470-471

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Reports of Committee on Foreign Relations 1789-1901 Volume 6 pp470-471 300dpi scan (VERY LARGE!)

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back in the shape of duty-free articles and because the duty on sugar is higher (computed ad valorem) than the average of our total imports. A part of the California bullion and wheat and wine sent to England pays for Hawaiian sugar, which is duty free. About one sixth of the Hawaiian crop is thus paid for, and to that proportion there is a total loss of revenue. While it is impossible to compute what the real loss is, I think it safe to say that it probably does not exceed one-third, and certainly does not amount to one-half of the $18,000,000 computed as lost on sugar. In any event the duty never leaves the country. It is paid over by the refinery to the consignee of the Hawaiian, and is paid out again, with much more besides, to American shipping, banks, merchants, and stockholders. The gross profit of $36,000,000 throws into insignificance the possible loss of $6,000,000 or $8,000,000 of revenue.

It has been said repeatedly that all the profits of this magnificent trade and industry go to the benefit of Claus Spreckels and a small clique of speculators. What nonsense! If it did, he would richly deserve it, and a vote of thanks by Congress besides.

It will be going to the root of the matter at once to say that the opposition to the treaty has arisen from the systematic and. in some measure successful attempts to saturate the public press and Congress with utterly false ideas about Claus Spreckels and his relation to the islands, to create a bitter personal prejudice against him, and by implication to illogically and unjustly extend that prejudice to the commerce and industries of the Hawaiian Islands. Claus Spreckels certainly has for many years monopolized the manufacture and sale of refined sugars on the Pacific coast, and ruled that market to the extent of his powers with a rod of iron. But the first grand mistake consists in supposing that the Hawaiian treaty has or could have given any assistance to the establishment of his monopoly or to its maintenance or confer upon it any benefit whatever. The second mistake consists in wholly false impressions about the wholly distinct personal relations of Mr. Spreckels to the industry and commerce of raw sugar. In these he is only one of many men, and though individually his relations are large, yet relatively to the whole they are small, and he can no more control the whole than the Cunard Company can control our commerce with England. As a monopolist of refined sugar he can not escape the odium which always attaches to a monopoly. As a planter and stockholder, as a director of an American steamship company, and a banker, his whole career and course of conduct will compare favorably with that of any great and successful merchant in America.

The monopoly of refined sugar in San Francisco is, like all other monopolies, a perfectly legitimate object of attack; and if it can be broken up in any way such an end is devoutly to be wished.

But Claus Spreckels's relations to the island trade and industry are a totally different matter, and when rightly understood will present themselves to the unprejudiced mind in a totally different aspect. In this field his operations are perfectly legitimate. It is my purpose to point out that any attempt to terminate the treaty is simply an attempt to strengthen and fortify his monopoly and to break down commendable enterprises which should be built up and sustained, and in which Claus Spreckels is merely one of many participants. Whatever damage might be inflicted upon him in respect to his island interest would be more than compensated to him out of enlarged profits of his monopoly as a refiner, while the blow would fall with full and disastrous effect upon thousands of innocent third parties, both in Hawaii and California, whose interests should be dear to Congress and to the American people.

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The Hawaiian treaty has become an object of attack by the sugar-refining interest of the Eastern States and of the sugar-planting interests of Louisiana. The motives which have led to this attack are as follows:

During the last few years the sales of sugar imported from Hawaii, Manila, and Central America, and refined in San Francisco, have been extending gradually into the markets of the Mississippi Valley, advancing further eastward every year, thereby displacing the sales of eastern sugars in the States and Territories west of the Mississippi River. The Eastern refiners and the Louisiana planters believe that the possibility of this arises from the free entry of Hawaiian sugars, thus enabling (as they suppose) the San Francisco refiners to purchase raw sugar much more cheaply than they otherwise could. Thus they believe that the treaty discriminates severely against their interests, and is unjust to them.

This position is denied by the San Francisco refiners and importers of sugar and by the owners of Hawaiian sugar properties in California. They contend that the San Francisco refineries get their raw sugar no cheaper by reason of the treaty, but are obliged to pay the same price for it as for equivalent dutiable sugar from Asia; that the ability of the Pacific refiners to compete successfully with the Atlantic refiners is founded upon conditions wholly independent of the treaty, viz: First, because unlimited amounts of Asiatic sugar can be laid down in San Francisco cheaper than raw sugars can be laid down in New York; second, because through eastward freights over the Pacific railways are scantier than westward through freights, and the railroads naturally prefer to carry sugar at low rates to hauling empty cars. They contend that this competition is a natural one; that it is not helped by the treaty and will not be hindered by its abrogation; that it is destined to grow, and would grow if the Hawaiian Islands did not exist.

Since it is also claimed by the opponents of the treaty that it fosters and sustains a monopoly of refined sugars, and that the benefits of the treaty accrue only to that monopoly, and since the whole complaint is founded in a gross misunderstanding of the nature and conditions of the sugar business on the Pacific coast, it seems proper to discuss the facts at some length. From these it will appear that these charges, as well as others, are utterly without foundation.

It is a self-evident proposition that a cargo of Manila sugar delivered in New York must sell at a price just equal to that of so much Cuban sugar of equal grade. It is evident, also, that the price of that cargo at Manila "free on board" must be less than the New York price by an amount equal to the cost of transportation. It is further evident that the price of a similar cargo of Manila sugar delivered in San Francisco must exceed the Manila price by an amount equal to the total cost of transportation. It is, therefore, an easy matter to compute whether Manila sugar in San Francisco ought to be cheaper than Cuban or Manila sugar in New York. The rate of freight from Manila or Hongkong to San Francisco on sugar is very low. A vessel can be chartered to go from San Francisco to Manila in ballast and bring back sugar at $5 or $6 per ton, but during the last eight years Asiatic sugar has largely come as mere ballast. Freights from Manila to New York range from $9 to $12 per ton. Interest, insurance, and shrinkage being proportional to the time of the voyage are evidently in favor of San Francisco as compared with New York. In brief, the San Francisco price of raw sugar is lower than the New York price by three-eighths to five-eighths of a cent per pound.


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