Some Aspects of the Tariff Question

Taussig, Frank William
(1859-1940)
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1915
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Cambridge, MA: Harvard University Press
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Part II, Chapter VII

Beet Sugar

II.VII.1

The beet-sugar industry presents questions essentially different from those considered in the preceding chapters. The sugar beet is grown in the temperate zone, and its cultivation is one among many possible, forms of agriculture. In view of its peculiar position and significance, it deserves careful and detailed consideration.

II.VII.2

Chronologically, the beet-sugar supply is among the later additions to the total for the United States. Barring a slight amount from one or two California enterprises, no beet sugar at all was produced in the country before 1890. The bounty given by the tariff act of that year (1890) is often referred to in the literature on the subject, especially that put forth by protectionists, as having had a stimulating effect on the industry. Though this bounty was no more than an equivalent for the duty then remitted, it may have given some impetus, for the same psychological reasons as in the case of the Louisiana planters.*53 Several states also gave bounties for the production of beet sugar, usually moderate in amount and limited in time; these constituting, so far as they went, a substantial bonus.*54 Probably no less effective than the bounties at the start, and more effective as time went on, was the propaganda of the Department of Agriculture. That Department preached beet sugar in season and out of season; spread broadcast pamphlets dilating on the advantages of beet growing for the farmer and giving minute directions on methods of cultivation; maintained a special agent, who kept in touch with the manufacturers and farmers, and annually reported on the progress of the industry. The result was familiarity with the possibilities throughout the country, the removal of all obstacles from inertia and ignorance, and a rapid development in all regions where there was a promise of profits.*55

II.VII.3

At all events, the beet-sugar product increased rapidly after 1890. It quadrupled between 1890 and 1900, and more than quadrupled between 1900 and 1910,—a remarkable rate of growth. Far from remaining insignificant and quite negligible, its contribution to the country's sugar supply became more and more important. It surpassed that of Louisiana cane sugar, equalled that from Hawaii, and itself was surpassed only by the supply from Cuba. In round numbers, over one billion pounds of beet sugar were produced in each of the four years, 1908-12. The years 1912-13 and 1913-14 still showed a marked increase.

II.VII.4

Equally significant and striking was the geographical distribution of the industry. The tabular statement on the next page shows what that distribution was.

BEET-SUGAR PRODUCT IN THE UNITED STATES
(in million pounds)
Total California Utah Colorado Michigan Wisconsin Other States

1899-00 163 85 19 2 33 .. 24
1900-01 172 57 17 13 55 .. 30
1901-02 365 140 28 45 105 6 41
1902-03 438 159 38 78 109 8 46
1903-04 466 136 46 89 128 11 56
1904-05 470 93 57 111 104 22 83
1905-06 635 144 48 209 122 27 85
1906-07 970 178 82 343 177 36 154
1907-08 852 180 93 245 171 37 126
1908-09 1,025 255 98 299 212 34 127
1909-10 1,120 280 77 206 278 36 243
1910--11 1,019 291 76 206 260 38 148
1911-12 1,199 323 115 250 251 57 203
1912-13 1,385 318 119 432 190 46 139
1913-14 1,467 342 114 448 244 25 140

II.VII.5

One fact is obvious on a cursory inspection of these figures. The beet-sugar industry is in the main massed in the far west,—in California, Utah, Colorado, and the adjacent region. The agricultural belt of the central states has a very slender share. Only one state in this part of the country, Michigan, makes a considerable contribution to the supply. Wisconsin, and Ohio (not separately given in the table) each adds a little. No other state in this region has more than one beet-sugar factory. Barring Michigan, the production of beet sugar may be said to be confined to the Rocky mountain and Pacific states.

II.VII.6

The explanation of this geographical concentration does not lie in any obstacles from climate or soil in other parts of the country. The beet flourishes over a very wide area. An instructive pamphlet issued by the Department of Agriculture shows the zone in which the sugar beet may be expected to "attain its highest perfection."*56 This zone or belt, two hundred miles wide, starts at the Hudson, and sweeps across the country to the Dakotas; turns southward through Colorado, New Mexico, and Arizona; and then, turning again, proceeds west and northwest through California, Utah, Idaho, and the Columbia valley. It includes a great part of the north central region. Yet in the last mentioned, the most important and productive agricultural region of the country, there is virtually no beet growing or sugar making, except, as just mentioned, in Michigan. The climatic and agricultural possibilities are not turned to account until the far west is reached.

II.VII.7

The reason for the absence of beet growing and hence of sugar-beet production in the north central region is to be found in the principle of comparative advantage: agriculture is applied with greater effectiveness in other directions. It is not that the climate or soil or even the men make it more difficult to grow beets here than in Europe. It is simply that other ways of using the land are found more advantageous.

