32 THE CUB A REVIEW 



normal. The following figures are a comparison between the pre-war carry-over, produc- 

 tion and consumption and those of 1921 and 1922. 



Comparative World Supplies and Consumption. Final carry- 



Carry-over, Estimated Estimated over, end 

 Periods. first of year, production, consumption, of year. 



Tons. Tons. Tons. Tons. 



Pre-war .... 750,000 17,500,000 17,500,000 750,000 



1921 1,216,000 16.509,000 16,024,000 1,700,000 



1922a 1,700,000 ^15,887,000 16,500,000 cl,000,000 



^Estimated. 



i) Assuming estimated decrease of 1,000,000 tons in cane sugar, as reported by WiUett & Gray 



cThe apparent carry-over of 1,000,000 tons may properly be reduced by the estimated deficiency 



of 400,000 tons in invisible stocks, which would leave a carry-over'at the end of 1922 of only 600,000 tons . 



The foregoing table is based on the best figures available at present, assuming that 

 Cuba will produce only 3,000,000 tons this year. Any increased production on the part 

 of Cuba or other producing areas, of course, will increase the carry-over for next year. 



Shortage in "Invisible" Stocks at End of 1921 

 At the end of December a careful inquiry among the trade was made by the Depart- 

 ment of Commerce on '"invisible" stocks or supplies usually held by warehouses and whole- 

 salers. During 1918, when exact estimates of invisible stocks were made, they were 

 found to vary from 200,000 to 900,000 tons, with a normal of about 600,000 tons. It is 

 not possible to secure exact figures on invisible stocks at present; but all estimates were 

 very low, apparently 300,000 to 400,000 tons below normal. This is a situation naturally 

 growing out of a steadily declining market. Experience has shown that when markets 

 decline the stocks in the hands of the wholesale, jobbing and retail trade become low 

 owing to the expectation that prices will fall further, and the natural tendency is to buy 

 on a hand-to-mouth basis. With a rising market, on the other hand, such stocks become 

 large owing to the attempt to anticipate the market. A rise in the market at present 

 would undoubtedly result in a quick absorption of perhaps a half million tons in the stocks 

 of the country. Reports from England show that the invisible stock is very low in that 

 country also, being estimated by different authorities at 100,000 to 200,000 tons below 

 normal. Presumably the same condition exists in other countries. 



Reasons for Expecting Improvement in Sugar Market in 1922 

 There is no way of estimating accurately just how much consumption should increase 

 as a result of low prices. We know, however, that consumption does adjust itself, within 

 certain limits, according to price. The very high prices of 1920 undoubtedly had a tend- 

 ency to reduce consumption, as people soon discovered ways of economizing on high-priced 

 commodities. Conversely, the relatively low price of sugar, which is now reaching the 

 public through lower retail prices, will result in an increased consumption, which will be 

 felt before the end of 1922. If we take this into consideration, together with the fact 

 that the probable carry-over will be reduced to normal by the end of 1922, there is sound 

 reason to expect that sugar prices should stabilize and gradually register some improve- 

 ment. 



There is now no artificial control on the sugar market for practically the first time 

 since the early years of the war, and the law of supply and demand will henceforth 

 determine the price of sugar. There was actual public concern over the prospect of a 

 crash in the Cuban sugar market lest it might result in a very small Cuban production this 

 year, because of difficulty in finding money for the new crop, which must be largely 

 financed in advance. The fact that there is prospect of a stable market has enabled 

 bankers who hold money against the old Cuban sugar crop to carry it safely and to 

 advance sufficient money on the new crop to guarantee practically all the Cuban sugar 

 that can be produced at a reasonable price. 



Summary of Sugar Situation 

 The following conclusions as to the sugar situation were issued by the Department on 

 the 9th instant : 



