Honolulu star-bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1912-2010, 1917-06-30
ELEVEN PER CENT
URGED AS FAIR
SUGAR PROFITS
Federal report on beet sugar.

Federal report On beet sugar.
The report OF the Federal Trade
Commission on the beet sugar indus
try which was awaited with great
interest at the time the investiga-
ton was undertaken, following the
passage Of the Underwood tariff law
in 1913. has been made public at last.
With the time that has elapsed since
the facts on which it is based were
collected it now has little except
historic interest Perhaps the most
significant point about the publication
OF the report at this time is that it
serves TO illustrate the remarkable
change that has taken place within
the past three years in the con
ditions surrounding the industry,
says a recent issue of Facts About
Sugar"
Every item that enters into the
cost OF producing sugar, for example.
has increased tremendously in price
since the report was compiled. The
cost OF seed has multiplied several
times over; the price of beets has
nearly doubled; field and factory la
Dor is much more highly paid; coal,
chemicals, bags and other supplies
all show great advances. The prices
of many of the materials aud sup
plies used in sugar manufacture are
double or treble the figures that pre-
vailed before the war. The cost of
construction and of all kinds of equip
ment has increased correspondingly
so that the capital investment in
VolVed in erecting a factory Is much
greater now than at the earlier date.
Without attempting to figure out pre-
cisely the effect of the advances In
price that have taken place in these
various factors of production it is a
conservative estimate that the cost
Of producing sugar has increased
seyenty-five per cent or more within
this period. 1t Is obvious, there
fore, that investigations into the cost
Of production in 1914 or previously
are valueless for application to pres
emit conditions.
1t is estimated by the. report that
the average profits Of beet sugar
companies for the five years prior
to 1913-1914 were eleven per cent.
In 1913-1914, it is pointed out, the
average return was only three per
cent. AS a matter Of fact, as the
report mentions, some companies
were operated at a loss throughout
the period. It is interesting to note
that eleven per cent is exactly the
amount agreed upon, in the orders
for the taxation of profits which were
adonted in Great Britain early this
year, as the rate of profit that should
reasonably be exempt from taxation
in the case of a sugar company.
The Board of Referees who passed
mon the matter decided that earn
inss of eleven per cent upon the cap
ital invested should be exempted
from taxation in the case Of corpor-
atoms and twelve per cent in the
case of individuals engaged in sugar
production. In arriving at this de-
eision the Board took into consid-
Grafton the fact that the sugar indus
try is subject to sharp fluctuations
and that in many seasons 1t is i'm
possible for capital to realize any re-
turn upon It's investment.
Judged by this standard, therefore,
the beet sugar companies of the
United States were earning only
what is regarded as a reasonable re-
turn according to the basis adopted
in Great Britain where capital, prior
to the war at least, was satisfied
with a lower rate of income than
was demanded in this country.