II.VII.8

An excellent investigator in the agricultural aspects of the beet-sugar industry has said:*57 "The growing of beets is not agriculture, but horticulture." All the manuals and pamphlets insist on the need of elaborate preparation, minute care, much labor directly in the fields. The planting of the seed does indeed take place by drills, the plants coming up in continuous rows. But after this first operation, painstaking manual labor is called for. When the young shoots come up, they need first to be blocked, then thinned. "Blocking" means that most of the beets in the rows are cut out by a hoe, only small bunches being left, about ten inches apart. These bunches are then "thinned"; every plant is pulled out by hand except one, the largest and healthiest. "Great care should be exercised in this work, and by careful selection all the inferior plants should be removed... When thinning, it is a good plan to give the ground a thorough hand hoeing."*58 Throughout the growing period the beets must be cultivated, partly with a horse cultivator, partly with the hand hoe. "The cultivator and the hoe should be used alternately until the beets are too large for horse cultivation without injuring them. Hand laborers should continue to go over the beet field, pulling the weeds and grass that may have persisted."*59

II.VII.9

Essentially the same situation appears when harvesting is reached. The beets may be first loosened by a plow and by a lifter; but each individual beet must be pulled out by hand. Then they are knocked together gently to remove the adhering dirt. Finally, they are "topped"; that is, the neck and leaves are cut off with a large knife." The removal of the tops of the beets is a tedious process, which in Europe is performed by women and children.... Constant supervision is necessary in this work."*60

II.VII.10

No machinery has been devised that serves to dispense with the large amount of hand labor called for. "Several attempts have been made to construct a mechanical device by which the beets can be topped, thus saving a large expense, and perhaps a successful device of this kind may some day be invented. So far as is known at the present time [1908], however, this process has not been successfully accomplished by machinery, and the topping must still be done by hand."*61 "Inventive ingenuity in Europe and especially in America," said the Special Agent of the Department of Agriculture in 1906, "has been directed to planning a harvester which will do away, as far as possible, with this expensive hand work.... It cannot be said that any of these newly-devised implements works successfully in all soils."*62 In 1912 the Department's report again had to confess that "a really successful beet topping and harvesting machine" was yet to be devised, and that "at present all the operations of pulling, topping and loading are done by hand."*63

II.VII.11

It follows that the successful growing of the sugar beet calls for a large amount of monotonous unskilled labor. No small part of it is labor that can be done by women and children and tempts to their utilization. Not only does the typical American farm and farm community lack the number of laborers required; the labor itself is of a kind distasteful to the farmers. "Thinning and weeding by hand while on one's knees is not a work or posture agreeable to the average American farmer. Bending over the rows and crawling along them on one's hands and knees all day long are things that the contracting farmer is sure to object to as drudgery.... Our farmers ride on their stirring plows, cultivators, and many implements."*64 As was remarked by a witness at a tariff hearing: "the thinning and the topping of the beets it is pretty hard to get our American fellows to do, and they prefer to hire the labor and pay for it."*65

II.VII.12

Anticipating for a moment what will be said in the following paragraphs of the beet-sugar industry of the Mountain and Pacific regions, it may be pointed out how this need of extra labor has been met. The labor situation is instructive not only as regards the beet-sugar industry itself, but also as regards the general trend in the United States during the last generation.

II.VII.13

Almost everywhere in the beet-sugar districts we find laborers who are employed or contracted for in gangs; an inferior class which is utilized, perhaps exploited, by a superior. The agricultural laborers in the beet fields are usually a very different set from the farmers. On the Pacific coast they are Chinese or Japanese. Except in Southern California, where the Mexicans are near at hand, most of the work is done by Japanese, under contract; there being usually a head contractor, a sort of sweater, who undertakes to furnish the men. In very recent years Hindus (brought down from British Columbia) also have appeared in the beet fields of California. In Colorado "immigrants from Old Mexico compete with New Mexicans (i.e., born in New Mexico), Russians, and Japanese."*66 Indians from the reservations have been employed in Colorado. At one time, convict labor was used in Nebraska. In some parts of Colorado, in Montana, and at the beet fields of the single factory in Kansas, refugees from German colonies established long ago in Russia are employed. In Michigan, the main labor supply comes from the Polish and Bohemian population of Cleveland, Buffalo, Pittsburgh. The circulars issued by the Department of Agriculture and by the state boards and bureaus repeatedly call the attention of the beet farmers to the possibility of employing cheap immigrants. The troublesome labor problems, it is said, need not cause worry: here is a large supply of just the persons wanted. "Living in cities there is a class of foreigners,—Germans, French, Russians, Hollanders, Austrians, Bohemians,—who have had more or less experience in beet growing in their native countries.... Every spring sees large colonies of this class of workmen moving out from our cities into the beet fields."*67

