The Equities in the (Customs) Taxation of 
 Sugar. 
 
 Viewed from the standpoint of equity and expediency, the pro¬ 
 position to assess all the varieties of imported sugars at one and the 
 same rate of duty is something extraordinary. The United States, 
 for the attainment of its fullest material development as a nation, 
 mnst have foreign commerce. It desires to attract all nations to its 
 markets; and, except when it is itself made the subject of discrimi¬ 
 nation, it must, for the attainment of this end, admit to equal privileges 
 the people of all nations desiring commercial intercourse. Were the 
 proposition soberly made to discriminate specially and by name, in 
 our commercial laws, against any one, two or more unoffending 
 nations, the proponent would be speedily hooted into silence. But 
 the proposition to assess raw sugars at one rate embodies this very 
 thing. Thus, to illustrate, the sugars produced in countries of 
 low civilization like, Brazil, Central America, the East Indies and the 
 like, constituting the bulk of the sugar product of the world, and low in 
 grade and price, and necessarily so because these countries lack intelli¬ 
 gence and capital. Let anyone take his stand at one of the wharves 
 of New York or other ports’and he will sometimes see sugar unloading, 
 almost black in color and inclosed in palm-leaf bags, of a weight and 
 form suitable to carry on men’s backs. Such sugars are evidently 
 the product of countries wanting in roads and beasts of burden, and 
 in facilities for even making lime for use in purification. Such 
 sugars are, however, capable of purification without difficulty, 
 and afford the largest basis in so doing for the profitable employ¬ 
 ment of domestic labor and capital. The producers, furthermore, 
 must sell them in our markets if they in return are to buy any 
 of the products of our skill and machinery, for they have little or 
 nothing else to buy with. Such raw sugars naturally command the 
 lowest prices in the world’s markets. On the other hand the raw 
 sugars produced in Cuba and Demerara are much further advanced 
 in manufacture, and are largely, known as “ centrifugals ” from hav¬ 
 ing been subjected to a purely mechanical (rotary) process of refining. 
 Such raw sugars command the highest prices and are worth on the 
 
2 
 
 average at least 50 per cent, more than the sugar products of coun- 
 tries of a low civilization. 
 
 The range of maximum prices for raw sugars from the two 
 sources of supply above noticed, for the year 1893 (according to 
 standard trade reports), was from 1.90 cents to 3.92 cents per 
 pound. A uniform duty on all raw sugars of one cent per pound 
 would, therefore, be equivalent to an ad valorem tax, or tax on 
 market value, of 52.40 per cent, on the cheaper grades and about 
 25 per cent, on the highest grades; or, in other words, if the govern¬ 
 ment, under a uniform rate of one cent, were to collect its (customs) 
 taxes in kind on sugar, it would take one-half the importations of 
 low grade sugars, while only one-fourth of the importation of high 
 grades would be taken for the same purppse. 
 
 The production and distribution of sugar constitutes one of 
 the largest factors in the great aggregate of the world’s busi¬ 
 ness. It is the largest item in the list of commodities that the 
 United States imports in respect to both value and quantity. 
 The business of refining sugar, or rendering the raw sugars 
 pure and fit for consumption, measured by the value of its 
 product, ranks ninth among the so-called manufacturing indus¬ 
 tries of the United States. So sharp, moreover, is the competi¬ 
 tion between the various sources of supply of raw sugars, that the 
 trade is controlled to a greater extent than in the case of almost 
 any other commodity by fractions of cents in prices. A change 
 of only one thirty-second (1-32) of a cent would be sufficient to 
 divert the sugar produced in the “West” or “East” Indies to 
 any particular market. It would represent on the average 
 price of raw sugars one per cent, of their value, and for that 
 consideration all importers of such sugars would be willing to 
 do business. Can it be doubted, therefore, that with a bounty 
 much greater thau one thirty-second of a cent created by a uniform 
 rate of one cent in favor of Cuba and Demerara, that the production 
 of the characteristic high grade raw sugars of these countries would 
 be pushed to the utmost; and that the characteristic production of the 
 cheaper low grade sugarsof Brazil, Central America and the East Indies 
 would be discriminated against and impaired ? Can it be doubted, also, 
 that with such impairment the market for our produce and manu¬ 
 factures in these and like countries would be necessarily restricted; and 
 also what little of employment is left for American vessels in these 
 same spheres ; for ships, to be profitably employed, must have return 
 as well as outward profits ? As confirmatory of these views attention 
 
3 
 
 is asked to the circumstance that during the winter of 1878-79, 
 when Congress had this same subject of a one rate of duty on all 
 imported raw sugars under consideration, and it was popularly 
 assumed that such a rate would then be enacted, a gigantic stock 
 company commenced organization for the erection of an immense 
 sugar refinery at Havana, for the purpose of preparing raw sugars of 
 the highest possible grade permissible under such uniform rate, for 
 the supply of the American market. 
 
