No. 524.
Mr. White to Mr. Bayard.

No. 757.]

Sir: With reference to previous correspondence on the sugar bounties question, I have the honor to inclose herewith the copy of a letter which I have received from Mr. Neville Lubbock, chairman of the West India committee.

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.

I have, etc.,

Henry White.
[Inclosure in No. 757.]

Mr. Lubbock to Mr. White.

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.,

N. Lubbock.