II.VII.14

The sugar manufacturers, who buy the beets and make the sugar in their factories, play a large part in bringing this labor to the fields. Indeed, they play a large part in every phase of the industry,—on its agricultural side as well as on its manufacturing side. They supply seed; give the farmers elaborate directions on methods of cultivation; employ supervisors to visit and inspect the farms, and to spur the farmers to the needed minute care; of necessity they test the beets at the factory, and pay according to sugar content; and they often undertake to provide the labor. Sometimes the factories contract to attend to the field labor themselves, receiving from the farmers a specified price,—so much for bunching and thinning, so much for each hoeing, so much for topping. The farmers then have nothing to do but supply "reasonable" living accommodations.*68 More often farmers not thus provided for secure their laborers through contractors, at a fixed price of so much (varying from $15 to $20) per acre for all the work; these middlemen being hunted up or selected for the farmers by the factory managers. Such "sweaters" make a profit from their sub-contract with the field hands; the system being open to the possibilities of overreaching which are too familiar under such arrangements.

II.VII.15

All this is part of the transformation which has been wrought in so many parts of our social and economic structure during the last quarter of a century by the great inflow of immigrants. Agriculture as well as manufacturing industry is feeling the influence of the new conditions. Laborers from the congested foreign districts of the cities—Italians, Bohemians, "Huns," "Polacks," Russians—make their way to the market gardens surrounding the cities, to vegetable districts such as that of the Chesapeake peninsula, to the cranberry fields of New Jersey; these do the hand work for the shrewd Yankee farmers. Some of them may be on the way to the acquisition of land through their savings. But certainly for the time being the conditions are socially and industrially unwelcome. They are not dissimilar to those of the Sachsengängerei, of ill repute in eastern Germany. They are very different from the conditions which we think of as typical of agriculture in the United States. As in these analogous cases, so in the beet fields, there is an agricultural proletariat.


II.VII.16

As yet, however, the main agricultural region of the United States,—the great central region in which are the wheat and corn belts,—has been little affected. Here we still find extensive cultivation, agricultural machinery, the one-family farm. It is true that during the harvest season there is a heavy demand for agricultural laborers, and that this is satisfied by laborers who may be said also to constitute an agricultural proletariat. It is true, further, that the stage of pioneer farming has been passed or is rapidly being passed, that rotation is becoming more systematic and skilful, the land more valuable, cultivation more intensive. Nevertheless this remains the region of the one-family farm. The farmers "ride on their stirring plows and cultivators" and in this way are able to do most of the work on their lands for themselves.

II.VII.17

Throughout the corn belt, more particularly, there is no sugar-beet industry of any moment. It pays better to raise corn; there is a clear comparative advantage in corn growing. This grain is peculiarly adapted to extensive agriculture. It also lends itself readily to the use of machinery; corn can be "cultivated" between the rows by horse power. It is a substitute for root crops, and can be rotated steadily with small-grain crops.*69 It is a direct competitor with the sugar beet for cattle fattening. The advocates of beet raising always lay stress on the value of the beet pulp, the residue at the factory after the juice has been extracted, for cattle feeding. But corn is at least equally valuable for the purpose, and the typical American farmer raises it by agricultural methods which he finds both profitable and congenial. One man can grow forty acres of corn. He can plant only twenty acres of beets; and these he cannot possibly thin and top.*70 In Iowa "the farmers are progressive, successful, and satisfied. In fact, this has been the main obstacle to installing the sugar industry there. The farmers have not shown a disposition to grow the beets. When the farmers are advised that beet culture is accompanied with considerable hard work, factory propositions usually succumb to the inevitable. The farming class of the state is accustomed to the use of labor-saving implements in the fields."*71

II.VII.18

It is not an accident that the states of the Great Lakes region in which the sugar-beet industry has shown some development,—Michigan, and in much less degree, Ohio and Wisconsin,—are outside the corn belt. Except along the southern edge of these states, the grain does not ordinarily mature. Yet even here corn remains a formidable competitor of the sugar beet, in its use through ensilage.*72 It is cut green, stored in the silos, and so is available for cattle feeding. It continues to be available in rotation with other grain and with grass. During the last two decades Wisconsin has become a great dairy state. "The pasture, hay, and corn lands of the state form the basis of the livestock industry."*73 Here there is a profitable system of agriculture in which there is no need of the minute attention, the elaborate cultivation, the wearisome labor, which are required for the sugar beet. As compared with the far west, Michigan and Wisconsin, as will presently appear, lack some climatic advantages. A tariff subsidy may make it worth while for their farmers to grow the beets; but without the subsidy this use of the land cannot compete with others more advantageous.

