SUGAR AT A SECOND GLANCE.

THE INFLUENCE OF OUR HIGH TARIFF ON SUGAR UPON THE ULTIMATE PRICE TO THE CONSUMER AND AS AFFECTING THE HIGH COST OF LIVING.

If protection to young industries was needed, it has been given. The initial stages of trial and unfamiliarity are certainly passed. The industry in the far West has quite passed the infant stage. Its difficulties in the farming region proper seem to be due to the competition of the other kinds of agriculture, which, under the typical American conditions, are more profitable. If this kind of agriculture needs protection, and if the familiar grain-growing, cattle-fattening, and dairying of the cornwheat belt do not, the explanation is still to be found in the principle of comparative cost. (F. W. Taussig, professor of economics, Harvard University.)

MR. TRUMAN G. PALMER: AN APPRECIATION.

For the benefit of the many new Members of the House and Senate who may be unacquainted and uninformed, we wish to introduce the author of "Sugar at a Glance," to account for the appearance of this work in the form of a public document and to explain the exact occasion for Mr. Truman G. Palmer's interest in the subject of sugar.

To begin with, he is not an expert in the employ of the United States Senate, as might be inferred, "at a glance," from Senate Document No. 890. He merely enjoys the privilege of intimacy with certain retiring Members of that body to whom on pressing occasions he furnishes information, "disinterested," but compatible with their standpat views which, in appreciation, they cause to be published and circulated as a public document (at the Government's expense). Nor is he wholly committed to the cause of the beetsugar farmers, as might be taken for granted from the pronounced bucolic nature of his latest composition. In reality he is the secretary of the United States Beet Sugar Industry, a "voluntary" organization comprehending all of the principal beet-sugar companies of the United States with headquarters at 901-903 Union Trust Co. Building, Washington, D. C. This was formerly known as the American Beet Sugar Association and was recruited at Washington several years ag by Henry T. Oxnard, the original beet-sugar "volunteer" and now vice president of the American Beet Sugar Co. The name was changed in order to avoid confusion with the company of its founder and to obviate the embarrassment of identification with the American Sugar Refining Co., or Trust (though all of the beet-sugar companies, in which the latter is most heavily interested, are members of this "patriotic" society).

Mr. Palmer testified before the Hardwick committee that he had been in the employ of this "voluntary" organization since 1902, when, as a beet-sugar land patriot, he abandoned his fields in the West to appear at the Cuban reciprocity hearings to present his

"deadly parallel." That his earnest but futile endeavors attracted the attention of the Washington beet-sugar brigade, who then and there employed him to safeguard their interests, and, if forced, to resort to authorship again, which he forebore to do until driven to desperation by the House free-sugar bill.

That his salary while engrossed at Washington was $10,000 per year, raised by "voluntary" contributions from the members of the "volunteer" organization; that he was allowed expenses besides while engaged in special services away from Washington; that he was the only salaried official, though there existed a "voluntary" executive committee, composed of such well-known beet-sugar "economists" around Washington (during sessions) as the beforementioned Henry T. Oxnard, Charles C. Hamlin, vice president of the United States Sugar & Land Co., a company with a capitalization of $8,000,000, and but one beet-sugar factory at Garden City, Kans., with a daily slicing capacity of 900 tons (factory cost $900,000) and Thomas R. Cutler, ex-bishop of the Mormon Church, vice president of the Utah-Idaho Sugar Co. (in which the Trust owns a half interest); that he was employed in a legislative capacity at Washington, principally to present the case of the beet-sugar interests "from an economic viewpoint" before congressional committees when the tariff on sugar was under consideration; but that he was in no sense a lobbyist; that when not thus preoccupied he found time to attend and address the Trans-Mississippi and National Irrigation Congresses for the purpose of influencing resolutions favoring the fostering of the beet-sugar industry through maintenance of a high tariff. His testimony to this effect may be found between pages 2694 and 2702 of the Hardwick hearings.

From the nature of his employment it must become apparent that the "economic viewpoint" entertained by Mr. Palmer is not altogether a disinterested one; but must of necessity have special reference to the interests of the beet-sugar manufacturers and land promoters who seek to have the present "pork-barrel" tariff maintained for their exclusive benefit at the expense of the consumer without regard to the interest of the beet grower. What other "patriotic' impulse could move this "volunteer" organization to pay such a high price for the luxury of Mr. Palmer's services and publications?

INTRODUCTION.

