Your attention is respectfully called to the fact that the sugarrefining business is one of severe and fierce competition; that large numbers of people are employed in the different departments, and that in the case of the American Sugar Refining Company attention is also called to the fact that the average holding of its stock amounts to less than 48 shares for each stockholder, of whom there are 18,852. Any legislation hostile to the industry will be keenly felt by many. A careful consideration of the accompanying statements will, we believe, convince your committee that the protection at present afforded the industry is very small, but indispensable.

There apparently exists uncertainty as to whether the American Sugar Refining Company is interested in the beet-sugar industry of the United States. There is no mystery about it. The annual statement for 1907 contains an item which states the fact that the company is interested in the beet industry.

The American Sugar Refining Company in the extension of its business in this direction has done it solely for the purpose of keeping abreast of the general development of the sugar business, whether it be the refining of cane or beet sugar.

Furthermore, the company was sought after by the people who were interested in the beginning of the beet industry in this country to contribute financial aid and such technical knowledge as the company might have at their disposal for the development and prosperity of the industry and the community in which it is carried on, in which cooperation the company was willing to participate.

The interest of the American Sugar Refining Company in the beet-sugar factories of the United States is less than 29 per cent of the total beet-refining capacity for working beets into refined sugar. The American Sugar Refining Company is not a party to any agreement, expressed or implied, with any competitor, either in regard to the regulation of production or the fixing of prices. Respectfully, yours,

THE AMERICAN SUGAR REFINING COMPANY, By C. R. HEIKE, Secretary.

REASONS WHY THE PROTECTIVE TARIFF ON REFINED SUGAR SHOULD NOT BE DISTURBED.

The following statements are respectfully submitted:

1. In the event of a reduction in the protection to the refining industry competition would first come from Europe. The cost of refining sugar in the United States is necessarily greater than in Europe, and for this reason adequate protection is imperative. The higher price paid in this country for labor not only directly affects the wages of the men working in the sugar refineries, but also increases the cost of all machinery, materials, and supplies used in the refining process. (See pp. 8, 9, 10.)

2. The greater part of the expenses in the refining operation are incurred for labor performed, whether the work be done at the refineries or in the preparation of the material consumed by them. Any decrease in the differential in favor of refined sugar, rendering neces

sary a reduction in the expenses of refining, would therefore fall heavily upon labor. (See p. 11.)

3. The machinery and many of the supplies used in the refining process are protected by a high tariff, thus increasing the price of the home products and compelling the refiner to pay considerably more for his needs than his European competitors. This unequal basis for competition between the refineries of this country and those of Europe renders necessary continued protection to the refining industry.

4. A large percentage of the raw cane sugar of the world's production finds its natural market in this country, and this condition has been further artificially encouraged by the preferential tariffs under which much of the sugar is admitted. As a result cane sugar now practically constitutes the sole supply of the refineries (as distinguished from beet sugar factories) of the United States. This raw material is much more expensive to refine and convert into white sugar than the beet sugar, which our European competitors almost exclusively handle. (See pp. 12 and 13.)

5. Not only is the actual cost of refining cane sugar greater than of refining beet sugar, in the matter of process, the number of men employed, etc., but the refining of cane sugar also involves a very much greater investment for additional filter houses, machinery, boneblack, etc. The capital account is thus considerably larger, and the depreciation charges also, than if the refineries were equipped to handle beet sugar only. (See p. 14.)

6. Under the present tariff it has been the purpose of the United States Government to benefit Cuba and the Philippines by admitting the sugar from these countries under a preferential duty. Inasmuch as the market for Cuban and Philippine sugar is necessarily largely confined to the United States, one of the immediate effects of a reduction in the protection on refined sugar would be to partially defeat the object of the preferential tariff and to force down the price of raw cane sugar so as to enable the refiners of the United States to compete with the refined beet sugar of Europe. It is therefore evident that a reduction in the protection on refined sugar would not only work to the disadvantage of the refining industry, but would also injuriously affect the Cuban and Philippine planters. (See p. 15.)

7. The margin existing in recent years between the price of raw and refined sugar has not been excessive, being only a fraction of a cent per pound. This fraction includes not only the cost of refining, but the losses of sugar involved in the refining process, the wear and tear and depreciation on the expensive machinery used, the cost of the packages in which the sugar is delivered to the market, and, finally, the refiner's profits.

8. Although the cost of the refining operations has gradually increased during the life of the Dingley tariff and is now materially higher than in 1900, there has been no increase in the margin between the price of raw and refined sugars. The margin of protection, therefore, has steadily decreased, and such margin as still exists is necessary to a fair return for both labor and capital. (See pp. 16 and 17.)

9. At the time that the Dingley tariff was framed the careful investigations conducted by the government committees convinced the

majority in both Houses that the one-eighth of a cent protection afforded to refined sugar was necessary and just. It would be illogical to reduce it at a time when this margin is considerably less, on average, than it has ever been before, and it is worthy of notice that refined sugar is about the only article among the necessities of life which is lower in cost than in former years. All other necessities, generally speaking, are higher in cost than formerly.

10. The recently framed Canadian tariff (1907) recognizes the necessity for still greater protection than that afforded by the Dingley tariff of the United States. The protection to the Canadian refiner under this tariff is more than twice as great as that under the Dingley tariff. (See p. 18.)