II.VII.19

When the tariff legislation of 1913 was under consideration the beet-sugar makers of Michigan pleaded strenuously for the maintenance of protection on the ground of consideration for vested interests. It must be admitted that the plea was in one regard of exceptional force. Not only had the general policy of protection been long maintained by Congress, and investment in accord with it encouraged; but, as one of the witnesses before the Ways and Means Committee said in 1909, "the investment which our company made in the sugar business was made on the invitation and urgent advice of the United States Government through its Department of Agriculture."*74 It was a serious responsibility which the Department thus took on itself. Its zeal too often was indiscriminate. Its propaganda rested, in part at least, on a crudely mercantilist principle; on the assumption that it is desirable to produce within our own borders anything and everything that can possibly be produced there, and that a tariff policy based on this assumption will be maintained indefinitely.


II.VII.20

Turn now to the far west, where most of the beet sugar is made. Two conditions are favorable to beet growing in this western region: the climate, and the special advantages of irrigation.

II.VII.21

The variety of the beet suitable for sugar making flourishes in a cool climate; but it needs plenty of sun. "Abundance of sunshine is essential to the highest development of sugar in the beet. Other things being equal, it may be said that the richness of the beet will be proportional to the amount—not intensity—of the sunshine."*75 Evidently the cool region of cloudless sky in the arid west meets this condition perfectly.

II.VII.22

Again: "in respect to moisture, the sugar beet is peculiar in some respects.... There are three periods in the life history of the sugar beet which demand entirely different treatment so far as moisture is concerned: (1) the germinating or plantlet period; (2) the growing period; (3) the sugar-storing period." During the first "the beet needs sufficient moisture and warmth to germinate and start it, but never an excess." During the second, "the beet needs little if any moisture." During the third, or sugar-storing period, "the plant should be given no water. The conditions desirable at this period are plenty of light and dry cool weather. If the beet is given moisture to any considerable extent, it will be at the expense of both sugar and purity."*76

II.VII.23

The irrigated regions of Colorado, Utah, Idaho, Montana supply just the right combination of climate and moisture: cool temperature, abundant sunshine, moisture as needed, absence of moisture when harmful. Hence Colorado and Utah are described as the ideal beet-sugar states. "Considering everything, Utah is the ideal beet-sugar State.... Its natural conditions are quite similar to those of Colorado."*77 In Colorado 12 to 25 tons of beets to the acre are readily secured; even in the early days 15 to 17½ tons were got on the average; whereas in European countries not only is the tonnage per acre less, but the sugar content smaller.*78 California, where the industry first was undertaken on any considerable scale, and where it has grown steadily, has some special advantages. A good part of its beet district has just the required combination of climate and precipitation.*79

II.VII.24

Contrast such exceptionally favorable climatic conditions with those of the Great Lakes region. The successive reports of the Department of Agriculture dwell on the uncertainty of the beet-sugar crop in this zone because of the irregularity of rain and sunshine. The Michigan farmer, unlike the grower in the irrigated region, cannot count with certainty on abundant sunshine and cannot apply moisture exactly when needed: difficulties which threaten not only the quantity of the crop but also its saccharine content.*80

II.VII.25

The same climatic difficulties are encountered in the European countries where sugar beets are grown. There also the beet harvest and the sugar output are greatly affected by the weather during the growing and harvesting season. The north central states of our own country are not in this respect at a disadvantage. But they possess no climatic superiority for beet growing; whereas they do possess agricultural and industrial superiority for other crops. Beet growing, in other words, suffers from a comparative disadvantage. The far western region, on the other hand, does have unusual natural advantages for the sugar beet. Whether these natural advantages are so great as to enable the industry to hold its own, in free competition with cane sugar and with beet sugar made in the European regions of permanently cheap labor supply, is another question. But they explain why, under the stimulus of protection, the industry grew fast in that region, and in widely distributed parts of it; while yet under the same stimulus it made little progress in the typical agricultural states.

II.VII.26

It is constantly said, with reference both to the mountain states and to those of the central region, that the culture of the sugar beet brings special agricultural benefits. The high cultivation, it is said, improves the quality of the land; general fertility is enhanced; a better rotation is established; the byproducts, especially the beet cake, are valuable for cattle feeding, and this in turn provides manure and maintains fertility; the factory makes a market for local coal and lime; it "stimulates banking and almost all kinds of mercantile business." These advantages have been dwelt on almost ad nauseam in the publications of the Department of Agriculture.*81 So far as the tariff question is concerned, they prove altogether too much. If beet culture is so very advantageous for the farmer, why does he need a bonus or protective tariff to be induced to engage in it? The American farmer is not an ignorant or stolid person; he has access to a multitude of educational and propagandist agencies, and is even beset by them; he is a shrewd observer, a ready innovator. With the transition from pioneer farming, the agricultural methods of the central region have been revolutionized during the past generation. If beet culture were really so advantageous a part of the general change, we might expect its speedy and wide-spread adoption. The advocates of beet growing have simply accepted the common and fallacious notion that the highest cultivation is necessarily the most advantageous cultivation. The agricultural expert is apt to be intent on the gross product, on the largest yield per acre. But the best agriculture is that which secures the largest yield not per unit of area but per unit of labor. Minute cultivation means a large product per acre but by no means necessarily a large product per man.

