No. 528.
Mr. White
to Mr. Bayard.
Legation of
the United States,
London, June 20, 1888.
(Received June 30.)
No. 785.]
Sir: I have the honor to acquaint you that upon the
reception of your instruction No. 876 of May 17 I communicated to Mr.
Walpole and to Mr. Bateman (a very able statistician at the board of trade,
to whom I am indebted for much valuable information on the sugar bounty
question) copies of the letter from our assistant secretary of the Treasury
to yourself, dated May 14, with an intimation that I should be happy to
receive any expression of opinion with reference to the view therein
expressed which they might see fit to send me; and I beg to inclose
herewith, for your information, the copy of a letter, with the accompanying
memorandum, which Mr. Walpole has sent me in reply; also a memorandum, from
Mr. Bateman on the same subject. You will observe that the latter is based
entirely upon our own and the French official statements, and ignores any
unofficial yield of refined sugar. Mr. Bateman in a private note, however,
tells me “that it is quite a personal statement.”
In view of Article VII of the draught convention, signed in April last at the
International Sugar Conference, I venture to think it of great importance,
not only that our Treasury, but also that the Governments represented at the
conference should be satisfied that there is at present no excess of
drawback over duty in the United States.
[Page 734]
That such is not the present conviction of the delegates by whom these powers
were represented at the conference there is no doubt whatever, and I may add
that until the receipt of Mr. Thompson’s letter I was under the same
impression, the more so as no exception was taken in your instruction No.
830 of March 22, acknowledging the receipt of my report upon the first
session of the conference, to the statement therein contained, that the
drawback in the United States “still affords a bounty to our exporters.”
I have the honor to acquaint you, in connection with the sugar-bounties
question, that on the 16th instant a deputation from the Work, men’s
National Association for the Abolition of Foreign Sugar Bounties” called
upon me for the purpose of expressing the earnest hope of that body that the
United States would not be a barrier to the abolition of bounties by
refusing to sign the proposed convention. They argued that the American
workingman would not be at all injured by the abolition of export bounties,
whereas the British workingman would be thereby greatly benefited. I replied
that it was impossible for me to say what course my Government would
eventually pursue with regard to this question; but that if they would put
their views in writing I should be happy to forward the document to you.
They have not deemed it necessary, however, to adopt this course.
I have, etc.,
[Inclosure 1 in No. 785.]
Mr. Walpole to Mr.
White.
Custom-House, Dublin, June 11, 1888.
Dear Mr. White: I inclose a memorandum in
answer to the United States Treasury letter of the 14th of May last.
I hope you will understand that I have no wish to set up my views as
against very competent authorities in the United States; indeed my
desire would be to agree with the United States Government that there is
no bounty on export, and you may recollect that I was glad to bring
under your notice at the conference statistics showing the enormous
falling off of the exports of refined sugar to Great Britain since the
reduction of the drawback in 1886, but the letter of the 14th ultimo
from the United States Treasury does not, I fear, dispose of the fact
that there is still a bounty on export. Practically the position is as
follows: A Quantity of raw sugar, yielding 100 pounds pure sugar, pays
duty 2.40 cents per pound, but on this 100 pounds the refiner receives
2.60 cents per pound. Now, I think that since the reduction of drawbacks
in 1886, so far as the British refiners are concerned, the United States
are not an important factor in the matter; but as regards foreign
producers, the United States bounty, however small, may be used by them,
unduly, for the purpose of defeating the convention. You will recollect
that almost all the foreign delegates alleged that their Governments
were ready to abolish bounties, subject to the condition that all other
countries did likewise.
Foreign refiners and producers will say we like our bounties, and we
think we ought to keep them; but at all events, if you are going to
deprive us of them, obtain for us fair play all round.
I believe that the United States can not move in the matter at present,
and I must apologize for sending you so long a memorandum. I only do so
because ultimately it may be of advantage that an as exact appreciation
of the matter as is possible should be arrived at; moreover, Louisiana
producers may be benefited by a convention.
You will understand that the memorandum and these observations emanate
from me personally, and that if I have made any mistake in the
memorandum I alone am to blame, for I have not been in communication
with Baron de Worms or my colleagues on the subject.
Yours, etc.,
[Page 735]
[Inclosure 2 in No. 785.]
Memorandum on letter from United States Treasury,
dated 14th May, 1888.
