THE CUBA REVIEW 31 



The Sugar Situation in the 

 United States 



Edward G. Montgomery, Chief, Foodstuffs Division 



The world sugar market has followed a very uncertain course during the last two 

 years. During the years 1918 and 1919 the sugar prices and distribution of the world 

 were under joint international control and Western Hemisphere sugars were administered 

 through the Sugar Equalization Board. The previous administration decided not to con- 

 tinue the operations of this board beyond distribution of the 1919 crop, and immediately 

 thereafter large speculative operations began with most disastrous results, whereas during 

 the period of great stress of the war sugar was maintained at prices that dealt fairly 

 with both producer and consumer. The control was obviously dissolved too early in view 

 of the enormous disturbance to both production and consumption. The loss to the 

 American consumer amounted to several hundred millions of dollars and was inevitably 

 followed by a crash which has done infinite injury to the sugar producers themselves. 



Disturbance of Sugar Market in 1920 and 1921 

 At the close of the war sugar production was something like 2,000,000 tons below 

 pre-war figures. Consumption had also dropped, and there was no way of knowing how- 

 soon consumption would increase and pass production. The principal change as a result 

 of the war was the great reduction in beet-sugar production in Europe, especially Ger- 

 many, Austria and Russia, and the enormous increase in cane-sugar production in Cuba. 

 As a result of the situation, there was much uncertainty as to supply and demand, and 

 prices soared to an almost unheard-of height in 1920, when the wholesale price of granu- 

 lated sugar in New York reached 26.50 cents per pound in the months of May and June. 

 It was soon discovered, however, that there was no real shortage of sugar in the world, 

 and we had first a rapidly declining market and then a long, steady decline, reaching its 

 lowest point at the end of December, 1921, when Cuban raw was quoted c. and f. New 

 York at 1.75 cents per pound and granulated as low as 4.80 cents. 



Effort to Stabilize Price of Cuban Raw Sugar 

 The most depressing market condition toward the end of 1921 was the large stock 

 of unsold raw sugar in Cuba. This was produced at a high price, and in order to minimize 

 the loss every attempt was made to sustain the price of Cuban raw. One of the most 

 important steps was the appointment, in February, 1921, of the Cuban Sugar Commission, 

 which took over practically the whole 1921 crop in order to stabilize the market. Doubt- 

 less this had some stabilizing effect on the market, but the fact that Cuban raw was 

 ■ frequently underbid resulted in the importation into the United States of sugar from 

 other sources, such as Java, whose sugar normally does not reach this markec in large 

 quantities. 



Causes of Depression in Last Quarter of 1921 

 At the end of 1921 there was estimated to be in Cuba 1,200,000 tons of old sugar. 

 as against a normal carry-over of less than 100,000 tons. It was known that this sugar 

 had been financed largely by American bankers; and, with prospects of the Sugar Com- 

 mission going out on the 1st of January, there was much speculation as to what would 

 happen to the sugar market in case it was decided to liquidate this sugar and throw it on 

 the m.arket. Moreover, the Cuban mills began grinding the new crop in December, with 

 enough cane in sight to produce 3,750,000 tons if all the cane crop is worked out. This 

 situation produced a great depression on the sugar market during the last three months 

 of 1921. 



Prospects for Absorption of Surplus in 1922 

 However, a careful survey of the world sugar situation indicates that if Cuba does 

 not produce above 3,000,000 tons this year there is fair prospect that the present surplus 

 may be absorbed by the end of 1922, with a world carry-over that will be not far from 