II.VII.27

The only solid ground for maintaining that protection for beet sugar has been of advantage to agriculture is that of the young industries argument. Ignorance, settled habits and prejudices, unaccustomed methods, the inevitable failures in first trials, all these obstacles may have stood in the way of the beet-sugar industry in its first stages. It is true that the argument for protection to young industries was not supposed to apply to agriculture by List and his followers, since unalterable conditions of soil and climate were thought to determine once for all the geographical distribution of the extractive industries. It would, perhaps, be hazardous to lay down an unqualified proposition of this sort. The course of industry may conceivably be guided and diverted to advantage in agriculture as well as in manufactures. The difference between the two cases would seem to be simply one of probability, of degree. None the less, an important difference in degree remains. It is more likely that industry will pursue its "natural" course in agriculture than in manufactures; since agriculture is affected much more by the physical factors of soil and climate and much less by acquired skill.

II.VII.28

There are still other grounds for questioning the applicability to agriculture of the young industries argument. There is not in agriculture that close contact between different producers or that stress of competition between them which is most likely to lead to improvements; and a stimulus to improvement is the essence of the argument. In the contemporary German controversy, considerations of this sort have been advanced in support of the duties on grain; but there is quite as much weight in the counter argument that agricultural improvement is most effectively spurred by adversity. It comes not from high prices and easy gains, but low prices and the need of facing a difficult situation.*82 The low prices of sugar which prevailed for a considerable period (especially in the decade 1890-1900) proved a blessing in disguise to the Louisiana sugar planters; their methods of cultivation and sugar extraction were improved in the effort to meet conditions of depression. The same seems to have been the case with the Hawaiian planters during the period (1890-94) of free sugar.*83 It has already been pointed out how difficult it is to say whether protection tends on the whole to promote technical improvement or to retard it.*84 A general proposition one way or the other would be as hard to prove conclusively with reference to agriculture as with reference to manufactures. But it seems clear that acquired skill and established advantages count for more in manufactures than in agriculture; and that tariff protection is therefore an even less promising device for promoting better use of the soil. Education, experiment stations, diffusion of the right sort of information, are much more promising. But education and the spread of information, to be really effective, must be adapted to the economic conditions. In this regard our Department of Agriculture for many years showed no discrimination. Under the Republican régime of 1897-1913 its publications were pervaded by a crude mercantilism. Its propaganda for beet sugar rested not on the young industry and eventual independence principle, but on the crude protectionist doctrine that any and every increase of domestic supply was necessarily to the country's advantage.

II.VII.29

Questions in some respects different arise concerning the beet-sugar factory, which buys the beets from the farmers and makes the sugar. Here there is what the business world calls "a straight manufacturing proposition." Whether the manufacturing of sugar can be done to advantage in the United States depends on the same conditions as in other manufactures. It is much affected by the opportunities for using machinery and for the exercise of American inventive and engineering capacity in improving machinery. Such evidence as I can get indicates that so far as this branch of the industry is concerned, the conditions are not unfavorable to its sustained prosecution with little need, if any, of tariff support. When the first factories were built in California the machinery was imported from Germany. "The Yankee inventive genius of machinery men at once took hold of the matter, making so valuable improvements that both the above mentioned factories [at Watsonville and at Chino] were shortly refitted with machines of American make, and every factory in this country in the last few years has purchased American machines."*85 So in the Department of Agriculture's pamphlet on the industry, it is stated that "in the early days of the beet-sugar industry in this country, Europe was called on to furnish all machinery. Now very little is imported, and in fact some of the foreign factories are using American-made machinery."*86 The breaking loose from European tutelage and the introduction of technical improvements are significant indications of the successful adaptation of a new industry to American conditions and of the ability to meet foreign competition unaided. It should be borne in mind, moreover, that the factory managers take an active part in directing and supervising the agricultural operations. In this regard there seems to be abundant and successful enterprise. The managers of the beet-sugar factories have been chiefly instrumental in bringing the indispensable labor supply to the farms. Through traction engines and the like they have grappled with the difficulties of transporting the beets from the field to the factory. They have selected the seeds, and have assiduously spread information among the farmers on the best ways of getting a large tonnage of beets and a large content of sugar. In the far west especially, all this activity has been carried on with industrial and pecuniary success. Neither in the factory itself nor in the problems of organization arising from the interdependence of farm and factory has there been a lack of skill or energy.*87

