat year was that? ISh. MoTT. 1801, T 'bel^e^e. Mr. Si LZER. Have you been in the employ of the company, in one capacity and another, ever since that ? Mr. MoTT. I have. Mr. Sm^zER. During the time Mr. H. O. Havemeyer was the presi- dent of the company he practically controlled its policy, did he not? Mr. Mo'rr. He did. Mr. SuLZER. Do you think that his policy was always correct and in the interest of the stockholders^ Mr. MoTT. I think that the rexiilt of his policy showed that it was usually a very successful one. Mr. SuLZER. You have changed that policy, however, very ma- terially since you became a director, ha^ e you not ? Mr. MoTT. I think that is probably true. Mr. Stjlzer. AMiy did you make a change if Mr. Havemeyer's policy was correct? Mr. MoTT. Do you speak of me personally? Mr. Stjlzer. As a director of the company. Mr. MoTT. Times have changed and we have changed with them, I suppose. Mr. Stilzer. In other words, Mr. Havemeyer conducted the affairs of the American Sugar Refining Co. as if there were no laws in the country, and you are conducting the affairs of the American Sugar Refining Co. according to the laws of the State and Federal Gov- ernment. Is not that about the distinction? Mr. MoTT. I would not say yes as to the first part of your propo- sition. As to the second part, you are quite correct, I think. Mr. StJLZER. Mr. Havemeyer was a very dominant factor; a very forceful man? Mr. MoTT. Very commanding. Mr. SuLZER. And he always went on the hypothesis that the end justified the means? Mr. MoTT. I do not know that at all. Mr. Sulzer. He could not brook any opposition, would he ? Mr. MoTT. No; he was a very masterful man, and a man of very great ability and foresight. AMEBICAN SUGAR EEFIjSTING CO. 2473 Mr. SuLZEE. If he told you to do anything while you were in his employ, you would not protest or object or oppose him? Mr. MoTT. I certainly should in any case Mr. SuiiZEE. Did you ever do so? Mr. MoTT. I do not think I ever had occasion to. Mr. SuLZER. Do you think if you ever did you would have held your job 24 hours? Mr. MoTT. I do not. Mr. SuLZER. Indeed you would not. Mr. MoTT. But I should have opposed if he had ever asked me to do anything dishonorable or that I thought was wrong. Mr. SuLzER. I have no doubt of that. Now, as a matter of fact, a number of reforms have been inaugu- rated by the new management of the American Sugar Refining Co. since the death of H. O. Havemeyer, have they not? Mr. MoTT. Yes, sir. Mr. Stjlzer. Many of these things to which Judge Madison has referred in the minutes have been eliminated entirely ? Mr. MoTT. Yes. Mr. SuLZEE. And the company is now being run strictly on a busi- ness basis? Mr. MoTT. Yes. Mr. Sulzer. And in so far as you can and know, you are doing everything strictly in accordance with the law? Mr. MoTT. Yes, sir. Mr. StTLZER. There is no disposition on the part of yourself or any of your colleagues on the board of directors to curtail the sugar products ? Mr. MoiT. No, sir ; none whatever. Mr. Sulzer. In other words, you are in business now to make money, all the money you can ? Mr. MoTi'. Undoubtedly. Mr. SuLZEE. JFor the stockholders of the company? Mr. MoTT. They naturally would be the beneficiaries. Mr. Sulzer. You buy as much sugar as you think your plants can manufacture? You buy all the raw sugar you think you can manufacture? Mr. Mo'ri'. The capacity of our plants is greater than what we manufacture. i j Mr. SuLZEE. In other words, you manufacture and produce as much sugar, refined sugar, as you think you can sell? Mr Mcrr. As we think we can market ; yes, sir. Mr. SuMEE. And you have to buy your raw sugars m the markets of the world? Mr. sSSr. In' competition with all the other manufacturers of sugar throughout the world? £ Serb's? vou have to sell it in the markets of the world? Mr. ^UL^^ER^fn competition with all the other manufacturers of sugar ? Mr f^^^Mj colleague, Judge Raker, of California, suggests rigM afoTthis Hne an inquiry which I think is very pertinent, and 2474 AMERICAN SUGAR REFINING CO. that is why do you not — if you are in business to make all you can — manufacture as much sugar as the capacity of your various mills will warrant? Mr. MoTT. Because there are other people in the business, and they try to manufacture all they can. Mr. Stjlzer. And you only manufacture what you think you can sell? Mr. MoTT. We can not all be turning out all the sugar we can make, or it would lead to a plethora. Mr. StJLZER. Or a monopoly? Mr. MoTT. No; an overproduction would lead to a great glutting of the market, would it not ? Mr. Sttlzer. You only manufacture, in other words, as much sugar as you think you can market ? Mr. MoTT. I think that is about right. Mr. SuLZER. Is the product from your mills increasing or diminishing? Mr. MoTT. I think it is increasing slightly. Mr. Stjlzer. In other words, you are manufacturing and market- ing more refined sugar now than you did under the administration of Mr. H. O. Havemeyer? Mr. MoTT. I do not know that it is just that at this very day, but I think the tendency is to increase. Consumption is increasing. Mr. SuLZER. ^Vhat is about the percentage of the output of the American Sugar Eefining Co. in comparison with all the other sugar refinin