3 marks 50 or 8 fr. 75 per 100 kilog. To show more clearly how German refiners profit by this arrangement it suffices to say that in France the difference is only 4 fr. per 100 kilog. Summing up the various advantages which refiners get from the Trust, we find : 1. Increase of margin of refinery expenses, from 3 marks 60 to 4 marks (for 50 kilog.) ... 2. Acknowledged profit on minimum price ... ... 3. The difference between the actual rate and the maximum and minimum price being 2 mks. it is not unreasonable to suppose that refiners will at least get 80 per cent. of it, i.e. : ... 4. The difference between loaf and cube sugar will increase by about 0.75 mks. Supposing that two-thirds of the consumption will be under that form, they will obtain ... Thus on every 50 kilog. i.e. 6 mks. or 7 fr. 50 for 100 kilog. 0 40 0 50 1 60 ... ... 0 50 Seeing that the German consumption amounts 750,000 tons refined, the profit to the Ring can therefore never be below 52,500,000 fr. We have just explained that at the low quotation of the season 1897-98, the manufacturers would have obtained 46,000,000 fr.; but surely in that case the maximum price would have been applied, which would have given an additional profit of 3,750,000 mks. or 4,700,000 fr. to refiners as profit from the Ring during that critical year. It would be altogether different if the raw sugar rates were average rates: by taking the quotation of 11 mks. (which corresponds to 9 mks. 65 per 50 kilog. Hamburg, and to 28 fr. per 100 kilog. for No. 3 in France), the manufacturers would have a profit of 2 + (1 mk. 75 + 0.175) × 750,000 = 28,875,000 mks. or 36 million fr., which divided by the number of tons of the total output, i.e., 1,800,000 tons, would give a profit of 2 francs per bag, and leave a minimum of 16 million francs in the pockets of refiners; this sum applied to the 750,000 tons for home consumption, would show also a little more than 2 fr. per 100 kilog., and applied to the 500,000 tons refined exported would represent a supplementary export bounty of 3 fr per 100 kilog. It is reasonable to expect that the exportation of German sugar which up to this time was divided equally among raw and refined, will more and more take place in the form of the latter, i.e., the proportion will soon be greatly in favour of the refined. The sugar industrial community of Germany, which seems far more anxious to husband public opinion than the same circles in Austria, has tried to find an excuse for those advantages in a pamphlet. In this it is stated that a large part of the money will go to the pension fund of the workmen of the factories, and a part of the profit will be set aside for the war fund, etc., etc., but this does not alter the question. What is truly remarkable is the lavish precautions taken to prevent secessions, and the enormous penalties imposed upon possible contract breakers. Adherents must give in advance bills of exchange as a guarantee for the payment of those penalties. The foregoing remarks prove that Germany and Austria have forged a formidable war weapon. But all this is only possible, because there exists in those countries a very high customs surtax, which is almost equivalent to the value of the sugar itself. It shows therefore the importance of studying that customs question at an International Conference. XVI. Indirect Premiums in Russia. SINCE August 1, 1881, the duty on native sugar has been levied on the actual quantity produced. Since September 1/13, 1894, sugar of every class produced by the Rus sian factories, pays a duty of 1 rouble, 75 copecks* per pood.† Imported raw sugar pays a duty of 3 gold roubles, and refined sugar a duty of 4 roubles. Ukase of July 2, 1895:-After the sugar crisis in 1894-5, the Syndicate of Russian sugar manufacturers solicited the intervention of the government with regard to the legal regulations concerning the production and the grant of export bounties. The new legislation, established at first for the three seasons, 1895-6, 1896-7, and 1897-98, then prorogated till further order, is based on the following principles: The Cabinet Council fixes every year the probable sugar consumption of the country. This quantity is divided between the various factories according to their average output, and all sugar manufactured beyond the stated quantity will have to pay in addition to the actual excise duty of 1 rouble 75 copecks per pound, a surtax equal to that duty, a deduction of 60,000 poods (9,828 bags of 100 kil.) being made in favour of each mill. In other words, the sugar produced in excess of the quantity required stated by the Government pays twice the amount of the excise. Each manufacturing or refining firm must have a certain compulsory amount of stock, fixed for each season by the Cabinet Council, and this stock the owners may not dispose of, except on receipt of an ordinance from the Minister of Finances. This stock, kept for the home markets, shall only be used when the price of sugar in the Russian market has gone beyond a certain limit, fixed likewise by the Minister of Finances. It will not be subject to a surtax. When the sugar is exported the excise duty and the surtax on the surplus production will be refunded. But the surtax on the surplus quantity is never reimbursed if the sugar is sold for home consumption. The manufacturer cannot possibly sell his surplus sugar * 1 rouble=100 copecks=2/2. † Pood 36,1127 lbs. Ꭰ for home consumption because he would have to pay a duty of 3.50 r. per pood. Prices fluctuate between 4.80 r. in summer and 4.60 r. in winter, giving an average of 4.70 r.; the duty of 1.75 r. being deducted there remains a sum of 2.95 r. per pood or 48 fr. per 100 kilog. Deducting the surtax of 1.75 r., he would obtain a net price of 1.20 r. or 3 fr. 20 per 16.38 kilog. (1 pood) net, i.e., 19 fr. 54 per 100 kilog., which is below cost price in Russia and the price in London. This means, therefore, compulsory exportation, and M. d'Aulnis de Bourouill explained very clearly the character of the export bounty which the Russian system disguises.* No manufacturer knows in advance how many poods he will be able to sell to the home market beyond the fixed allowance of 60,000 poods granted to each factory. That quantity will be determined by comparing each factory's total production with that of other firms. Thus it is to the interest of each manufacturer to increase his output, for the price at 48 fr. per 100 kilogs. duty deducted, leaves him a very good profit, while prohibitive custom dues insure him against foreign competition. Thus, though the legislator intended to limit the production of sugar, he has, in fact, stimulated it, because manufacturers can manage to sell at a loss to foreign markets in order to realise compensatory profits on the home markets. The number of factories has increased considerably of late years. At the present time there are 286 sugar factories in Russia, against 268 in 1899-1900 and 244 in 1898-99. Taking the season 1898-99 we find the general stock was 46,359,819 poods powdered sugar (99%) divided thus: Stock from preceding season... poods 4,124,879 * Conférence internationale sur le régime des sucres (p. 86), Brussels, 1898.-Les primes à l'exportation des sucres, broch., 1899. In order to maintain the price of 4.70 r. the Minister of Finances took 35,500,000 poods for the Russian markets, which left for compulsory reserve and exports 10,850,819 poods. = = The 244 factories had the right to sell at the rate of 60,000 poods each, a total of 244 × 60,000 poods 14,640,000 poods, leaving 35,500,000 14,640,000 20,860,000 poods to be divided between them. From the latter quantity is to be deducted a compulsory stock, fixed by the Minister of Finances at 10 per cent. over the quantity necessary during the previous season, i.e., 3,171,981 poods. There is therefore an exportable quantity of 7,687,838 poods, or 24.5 per cent. of the surplus. For a factory with an average output of 173,000 poods per season the position is as follows: If the same factory trebled its output, the division The net selling price of sugar (duty deducted) in Russia being 2.95 r. per pood, against a cost price of 2.20 r., a profit of 75 copecks per pood is therefore realised. The price of export sugar, F. O. B. Odessa, is 1.73 r., leaving a loss of 47 copecks per pood. The result is on the difference between the sales in the home markets of 134,015 and 332,646 poods = 198,631 poods, a gain of 198,631 x 75 copecks 148,973 roubles profit. = |