II.VII.30

It is probably another sign of successful adaptation to new conditions that the American beet-sugar factory carries its operations a stage further than do the factories of Europe. The latter usually produce raw sugar only, which is sent to refineries for the last stage of preparation; precisely as our cane sugar is imported in the "raw" form, and goes through the refineries before being marketed for consumption. The American beet-sugar factories, on the other hand, make refined (granulated) sugar, which is sold at once to the grocers. In Europe the greater geographical concentration of beet growing and sugar making, and the consequent ease of transportation to refineries near by, probably account for the practice there prevailing. The different American practice doubtless took its start because refining was controlled, during the earlier years of beet sugar, by the Sugar Trust and its affiliated concerns; but it persisted because it fitted the geographical and industrial conditions of the industry. Another reason is that in continental Europe beet farming and sugar making constitute commonly one integrated enterprise, and are associated either with estate farming on a large scale or with direct coöperation between large-scale agriculturists and the factory owners. A different sort of cooperation between farm and factory was necessary under our conditions of land ownership, and this has been worked out successfully by the American manufacturers. Neither in the technical aspects of the manufacturing industry, nor in its appropriate organization, is there indication of disadvantage in the United States.


II.VII.31

This brings us to the close of our examination of the sources of sugar supply, and their relation to the tariff. Let us now, by way of summary, proceed to a quantitative estimate of the consequences of the duty on raw sugar; postponing for the moment the consideration of the effect (comparatively slight, as will shortly be shown) of the additional duty on refined sugar.

II.VII.32

The burden of the sugar duty can be measured with greater exactness than is often possible. We know that the price of sugar was raised by the duty throughout the area of consumption. In this case, we have no reason to question the significance of continued imports. The only serious qualification which needs to be made is that which arises for the later years from the uneven and irregular effect of the partial remission on Cuban sugar.*88 Except for this, we could say with confidence that from 1897 to 1913 the price of sugar was raised, the country over, by the full amount of the duty,—one and two-thirds cents a pound. Allowing for the modifying influence of the Cuban remission, we may make our calculations on the assumption that the effect of the duty during the years immediately preceding 1913 was to raise the price of all sugar by one and one-half cents. The figure may not be accurate to the last dot; but the economist is fortunate when he can measure his results with so close an approach to exactness as this.

II.VII.33

Of the tax paid by consumers in the form of enhanced price, a little less than one-half went to the government treasury; the rest,—more than half,—was handed over to the various favored sugar producers. Let us imagine the United States government to present an account, rendering to its wards, the sugar consumers, a statement of what had become of the sums collected from them. The government would properly enter on the debit side the total which it had taken from the consumers, on the credit side an enumeration of the various ways in which it had distributed the total. The fiscal year 1909-10 may be taken as representative. For that year the account would stand thus:*89

UNITED STATES GOVERNMENT IN ACCOUNT WITH SUGAR CONSUMERS,
for the fiscal year 1909-10
Dr. Cr. Paid over (mill. dollars) to
U. S. Treasury Sugar Producers
Taxes
collected on
7,400 mill. lbs.
of sugar @ 1½ c.
On 300 mill. lbs. of full-duty sugar . . . . . $5.3 . . .
" 3,500 " " " Cuban " 45.6 $5.2
" 1,100 " " " Hawaiian " ... 16.6
" 570 " " " Porto Rico " . . . 8.5
" 175 " " " Philippine " ... 2.6
" 750 " " " Domestic Cane Sugar ... 11.2
" 1,025 " " " Domestic Beet Sugar . . . 15.4

$50.9

$59.5
$111.0
$110.4

II.VII.34

It appears that in 1909-10 the government collected 111 millions of dollars from the sugar consumers. It put about 50 millions into its own treasury, using that sum for meeting public expenses; and handed over about 60 millions to the various sugar producers. The proportion going to the sugar producers tended to grow greater during the whole of our period,—from the close of the civil war until 1913. During the early years of the period, the sugar duty had been mainly a revenue tax. By its close, the characteristic features of a protective duty had become dominant: the treasury received less in revenue than the favored producers secured in largess or bounty.

II.VII.35

The sum paid over to the sugar producers would be described by some free traders as a net bonus or tribute to the protected persons: robbing Peter to pay Paul. By other free traders it would be described as so much net loss to the country; not a source of extra gains to Paul, but merely an inducement for engaging in an industry in which the producer made no improper gains, while the consumer paid more than a proper price. The truth would seem to be mid-way. Since the production of raw sugar has the characteristics of an extractive or raw product industry, different producers were in different circumstances. Some were just able to hold their own even with the higher price caused by the duty: they were at the margin, and made no unusual profits. Such would seem to have been the case with many of the Louisiana planters, perhaps most of them; with many beet-sugar growers; with some planters in Hawaii and Porto Rico. Others were in the fortunate position of producing cheaply and yet selling at the duty-raised price; they secured unusual gains, a producer's surplus or economic rent. Such was probably the case with the majority of the Hawaiian planters, with some beet-sugar growers, doubtless with other sugar producers also. As regards this second class, the sugar duty brought not a net loss to the community, but a transfer from some to others: Peter really was robbed to pay Paul. How the total charge was divided between the two, it would seem quite impossible to say.


