Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-02-20

higher tariff would increase the
advantage of domestic producers still
further, especially those producers in
our dependencies and possessions, Porto
Rico, the Philippines and Hawaii, who
also pay no tariff. For the past several
years the tariff has benefited these
producers at the expense of Cuba, and
the industry in Cuba has been in the
depth of depression Because of this
discrimination against the Cuban pro-
ducers, the domestic sugar industry has
done fairly we'll in recent years, al
though it has never regained the pros
perity 1t enjoyed in 1920 when sugar
touched Csc.
The tariff makes 1t tremendously i'm
portant for an investor In sugar securi-
ties to understand the position Of each
company.
Cuban Producers.
Since it is estimated that rs per cent
Cuba are American owned, many believe
that aside from the moral effect of
pauperizing Cuba by still higher tariff
the Government should lower the tariff
rather than raise it. But the present
tendency seems to be in opposite direc-
ton and investors in Cuban sugar pro-
ducing properties today find their stocks
sinking lower and lower.
The chart shows the trend of three
of the larger Cuban producing COM
panies. All of them have suffered
heavily during the past five years, espe-
cially while the Cuban government was
attempting to restrict production Of
sugar in an effort to raise the price
Recently Cuban officials have come to
the realization that since Cuba produces
only one-sixth of the worlds sugar they
could only control the price at the ex-
pense of their own producers and for
the profit of the rest of the world. Next
year Cuban producers are free to pro-
duce as much as they please. although
they still have the tariff differential
hanging over their heads.
Cuban American is the only major
producing company in Cuba still pay
ing a dividend. Besides producing on a
large scale it operates many factories
and has recently gone into refining AS
with all Cuban producers strenuous eff
forts are being made by Cuban Ameri-
can to cut down cost of production.
But the tariff has caused earnings to
decline from $7.45 in 1928 to $1.08 last
year. For several years it has man
aged small earnings and to continue its
81 rate.
Punta Alegre's story has been pretty
much the same as Cuban American, al
though this company deemed it wise to
discontinue dividends after 1925.
Cuban Dominican has had the sharp
est decline of all, for 1t is more highly
speculative and has earned nothing
since 1924.
Porto Rico.
The other three sugars shown on the
chart operate in Porto Rico and have
the tariff advantage over the Cuban
companies. Fajardo is listed on the
curb and its earnings have fiuctuated
widely from $4,73 to $2334 a share
since 1922. It pays $40 in dividends,
but has not held up quite as well
against the general depression in the
world sugar industry as did the other
two companies. South Porto Rico'S
earnings have been fairly steady, aver
aging 1914 during the past five years.
1t pays So dividends and an extra.
Central Aquirre has been notably sue
ceSSful in recent years In following a
program of intensive cultivation. Its
success is reflected in the steady rise
of its stock. Earnings have been some
what more erratic than South Porto
Rico's, but have averaged $3.50 share
on present stock for the past five years.
1t is interesting to note the depressing
effect of the hurricane on Porto Rico
sugar stocks last September.
While 1t is generally expected that
world conditions in the sugar industry
might improve gradually within few
years, the price of sugar is now at
very low level. If higher sugar tariff
is put in force it will offset the Cuban
companies adversely and help the Porto
Rican companies. A lower tariff would
of course have the opposite effect.
copyright, 1920