The Imperialist Role of the American Sugar Company
Rugoff, Stephanie
The history of cane sugar parallels the evolution of colonialism and imperialism. First introduced to southern tropical climates where it was planted by Western Europeans, it is primarily...
...The ASRC was therefore in a position to force the railroads to lower their freight costs through a system of secret rebates -in return for guaranteeing shipment, ASRC received lower freight rates...
...The volume of sugar production drastically increased through the centuries as the demand for sweetened food grew along with the standard of living...
...IMPERIALISM AND CUBA The full colonization and economic integration of the Cuban economy was the last step in the worldwide expansion of the U.S...
...Utah), Lewiston Sugar Co...
...Standing between production and consumption,the refiner found it necessary to regulate and control competition by limiting overproduction and stimulating sales...
...All of these alterations are a reflection of high finance capital's need to coordinate the production of separate corporations...
...The climate, land and geographical location of Cuba were ideally suited to the application of the latifundia mode of capitalist production...
...The company reached this position through economic and political manipulation characteristic of the age of the robber barons...
...Babst, refineries were built in the United States and not in Cuba...
...however, ASRC had many other sources of supply...
...17 in 1920...
...3. As the table above demonstrates, at no time did Cuban citizens own any significant amount of ASRC stock...
...government limited cane imports and domestic beet production through price subsidies...
...Henry ruled the ASRC until his death in 1907, converting the family firm into a major industrial company through his entrepreneurial skills and upper class connections...
...It appears that Chase reversed its interest in the food processing industry...
...Oliver...
...Large refineries and freight terminals were constructed by the company along the eastern seaboard (primarily New York) facilitating the direct transfer of sugar from ship to refinery to railroad...
...interests...
...Under the leadership of Henry Havemeyer, member of the renowned Havemeyer sugar family, a sugar trust was formed in 1887 combining 18 eastern refineries and controlling 84 percent of the market east of the Rocky Mountains...
...Protectionist trade policies and the congressional power of the beetproducing states was a constant obstacle to the import of cane...
...Moreover, advertising was introduced to artificially stimulate and manipulate sales...
...2 At the turn of the century, American Sugar as assisted in Utahand daho by the Mormon church which had a major interest in farm land and several refineries in that area...
...After Henry Havemeyer's death, his son was summarily booted from the board, partially as a public relations sop to counter the charges of monopoly, but more importantly because the Havemeyers lacked control over the voting stock...
...In periods of rising demand, such as World War II and the Korean conflict, quotas were increased, temporarily stimulating Cuban production...
...industrial corporation and sugar represented a major item in shipping and wholesale trade...
...California), Continental Sugar Co...
...representative to the South Vietnamese puppet regime...
...Vermont, Mass., Rhode Island, and Conn...
...Utah), Michigan Sugar Co...
...Together the capacity of these areas exceeded world-wide demand...
...1915 60.7 35.8 3.0 895,587 99.5 22 ** 4,400 .5 1920 53.7 39.5 8.0 797,010 99.7 S2 ** 2,990 .3 1925 42.0 44.7 12.9 na 99.3 na ** na .7 1930 33.6 51.1 14.7 na 99.5 na ** na .5 1935 32.9 47.0 19.5 893,576 99.1 290 * 6,424 .9 **less than .1 percent 1. Both coon and preferred stock...
...In his office, he had "two shelves of calf-bound law books containing the scalps that he won in this commercial warfare...
...By the turn of the century, sugar constituted about 40 percent of the wholesale grocery trade...
...When a number of refiners were in competition, the margin was narrowed and the refiner was forced to increase volume in order to maintain a profit...
...Another shift in control took place in the 1950's...
...HIGH FINANCE AND MONOPOLY The shift from family to finance capitalism paralleled and redirected the ASRC's imperialist expansion...
...The raw cane is semi-refined in a mill near the plantation where it is grown and is then transported by ship to a coastal refinery in the consuming country...
...With the assistance of the Rockefeller law firm, Sullivan Cromwell, Spreckles was merged with American and the name was changed to American Sugar Company...
...But as capitalism developed into a stage of monopoly capital, family fortunes were inadequate to provide the broader financial base that was needed...
...but only 148,000 of these were under cultivation...
...With the passage of the Sherman Anti-Trust Act in 1890, the Trust's constituent companies were consolidated into the American Sugar Refining Company (ASRC) which is known today by the brand name Domino...
...However, his financial wizardry suffered a severe blow when ASC's holdings in Cuba were nationalized without compensation by the revolutionary government...
...Utah), Great Western Sugar Co...
...Previously, sugar was sold in bulk from barrels...