Knowing that sugar is too broad a subject to be covered "at a glance," and that a practical knowledge of any special phase of it can only be acquired through circumspect observation, "Sugar at a Second Glance" implies a closer scrutiny to the tariff aspects lost sight of in "Sugar at a Glance," and it is intended to be a comment upon, exposure of, and answer to this latest "vision" of the beetsugar interests.

In the explanatory letter, to be found on page 2 of his treatise, the author indulges in this "modest" self-recommendation: "Having exercised the utmost care in making and checking the various conversions, I feel justified in stating that no substantial error has crept into the work." While this expresses the self-satisfaction of the author with his effort, we accepted it as merely defining the limits of

his knowledge and pursued our independent investigations with the result of having revealed to us in chart after chart and page after page not only where "substantial error had crept into the work," but also where willful misrepresentations had been attempted.

In the first place, under the pretentious caption of "National Economy," and "High Cost of Living," "Sugar at a Glance" is a masquerade of the beet-sugar manufacturer and land promoter in the guise of the beet-sugar "economist" for the purpose of obscuring and evading the real issue of tariff revision. Their disguises and distractions are graphic representations of remote and imaginary "indirect benefits" to accrue primarily to the farmer and eventually to the public through encouragement to more extensive cultivation. of the sugar beet by maintenance of a high tariff.

For themselves they prefer the more direct benefits" that accrue from the maintenance of this special privilege legislation that enable the factory to buy sugar beets from the farmer on a free-trade or low-tariff basis and sell sugar to the consumer on a high-tariff basis. This has in the past enabled the beet-sugar factories to overcapitalize, to pay excessive dividends amounting in some cases to 35 per cent (Michigan Sugar Co.) and others to 100 per cent (Union Sugar Co.), or to accumulate a surplus of $9,000,000 in five years, after paying regular yearly dividends on preferred and common stock (a large part of which was originally water), a feat accomplished by the Great Western Sugar Co. of Colorado.

Mr. Palmer conveniently abandons any attempt to justify our present high tariff on sugar, from the attractive but elusive theory of "equalizing the cost of production between home and abroad." The author well knows that the present "pork-barrel tariff rate" can not be defended upon that basis; hence, he presents arguments to divert attention from the real question at issue in the hope of leaving in the minds of his readers the impression that any material reduction made in the interest of the consumer would spell "ruin" to the domestic sugar industry, discriminate against the farmer, and indefinitely postpone solution of "the high cost of living" problem, while he claims acceptance of his doctrines would promote the direct interests of the factory, the indirect interests of the farmer, and eventually compensate the consumer by reducing the high cost of living through remote increases in crop yields. Even the familiar appeal "to be given 10 years more" is not touched upon. This oldtime favorite was first introduced at the Cuban reciprocity hearings, appeared again before the Payne committee to ask for an extension of 10 years, in order to fulfill the former promise of "production of all sugar at home," but was too feeble or ashamed to present itself at the last hearings before the Senate Finance Committee, since 10 years of high protection disclosed an increase of only 400,000 tons in domestic beet production, while domestic consumption increased nearly 1,000,000 tons. All past representations and favorites have now given place to this new discovery and panacea for "high cost of living" known as "indirect benefits."

To indulge in a controversy over the indirect agricultural benefits to be derived through cultivation of sugar beets in rotation with other crops would carry us too far afield and away from the principal consideration of the effect of our high tariff upon the ultimate price to

the consumer. Suffice to observe that these remote, "indirect benefits" do not materialize solely because of the planting of the sugar beet, but rather as a consequence of the condition in which the soil is left after employing the necessary intensified "horticultural" methods in its cultivation. This may be understood readily from the fact that England neither cultivates nor produces any sugar beets, yet by application of the most e."ective, intensified methods of farming and use of the most productive means in rotation upon her limited agricultural area forces her soils to yield more bushels of wheat, rye, barley, and oats per acre than do the fields of Germany on which the sugar beet is grown so extensively. This was effectively pointed out by Senator Williams in his speech on the sugar tariff in answer to Senator Lodge's "review" of Senate Document No. 890. It is highly improbable that England would have failed to have experimented with the sugar beet in her aim to secure the maximum yields or to have adopted their extensive cultivation and use did they prove either necessarily conducive or indispensable to the attainment of this end, as she had the further inducement of originating domestic sugar production; whereas now all the sugar she consumes is imported. The comparison of crop yields between the two countries, with the advantages in favor of England where no sugar beets are cultivated, demonstrates that intensified methods of farming, and not the use of sugar beets, are responsible for the increase.