Notes for this chapter


53.
"It is certain that it [the tariff act of 1890] gave new hope to both operators and growers, and between the time this act went into effect, in October, 1890, and the following June, some $6,000,000 had been invested in beet-sugar factories in this country.... This small bounty, even for a brief time, was a wonderful stimulus to the struggling industry." G. W. Shaw, in Bulletin no. 149 (The California Sugar Industry) of the University of California, 1903, p. 17. Cf. p. 55 above, on the Louisiana situation.
54.
On the bounties which several states have given, see a note by Mr. P. T. Cherington, in the Quarterly Journal of Economics, February, 1912, p. 381.
55.
A series of Special Reports on the Progress of the Beet-Sugar Industry was issued by the Department, and from these I shall quote freely in the following pages. The "Special Agent," though by no means a scientific person, acquired and diffused much information.
56.
H. W. Wiley, The Sugar Beet, p. 5. This pamphlet has been published in several editions by the Department of Agriculture; my references are to the edition of 1908 (Farmers' Bulletin 52).

In the Department's Report on the Sugar-Beet Industry for 1910 and 1911, at p. 29, a statistical statement is given of the millions of acres in the country (including such states as Illinois, Indiana, Iowa, Kansas, Ohio) adapted to sugar-beet raising; and the complaint is made that "if one farmer in four of these states were to plant a three-acre patch and give it the care that could readily be bestowed on so small a plot, it would be unnecessary for us to buy foreign sugar,"—a mercantilist utterance of the sort often found in the Department's publications.

57.
Professor G. W. Shaw, of the University of California; among his various writings see the pamphlet on Sugar Beets in the San Joaquin Valley, p. 6; Bulletin, no. 176, Agricultural Experiment Station, University of California.
58.
The Sugar Beet, p. 20.
59.
Report on Progress... 1909, p. 19. The same story appears in all the accounts of beet-sugar growing. See for example the statements of Mr. Hathaway, of the Michigan Beet-Sugar Company, before the Committee on Ways and Means in 1909; Tarif Hearings of 1909, p. 3311.
60.
The Sugar Beet, pp. 21, 22.
61.
Ibid., p. 22 (1908).
62.
Report on Progress... 1906, p. 38.
63.
Report for 1910 and 1911, p. 64.
64.
Report on Progress... 1906, p. 24. A correspondent writes me from California (1912): "Otherwise than in the performance of such labor as can be done with teams, very few Americans undertake hand labor in the beet fields."
65.
Tariff Hearings of 1909, p. 3418. "Americans will not do that work; not one in fifty," said a Colorado beet grower, testifying (in 1911) before the House Committee to investigate the American Sugar Refining Co.; Hearings, p. 3192. Compare a similar passage in Report of Kansas State Board of Agriculture for September, 1906 (a special report on sugar beets), p. 20.
66.
V. Clark, in Bulletin Department of Labor, September, 1908, p. 483.
67.
Report on Progress... 1904, p. 37. Compare the Report of the Kansas State Board of Agriculture, cited above, p. 19. A correspondent writes me from Bay City, Michigan: "We secure the laborers in such centers as Cleveland, Detroit, Chicago, and Pittsburgh, and these laborers when brought to Michigan make a contract with the farmer to take care of his beets at a certain sum per acre, averaging about $20 per acre.... It is safe to say that about two-thirds of the beets are taken care of by outside labor. In our own case [a large sugar company] we probably brought in about 18oc, laborers." On some smaller beet tracts in Michigan, the farmers and their families do the work themselves, employing no "outside" labor.
68.
The form of contract used by the Great Western Sugar Co. of Colorado is printed in the Hearings of the Committee to investigate the American Sugar Refining Co. (1911), p. 3186.
69.
See the excellent analysis by Professor H. C. Taylor, in Annals of the American Academy of Political and Social Sciences, xxii, p. 179 (1903). Cf. the same writer's Agricultural Economics, pp. 65 seq., and Carver's Rural Economics, p. 100. Professor Taylor, in a recent paper (The Place of Economics in Agricultural Education and Research, p. 96; published by University of Wisconsin, 1911)states more explicitly his conclusion that "it is hardly probable that the sugar beet will ever be able to compete with corn on even terms in the corn belt of the United States."
70.
Tariff Hearings of 1909, p. 341.
71.
Report on Progress... 1904, p. 56.
72.
My colleague, Professor T. N. Carver, states to me: "Corn silage will furnish fifty per cent more feed, acre per acre, than any root crop. Moreover it costs half as much, or less than half, to grow an acre of silage and feed it as it does to grow an acre of any root crop and feed it. The only chance for beet-root cake is to sell it as a by-product, the balance being covered by the profits on sugar."
73.
Progress of the Dairy Industry in Wisconsin, by H. C. Taylor and C. E. Lee, p. 7; Bulletin no. 210 of the Agricultural Experiment Station, University of Wisconsin (1911).
74.
Mr. C. N. Smith, in the Tariff Hearings of 1909, p. 3317.
75.
Professor G. W. Shaw of the University of California, in the pamphlet already referred to, p. 6.
76.
I quote again from Professor Shaw's instructive pamphlet, at pp. 16, 17.
77.
Report on Progress... 1909, p. 37.
78.
Report on Progress... 1904, p. 46.
79.
"The exceptional soil and climatological conditions in California seem peculiarly adapted to the production of beets with a high sugar content. While their reported yield per acre is not so great as that of some other states, the sugar content is decidedly in excess of any other, so that with an acreage considerably less than that of Michigan the total yield of sugar is much more. The calculated yield per acre for the past season was very nearly 3,310 pounds. Many of the California soils are very retentive of moisture, so that with an annual rainfall far below that of the central and eastern part of the country beets can be grown successfully without irrigation. The little rain which they have is usually so nicely distributed through the early and middle seasons of growth as to leave almost ideal conditions for the period of ripening, with its accompanying storage of sugar in the cells. This ripening process is also materially assisted by the alternation of cool nights and warm days, a condition which seems best suited to the formation and storage of sugar in this plant." Report on Beet-Sugar Industry in 1910 and 1911, p. 19.

