Mr. MACK. Unrealistic to expect that if you do not decontrol now, that you can decontrol any time before March 1948, because you do rot get your big crop.

Senator BRICKER. In other words, you could not decontrol when supplies were down because you would have a tremendous increase in the price and a restricted supply more than you have at this time.

In other words, if you are going to decontrol, it has to be now or next month?

Mr. MACK. Yes, sir. Now, it is perfectly true that nobody can tell you what the.new crop in Cuba next year is going to be. I guess because the law of averages usually works it will be a smaller crop. Only the good Lord can tell you what it is going to be, but if you are going to guess that it will be as big as this year, then you are being very ambitious and hopeful, because your law of averages over the last 20 years shows it should be smaller.

Senator BRICKER. This may be entirely out of your field, but in the Middle West we are about 2 years beyond the average cycle of a drought year. I do not know whether that prevails in the beet sugar country in the far West or not. We may have a good year, but we are trusting to luck, and it will be just by good fortune that we do have a good growing year in Ohio and Michigan and Wisconsin.

Mr. MACK. I was in the largest cane-growing country in Louisiana many years ago and about every third year we either had an early frost or we had too much rain. I have been in sugar for a great many years. Under normal conditions you get a normal crop. We have not had bad conditions since 1942 or 1943. I pray that you will not get it next year, but according to the law of averages you may get something of that sort, and you may be continuing control into a worse picture for the United States but a better picture for the world.

Senator BRICKER. May we get a drought situation?

Mr. MACK. According to the law of averages, you may have. But you may have a better crop situation in the Dominican Republic or France or Germany.

Senator BRICKER. Or in Louisiana, or Colorado, or the rest of the States?

Mr. MACK. But we do not get that sugar from Europe that they are talking about.

Senator BRICKER. You have a suggestion here not only inventory control but price control.

Now, as I get the testimony of the Government representatives, they feel that that would be practically impossible because of the tremendous machinery there would have to be set up to carry out such a program. Have you any further idea about that?

Mr. MACK. Well, sir, it is a known fact, and I think Mr. Marshall and Earl Wilson, who are well versed in the industry, will tell you, that 80 percent of the sugar goes through large suppliers. That is 80 percent of the sugar. That means the refineries, the big industrial users, the big sugar wholesalers that give it to the retailer and the big retail stores.

Those people, the people handling 80 percent of the sugar supply in the United States, are not going to ignore your laws. They are too big. They have got too much at stake to do it.

Senator BRICKER. It is your judgment, then, there would not be much more violation either of price or of inventory than you have at the present time through the black market, both through your coupons and your price?

Mr. MACK. That is correct, sir. I picked the ceiling price-if you took 15 cents as the ceiling price for the housewife and she had to pay the full ceiling price for all of her sugar, that would mean an increase of approximately 6 cents a pound; and if she is using 35 pounds, that is $2.10 a year which a person would have to pay for decontrol. It does not amount to much in their pocketbook right now as the price for the return to free enterprise-the American system-in the use of sugar.

Senator FLANDERS. I have the following communications to be read into the record.

(The following were submitted for the record:)

Hon. CHARLES W. TOBEY,

DEPARTMENT OF AGRICULTURE,
Washington, February 27, 1947.

Chairman, Committee on Banking and Currency,

United States Senate.

DEAR SENATOR: This is in reply to your request for a report on Senate Joint Resolution 58, a bill to extend the powers and authorities under certain statutes with respect to the distribution and pricing of sugar, and for other purposes, introduced by Senator Robertson.

The position of the administration is that it would be more desirable to extend the Second War Powers Act and other necessary legislation under which sugar is now controlled than to enact separate legislation for each of the commodities that should remain under control in whole or in part beyond March 31, 1947. As you know, it is the established policy of the Government to take specific decontrol actions as rapidly as they may be taken with reasonable safety to the country as a whole. Under this policy, most commodities have already been decontrolled. Accordingly, it is recommended that the Congress permit this policy to be continued consistently until all controls may safely be removed. The administration has also considered it desirable that remaining wartime price, rationing, and similar controls be administered during the remaining period of their operation by a temporary agency, the Office of Temporary Controls. It is believed that this administrative practice will simplify the termination of such controls and the appropriate reduction in force when such controls are terminated.

sugar

Subject to the above observations, it appears that Senate Joint Resolution 58, with certain modifications, would form an effective basis for continuing controls. It would be particularly desirable under section 3 (c) to provide for the transfer of such property as may be needed to continue the work along with any transfer of functions so that if such work were to be carried out by the Department of Agriculture in the future, it would not be necessary for the Department to purchase additional office furniture and other equipment necessary for carrying out such functions during the next few months.

to the

It would also be essential to permit the transfer of necessary personnel on a temporary-status basis so that the Department would not find it necessary to recruit and organize a new staff and field force during the remaining life of the sugar-control program. Naturally, if these functions are transferred Department of Agriculture in the manner proposed in Senate Joint Resolution 58, the Department will assume full responsibility for the policies and procedures under which they are administered. However, it would cause an unjustifiable disruption of allocation, rationing, and price ceiling operations to require the

Department to recruit and organize a new staff to administer such transferred functions at this time. In fact, the Department would have to recommend strongly against the transfer of such functions unless it could avail itself of the existing organization for administering them.