...The Mormons were able to provide access to the capital stock of several refineries as well as control of the required labor force...
...First introduced to southern tropical climates where it was planted by Western Europeans, it is primarily consumed in the cooler northern industrial countries...
...By World War I, the banking houses showed interest in the burgeoning food processing industry of which sugar is a crucial part...
...In effect, when the importance of sugar in the form of direct sales to consumers declined and its role as supplier to industrial producers increased, it was necessary for high finance to play the initiating role in verticalhorizontal integration...
...In addition, once refiners gained some leverage over the market, they mustered the capital necessary to integrate related industries to lower the cost of production...
...In 1965-66, he was U.S...
...3 Without access to the land, small farmers could not develop, crop diversification could not occur and trade policies could not be altered...
...ALBERT H. WIGGIN: For nearly 40 years, Wiggin faithfully served ASRC as chairman of the board or director and is an Executive Committee member...
...With a sharp increase in volume, the question of distribution became as important as the problem of production...
...The scale would then register less than the actual weight...
...In short, U.S...
...WILLIAM FREDERICK OLIVER: The current head of American Sugar Company (ASC) is a rather colorless managerial type who worked his way up through ASC since 1935...
...A few new companies, primarily National Sugar Refining Company (Jack Frost), were permitted to enter the market on a non-competitive basis.l CAPITALIST TRICKS FOR GREATER PROFITS By 1907, the ASRC was the sixth largest U.S...
...Logically, this system led to the exclusive sale of ASRC products...
...simultaneously, several interlocking relations between American Sugar Company (ASRC's successor, now ASC) and Chase were dropped...
...interests owned so much of Cuba's productive land...
...This situation was turned into a quick killing...
...government to increase their profits...
...As a commodity which moved primarily from the sea inland, it helped offset the railroads' predominantly eastbound freight...
...The real value of Cuba lay in 1) its tremendous productive capacity and 2) the fact that this capacity was thoroughly regulated by U.S...
...EDWARD F. ATKINS: Representing the directors who took over after Havemeyer died, Atkins was chairman of the board in 1915 and a director until 1920...
...By weathering the financial crises of 1893, the new monopoly proved its viability...
...Innovations increasing output were introduced and'altered the industrial refining process into a system of world-wide speculation...
...2. Includes Maine, New Hamphshire...
...One was his personal leadership in placing a credit of one hundred million dollars in 1917 at the call of the International Sugar Committee in negotiating for the Allied countries the purchase of the total sugar crop of Cuba...
...as well as two other...
...troops...
...Michigan) and the Utah-Idaho Sugar Co...
...Atkins was extremely influential in pushing congressional tariff legislation favorable to U.S...
...The ASRC's president, Babst, officially represented the United States on the International Sugar Committee which set country allotments for the allies...
...The federal government stepped n to help coordinate production, consumption and exports...
...He [used to finger] them lovingly...
...The ASRC was the main corporate buyer of Cuban cane...
...The company was hit, however, with state and federal litigations and investigations threatening to break up its monopoly structure...
...The high-volume refineries were fed by raw sugar imports (primarily from Cuba) and the preferential tariff treatment insured stable supplies at low prices...
...In its more cavalier days, it systematically cheated the government by drilling small holes in the weighing scales of its Brooklyn terminal...
...These attempts proved relatively unsuccessful, although some of the company's excesses were terminated...
...What are they afraid of...
...refiners...
...at the same time, the ASRC's need to expand required vast capital sources...
...EARL D. BABST: Born in Crestline, Ohio in 1870, Babst died at the ripe old age of 97...
...Ellsworth later became president of the company...
...Over the last 100 years, producing countries have been subected to extraordinary socio-economic pressures generated by a transition from a colonial to an imperial form of production...
...4. Vertical integration is the assimiliation of varying processes within the same industry into one corporate network...
...directors, joined First National City's board...
...19 in 1925...
...More recently, he took up residence in Saigon as U.S...
...From 1891 on, the tariffs also excluded the import of competitive refined sugar...
...FOOTNOTES 1. Ellsworth Bunker's father, George, was one of its founders...
...I can offer the 11,000 stockh:'ders of the American Sugar Refining Company to take on the job...
...citizens to make direct investments in the Cuban sugar industry...
...There it is further refined, bleached, packaged, transported and distributed to household consumers and industrial food manufacturers...
...The corporation's owners and managers did not hesitate to further use the U.S...
...After the Civil War, a number of new refineries entered the market because of the low capital investment required...
