manufacturers and refiners to combine and to keep the prices of sugar for home consumption at a high level, and thus collect themselves a supplementary duty from the consumers. These are the main lines of the entente : All the Austrian sugar manufacturers have arranged with the refiners not to supply any sugar for home consumption. In return, all the refiners have agreed to pay 15 florins per 100 kilog., 88% (31 fr. 50), to the sugar manufacturers for every quantity of raw sugar used for home consumption. The total of the allowance due to the manufacturers is divided between themselves in proportion to their specific production, which is calculated in accordance with the average production of a certain number of years. It is very easy to calculate the profits resulting from the Ring, and how they are divided between refiners and manufacturers. For, according to prices quoted in Trieste, we know the value of refined sugar quoted in the international market, as it should be quoted in the Austrian home market,-were it not for the understanding between the sugar interests-by adding to the duty the export bounty with which amount in every country home consumption rates are increased. Thus from the last quotations in kronen, we find the export price at Trieste Export bounty ...... Kr. 27 75 4 60 38 99 Total..... ..... Kr. 70 35 Thus, if there had been no Ring, the price in the Austrian home market would have been 70 kr. 35. Now if we take the quotations for refined on the Prague or Vienna markets, we find : Difference ..... ......... Kr. 84 25 Kr. 13 90 In fact, the profit which is divided between sugar manufacturers and refiners, is slightly below this figure, as it was agreed that so long as raw sugar was not sold at more than 15 florins, or 30 kronen, the price of refined sugar, which would serve as a basis for the division of profits, would not be above 42 florins or 84 kronen; thus everything above 84 kr. went into the refiners' pockets. The price of raw sugar which serves as a basis for these calculations is not the average price of the year, but the average market price in the months between November and April. For the season 1899-1900, this average price was 25 kr. 44; thus the profit which went to the manufacturer for every bag of sugar consumed at home was 30 kr. 25 kr. 44 4 kr. 56. = This difference, therefore, represents a fixed profit to them. If from April to November the price of raw sugar were to rise, manufacturers would nevertheless benefit to the extent of 4 kr. 56 per bag, but in the same way they could not claim any additional profit if prices were to go down. The aim of the contracting parties was to prevent sudden and violent fluctuations from which the markets might suffer when sugar became scarce, and this precaution is all the wiser, since Austrian legislation is wellnigh prohibitive as regards the importation of foreign sugar. To return to the method by which profits are divided, it is necessary before all to fix the figures for production and consumption. Production varies of course every year, yet it may reasonably be set down at 1,000,000 tons. The quantity set down for home consumption is valued at 320,000 tons in refined; but it has been agreed between manufacturers and refiners that 10 per cent. should be added to this figure, so as to represent the consumption in the form of raw sugar, thus giving for 320,000 tons of refined sugar, 352,000 tons of raw sugar. In applying to this figure the difference found above of 4 kr. 56 or 4 fr. 78, we find that for the current year (1899-1900) manufacturers obtained 16,825,000 fr. out of a total profit which stands at 46,400,000 fr. minimum. This sum, then, of 16,825,000 fr. divided by the total of sacks produced, represents a premium to the manufacturers of 1 fr. 68 per bag of manufactured sugar. To the refiners, the premium per 100 kilog. of refined sugar sold for home consumption would amount to 9 fr. 25 if the total of that premium was applied to the 500,000 tons of refined sugar exported on an average. This would mean a supplementary bounty of 4 fr. 50. Without going so far, it is certain that part of this new premium goes to favour exportation under the form of refined sugar. Since the Ring arrangement was started, the proportion of refined in the exports of sugar has increased very rapidly, and is now 80 per cent. of total exports (500,000 tons of refined against 140,000 tons of raw sugar for the last season). Thus it appears that the Austrian refiners obtain the principal advantages of the arrangement concluded, but it is only fair to point out that that state of things would change if the price of raw sugar declined materially on the international markets, and that in that case the manufacturer's share would increase to a large extent. If, for instance, the rate dropped to 20 kr., as it has happened already, the manufacturers would get 36 millions instead of 16. To sum up, the arrangement is of advantage to the manufacturer : 1. Because it guarantees him an excellent average price. 2. Because many manufacturers are refiners at the same time. 3. Because the effect of the Ring, aiming as it does to facilitate exports of refined sugar, is this: that Austria, who had only two customers-England and the United States for her raw sugar, has obtained everywhere new markets for the outlet of her enormous production, and she is for instance enabled to-day to send very large quantities to the Far East, especially to Japan. XV. The German Ring. THE German Ring is in its main lines a reproduction of the Austrian. Owing to a surtax of 20 marks or 25 fr. on foreign sugar, the system works satisfactorily. It has only been in existence since June 1st, 1900, so that we can but judge it by its organization. Two syndicates were formed, one comprising all manufacturers of raw sugar, the other comprising all the refiners, the manufacturers of white sugar, and the mills where molasses are converted into sugar. These two syndicates have come to the following agree ment: Manufacturers shall only sell their raw sugar for home consumption to the firms belonging to the other syndicate, who, on the other hand, bind themselves to buy at 12 marks 75 (exactly equal to the 30 kronen stipulated by the Austrian manufacturers of raw sugar), and declare themselves liable for the difference. But if the price falls below 9.35 marks (equal to the quotation of 8/-, Hamburg, at the international market), nothing is due, so that the maximum which manufacturers may receive on each bag of sugar for home consumption is 3.40 marks per 50 kilog. of refined sugar, i.e. : 6.80 marks + 0.68 marks = 7.48 marks per 100 kilog. of raw sugar. It is admitted, as a rule, that in order to get 100 kilog. of refined sugar, 110 kilog. of raw sugar must be used. From calculations made by the German sugar manufacturers themselves, it appears that if the above had held good during the commercial year, 1897-98, the manufacturing firms would have obtained an additional profit of 36,675,026 marks, or in round figures 46,000,000 fr. The average rate corresponded with 8/94d. on the international market. While the Austrian Ring considers only the price of raw sugar of the first six months of the season, in Germany the allowance will be fixed monthly by taking into account the price of sugar and the quantities sold to home consumption every month by refiners. In order to pay this premium to the manufacturers the refiners have of course to keep the prices for home consumption high. Those prices are fixed by them, as follows: Price of raw sugar for home consumption (per 50 kilog.)... ... ... Cost of refining ... Marks. 12 75 This is the minimum price at which loaf sugar, No. 1, may be sold, while the maximum price may not exceed the minimum by more than 2 marks, that is marks 29.25. It may be accepted as almost certain that this maximum price will be the current one. It is necessary to point out that the refining cost of 4 marks includes already a profit, for during the last three years the average cost was only 3 mks. 60, and even this left a profit. This low cost is explained by the very inferior quality of nearly all the products, by the cheapness of labour and the cheapness of coal. It is very probable that the margin of cost which would leave no profit to the factory, is not 4 mks. but 3 mks. So that on first quality loaf sugar, the profit would not be 0.50 mks. but 1.50 mks. per 50 kilog. or 3 fr. 75 per 100 kilog. But this is only a part of the advantages obtained by German refiners. They are very careful not to mention that the consumption takes place more and more in the form of cube sugar, and that their main profit on the consumers will be the increase of the difference between the price of that class of sugar and loaf sugar. Thus it was decided by the Ring of the refiners that per case of 50 kilog. the difference in favour of cube sugar as compared with loaf sugar would be for the future |