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ESSAY No. LXVIII. - Condy Raguet, The Principles of Free Trade [1835]Edition used:The Principles of Free Trade illustrated in a series of short and familiar Essays originally published in the Banner of the Constitution, 2nd ed. (Philadelphia, 1840).
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ESSAY No. LXVIII.november 24, 1830. The sugar duty. Probable effect upon the price of sugar throughout the trading world, if that duty were abolished. Probable effect upon the sugar-planting interest of Louisiana. THE following article upon the subject of the duty on sugar, is extracted from a Mississippi paper, the Natchez Gazette: “Mr. Editor—You will oblige a Planter of Adams County, by publishing the following extract from a letter, received by the mail of last week, from a gentleman (now in the north) who owns a large sugar estate in Louisiana; addressed to his friend in this neighbourhood. “ ‘I thank you for your opinions about sugar, and your advice to sell my estate, in consequence of the probability of a repeal of the duty on sugar. I cannot bring my mind to the same conclusion. A repeal of the duty would be no saving to the consumers in the U. States—it would only ruin Louisiana, for the benefit of the W. Indies; inasmuch as the planters of Louisiana would have to turn their attention and their capital to cotton and provisions: and the product would consequently be so much diminished in two or three years, that the price would advance in the West Indies, and would command higher prices here than our sugar now does. Our best informed iron masters were opposed to the last additional duty on iron, fearing home competition more than foreign. The result shows their fears were well founded, for there is a considerable decline in the price of the home article. “Would it not be cruel now, after encouraging the investment of so much capital in sugar estates, to reduce the duties, and thereby prostrate all the new establishments? if the protection is continued, in a few years, more will be raised in the United States, than will be required for consumption; and the price must be reduced by domestic competition, to the lowest sum for which it can be produced. “As regards myself, I cannot be a great sufferer, if the duty is repealed; for I am, fortunately, out of debt, and can devote one half of my cleared land to the culture of cotton and provisions. That part of it, which has been in cultivation in cane for some years, can be greatly improved by two or three crops of peas, ploughed in, in the winter; and on the remainder, I can make 60 or 80 hogsheads of sugar, merely to keep my hands accustomed to the culture and manufacture. I have no fear that, by the time my poor land is restored by two or three crops of peas, the price of sugar will be 10 cents by the crop, instead of 6 or 6¼, which we now get; and I will then be prepared to push the culture to the extent of my means. If I should then desire to sell, I doubt not I shall get a much better price for my estate than I can now realize. “If my recollection serves me, the crop of Louisiana sugar, in 1816, was but 16 or 17,000 hogsheads; then the price was 10 to 12½ cents. I believe the crop of the present year, is estimated at 80,000 hogsheads. If only half the new establishments are converted into cotton estates, the price of sugar would not be much reduced by a repeal of the duty. The consumption is increasing daily, and will be greatly accelerated by the repeal of the duty on tea and coffee; so that, in another year, if the crop is diminished 20 or 30,000 hogsheads, by the repeal of the sugar duty, the price will rather advance than decline. “I should think there was much more to be apprehended by the cotton planter from a repeal of this duty, than by the sugar growers—for, the inevitable result will be, to increase the product of cotton greatly beyond the consumption, and thereby create a glut in the market, which must reduce the price. I would, therefore, advise you to sell your cotton estate, and hold your funds for a year or two, and then invest in a sugar estate, which will probably, at that period, be bought for one-third less than they now can. If you do this, by the time you get your sugar estate fairly under way, I have not a doubt it will pay you well, for the price of sugar must then be at least 8 if not 10 cents.’ ” It would seem from the foregoing, that the sugar planters of Louisiana have the faculty of lulling themselves into the same fatal security which is so generally displayed by the Northern manufacturers. Some of them suppose that the duty on sugar is in no danger of being reduced; and what is a little extraordinary, they found this belief upon the notion that the consumers of sugar will be deterred from reducing it, through the fear that the price of the foreign article will be raised upon them, should the culture in this country be materially diminished. To let these gentlemen see that the consumers understand this subject too well to be led into an abandonment of their rights, we shall take the liberty of dissecting the letter in question. The duty on brown sugar is three cents per pound, which is about equal to its first cost in the West Indies, and is, therefore, 100 per cent. The present price of sugar at New York is as follows:
Now, if any merchant wishes to buy sugar for exportation, he can procure it just as readily for the above prices, with a deduction of three cents per pound, as any grocer can, for home consumption, buy it at the full prices named. This, then, settles the question, as to the fact that sugar, if there was no duty on it, can be imported and sold at from 3½ to 5½ cents per pound. But, it is supposed, that if the duty were reduced, the increased demand made upon the West Indies and Brazil, owing to the diminution of the home production, would occasion a rise in price to 8 or 10 cents. To suppose such an effect, would require that this increased demand should bear a very great proportion to the total demand for sugar existing in the commercial world. Now let us see what this proportion would be. The crop of the present year in Louisiana is estimated at 80,000 hogsheads, equal, according to the common estimate, to 1000 lbs. per hogshead, making in all 80,000,000 lbs. The proposition then is, that an increased demand upon all the sugar growing countries in the world, including the East Indies, China, and Manilla, (which now supply 800 millions of people with sugar,) for the consumption of 12 millions of persons, would have the effect of raising it from 3½ and 5½ cents per lb. to 8 or 10. The idea is preposterous, and cannot be entertained for a single moment by any man who will reflect on the subject. This statement of the question, it must be observed, is the fairest possible one for the writer of this letter; for, had we been pressed within narrow limits, we should have stated, that this increased demand was only to supply a little more than one half of the demand of the United States, say that of eight millions of people. We already import 60,000,000 pounds of sugar, and make besides a large quantity from the maple. And now, let us ask, what effect would be produced upon the sugar markets of the world, by an increase of demand arising from the addition of one new consumer to every one hundred? We apprehend, just about as much as would be produced in the price of flour, if there was an increased demand for one barrel to every hundred. And all this too is argued upon the supposition that the quantity of sugar made in the world could not be increased. But what is the fact in reference to this point? Why, that the West Indies alone could produce this additional quantity, without scarcely feeling the new demand. As proof of this, we submit the following
Equal, upon an average, to 3,551,350 cwts. or 397,751,200 lbs., that is, near five times the new quantity demanded. Any one who knows how the British West Indies have been kept down in their production, by the colonial system, will have no difficulty in perceiving how readily an increased demand for eighty millions of pounds could be supplied. But, after all, would the cultivation of sugar be abandoned in Louisiana, if the duty were reduced? We do not believe it would, and for the following reasons. First. Capital was turned of its own accord to the cultivation of sugar, at a time when the existing duty of 2½ cents a pound did not afford a protection of fifty per cent. At the period referred to by the letter writer, when sugar was at ten to twelve and a half cents per lb. the foreign cost was at least five cents for what now is procured at three. The protection was therefore at that period only half what it is now, and it is very clear, that if the cultivation of sugar was sufficiently profitable to invite investments when the experience of the planters in that species of agriculture was extremely limited, it must continue so, under the same ad valorem rate of duty, now that the planters have had fourteen years’ experience. Secondly. A great portion of the land of Louisiana is better adapted to the cultivation of sugar, than any thing else, and would yield a greater income to its proprietor, planted with cane, even under a reduced duty on sugar, than if planted with cotton. But even if this were not the case, the idea of maintaining a monopoly of so great magnitude, as that of the cultivation of sugar, must be abandoned. The tax of four millions of dollars now paid, is too much to be imposed upon the people of the United States, for the purpose of maintaining the sugar planters. Estimating the labour of each hand engaged in the cultivation of sugar at the moderate rate of $112 per annum, the amount of 1600 lbs. of sugar, at 7 cents per pound, the whole number required to produce 80,000,000 pounds, would be but 50,000; and if for the support of these 50,000 hands, a tax is laid upon the people of three cents a pound upon the 140 millions of pounds consumed by them, it amounts to a bounty of $80 upon every hand. And for doing what? Why, for making a quantity of sugar, that can positively be purchased abroad for a great deal less money than the bounty alone; for 80 millions of pounds can be bought for three cents a pound, which would be but $2,400,000, while the bounty paid on raising an equal quantity is $4,200,000. These are facts, and they are facts worth a thousand theories, and we challenge a refutation of them. As to the reference to the case of the high duty on iron, it is a most unfortunate one for the planter in question, and shows how little he is acquainted with matters upon which his interest so greatly depends. The iron masters, notwithstanding that the price of iron is lower than it formerly was, make the sugar planters pay two or three prices for every pound of iron that they buy for their mills and machinery, and by that means get back the tax they pay on their sugar, which the mass of the community are not enabled to do. As regards the sage remark, that the abolition of the duty on raw cotton, would do more injury to the cotton planters, than the reduction of the duty on sugar would do to the sugar planters, we can only say, that we should be glad to see them both in the same bill, and we will venture to say, that if the representatives from Louisiana will at the next session of Congress offer to join the representatives from South Carolina, Virginia, North Carolina, Georgia, Tennessee, Mississippi, and Alabama, in a voluntary sacrifice upon the altar of the country’s peace and prosperity, the sugar duty, the others will cheerfully offer upon the same altar the cotton duty. |
