former was commuted to fine and costs, and of the latter to 30 days in jail.

The importance of these underweighing practices, however, must not be exaggerated. They evidence the cupidity of the sugar companies, or perhaps the desire of their managers to get results (and thus earn their salaries); but even if never discovered, they would not have helped the trust appreciably to maintain its position, except by providing it with the sinews of war. At best, they would merely have enabled it (and the other companies that carried on these practices) to make somewhat larger profits.

The American Sugar Refining Company has also been guilty of other abuses. It has been the recipient of special railroad favors. Freight in the sugar trade is an important item; the territory in which a sugar refining concern can profitably sell depends largely on the freight rates. Both the testimony of officials and the decisions of the courts bear witness to the fact that the American Sugar Refining Company has obtained railroad rebates; in fact, the federal government has collected large sums of money by way of fines for these illegal practices.2 The company has also made use of local price discrimination, factor's agreements, and covenants restraining sugar refiners from reëntering the field. A special form of competition directed against the beet sugar companies-so the government petition charges was the practice of erecting beet sugar factories in the neighborhood of proposed independent plants, and of contracting for all the available beets in the neighborhood, thereby making it impossible for the independent factories to engage in manufacture.3

The American Sugar Refining Company, up to the death of Mr. Havemeyer in 1907, was a great advocate of secrecy in corporate affairs; and subsequent events made it clear that this policy was adopted mainly because so much was being done

1 See Hearings on the American Sugar Refining Company, 1911-1912, pp. 301-302, 1419; and 212 U. S. 481-499.

2 Original Petition, p. 91.

* Ibid., p. 147.

that could not bear the light of day. Up to 1907, for example, very little information was given out in regard to the earnings of the company. Mr. Havemeyer, in answer to the queries of the Industrial Commission, stated the philosophy which underlay this attitude of the company. "Q.-Do you believe that these trusts should be put more specifically under governmental control than they are, that they should have examination or inspection similar to the national banks? Mr. Havemeyer.Not at all. I think the Government should have nothing to do with them in any way, shape, or manner.

"Q. You think, then, that when a corporation is chartered by the State, offers stock to the public, and is one in which the public is interested, that the public has no right to know what its earning power is or to subject them to any inspection whatever, that the people may not buy this stock blindly?

"Mr. Havemeyer.—Yes; that is my theory. Let the buyer beware; that covers the whole business. You can not wet nurse people from the time they are born until the time they die. They have got to wade in and get stuck, and that is the way men are educated and cultivated." 1

Of recent years, however, the policy of the company has changed. According to its officials, its policy is to give the greatest possible publicity to its affairs.

Railroad favors and unfair competitive methods thus helped the sugar trust to establish its position. But undoubtedly the greatest source of the sugar trust's strength was its financial ability to buy out those concerns that proved themselves able to compete successfully with it. The tariff wall shut out foreign competition; all that was necessary to retain control was the acquisition of the strongest concerns in this country. During the earlier years of the life of the trust, this policy of buying out competitors proved generally successful, in spite of the persistence of these competitors. But recently, especially with the development of the beet sugar industry, the American Sugar Refining Company has been steadily declining in relative im

1 Industrial Commission, I, pp. 122-123.

portance. Apparently it is losing its right to be called a trust. A seeker after truth might properly inquire, why, if the trust form of organization is in fact more efficient, the sugar trust has not held its own against independent refiners, even with the purchase now and then (at excessive figures) of the more aggressive of its competitors? Before accepting industrial monopoly as a natural evolution, he would be justified in asking for more proof of the fact of such economies.

As to the influence of the trust on prices, the former head of the American Sugar Refining Company claimed that the sugar trust had been a benefit to the country; that it had reduced prices to the consumer. As proof, he compared the average margin1 between raw and refined sugar during the nine years 1879 to 1887-the trust was established in 1887-with the average margin during the eleven years 1888 to 1898. His comparison showed that whereas the margin averaged 1.098 cents during the period prior to the organization of the trust, it averaged only .966 cents during the period subsequent thereto.2 This proved, it was claimed, that the consumer had benefited by the existence of the trust.

This comparison, however, is not convincing. The period prior to 1887, as the following table shows, was one of high margins during the years 1879 to 1882, but also one of rapidly declining margins. The scale of operations was being greatly expanded, with a consequent lowering of costs; and competition being active, lower prices for refined sugar and lower margins were the natural result. Had Mr. Havemeyer compared the four years 1884 to 1887 with the four years 1888 to 1891 or with the four years 1892 to 1895-the American Sugar Refining Company was organized in 1891-he would have arrived perforce at the opposite conclusion.

A more significant study is the course of prices year by year,

1 Because of the frequent fluctuations in the price of raw sugar, the significant figure is not the price of refined sugar, but the difference between the price of raw and refined sugar, known as the margin. The margin represents the cost of refining, plus profits.

2 Industrial Commission, I, p. 103.

interpreted in the light of the facts related in the historical survey. These prices are shown in the table below.

PRICE OF RAW AND REFINED SUGAR, AND MARGIN BETWEEN THEM, 1879 TO 1914 1

During the first four years shown in the table the margin between the price of raw and refined sugar was high. Costs were high, and the margin was necessarily high, if refineries were to make a reasonable profit. During the early eighties, however, as shown elsewhere, sugar refineries were much enlarged; and it became apparent that only those refiners could live who were in a

1 Industrial Commission, I, p. 103; and Willett and Gray's Weekly Statistical Sugar Trade Journal.

Trust formed the year previous.

In March and April of this year the four Philadelphia refineries were acquired.

position to secure the economics of large-scale production. The result of this movement was increased output, lower costs, and reduced margins. The margin had been 1.362 cents per pound in 1879, and 1.437 cents in 1882; by 1887 it had fallen to .768 cents. In October, 1887, the Sugar Refineries Company-a trustee device became operative, and the next year the margin rose to 1.258 cents, an increase of almost half a cent a pound. Possibly the margin in 1887 was so low that even under competitive conditions it would have subsequently increased, and therefore it may not be correct to ascribe all the advance to the trust. Nevertheless it would seem to be clear that the trust did advance prices in 1888, and that they were higher than they would have been had it not been for the trust. In 1889 the margin continued high, though somewhat less than in 1888. These high prices, however, could not be maintained. The price of refined sugar dropped even more than the price of raw, and the margin in 1890 was only .720 cents, and in 1891, .828 cents. In March and April of 1892, it will be remembered, the four Philadelphia refineries were acquired, and the American Sugar Refining Company produced 98 per cent of the country's output. The margin increased from .488 cents per pound in February to .916 cents in March, and to 1.105 cents in April.1 The average margin for the year was 1.035 cents in 1892, and 1.153 cents in 1893 (a panic year). These high margins led, even in a period of industrial depression, to the building of a number of competing refineries; and this would seem to explain, in part at least, the lower margins from 1894 to 1897. In 1898 both the Doscher and the Arbuckle refineries began operations. In that year the margin fell to .730 cents, and in 1899 to .500 cents. Mr. Havemeyer testified before the Industrial Commission that the decline in the margin in 1898 was caused by competitors (or "interlopers" as he called them) starting active operations.2 The margin for 1899 averaged .50 cents per pound. This was

1 Jenks, Bulletin of the Department of Labor, vol. V, no. 29, p. 713. For weekly quotations see Report of the Federal Trade Commission on the Beet Sugar Industry in the United States, pp. 108-122.

2 Industrial Commission, I, p. 108.