In the event Senate Joint Resolution 58 should be enacted, it might also be desirable for Congress to give new authorization for the appropriation of funds necessary to carry out the provisions of the act. Although such authorizing language is contained in the original acts which are to be extended, it would simplify the references to include authorization for such appropriations in the new legislation.

The Bureau of the Budget advises that it has no objection to the submission of this report.

Sincerely,

N. E. DODD, Acting Secretary.

BOWEN'S INC.,

Re Sugar for United States of America.
SENATE BANKING AND CURRENCY COMMITTEE,

Chicago 10, February 24, 1947.

Senate Office Building, Washington, D. C.

GENTLEMEN: After giving it much thought and consideration, I can see no reason for continued rationing of sugar after March 31. I think there will be a fairer distribution of sugar if there is a return to a free market, that everyone will have a proportionate share, that the sugar refiners on the whole will do a good job just as the corn processors have done during the war. True, while prices may go up temporarily, yet, we believe it will go down just like it has on a number of other products after price controls and rationing controls have been removed.

I want to call your special attention to an article in the Chicago Tribune entitled "Truman's Sugar Sell-Out," setting up why sugar should no longer be controlled in the United States; also a publication put out by B. W. Dyer & Co., sugar economists and brokers, 120 Wall Street, New York City, dated February 20, 1947, referring to the fact that "sugar reached as high as 30 cents per pound and in the peak month 23 cents per pound at primary distributor levels after sugar controls were lifted in 1919, but such high sugar prices appear unlikely upon sugar decontrol after World War II."

We are also looking forward to a smaller budget for the Government to operate upon. Here is an opportunity for a new Congress to act upon the mandate of the people to remove Government control as fast as possible, not continue them. We are supposed to have received an allotment from the International Emergency Food Council as to what to do with our sugar. Are we going to take orders from a number of foreigners forever, or are we going to run our own affairs, stand on our own feet, and operate for the benefit of the United States of America?

Also, a number of European countries would not be out for sugar like they are to get it from us except we are selling it at bargain prices in the world market. When they find out they have to pay legitimate prices for sugar, then, no doubt, there will be more available for us here in the United States of America.

Let sugar control expire now. It will be better in the long run for the American housewife, American institutional and industrial user, I sincerely believeand this, after studying and living with the situation a number of years.

Let us not be misled by the shouts of a few large users who, perhaps, want to perpetuate their position in industry by having a high base in 1941 and keeping all industry frozen at that because of competition they may fear or not want to meet.

Yours very truly,

WM. H. HOTTINGER, Jr.,
Assistant Secretary.

98445-47-17

[Chicago Daily Tribune, February 24, 1947]

TRUMAN'S SUGAR SELL-OUT

The International Emergency Food Council has announced that the United States may have 6.8 million tons of sugar this year. This is about a million and a half tons more than we had last year, and will make possible an increase both in household and industrial supplies.

The people should understand whose sugar it is that we are being given more of, and what this outfit is which says how much we may have. The sugar we are to get will come from the production of the United States and its possessions to the extent of 3,146,000 tons. Two hundred thousand tons are to come from another source, to be named later in this editorial. The entire output of Cuba, estimated at 5,000,000 tons, belongs to the United States, having been contracted for in advance of the planting. This is where the Cuban planters always sell their product. What we are having allotted to us, therefore, is a portion of our own goods, that which we produced and that which we have purchased from our regular source.

As Cubans are dependent upon a market here, we were able to make a deal with them so that granulated sugar can be sold here for about 8 cents wholesale. In the world market sugar is selling for 15 cents a pound. Although about every country in the world is able to produce sugar for itself, nearly every country not an exporter would naturally like to have as much as possible of our supplies at half the regular price. The other 200,000 tons mentioned above we are to be permitted to buy from Java, South America, and the Dominican Republic, at the full world price, now 15 cents a pound.

What is this International Emergency Food Council which tells us how much of our own sweetening merchandise we may eat ourselves and how much we must let go to others? Well, it is a body composed of the representatives of 25 countries. It was created after the war to continue a wartime activity carried on by the Combined Food Board, consisting of representatives of only three nations-the United States, Canada, and Britain. With sovereignty being conceded in other directions, the Truman administration couldn't see why we shouldn't have our table supplies controlled, too.