...This move from National City to Chase was brought about bv the shifting allegiance of the Boston interests -represented by the First National Bank of Boston -who maintained control over a substantial block of stock (see accompanying table for an indication of stock ownership distribution...
...For Cuba, U.S...
...After its property was nationalized by the revolutionary government in 1960, the firm showed a net loss of nearly $15 million...
...Distribution of American Sugar Refining Co...
...refineries...
...From this time on, consumers bought sugar according to the brand and convenience rather than the fluctuation in price...
...A veritable rural proletariat, unemployed three quarters of the year, testified to the stagnation of the Cuban economy...
...Entrepreneurial capital was sufficient in its time to maintain corporate control...
...The firm ranked 222nd in Fortune's list of the top 500 industrial corporations in 1969...
...Babst's shift from the board of directors of Chase to the First National City Bank of New York in the mid-twenties marked ASRC's changing position in the financial power structure...
...24 in 1930...
...capital investment markedly increased, concentrating on the consolidation of large tracts of land, railroad and port facilities as well as the construction and modernization of sugar mills...
...special envoy to the Dominican Republic after that key sugarproducing country had been invaded and occupied by U.S...
...And I want to point out that they would do it if they had the chance...
...Henry, also a director of the Chase Manhattan Bank, continually attempted to strengthen his business interests in Cuba...
...By 1963, the ASRC controlled 92 percent of Spreckels, the largest west coast beet and cane producer...
...While Cuba was the largest and most profitable producer, corporations such as ASRC maintained widely diversified holdings, including domestic beet, Puerto Rican, Dominican and Philippine cane...
...The resulting overproduction tended to saturate the market, forcing a decline in prices...
...intervention and occupation during the so-called Spanish-American War, U.S...
...The truth is that they're more than enough to take over Cuba...
...In the late 1950's he was admitted to the inner circles of high finance when he joined the board of the First National City Trust Company of New York...
...Since the greatest profit in the sugar industry is made on the sale of refined sugar and because of fear of hurricanes, revolutions and other disasters, as expressed by Mr...
...In its own way, sugar was as important to the railroads as petroleum...
...As a result, much of Cuba's capacity lay dormant, held in reserve until needed...
...Severe competition limited profits, encouraging the ASRC to arrange a convenient system whereby the grocers promised to sell the sugar at a given price in exchange for a guaranteed rate of return...
...A colonialist at heart, he served on committees on Indian affairs in the Senate and House...
...4. Total foreign countries, including Cuba, were 19 in 1915...
...During the so-called Spanish-American War, he was Assistant Secretary of the Navy...
...Figures on the number of workers the company exploits in Latin America are not available...
...After the U.S...
...Two principal figures in ASRC's history, Havemeyer and Atkins, were pioneers in the Cuban investment frontier, staking their first claims as far back as the late 1880's...
...In the spirit of monopoly, the ASRC simply absorbed a number of the leading beet producers and regulated local farmers and refiners as well as their political influence according to the corporation's over-all needs...
...Once again, First National City of New York (the successor to National City Bank) moved in and ASC's resident...
...no...
...Both the overproduction of farm commodities and land settlement after the Civil War stimulated the cultivation of beet sugar in the United States...
...3. Includes New York, New Jersey, Penn., Maryland and Delaware...
...THE RISE OF THE SUGAR TRUST The industry's evolution placed the refineries in a key position...
...Minnesota), Iowa Sugar Co...
...An annexationist, he once said, "It seems that many vacillate on the matter of taking over Cuba...
...domination doomed the workers to a subsistence standard of living, syphoned off the island's riches, stifled Cuban capitalism and strangled the island in the grip of underdevelopment...
...In 1941, 23 percent of ASRC's net income was derived from its Cuban holdings...
...The outbreak of World War I temporarily drupted European sugar production and trade, placing an increased demand on U.S...
...Under the leadership of Babst, the firm avitated toward National City Bank (New York), which made sizeable loans to cane producers in Cuba during and immediately after World War I. Babst joined the board of National City in 1917 and with the 1920-21 sugar crash, the bank took over several Cuban firms, striving to integrate their utput with U.S...
...THE TAKE-OVER OF BEET SUGAR Bect sugar, grown primarily in the northern countries, is the world's other major sweetening source...
...All of these techniques in combination produced a new form of monopoly sanctioned by law.20 AMERICAN'S LEADING LIGHTS HENRY OSBORNE HAVEMEYER: Born in 147, Henry Osborne inherited $3 million when he was 14 years old from his father, Frederick Christian, a refiner who came to the United States from Germany...
...He and Havemeyer made several joint investments that proved quite profitable...
...His consequent influence was useful for manipulating congressional votes on the question of tariffs...