 Furthermore, the refining of sugar can only be conducted economi¬ 
 cally, and with the greatest advantage also to the public, by the use 
 of all grades of raw sugars. The light yellow refined sugar, such as 
 by reason of cheapness is in great popular demand, cannot be profit¬ 
 ably made from the high grades and most expensive of raw sugars ; 
 while to make low grade and cheap refined sugars necessitates the use 
 of low grades of raws. A specific rate of duty on all raw sugars 
 would naturally restrict the refining industry of the United States to 
 the almost exclusive production of the higher grades of refined sugar, 
 and prevent that diversity of the business of refining, which is essen¬ 
 tial to the prosperity and growth of this industry. 
 
 Again, it has always been an economic principle, advocated alike 
 by free-traders and protectionists, that with a view of encouraging 
 American manufactures, all raw, or crude materials, the produce of 
 foreign countries, especially such as do not compete with our domestic 
 products, as ivory, gums, dye-stuffs, fibers, etc., should be either 
 admitted free or at low duties. But the proposal to assess all grades 
 of raw sugar at one specific rate is a clear reversal of this policy ; 
 inasmuch as it discriminates against, or prevents the importation of 
 a truly crude material which a great branch of domestic industry— 
 the refining of sugar—demands, and at the same time and in the 
 same degree offers a bounty for the development of a rival branch of 
 the same industry in a foreign country. To understand clearly how 
 this bounty originates and operates, it is desirable to recall that under 
 a uniform rate of one cent on all sugars, the low and cheap grades of 
 raw sugars would be subject to an ad valorem tax of over 50 per cent.; 
 the higher grades of raws, advanced in manufacture, to about 25 per 
 cent., while the refined or industrial product of the two former, 
 which requires the greatest amount of labor, skill and expense to 
 produce is subjected to the lowest rate, namely, about 18 per cent. 
 It would obviously be to the advantage of the foreign sugar producer, 
 by reason of saving in duties, to export his product in the refined , 
 rather than in the unrefined, or unmanufactured condition. 
 
4 
 
 Suppose the United States was dependent on foreign countries for 
 its supply of bread stuffs, and imported most or all of the wheat it 
 needed to make flour. What would be thought of a proposition to 
 impose the same duty on flour and wheat ? Can it be doubted that 
 under such circumstances the country would import a good deal of, 
 flour and comparatively little wheat, or what would happen to the 
 domestic milling (flour) interest. And yet such a proposition finds 
 an exact parallel in the proposal to put a uniform rate of duty on all 
 the grades and varieties of sugar. 
 
 The following other advantages will accrue to the foreign producers 
 of sugar under a uniform duty of one cent. Thus, from 100 pounds 
 of low grade raw sugar—those furnishing the cheapest grades of re¬ 
 fined sugar and employing the greatest amount of domestic labor to 
 produce—only about 93 pounds of pure sugar can be obtained. The 
 American refiner working on such grades, must, therefore, import and 
 use about 107.6 pounds of raw sugar to produce 100 pounds of refined, 
 and pay 7 6-10 cents more on every hundred pounds of refined sugar 
 lie produces, or 1-14 cents more per pound, than he would if he im¬ 
 ported a like quantity the product of a foreign competitor. But as 
 already shown, a difference of only 1-32 of a cent is sufficient to 
 divert sugars in the world's commerce from one market to another. 
 Under such circumstrncese the American sugar refiner is left in a 
 much worse condition than he would be under absolutely free freed 
 trade for all descriptions of sugar. 
 
 If a higher grade of raw sugar be worked, one that will yield 95 lbs. 
 of refined sugar, then on a uniform one cent per pound rate on both 
 raw and refined, the United States refiner will have to pay a duty of 
 $1.05£ cents on every 100 lbs., while his foreign competitor pays but 
 $1, which is equivalent to a bounty on foreign refining. To place the 
 U. S. refiner simply on an equality, and without any favoritism, with 
 the foreigner it would be necessary to have an extra duty on refined of 
 about 1/19 c. per pound. 
 
