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05/26/2000

The History of Sugar, Part II

Before we resume our history of sugar and the role it played in
the American Revolution, it''s interesting to note that even today
sugar is at the forefront of political debate. On May 22, a lead
editorial in the Washington Post said in part:

"The current federal sugar program was enacted in the early
1980s to keep the price of sugar high but leave no fingerprints.
Rather than try to buy up surplus production and have the cost
appear in the budget, the architects used import quotas to seal off
the U.S. market and create an artificial shortage.

"The shortage kept prices high, which pleased the producers.
Because the public paid the extra billions per year at the
checkout counter rather than in taxes, politicians were able to
escape blame. A perfect arrangement. The only losers apart
from duped U.S. consumers were low-cost foreign producers in
the Caribbean and other needy parts of the world, who, despite
supposed U.S. fealty to free trade as a way of improving the lot
of people in poor countries, were locked out. Why should the
politicians, looked after so well by their domestic patrons, take
time out to worry about a pesky detail such as that?

".Why does a Congress opposed to so many other taxes impose
a sugar tax on the American people?"

As to this last statement, we will shortly find out about the
original American sugar tax. And as for the treatment of the
Caribbean producers, we should be ashamed.

But back to our story.In the 18th century, the French colonies in
the Caribbean were more productive than those of England.
Sugar flowed to France from Martinique, Guadeloupe, and Santo
Domingo. After being refined, the sugar was sold throughout
Europe.

[In Britain, one of the most dramatic changes in eating habits
known to human history occurred. In 1700, on average, Britons
used a mere four pounds of sugar each year to sweeten their
drinks and food. By 1800, that total reached 18 pounds. By the
1960s, annual consumption had risen to 110 pounds of sugar per
person!! Almost a third of a pound every day of the year. Did
someone say tooth decay?!]

This British demand for sweets came in the face of high import
duties on tropical products brought into the British Isles. But by
1739, the British government eliminated duties on sugar exported
directly from the West Indies to Europe due to competition from
French merchants. Nevertheless, French West Indian sugar
remained cheaper than British products.

The French planters at this time had an abundance of molasses.
Throughout the 18th century, British North American merchants
purchased inexpensive rum from the French islands, as well as
molasses for their rum distilleries. As a result, British planters
lost the American market. So, to placate planter interests, the
Parliament levied a sixpence-per-gallon duty on sugar, molasses,
and rum imported from non-British islands. It was set
prohibitively high not for revenues but to prevent trade with the
French sugar islands. But "The Molasses Act of 1733" proved
too costly to enforce and American merchants openly and
brazenly violated it.

In 1763, the Treaty of Paris (or Peace of Paris) signaled the end
of the Seven Years War, a conflict fought by the likes of Britain,
Prussia, France, Austria, and Russia. In North America, the
British and French fought the French and Indian Wars. Bottom
line, the Treaty confirmed British supremacy in North America
(and elsewhere).

Historian Paul Johnson calls the Peace of Paris "one of the
greatest territorial carve-ups in history." Britain had seized St.
Vincent, the Grenadines, Tobago, Dominica, St. Lucia,
Guadeloupe and Martinique during the war that preceded the
peace. The British sugar lobby, fearing overproduction, objected
to keeping them all, so Britain graciously handed back
Guadeloupe, Martinique and St. Lucia. In return, the French
surrendered the whole of Canada, Nova Scotia, and their claims
to the Ohio Valley - "Snow for Sugar," as the deal was called.
[To complete the triangle, kind of, Britain handed Cuba back to
the struggling Spaniards.]

Meanwhile, George Grenville, Britain''s first lord of the treasury
and later, Prime Minister, thought that the American colonists
had benefited from the thorough elimination of French forces in
Canada and the West. Back home, Britain was suffering from
the large tax burden that had to be imposed in order to pay for
the war. [The nation was now $130 million pounds in debt.]
The colonies had a far smaller burden so Grenville reasoned that
the Americans were obligated to share the cost of their own
defense. [Seems reasonable, mused the editor.] Grenville was
also learning that the American customs service was inefficient
and corrupt.

So, Lord Grenville introduced the Sugar Act of 1764 which
halved the duty on molasses (to 3 pence) while, at the same time,
putting in place a large system from which it was hoped that
the collection of revenue would be made easier (with large
penalties for those who tried to avoid the tax). Grenville was
also reasoning that with the reduced tariff, the temptation to
smuggle or to bribe the customs officers would be reduced.

The Sugar Act also levied new duties on imports of foreign
textiles, wines, coffee and indigo. The estimated revenues would
go "toward defraying the necessary expenses of defending,
protecting, and securing, the said colonies and plantations."

But if Grenville was looking for a way to pay for defense, the
Sugar Act wasn''t the solution. It only accounted for a fraction of
the cost of maintaining the 10,000 soldiers that were to be
stationed along the western frontier. By some estimates the
Sugar Act cost 8,000 pounds in administration costs for every
2,000 pounds raised in revenue.