Moreover, we are inclined to question whether the sugar beet is responsible for the increase in crop yields of Germany to the extent and in the manner represented by Mr. Palmer. His claim is to the effect that Germany has more than doubled her yields per acre of wheat, rye, barley, and oats, solely through a system of rotation, one year in four, in connection with fields planted to sugar beets. Such a process would require one-fourth of the agricultural area of Germany to be planted in sugar beets annually. This area, according to Mr. Palmer's statistics, is 42,776,000 acres, one-fourth of which would be 10,694,200 acres. As a matter of fact only one-eighth of this allotted area, or 1,247,213 acres, is planted to sugar beets in Germany, from which is produced an average crop of about 2,500,000 tons. Hence, the logic of the situation makes us rather skeptical about the actual application of the sugar beet in rotation with other crops in the manner assumed by Mr. Palmer, and inclines us to the belief that the adoption of more intensified methods of farming during recent years may be the more probable cause of these increased yields.

Furthermore, he apparently overlooks the most important point; and that is, what might be entirely practical in Germany with an area of 209,000 square miles and a population of 65,000,000 would be most impractical in the United States, with an area of 3,025,600 square miles and a population of 94,000,000.

In order to reap the indirect benefits of the necessary crop rotation system alleged by Mr. Palmer to be practiced in Germany and to be responsible for the crop increases, it would be necessary to plant to sugar beets, annually, one-fourth of the 194,371,000 acres now planted to corn, oats, barley, wheat, rye, and potatoes in the United States, or 48,592,750 acres, which on the present basis of production of 600,000 tons from 500,000 acres, would result in a production of

beet sugar in the United States of 58,308,000 tons, or more than three times the world's annual production of sugar, both beet and cane, would require 7,020 more beet-sugar factories to be erected, and a capitalization (based on the present basis) of the stupendous amount of $13,800,560,000. These preliminaries would have to be adjusted before the farmer could profit from the "indirect benefits," so alluringly pictured by Mr. Palmer.

In 25 years we have extended our sugar-beet cultivation to 475,000 acres. Ön the same basis, 2,500 years would be required to extend it to 48,592,750 acres. We beg to be excused from extending the calculations further so as to demonstrate the cost to the consumer. We are forced to these extraordinary calculations by adopting Mr. Palmer's impractical premises.

We are prompted to inquire what the effect of the withdrawal of all this land from the cultivation of other crops would have on "the high cost of living."

Thus it is apparent that so far as area is concerned there is no limitation to what could be done in the United States, but this shows how impracticable of application are Mr. Palmer's suggestions. All of this without reference to the most important fact that sugar beets require a large amount of hand labor as compared with other crops, and there are not sufficient field hands for our present agricultural needs. Besides, it is not proposed to interfere with the legitimate growth of the beet-sugar industry, as we will show later that the farmer does not receive the advantages of our high protective tariff, but is paid no more for his sugar beets, and, if anything, less, than the farmer in Germany who works under a low tariff rate.

Meanwhile he, in common with other consumers, has been required to pay $130,000,000 more annually for his sugar supply, as a result of our high tariff.

Again in chart No. 36, Mr. Palmer makes a comparison between the wheat yields per acre of the State of Minnesota and Germany, and shows that Germany raises 127,844,000 bushels of wheat on 4,316,400 acres, while Minnesota raises but 67,600,000 bushels on 5,200,000 acres. Now, in order to arrive at a same relative yield as that of Germany, one-fourth of the 5,200,000 acres, or 1,300,000 acres in Minnesota, would have to be cultivated to sugar beets each year. This is two and three-fifths times the total area now cultivated to sugar beets in the whole United States, and would mean a production in Minnesota alone of 1,560,000 tons annually, require the erection of 190 beet-sugar factories, in addition to the only one that is now in operation, and a capitalization of $360,000,000, in contrast with the present $1,200,000. If the area should be extended to North Dakota, Minnesota, and Kansas, to bring them up to the average of France, as represented by Mr. Palmer, in chart No. 37, then 4,168,000 acres annually would have to be planted to sugar beets, which would mean a yield of 5,004,000 tons of beet sugar annually, would entail an addition of 600 beet-sugar factories, where now there are only 2 over the whole area, and a capitalization of $1,184,280,000, in contrast to a present investment of less than $3,000,000. Then again, where is all the necessary labor to come from? All of which deductions illustrate the futility and impracticability of Mr. Palmer's