The scale of duties, according to polarization, presupposes a scale of
yield of each grade of sugar. The scale begins at sugars polarizing 75
per cent., on which a duty of 1.40 cents per pound is levied. The duty
increases .04 cent per pound with every degree of polarization, so that
sugars polarizing 90 per cent. are charged 2 cents per pound, and the
top of the scale, 100 per cent, polarization, is equivalent to a duty of
2.40 cents per pound. That being so, it is clear that sugar polarizing
90 per cent. is assumed, according to the scale, to yield tit 2/240 X
100 or 83.3 per cent. of pure sugar. As it appears that the average
polarization of raw sugar used by refiners is about 90 degrees, we can
calculate what the drawback on hard sugar should be when extracted from
that class of sugar. The calculation will give the same result whatever
proportion of hard and soft sugar we take, but I will adhere to the
proportion given by the United States refiners themselves. The scale of
duties, as I have pointed out, assumes that a polarization of 90 degrees
is equivalent to a yield of 83.3 per cent. of pure sugar. The figures
therefore stand thus:
|
Pure sugar. |
| 65 pounds hard sugar= |
65. |
| 24 pounds soft sugar (1.84 drawback = 76.6 per cent, yield of
pure sugar) |
18.3 |
| Total yield of pure sugar |
83.3 |
The drawback and duty received by the refiner are:
|
Dollars per 100 pounds. |
| 65 |
pounds hard (drawback 2.60) |
1.69 |
| 24 |
pounds soft, duty at least equal to drawback of 1.84 |
.44 |
| 7 |
pounds sirup. |
|
| 4 |
pounds loss of weight. |
|
| 100 |
Total duty returned |
2.13 |
Duty paid on the raw sugar:
| 90 polarization = 83.3 yield |
2. |
| Excess |
.13 |
Which is equal to 20 cents per 100 pounds of hard sugar.
The refiner really gains more than this because he receives a drawback on
sirup. Why he should receive that drawback it is difficult to
understand, as he has already received in drawback on sugar what
professes to be the full repayment of the duty he has paid on the raw,
though really an excess payment of 20 cents per 100 pounds. It is
erroneous to urge, because the calculation in the former memorandum
(based on a yield furnished by the United States refiners) showed that
the raw sugar which gave such a yield must have polarized 87, whereas
the average polarization of raw sugar used by refiners is 90, that
therefore this discrepancy accounts for the difference between the
drawback shown by calculation and that fixed by the Government. Every
raw sugar gives a yield in accordance with its strength, and every yield
arrived at must presuppose a corresponding strength in the raw sugar
from which it is obtained. It is not asserted nor is it probable that
the refiners are charged upon an excessive yield. It is impossible for a
sugar polarizing 87 to give the yield of one which polarizes 90; and it
is equally impossible to impure a yield of 87 to one which should give
90, or vice versa. The figures taken in the
former memorandum showed on calculation that they come from sugar
polarizing 87. They are, therefore, no guide to the drawback which would
be obtained from sugars polarizing 90.
There is no need, however, to go into any hypothetical yield because the
scale of duties indicates in itself that the drawback should be on each
grade of sugar, and even this calculation is unnecessary, for it is
clear that the scale of duties is equivalent to a duty of 2.40 cents per
pound on pure sugar and that therefore that is the correct drawback to
allow on pure sugar.
