Evening star., 1901-11-25
WEfss3
Germany's Combination Analysed by
the Industrial Commission.
PROF. JENKS,, INVESTIGATION
The Combination Advantage In
creases.
EFFECT ON HOME CONSUMER

An explanation of how the German sugar
| trust, known as the "Kartell," can supply
one-fifth of the worlds. supply of beet
sugar at a price below all competitions and
still make money for the manufacturers
through the governments bounty is ex-
planned in a report which the United States
Industrial commission has in readiness to
submit to Congress.
A London cablegram printed in The Star
Saturday is startling in the announcement
that this combination has Just been discov-
cred to exist, and that it's effects are so
disastrous to the sugar market that re-
taliatory measures are contemplated by the
British sugar interests, who have also en-
tered into negotiations with the same in
terests in this country to fight the "Kar-
tell
The report referred to was prepared by
Professor jerks, after personal investiga-
ton.
Prof. Jenks' Report. N'.-s
1t shows that before the organization of
the trust in Germany, in spite of the eff
forts made by the government to develop
the sugar industry, 1t had not been flourish
ing, and for long time efforts had been
made to bring about an organization which
would put that industry also INTO a favor
able condition. At length In the latter
part of 1900, the combination was COM
pleted, which SO far, at any rate, seems to
have been satisfactory to both producers
and refiners.
The combination is a union of the sugar
producers who manufacture raw sugar d.
rect from the beets on the one hand with
the refiners on, the other. The white sugar
factories. which themselves produce di-
rect from the beets white sugar that Is
capable of being marketed, have double
part to play, inasmuch as they belong in
part to the first group as being producers
h. o1c0 -.
ond group. inasmuch as they place their
wares directly upon. the market.
Minimum Price Guaranteed.
By the sugar syndicate, that is, the re-
firers there is guaranteed to the pro-
ducers Of raw sugar a certain minimum
price whenever that market price falls be-
low a determined level. This so-calIed in
land normal price has been fixed at 1915
marks per centner, corresponding to the
Austrian normal price of 10 forins per 100
Kilograms. The combination, therefore.
limits itself to an influence upon the inland
price and has nothing whatever directly to
do with the world market price. This lat
ter price, however,, which determines the
amount that may be contributed to the
raw sugar producers by the refiners, is the
average monthly price ON the Magdeburg
market Every month the refiners, the
white sugar manufacturers, and the pro-
ducers from molasses pay over to the syn
dicat ,Deutscher Zucksrra affinerien) the
difference between tile inland nor
NAL price and the world market
price, plus 10 per cent? The entire sum
thus collected forms the socalled combi-
nation advantage QSartennutzen). This is
then paid to the German sugar syndicate
Oeutscher ZuckerSyndieaO, made up of
the manufacturers of raw sugar, and by
this syndicate is distributed among the pro-
ducers of raw sugar in proportion to the
amount of production allowed them by the
tax authorities. .Qt Should be recalled that
the government controls absolutely the
output of sugar in Germany r. ..a,>.
In return for this compensation paid them
by the relineries, the raw-sugar factories
agree, in the first place, to produce them
selves no refined sugar for inland consump-
tion and, in the second, to sell raw sugar
and molasses only on the production OF a
contract which contains the so-calied COM
bination clause and on which is printed
list of all of the factories which belong TO
the combination, both raw-sugar factories
and those producing the refined sugar. Ac-
cording to the combination agreement the
sugar bought must either be sent directly
abroad or must be sold to one OF the. RAG
tories which belongs to the combination.
In case of sale to a third party the pos
SCISSOR is, in each case, obliged TO put the
purchaser his part under the obligations
of the combination. In no case may sugar
be sent to any refinery not included in the
combination. Beyond this the trade in raw
sugar remains entirely free, each factory
De11S dC liberty " Sell IT'S pIOuuCl dt Nitdl-
ever price and to whomsoever it WILL If it
fulills the conditions named above.
The refneries again, on their part, agree
to buy only the raw sugar which has come
from one of the factories belonging to the
combination. ..s
In order to make more easy the transition
to the method Of doing business under the
combination it was provided that during
the first year only half and during the
second only threequarters of the compen-
sation should be given to the raw-Sugar
producers. 49,. 49,.
A still further Limitation of the compen-
Sation to the raW-Sugar factories is this,
that the compensation per centner of raw
sugar can in no case exceed $40 marks. If,
therefore, the world market price goes be-
low 9.35 marks, the fall has no further in
fluence toward increasing the combination
advantage. On the other hand, If the world
market price goes up to the fixed inland
normal price, the combination, of course,
has no effect to increase that price further.
The Combination Advantage.
The combination advantage. therefore, OF
the sugar factories per centners increases
as the world market price decreases, as the
inland consumption increases, and as the
total production falls. 1t might appear at
first thought as If the raw sugar factories
would have no interest whatever In in
creasing the price of their product, since
an inland normal price is guaranteed to
them through the combination advantage
be mistaken, for the high world market
price goes finally to the advantage of the
raw sugar factories also, inasmuch as it
affects favorably their entire production,
while the combination advantage has to
do only with that part Of their product
which remains at home. The highest pos
sible price of sale in each separate instance
comes also to the advantage of the raw
sugar producer, sinces the combination ad-
vantage is reckoned according to the aver
age price for the month and not according
to the price reached i'll 'eaeh special case.
Through the comBfhatieh now the refner-
les, the white-sugap factories and those
which produce sugar from molasses on
their side are in a position to maintain
fixed inland price. since competition prac-
tically disappears. The fixed price for
home consumption is made up by the refin-
ers from the following factors: First, the
inland raw-sugar price, including the COM
blnat1on advantage: second, four marks
margin per centner between the price of raw
sugar and refined sugar; third, fifty pfen-
nigs per centner combination advantage for
the refinertb, and Fourth, ten marks con-
sumption tax per ecentner. Setting aside