I take some satisfaction in recalling that, when discussing the beet-sugar situation as early as 1889, I referred to the unusual possibilities of California. "It is not impossible," I wrote then, "that the extraordinary combination of soil and climate in California may bring about a development which could not be attained in other parts of the country." Quarterly Journal of Economics, iii, p. 266, note.

80.
References to the vicissitudes of the weather, similar to that quoted in the text, abound in the Department of Agriculture's Reports on Progress, e.g., Report for 1903, p. 139; for 1904, p. 113; for 1909, p. 46. Concerning the effect on the quality of the beets, see Report for 1903, p. 140; for 1904, p. 57.

A typical statement is that of a recent report: "Normally, the length of the growing season is sufficient and the rainfall is ample and suitably distributed throughout spring and summer, with dry, increasingly cool, fall weather to afford conditions needed for maturing sugar. It is to be noted, however, that in the case of the last crop (1911) this normal condition of affairs was seriously altered. A fine growing season was followed by an unusually rainy ripening and harvesting period, so that what had given promise of being the greatest crop ever produced turned out very poor in quality, although of fair tonnage." Report on Beet-Sugar Industry in 1910 and 1911, p. 22.

81.
See for instance Report on Progress... 1901, pp. 132 seq.
82.
See Ballod, in Verhandlungend. Vereins f. Sozialpolitik, 1909, p. 143, and Esslen, Das Gesetz des abnehmenden Bodenertrags, pp. 226, 237.
83.
Cf. above, p. 62.
84.
See chapter ii, p. 28, above.
85.
Shaw, The California Sugar Industry (1903), p. 17.
86.
The Sugar Beet (1908), p. 38. Similar statements have been made to me in conversation by persons engaged in beet-sugar making. Others, however, no less well informed, have expressed to me a doubt whether any appreciable improvements have been made by the American makers, especially when compared with what the Germans have done.
87.
There was and is bickering, inevitably, between the farmers who grow the beets and the sugar manufacturers; the farmers maintaining that the manufacturers beat down the growers and pocketed the bulk of the profits for themselves. Very likely this was the case; but the growers got quite enough to make beet culture worth while, as is proved by its rapid extension. See Hearings on the American Sugar Refining Co. (Hardwick Committee) 1911, pp. 3313 and passim.
88.
Considered in the preceding chapter, pp. 76 seq.
89.
Figures of this sort are not so easy to compile as one might suppose. They must be put together from scattered statements in the Treasury Department Report on Commerce and Navigation and in the Statistical Abstract.

Domestic production is reckoned by seasons, not by fiscal years, and some adjustment is necessary for comparison with the imported (non-domestic) supply.

In any year it will be found that there are slight discrepancies between the figures given in the various sources. For the present purpose, the discrepancies signify nothing. The figures, which I have intentionally given in round numbers, state the outcome without any substantial deviation from statistical accuracy.

End of Notes


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