Mr. Lubback came to see me a few days ago on the subject, and I told him if
he could put his views in writing that I should be happy to transmit them to
you.
[Inclosure in No. 757.]
Mr. Lubbock to Mr.
White.
The
West India Committee,
51 Lime
street, E. C., May 18,
1888.
Sir: Referring to the conversation I had with
you some days ago, I have now the pleasure to report to you, as
promised, upon the present position of the American sugar industries in
reference to the bounties granted upon sugar by various European
Governments.
The sugar industries of the United States may be divided into three
categories. There is, first of all, the interest of the producers, in
the main carried on in Louisiana, where the production last year war
about 140,000 tons of cane sugar. Endeavors are being made in other
parts of the United States to produce sugar from sorghum and from beet,
but it is still largely a matter of doubt whether, unless large
subsidies are accorded to this industry by the United States, they are
ever likely to become of any considerable importance.
The second category includes the refining industry of the United States.
This is a gigantic industry, and, in view of the annually increasing
consumption of the United States, is one which is likely to
increase.
The third category is a somewhat peculiar one. It consists of the sugar
industry of the Sandwich Islands, which, for some reason or other, the
United States seems to [Page 727] think
it worth their while to subsidize to an enormous extent. The production
of the Sandwich Islands, which under the influence of these subsidies is
rapidly increasing, was last year about 100,000 tons, and must have cost
the United States tax-payers not less than $5,000,000. What advantage
the United States gain by this enormous subsidy is not obvious to
outsiders. The amount of it, however, is so great that the question of
bounties or no bounties in Europe is one which is quite immaterial, so
far as this industry is concerned Should this subsidy, for any reason,
be terminated, it is obvious that the interests of the Sandwich Islands
would be identical with those of the producers in Louisiana. It will be
evident that any influence which forces the price of a commodity below
its natural price—that is to say, below the price at which it can be
produced and sold at, with a reasonable amount of profit, without
artificial assistance from Governments—must be detrimental to all those
engaged in the industry of production who are not in receipt of such a
subsidy as will enable them to compete, on equal terms, with those who
are more fortunate.
In the case of Louisiana, the duties levied in the United States at
present operate as a powerful protection—a protection which amounts to
£10 per ton, sugar being worth £15 to £18 per ton ex duty—so that the
injury caused to the industry by the European bounties is hardly
appreciable. In the event, however, of the sugar duties in the United
States being largely reduced or abolished altogether, the depreciation
of price caused by the European bounties would inevitably seriously
cripple the sugar industry of Louisiana. It seems, therefore, to be to
the advantage of this industry that the bounty system of the European
Continent should be brought to an end.
Coming now to the question as it affects the refiners of the United
States. In one respect they are in a similar position to the producers
of Louisiana, inasmuch as the existing duties prevent any competition
from outside upon United States markets. The only competition,
apparently, which they have to fear is the competition which is
obviously arising out of the large subsidies granted to the Sandwich
Islands on the production of sugar. As this production increases in
size, it will evidently enable the refiners of the Western States to
undersell the refiners of the East. In the event, however, of the duties
being abolished in the United States, if the European bounties should be
continued, as they at present exist, there can be no doubt that at once,
large quantities of bounty-fed refined sugar would be exported from
European countries to the United States. Of course, it would be open to
the United States Government to accord bounties to their own refiners
equivalent to or even in excess of those granted by European countries,
but, under the present law of the United States, such bounties are
illegal, and it would, therefore, appear that the interests of the
refining industry of the United States no less than those of the
producing industry, would be promoted by a general convention putting an
end to all bounties whatsoever.
I am, etc.,