The award of a little more of our own sugar to us than we had last year is a political trick. It was announced as the administration runs into heavy going on its request to have that portion of the War Control Act extended which gives the administration the power to ration sugar. If the American housewife actually gets 10 pounds more sugar than last year she can attribute it to the Republican victory at the polls. There is more to be done by the Republicans for the housewife. Sugar rationing ought to go at the end of next month. That will mean a higher price but the increase will be moderated if it is accompanied by a withdrawal from the IEFC.

We'll have sugar shortages as long as we encourage other countries to take some of our supply at a bargain price instead of providing for themselves as they did before the war Meat packers believe that meat will be permanently higher than it used to be because people are consuming a great deal more meat than they used to. The same may be true of sugar. The only way for people to

get sugar in the quantities they desire is by a free market.

UNRATIONED SWEETENERS IN A DECONTROLLED SUGAR ECONOMY

FEBRUARY 20, 1947.

This is a long but important "Dyergram." If sugar is decontrolled in 1947, the price of standard sweeteners presumably will advance sharply-prices will probably slide off considerably thereafter. This generally has been the price pattern of other decontrolled commodities. Refined sugar prices in the United States in isolated instances reached 30 cents per pound and the peak month averaged about 23 cents per pound at primary distributor levels after sugar controls were lifted in 1919. Such high sugar prices appear unlikely upon sugar decontrol after World War II.

Un

rationed sweeteners will drag heavily on rising sugar prices. "Unrationed sweeteners" exclude such standard sweeteners as cane, beet, and corn sugar and sirups.

The supply of unrationed sweeteners developed during World War II is many times greater than that existing during and after World War I. Total capacity is about 650,000 tons per year on a dry-content basis. This compares to about 750,000 tons of corn sirup (dry basis) and about 300,000 tons of Louisiana cane sugar produced in 1946. There is now unused production capacity of unrationed sweeteners amounting to around 400,000 tons per year on a dry-content basis. This potential supply (determined from plant-by-plant estimate in our own office) is available immediately if and when demand develops at current price levels.

Under a free economy where a buyer can buy all the sugar he wants at a higher price or unrationed sweeteners at around present prices, an analysis of typical buyer preferences is important. In short, at what sugar prices would buyers prefer unrationed sweeteners?

First we must convert unrationed sweeteners to comparable utility with cane and beet sugar. For simplicity let us assume an unrationed sweetener price of 10 cents per pound of sirup. (Currently manufacturers' offerings range from about 81⁄2 to 10%1⁄2 cents per pound.) However, unrationed sirups are sold on a wet basis, that is a buyer pays for about 25 percent water content. Converting the 10 cent wet-basis price to a dry-basis price, a buyer thus pays around 134 cents per pound for the solids content in unrationed sweeteners. If we assume that the dry solids in unrationed sweeteners (high conversion) are about 70 percent as sweet as standard cane and beet sugar, the equivalent price on a dry-sweetening basis is about 19 cents per pound. In other words, it would be to most sweetener buyers' advantage to purchase unrationed sweeteners instead of sugar if the price for sugar went higher than say 19 cents per pound.

In certain industries the preference price for unrationed sweeteners is substantially less than 19 cents per pound. For example, many baking operations use sugar as a fermentable carbohydrate or yeast food-not as a sweetener. On this basis the baker's preference price is probably closer to 134 cents per pound. Of course, there is a limit to industry's substituting unrationed for standard sweeteners and some buyers cannot technically substitute at all. Nevertheless there is a strong economic tendency putting an industrial user "ceiling" on refined sugar around 19 cents per pound in a free economy.

A small increase in sweetener supplies materially reduces high prices. This is a typical price effect where the demand for products like sugar is relatively inelastic. For example, the refined sugar price in the world market dropped from 16 cents per pound last year to 10% cents per pound this year by a mere increase of 150,000 tons of Cuban and San Domingo sugar supplies to the world market. A sale of Peruvian sugar to Ecuador was reported this week at 10%1⁄2 cents per pound.

You can protect yourself and your industry by studying now several unrationed sirups to determine which of these you can use in your production without noticeably reducing the quality of your finished products.

Incidentally, the quality of the unrationed sirups still being produced is substantially improved in color, clarity, and taste. Moreover, the trend toward quality improvement continues. You might be interested to know that several industries have used certain unrationed sweeteners up to 50 percent of standard sweeteners normally used-without noticeably reducing the quality of the finished product.

Prepare to purchase unrationed sweeteners in the event of decontrol. Remember that an ounce of prevention is worth a pound of cure. Again we recommend your studying unrationed sweeteners now if you have not already done so.

Actually the gross demand for unrationed sweeteners probably will drop off sharply within a few months after sugar decontrol. The higher price for cane and beet sugar will discourage demand not only for sugar but for the unrationed sweeteners. Therefore we recommend again a hand-to-mouth buying policy on unrationed sweeteners-that is purchasing for use within say about 30 days.