The calculation of the drawback which should be allowed on each grade is
as follows:
The duty on raw sugar is now levied in proportion to the pure sugar
contained in it, the scale beginning at the bottom with sugar containing
75 per cent of pure sugar, which is charged with a duty of 1.40 cents
per pound, and going up at the rate of .04 cent per pound for every
additional percentage of pure sugar, so that 100 per cent, of pure
sugar, i.e., pure sugar, would pay 2.40 cents per
pound. It is evident, according
[Page 736]
to this scale of duties, that a raw sugar containing 76 per cent, of
pure sugar is estimated to yield g 1.44/2/40 X 100, or 60 per cent. of
pure sugar, and so on up the scale, which therefore runs thus:
|
Estimated yield, per cent. |
| Raw sugar polarizing, i. e.,
containing, 76 per cent. of pure sugar |
60 |
| Raw sugar polarizing, i. e.,
containing, 79 per cent, of pure sugar |
65 |
| Raw sugar polarizing, i. e.,
containing, 82 per cent, of pure sugar |
70 |
| Raw sugar polarizing, i. e.,
containing, 85 per cent, of pure sugar |
75 |
| Raw sugar polarizing, i. e.,
containing, 88 per cent, of pure sugar. |
80 |
| Raw sugar polarizing, i. e.,
containing, 91 per cent. of pure sugar |
85 |
| Raw sugar polarizing, i. e.,
containing, 94 per cent, of pure sugar |
90 |
| Raw sugar polarizing, i. e., for
containing, 97 per cent. of pure sugar |
95 |
The excess of drawback is therefore fully proved as follows:
| Per cent, of pure sugar contained in the raw sugar. |
Equivalent yield of extractable pure sugar. |
Duty paid
on the raw sugar: i. e., drawback which
should be allowed on yield of pure sugar. |
Drawback
actually allowed (2.60 per 100 pounds). |
Excess of
drawback. |
Excess per 100 pounds
of pure sugar. |
| 76 |
60 |
1.44 |
1.56 |
.12 |
.20 |
| 79 |
65 |
1.56 |
1.69 |
.13 |
.20 |
| 82 |
70 |
1.68 |
1.82 |
.14 |
.20 |
| 85 |
75 |
1.8 |
1.95 |
.15 |
.20 |
| 88 |
80 |
1.92 |
2.08 |
.16 |
.20 |
| 91 |
85 |
2.04 |
2.21 |
.17 |
.20 |
| 94 |
90 |
2.16 |
2.34 |
.18 |
.20 |
| 97 |
95 |
2.28 |
2.47 |
.19 |
.20 |
In short, the higher a sugar polarizes the higher the yield. The variety
is infinite, but whatever holds good in one particular must be equally
true of every other.
[Inclosure 3 in No. 785.]
Sugar drawback in United States.
Taking the average polarization of raw sugar used by United States
refiners at 89.50 degrees, I turn to the French statement of cane sugar
yields for 1887 (Journal Officiel, May 30, p. 2232) and find the
corresponding effective yield in refined sugar polarizing 89.50 was
taken at 78.52 per cent. Taking the import duty at 2 cents per pound,
this would make the true drawback 2.55 cents, or .05 less than the
present United States drawback of 2.60; but there is no doubt that the
French system is too favorable to their refiners, as is very clearly
stated in a United States Government Report, Department of Agriculture,
Bulletin No. 5. At p. 36 Mr. Wiley says:
“The method of co-efficients described and used in France for the
commercial valuation of raw sugars, though doubtless justified for
certain beet and high-grade cane sugars, is open to serious objection.
The results given by it necessarily vary a great deal, approaching near
the truth for some, but falling far short for others, being generally
too low. In cane sugar (almost the only raw sugar imported into this
country) the ash is a much less disturbing factor than in sugar from
beets. In this latter case the ash is largely soluble and thus produces
a maximum melassigenic action, while the ash of cane sugar is largely
insoluble, and therefore excites a much less injurious effect.”
If, then, the deduction for ash is taken with the co-efficient 2 instead
of 4, as the United States Government chemist suggests, the sugar I have
described would show a yield in refined sugar of 80.96 instead of 78.52,
and the corresponding drawback, would be 2.47 cents. Mr. Wiley further
adds: “Under the present regulations of the tariff this amount (i e., the drawback) would be found, I believe, to
be nearly 2.50 cents per pound of pure sugar.”
There is little doubt, then, that, taking the calculations of the United
States and the French officials, these latter being notoriously very
favorable to the refiners, the present export drawback in the United
States of 2.60 cents is considerably in excess of the true amount.
[Page 737]
In making the above calculation I have been careful to take sugar of 89
plus polarization, in accordance with the Secretary of the Treasury’s
letter to the Secretary of State of the 14th ultimo, which states that
number to be the average used by refiners. I find, however, from the
last trade volume of United States, for the year 1886–’87, that the No.
94 plus was the one under which most raw sugar was imported, namely,
more than 11 hundred million pounds, compared with 525 million pounds at
89 plus degrees.
At the French equivalent the refined yield of raw sugar at 94.75 would be
89.61 per cent., which is equivalent to a drawback of 2.45
cents—(2.20/.896=2.45)—thus more than confirming my calculation that
2.60 is too high.