And so it came to pass that the Sugar Act became a major
grievance leading to the American Revolution. After passage,
there was a movement to boycott British goods. On May 24,
1764, radical Samuel Adams denounced the duties as improper,
proclaiming that Parliament had no right to use trade regulation
as a means of raising revenue. Speaking after him, James Otis
coined the phrase, "no taxation without representation."

In July 1765, King George III appointed a new minister, the
Marquis of Rockingham, and he reduced the molasses tax from 3
pence to a penny a gallon.

But then Rockingham (with the blessing of the King as well as
Prime Minister Grenville) introduced the Stamp Act, the first
direct tax levied on the American colonies by the British
government. This was to be another way of raising revenue for
the defense of the colonies. The Act required a special stamp on
all printed material, including newspapers and legal documents.
Whereas the Sugar Act had been a tax on imports, the Stamp Act
levied a tax within the colonies and thereby aroused widespread
condemnation, touching off a violent three-pronged attack - an
ideological assault on the nature of the British Constitution, an
economic boycott of British goods, and civil disorder and
disobedience.

On May 29, 1765 Patrick Henry attacked the Stamp Act in the
Virginia House of Burgesses, declaring that only colonial
legislatures could impose taxes on their respective colonies.
Shouts of "Treason!" interrupted Henry''s speech, to which he
replied: "If this be treason, make the most of it."

On October 7-25, the Stamp Act Congress met at City Hall, New
York City, to organize a united resistance to the Stamp Act. 28
delegates from 9 colonies resolved not to import any goods that
required payment of duty.

On November 1, a Stamp Act riot in New York City took place.

By now debate back in London was fierce. Charles Pratt,
English Lord Chancellor, proclaimed in a speech to the House of
Lords in December, "The British parliament has no right to tax
the Americans.Taxation and representation are inseparably
united." Charles, my man!

On March 17, 1766, the Stamp Act was repealed by Parliament.
However, the Sugar Act survived. Tensions simmered down for
a spell but, as Sam Adams stressed, "Where there is a spark of
patriotick (sic) fire, we will enkindle it."

So you see folks, it all started with a spoonful of sugar.

Next week, the U.S. vs. E.C. Knight Co. as our history of sugar
continues.

Sources: "The Pursuit of Wealth," Robert Sobel
"The Growth of the American Republic, Vol. 1,"
Morison, Commager, Leuchtenberg
"A History of the American People," Paul Johnson
"The Columbia History of the World," John Garraty
"A Brief History of the Caribbean," Jan Rogozinski

Brian Trumbore




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-05/26/2000-      
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Wall Street History

05/26/2000

The History of Sugar, Part II

Before we resume our history of sugar and the role it played in
the American Revolution, it''s interesting to note that even today
sugar is at the forefront of political debate. On May 22, a lead
editorial in the Washington Post said in part:

"The current federal sugar program was enacted in the early
1980s to keep the price of sugar high but leave no fingerprints.
Rather than try to buy up surplus production and have the cost
appear in the budget, the architects used import quotas to seal off
the U.S. market and create an artificial shortage.

"The shortage kept prices high, which pleased the producers.
Because the public paid the extra billions per year at the
checkout counter rather than in taxes, politicians were able to
escape blame. A perfect arrangement. The only losers apart
from duped U.S. consumers were low-cost foreign producers in
the Caribbean and other needy parts of the world, who, despite
supposed U.S. fealty to free trade as a way of improving the lot
of people in poor countries, were locked out. Why should the
politicians, looked after so well by their domestic patrons, take
time out to worry about a pesky detail such as that?

".Why does a Congress opposed to so many other taxes impose
a sugar tax on the American people?"

As to this last statement, we will shortly find out about the
original American sugar tax. And as for the treatment of the
Caribbean producers, we should be ashamed.

But back to our story.In the 18th century, the French colonies in
the Caribbean were more productive than those of England.
Sugar flowed to France from Martinique, Guadeloupe, and Santo
Domingo. After being refined, the sugar was sold throughout
Europe.

[In Britain, one of the most dramatic changes in eating habits
known to human history occurred. In 1700, on average, Britons
used a mere four pounds of sugar each year to sweeten their
drinks and food. By 1800, that total reached 18 pounds. By the
1960s, annual consumption had risen to 110 pounds of sugar per
person!! Almost a third of a pound every day of the year. Did
someone say tooth decay?!]

This British demand for sweets came in the face of high import
duties on tropical products brought into the British Isles. But by
1739, the British government eliminated duties on sugar exported
directly from the West Indies to Europe due to competition from
French merchants. Nevertheless, French West Indian sugar
remained cheaper than British products.

The French planters at this time had an abundance of molasses.
Throughout the 18th century, British North American merchants
purchased inexpensive rum from the French islands, as well as
molasses for their rum distilleries. As a result, British planters
lost the American market. So, to placate planter interests, the
Parliament levied a sixpence-per-gallon duty on sugar, molasses,
and rum imported from non-British islands. It was set
prohibitively high not for revenues but to prevent trade with the
French sugar islands. But "The Molasses Act of 1733" proved
too costly to enforce and American merchants openly and
brazenly violated it.