...Sharp price fluctuations resulting from intense competition led the industry to follow the example set in petroleum by Rockefeller's Standard Oil...
...For instance, ASRC alone held 500,000 acres...
...Albert H. Wiggin," American Sugar Refining Company, 1951...
...CHARLES H. ALLEN: President of ASRC from 1912-15, Allen then became a director of the company until the early 1920's...
...ASRC itself did not invest directly in Cuba until 1919 when it purchased and developed Centrals Cunagua and Jaronu on a 500 square mile plantation -- at the time, these centrals were capable of producing about 12 percent of the average raw sugar requirements of the Company...
...refiners (particularly the ASRC...
...21 This underutilization of resources was made official policy in the 1934 quota system whereby the U.S...
...On the other hand, the Chase National Bank began to show a keen interest in the sugar industry...
...by 1950, this figure had risen to 42 percent...
...In 1887, Atkins was one of the first U.S...
...The company is as dependent on imperialism today as it was at the turn of the century...
...During this same period, Wiggin was president and/ or chairman of the board of Chase Manhattan Bank--a situation which facilitated the coordination of the bank's sugar and food interests...
...The relatively large number of cane growers and mill owners were consolidated into a world-wide monopoly structure that incessantly sought to coordinate the factors of production and consumption for the highest rate of return...
...It controlled 50 percent or more of the stock of the Amalgamated Sugar Co...
...The president of the ASRC, Earl D. Babst, introduced these new techniques to increase consumer loyalty as well as the company's competitive advantage...
...Fortune article in Understanding the Corporation, 1934, page 261...
...The erepany employs nearly 6000 people in the operating plants it maintains in Brooklyn, Baltimore, Philadelphia and New Orleans...
...Thus, it was the role of the corporation to manipulate supply according to anticipated demand...
...In the case of the Olney tariff of the late 1890's, memos from Atkins served as the basis of the final act...
...The forced underutilization of resources was only possible because U.S...
...A significant portion of the national capital base in the cane producing countries was expropriated and rendered vulnerable to the vicissitudes of the international market, thereby fostering capitalist underdevelopment...
...sugar monopoly...
...Many instances might be cited of Wiggin's .contribution to the progress and welfare of the sugar industry as a whole...
...Thus, the company was able to keep its suppliers subservient by compelling the commodity to go through ASRC's refineries, centralized in the United States...
...Oscar Pino Santos, "Notes on the Private Life of Henry . Havemeyer and the Sugar Trust," Granma, October 30, 1968...
...interests...
...4 CURRENT STATUS After Cuba's removal from the "free world," ASC encouraged the increase of production in other areas including the Dominican Republic, Mexico, Brazil and Peru...
...Stock According to Geographical Area United States Foreign 4 New North Other England 2 Atlantic 3 States Total Cuba Total (%) (%) (%) (no...
...California) and The Western Sugar Refining Co...
...By 1915, pre-packaged name-brand sugar was introduced...
...2. By 1911, ASRC controlled large blocks of stock in the Alameda Sugar Co...
...iowa), Spreckels Sugar 'Co...
...Allen also served the Morgan interests as a vicepresident of the Guaranty Trust Company...
...Horizontal integration occurs when one corporation takes over other companies within the same industry...
...no...
...Source: American Sugar Refining Company, Annual Reports...
...in the late twenties, Babst, along with several other ASRC directors, joined Chase's board...
...Since beet cannot be processed in cane refineries, the growth of this industry represented a threat to east coast cane refiners...
...President McKinley then appointed him the first colonial governor of Puerto Rico, another country turned into a sugar supplier for the U.S...
...Cmtal JInG, Pr.o ad Camuwu, Cuba...
...However, the scheme was discovered in 1907 and the company was forced to pay millions in back customs duties...
...By 1927, another slump in the sugar market disillusioned22 National City with its investments and the interlocks between ASRC and the bank were terminated...
...Their profit derived from the margin between the price paid for raw sugar and the payment received for refined sugar...
...Havemeyer was a major contributor to both the Republicans and Democrats...
...and 26 in 1935...
...consumption...
...Before becoming the President of ASRC in 1915, Babst represented the National Biscuit Company in its legal battles against restrictions on the marketing of their products utilizing trade marks and advertising on a national scale...
...Utah), Carver County Sugar Co...
...The different lines battled furiously for a share of the sugar market since it constituted slightly more than a third of the westbound tonnage flowing from the port of New York...
...California...
...control subjugated the economy to the fate of the world sugar market, expecially U.S...
Vol. 4 • July 1970 • No. 4