 Anather point which ought not to be overlooked in this discussion 
 is that France and Germany pay bounties, on their exportations of do¬ 
 mestic and refined sugars. In the case of France the present bounty 
 is estimated at from 2 shillings (48.6 cts.) to 3 shillings (72 cents) per 
 hundred weight. In Germany, where the bounty accrues indirectly 
 tinough a rebate of an internal revenue tax, its net amount is esti¬ 
 mated at about 7 cents per hundred. It is claimed, however, that this 
 latter bounty is more than offset by the ocean freight on the transpor¬ 
 tation of German refined sugars to the United States. But such a 
 
5 
 
 claim is obviously based on the assumption that the American refiner 
 can import refined or raw sugars freight free, when the fact is that 
 the freights on raw sugars are comparatively higher by reason of their 
 greater bulk, 107 pounds of raw being the equivalent of 100 pounds 
 refined. 
 
 A further claim, has been advanced to the effect that the American 
 refiners of sugar have within recent years, through new inventions, 
 skill and economy, so greatly reduced the cost of refining that they 
 now require no further need of even the slightest tariff discrimination 
 in their favor. Such an assumption little accords with the theory on 
 which the advocates of protective duties have especially preferred a 
 claim for popular support and endorsement, namely : that if duties on 
 imports, shielding any domestic industries from foreign competition, 
 can be given for a period, such a degree of domestic industrial 
 development will result as to ultimately render any protection un¬ 
 necessary. Admitting now that such a result—without any increase 
 in the cost of the supply of their products, but rather a marked re¬ 
 duction—has been attained by the American refiners of sugar, the 
 present popular theory, as exemplified in the proposed uniform rate 
 of duty on all sugars, would seem to be, that they should be punished 
 for their achievements; and certainly the punishment of the American 
 sugar refiners would be signal and severe by the imposition of any 
 rates of duty that would practically subsidize their foreign com¬ 
 petitors. 
 
 Finally with a duty of over 50 per cent, on the importation of the 
 low grades of the raw sugars of the world as compared with 25 per 
 cent, of the importation of high-grades, it seems clear that the United 
 States would not constitute a favorable market for the former. Such 
 sugars, however, will continue to be largely made; because their 
 makers can produce nothing better; and being made will be sold 
 (exchanged) for the products of higher civilization—tools, cloth, guns, 
 ammunition, spirits, ornaments, etc., etc. The only market then open 
 to them for such exchange would be the English, and the English 
 would take them, as it were, at their own price ; and thus obtaining 
 at the outset an advantage in the supply of their raw material, would 
 be better able to compete.with the Americans in the export of refined 
 sugars to other countries. Such sugars, to the extent of many 
 hundreds millions of pounds, now annually find their way—to the 
 great benefit of the British trade and commerce—into England, and 
 are eagerly sought for in the market by British refiners. 
 
6 
 
 How then shall we tax raw sugar, assuming that Congress considers 
 it expedient to do so ? Considering the subject generally, there would 
 seem to be but one fair and intelligent answer—namely, tax it justly ! 
 This result can be attained in tfie simplest, most economical and most 
 equitable manner by adopting the exclusively ad valorem system in 
 the assessment of duties on imported sugars ; that is, fix on the rate of 
 duty it is desirable to impose—40, 50, 60, or, if need be, 100 per cent. 
 —and then apply it impartially to the value of all sugars, from what¬ 
 ever countries imported ; the Secretary of the Treasury being at the 
 same time empowered to determine values by the use of all such agen¬ 
 cies as he may deem expedient. The above answer also pre¬ 
 cludes the idea of imposing a tax for punitive purposes or 
 intent, or for punishing a Trust for anything it might or might 
 not have done in the management of its business. Once assert 
 and substantiate the contrary, and what becomes of the great 
 fundamental democratic principle that constitutes the foundation 
 of the most rational argument of tariff reform, namely : That 
 taxes should be imposed for revenue only. If it is a correct princi¬ 
 ple that the great sovereign power of taxation can be legitimately used 
 for the regulation of the businses of a citizen, what valid argument, 
 furthermore, can be made against the enactment of any law regulat¬ 
 ing the manners or customs of the people which partisan sentiments 
 or prejudices may induce legislators to consider expedient ? If the 
 business of manufacturing and distributing sugars by the so-called 
 sugar trust is an evil of such magnitude as to call for adverse legisla¬ 
 tion, let the State proceed against such evil directly and courageously 
 by making the acts which it considers desirable to suppress, misde¬ 
 meanors, or even felonies, and proceed against them under other or 
 existing laws than those authorizing taxation. 
 
 David A. Wells.