In 1763, the Treaty of Paris (or Peace of Paris) signaled the end
of the Seven Years War, a conflict fought by the likes of Britain,
Prussia, France, Austria, and Russia. In North America, the
British and French fought the French and Indian Wars. Bottom
line, the Treaty confirmed British supremacy in North America
(and elsewhere).

Historian Paul Johnson calls the Peace of Paris "one of the
greatest territorial carve-ups in history." Britain had seized St.
Vincent, the Grenadines, Tobago, Dominica, St. Lucia,
Guadeloupe and Martinique during the war that preceded the
peace. The British sugar lobby, fearing overproduction, objected
to keeping them all, so Britain graciously handed back
Guadeloupe, Martinique and St. Lucia. In return, the French
surrendered the whole of Canada, Nova Scotia, and their claims
to the Ohio Valley - "Snow for Sugar," as the deal was called.
[To complete the triangle, kind of, Britain handed Cuba back to
the struggling Spaniards.]

Meanwhile, George Grenville, Britain''s first lord of the treasury
and later, Prime Minister, thought that the American colonists
had benefited from the thorough elimination of French forces in
Canada and the West. Back home, Britain was suffering from
the large tax burden that had to be imposed in order to pay for
the war. [The nation was now $130 million pounds in debt.]
The colonies had a far smaller burden so Grenville reasoned that
the Americans were obligated to share the cost of their own
defense. [Seems reasonable, mused the editor.] Grenville was
also learning that the American customs service was inefficient
and corrupt.

So, Lord Grenville introduced the Sugar Act of 1764 which
halved the duty on molasses (to 3 pence) while, at the same time,
putting in place a large system from which it was hoped that
the collection of revenue would be made easier (with large
penalties for those who tried to avoid the tax). Grenville was
also reasoning that with the reduced tariff, the temptation to
smuggle or to bribe the customs officers would be reduced.

The Sugar Act also levied new duties on imports of foreign
textiles, wines, coffee and indigo. The estimated revenues would
go "toward defraying the necessary expenses of defending,
protecting, and securing, the said colonies and plantations."

But if Grenville was looking for a way to pay for defense, the
Sugar Act wasn''t the solution. It only accounted for a fraction of
the cost of maintaining the 10,000 soldiers that were to be
stationed along the western frontier. By some estimates the
Sugar Act cost 8,000 pounds in administration costs for every
2,000 pounds raised in revenue.

And so it came to pass that the Sugar Act became a major
grievance leading to the American Revolution. After passage,
there was a movement to boycott British goods. On May 24,
1764, radical Samuel Adams denounced the duties as improper,
proclaiming that Parliament had no right to use trade regulation
as a means of raising revenue. Speaking after him, James Otis
coined the phrase, "no taxation without representation."

In July 1765, King George III appointed a new minister, the
Marquis of Rockingham, and he reduced the molasses tax from 3
pence to a penny a gallon.

But then Rockingham (with the blessing of the King as well as
Prime Minister Grenville) introduced the Stamp Act, the first
direct tax levied on the American colonies by the British
government. This was to be another way of raising revenue for
the defense of the colonies. The Act required a special stamp on
all printed material, including newspapers and legal documents.
Whereas the Sugar Act had been a tax on imports, the Stamp Act
levied a tax within the colonies and thereby aroused widespread
condemnation, touching off a violent three-pronged attack - an
ideological assault on the nature of the British Constitution, an
economic boycott of British goods, and civil disorder and
disobedience.

On May 29, 1765 Patrick Henry attacked the Stamp Act in the
Virginia House of Burgesses, declaring that only colonial
legislatures could impose taxes on their respective colonies.
Shouts of "Treason!" interrupted Henry''s speech, to which he
replied: "If this be treason, make the most of it."

On October 7-25, the Stamp Act Congress met at City Hall, New
York City, to organize a united resistance to the Stamp Act. 28
delegates from 9 colonies resolved not to import any goods that
required payment of duty.

On November 1, a Stamp Act riot in New York City took place.

By now debate back in London was fierce. Charles Pratt,
English Lord Chancellor, proclaimed in a speech to the House of
Lords in December, "The British parliament has no right to tax
the Americans.Taxation and representation are inseparably
united." Charles, my man!

On March 17, 1766, the Stamp Act was repealed by Parliament.
However, the Sugar Act survived. Tensions simmered down for
a spell but, as Sam Adams stressed, "Where there is a spark of
patriotick (sic) fire, we will enkindle it."

So you see folks, it all started with a spoonful of sugar.

Next week, the U.S. vs. E.C. Knight Co. as our history of sugar
continues.

Sources: "The Pursuit of Wealth," Robert Sobel
"The Growth of the American Republic, Vol. 1,"
Morison, Commager, Leuchtenberg
"A History of the American People," Paul Johnson
"The Columbia History of the World," John Garraty
"A Brief History of the Caribbean," Jan Rogozinski

Brian Trumbore