11. The evidence collected by the British tariff commission in 1907, proved that a protective duty on refined sugar was necessary in order to place the refining industry of Great Britain in a position to compete successfully with the refined sugar produced in Germany, Austria, France, etc. The protection suggested for this purpose was 1 shilling per hundredweight or about twice that afforded under the Dingley tariff. Inasmuch as the wages paid to labor are considerably less in Great Britain and still less in continental countries than in the United States, it is evident that the differential duty on refined sugar of 12 cents per 100 pounds, which constitutes the present protection to the refining industry of the United States from competition with the countries above mentioned, can not be considered excessive. (See pp. 19 and 20.)

12. The removal of the protection now afforded to the refining industry would injure the industry as surely as competition from abroad has gradually undermined it in Great Britain. (See pp. 21 and 22.)

13. Unless the refining industry is adequately protected, refining will be gradually transferred to the points of sugar production. The refining industry of the United States will thus cease as an independent industry. Many of the beet sugar factories of Europe, as well as elsewhere, are now making directly granulated sugar for consumption. While the dfficulties are greater in the way of doing this in the case of cane sugar, there is no doubt that ultimately these difficulties will be overcome, with the resultant harm to the refining industry of the United States, unless that industry continues to be properly protected.

14. A blow dealt to the refining industry will not be confined to that industry alone. Very large sums are paid by the refiners annually for the materials they consume. The enormous expenditures for coal, for the transportation of coal, for boneblack, for sugar barrels, and many other supplies in smaller quantities furnish means of livelihood for thousands of men scattered throughout the entire country.

The idea is not uncommon that the refiner is benefited in competition with other countries by the duty on raw sugar. This is a great mistake. The duty on raw sugar operates in two ways to the disadvantage of the refiner. In the first place, it checks consumption, and inasmuch as the refining capacity of the United States is very much greater than that required to meet the needs of consumption, the duty results in smaller meltings than would otherwise be the case.

The fixed charges per pound of sugar are, therefore, higher and the cost of refining is indirectly increased. The duty on raw sugar also directly adds to the expenses of refining, as that operation can not be conducted without waste, and it is evident that the loss to the refiner from this cause varies directly with the cost of the sugar and, consequently, with the amount of the duty.

The impression has also gained ground that the refiner has been directly benefited by the lower tariff under which sugar from Cuba is admitted. This, however, is not the case. The United States is now able to draw very nearly the whole of the sugar needed for its consumption from Cuba, Porto Rico, Hawaii, the Philippines, Louisiana, and the domestic beet industry. These sources of production are all favored under the tariff and, consequently, the sugar can be sold to better advantage in this country than where no preferential tariff in their favor exists. The whole of this sugar is produced during a limited portion of the year and comes to market at essentially the same time. As a consequence, owing to forced sales in larger quantities than the market can readily take, the price of sugar in the United States has been lower than in Europe during the early months of the year, whereas formerly the price at the principal markets of the world was more nearly on the same basis. As a result of the pressure exerted upon the market just referred to, a portion of the reduction in the tariff which Cuba enjoys has been sacrificed, but the public and not the refiner has been benefited. This is clearly demonstrated by the fact that during the four years that the reduction in the tariff in favor of Cuba has been in force the margin between the price of raw and refined sugars has not increased; on the contrary, it has slightly decreased, the average margin during the period 1900-1903, immediately preceding the change in favor of Cuba, being 0.897 per cent, and during the subsequent four years, 1904-1907, 0.875 per cent. per pound. Had the refiner himself absorbed either the whole or a portion of the concession made, the margin between the price of raw and refined sugars would have increased.

APPENDIX A.

The following extract taken from the report of the British tariff commission, 1907, section 2, shows the rapidity with which the refining industry in the continental countries of Europe has increased, and indicates clearly the competition which would be likely to arise with the product of the refiners of the United States in the event of any reduction in the protection on refined sugar:

The extent of the development of foreign refining industries is shown by the following increases in the quantities of sugar refined in principal continental countries: In twenty years the German output has trebled, the Belgian output increased seven times, and the French output by 45 per cent. The Austrian output has doubled in the last ten years. The evidence shows that the principal factor in the development of the sugar industries of foreign countries has been the facilities afforded by this country for enabling them to take advantage of the rapidly growing demand for sugar in the United Kingdom.

The sugar production of Europe can be greatly increased. The opening of the markets of the United States to the refined sugar of Germany, Austria, Belgium, France, etc., would undoubtedly stimu

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late the production and refining of sugar in Europe generally, and there can be no doubt that under such circumstances large quantities of granulated sugar would be exported to this country.

APPENDIX B.

Comparison of the wages paid in the refineries of Great Britain and those of the United States.

Foremen in the United States are paid on an average $4.25 above the average wages shown for each station in the third column, whereas the foremen in Great Britain are paid on an average only 80 cents above the average wages shown for each station in the second column.

A comparison of the above figures shows that the wages paid in Great Britain in the refining industry are on an average only 50.2 per cent of those paid in the United States. The wages paid on the Continent are even lower, being probably not more than 75 per cent of those in the United Kingdom. The United States refiner therefore has to pay more than twice as much for labor as his European competitors.

The above detailed particulars of the wages paid in the refining centers of Great Britain were furnished by the well-known European firm of J. V. Drake & Co., sugar brokers.

APPENDIX C.

The wages paid directly for labor in the refineries of the United States amount to from 25 to 30 per cent of the total refining expenses, The cost of the barrels, etc., in which the refined sugar is sold and of the coal consumed in the refining operations together make up from 51 to 58 per cent of the entire refining expenses. Aside from transportation charges, the value of the barrels is very largely dependent upon the labor expended in their manufacture and that of the coal upon the labor of mining.

It is only fair to say also that a small portion of the increased cost of production is due to changes in the trade affecting varied and different forms of package and the higher grades demanded by

the consumer.