96 degrees to 100 degrees, the polariscope test of the refined. He thus thought that the margin necessary for profit should be put at some 75 cents a hundred, instead of from 50 to 60 cents. He apparently reckoned in some interest on the investment with the cost, whereas some of the other witnesses apparently did not do this. Mr. Jarvie, for example, of Arbuckle Brothers, testified that, with a margin of from 50 to 60 cents at that time, sugar could be refined without loss; while Claus Doscher was willing to state that refining could be done without loss on a margin of 50 cents. Mr. Post, at that time a commission merchant in sugar and molasses, selling agent of the Mollenhauer and National sugar refining companies (independent), was inclined to put the necessary margin somewhat higher than Mr. Doscher, about 60 cents, but he, although in a rival company, conceded that a great establishment like the American Refining Company's establishments ought to have an advantage of from 3 to 5 cents a hundred in refining. Since this testimony was given more than fifteen years ago, costs of refining have doubtless increased, especially since the outbreak of the European war, for the reasons previously indicated.

Another point which should be kept in mind when judging this margin, although the influence is often scarcely noticeable on the chart, is that, in order to secure the same profit, the margin between the raw and the refined sugars must be slightly greater when the price of raw sugar is high, inasmuch as the loss of weight is a more expensive waste. If, for example, with raw sugar at say $3 a hundred, there were a 7 per cent. waste in refining, this loss would amount to 21 cents a hundred

while if at the same 7 per cent. waste the price of raw sugar were $4 a hundred, the waste would amount to 28 cents. It is clear, therefore, that in order to make the same profit the margin should be 7 cents a hundred more with raw sugar at $4 a hundred than at $3 a hundred.

Frequently, too, it happens that there is unusually vigorous competition and a consequent low margin each year from December to March, while the Louisiana crop is being refined and marketed and when consumption is smaller than at any other period of the year. This, however, does not appear with any regularity. Likewise, the influence of vigorous competition upon the price of raw sugar should be noted at times. Whenever the crop is somewhat short, this not merely has the tendency to increase the price on account of the normal scarcity, but it is just at those times that competition is most vigorous.

Beginning with the year 1885, we see that during the years 1885, 1886, and 1887—and substantially the same conditions had existed before there was a low margin, averaging not very much above .5 or 6 of a cent a pound part of the time, as near the end of 1885-a fall distinctly below the margin that had existed for several years before. This decidedly low margin was due, of course, to vigorous competition among the independent refiners, with at the same time, a sharp rise in raw sugar. From the testimony given by witnesses before the Industrial Commission, this competition was so destructive in its nature that a large percentage of the American refineries, 18 out of about 40, went into bankruptcy.

In the latter part of 1887 the Sugar Trust was formed. The margin was immediately raised more than cent a pound, at times fully one cent. During the year 1888 and most of 1889 it will be noted that the margin was at no time less than one cent a pound, at times it was more than 12 cents, and it probably averaged not far from 14 cents. When one takes into account the lessened cost of refining and of distribution that come from the organization of the combination, it is fair to judge that the Trust made enormous profits. In the latter part of 1889 a large competing refinery built by Claus Spreckels at Philadelphia, entered the field, and vigorous competition began. The margin fell immediately to about the point where it had stood before the organization of the Trust, from .6 to of a cent a pound. This vigorous competition continued for rather more than two years, until in February, 1892, the Trust bought up the competing refineries, when the margin at once went back to more than 1 cent a pound, substantially at the same point that it had been held during the noncompetitive period, 1888 and 1889. From 1892 to 1899 the margin remained on the whole high, with a gradual lessening toward the latter part of this period. Presumably this lessening was due in part to improvements in methods of refining and distribution and, in part, probably, also to a growing realization of the danger of inducing new capital to enter the business, tempted by the great profits that the combination was making.

It will be noted that during this period there were various changes in the duty on sugar, but that these changes seem to have had apparently only a slight

temporary effect upon the margin, although the lessening of the duty on raw sugar by the McKinley tariff affected very decidedly the price of both raw and refined sugar to consumers. Early in 1891 a fall of about 2 cents a pound is noticed in the price of both raw and refined sugars, due, of course, to this removal of the duties. It happens that just at that time there is something of an increase in the margin. In fact, it will be quite generally observed that whenever there is an increase in the price of raw sugar, followed by a decline there is likely on the whole to be something of an increase in the margin. The refiners push up the price of their refined sugar as soon as there is an increase in the price of the raw sugar; but when the fall in raw sugar comes, they are likely to delay slightly the time of lowering the price of refined sugar, thus getting an increased profit for the time being. Such increases in profit, owing to the more rapid fall in the raw sugar than in the refined, may be noticed in a number of instances, for example, in 1893, 1896, 1901, and 1905.

In 1898, after a period of some six years during which the sugar combination had had little effective competition, Arbuckle Brothers, Claus Doscher, and some others entered the field in a vigorous competition against the American Sugar Refining Company. Prices were immediately cut, as will be noticed on the chart, so that the margin between raw and refined sugar was even less than cent a pound, probably all refineries running at a loss for a brief period.

Eventually in 1900 the bitter struggle ceased, and without any formal combination, the American Sugar Refining Company apparently gave up the attempt

to drive its rivals out of the market. From that time to the present there has been competition, new rivals having come into the field from time to time, although even to-day the great company takes the lead in the market. Its percentage of the total output, however, gradually diminished until in 1907 it fell below 50 per cent. Its percentage of the output for the last few years has been diminishing until in 1916 it was only 33.64 per cent. From the middle of the year 1900 on to the outbreak of the European war the margin has clearly been kept high enough so as to yield reasonable profits at least, and during most of the time very good, not to say large, profits.

It will be noted that during the last few years, when general prices have been increasing very rapidly, the price of sugar on the whole has not increased materially, although there have been two or three periods when for a brief time the price has gone up. When this has been the case, the reason has been clearly due to some temporary influence in no way immediately connected with the corporations. For example, in 1900 there was a decided increase in the price of raw sugar, as well as in that of refined. The influence was perhaps slightly due to the fact that in May, 1900, the German syndicate was completed, with the understanding that this syndicate was to last until 1904. That may possibly have influenced somewhat the price of the German beet sugar, one of the raw sugars used in the United States. Doubtless a much greater influence, however, was that the American supplies during that season ran short. In July, just about the time when the increase came, it was necessary for the Americans to do an un