The Washington times., 1931-02-07
SUGAR PROBLEM
IS BOTHER|NG
TRADERS
Only Gradual Recovery Hoped
For Due to Huge Supplies on
Hand in Many Markets
BY LEWIS HANEY
Director New York University Bureau
Of Business Research and Former
Enconomist of Federal Trade
mi igcio

| Fnconomist of Federal Trade
Commission.
Sugar production is one Of the
numerous industries suffering
worldwide depression. Raw sugar
in the world markets sells much
below cost of production, and
stocks on hand are so large that
no informed person hopes for
anything more than very grad
ual recovery.
AS in so many cases, the trou-
BILE goes back to war stimulation.
We urged Cuba to help win the
war by producing sugar, and
| prices were run up to highly In
flated levels. The output in Cuba,
Java, and elsewhere has been
enormously increased. Then Eu-
ropean beet sugar producers got
going again. But world consump-
ton of sugar increased less rap
idly than hoped, and actually tell
off a little in 1890. The result
has been the accumulation OF
enormous stocks of raw sugar.
Stocks at New York
At present, such stocks are
about 100000 tons larger than
a year ago. The storage is the
largest On record.
AS in similar cases, the over
production has been kept up by
efforts to maintain prices. CUBA
has tried many schemes to main
tain the market. Now comes tne
most ambitious of all, the SO
called Chadbourne plan.
Under this plan, the important
exporting countries have agreeo
to restrict exports to certain
Quotas" during the next live
years, and Cuba is to reStrlc'
production. BY presidential de
cree, the Cuban crop will be cut
to 3.l22,O0O tons this year, against
4.671 900 tons last year. Ol
course, the other exporting coun
tries may have to cut produc
ton, as a result of reducing thel1
exports.
In addition. Cuba is to finance
the holding of 1,250,000 tons car
ried over from previous crops
which are to be withdrawn from
the market temporarily.
Resembles U. S. Plan
The plan in some respects re
sembleS what our Government is
doing in wheat and cotton. 1r
the case of sugar, however, it i:
certain large banks are involved
They are heavily Germ
through loans and bond issues
and are reported to be back Of
the Chadbourne plan.
AS in other commodities, the
tariff is a factor. We are main
tanning a very high tariff to pro
tect our beet and Louisiana cane
producers. Cuba has also estab
lished high tariffs on many items
in an effort to make up fol
losses on sugar revenues.
The United States Government
is about the only organization
making money on raw sugar. II
collects 2 cents a pound no mat
ter how low the price Of sugar
falls, and will raise something
like $150,000,000 year. That
cent duty is over 100 per cen
on the price of raw sugar!
AS with cotton and wheat, al
this artificial restriction has made
the sugar market so uncertain
that trading is hindered. Wher
markets come to depend or
politics and legislation, business is
impeded.
Plan Is PrObIematiCal
At present, no one knows
whether the Chabourne plan vii
go through or not. Some JaVar
exporters are not in. and the Gov
ernment of Java may have to ex
ercise pressure. German bee1
sugar interests are reluctant par
ticipants. When it comes to get
ting individual producers in com
peting nations to cut their crops
the pinch will appear. Russia 'aS
in wheat and cottonD is disturb
ing factor.
Serious political disturbances
now exist in Cuba, where the gov
ernment is practically in the sugar
business. Moreover, the stats
tical position makes 1t very diff
cult for Cuba to accomplish any
thing by withholding sugar from
our market. Not only do we have
three or four months supply tol
our Eastern markets, but the Wes'
has a big surplus of beet sugar
and any price advance Woulc
stimulate sugar beet production.
The whole sugar situation /!
thus extremely unsettled. Th'
Chadbourne plan is a gamble
almost sure to fail sooner or later
The securities of sugar producing
companies are not suitable for in
vestment. Only the sugar retlner!
can hope to make profits and ever
they are handicapped by the un
certainty of their raw maCerla
markets.
ThicnuO Trndp ROnrn