No Shortage of Politics

The East is already so short of sugar that rationing is overdue--and the Senate Finance Committee is this week going to try to find out what's wrong. There has been no sugar rationing yet, because the Administration has not dared put it into effect--for fear that the public would demand its half a pound per week, when retailers do not have it to sell. But the Senate committee will be far more daring than the Administration if it has the nerve to tackle the political interests which have gotten the U.S. into its present sugar fix.

Is There Enough? Estimates of this year's sugar supply range from Leon Henderson's pessimistic 5,300,000 tons (2,200,000 tons below 1941's record consumption, 1,400,000 tons below the 1932-41 average) to the Commodity Research Bureau's 8,360,500. The great unknowns are 1) the 1941 carryover, estimated by the Department of Commerce at 2,000,000 tons on Jan. 1; 2) 1941 consumer hoarding, which some guesses put as high as 1,000,000 tons.

But the real joker is that the problem of estimating the sugar supply is not mathematical. It is military. For more than two-thirds of the U.S. sugar supply comes from offshore, and it takes precious ships to bring it in. The present plight of the East Coast, in fact, is thanks to U-boat activity in the Atlantic and Caribbean. The Japs, in occupying the Philippines, cut off about 900,000 tons a year for the U.S. Besides, the Jap's conquest of the Indies closed the last big source of sugar for Britain and probably for Russia (which lost two-thirds of her home supply with the Ukraine), and both these nations now become a charge on U.S. sugar supplies. Moreover, war takes explosives, which require alcohol, whose production is most easily expanded by using sugar.

Although some of these deductions from the sugar available to the U.S. can properly be charged to war, others are chargeable to politics. The U.S.'s annual sugar quotas have been political compromises to appease the various sugar lobbies which infest the Capitol.

For political reasons, the U.S. relied for about 15% of its sugar supplies on the Philippines, importing them across 7,000 miles of Pacific Ocean rather than across 200 miles from Cuba. For political reasons, the quotas of Hawaii and Puerto Rico, and particularly the quotas of U.S. beet-and cane-sugar producers have been kept high (in relation to their production)--and the quotas of Cuba kept down.

Back to Cuba. The result has been that Cuba, a low-cost producer close at hand, which by all the laws of economics should have supplied the U.S., has had her production cut (see chart, p. 63) by the laws of man. And now the U.S. has to turn to Cuba again for most of its supply.

Cuba's estimated production for 1942--all of it bought by the U.S. except what Cuba requires for her own use--is considerably bigger than in recent years. But Cuba cannot in one year turn back the hands of the clock. In 1925 she produced 6,000,000 tons, but having sold only about 2,000,000 tons a year to the U.S. during the '30s, the best she expects to be able to do for the U.S. and Lend-Lease in 1942 is 3,800,000 tons.

It took Pearl Harbor to persuade the domestic sugar bloc in Congress not to cut 1942 offshore quotas (TIME, Dec. 22), and the sugar bloc is already in full cry again. Domestic beet and cane producers are terrified of more post-war competition, are using the old argument that a war every 20 years proves the need for sugar self-sufficiency, however high the cost.

Nor is this the only damage that has been done by politics to the U.S. sugar supply. To keep the refineries of the U.S. sugar trust going, Cuba's quota of refined imports to the U.S. has been, and still is, limited to 375,000 tons a year. The U.S. refineries that handle Cuban sugar are nearly all located north of Baltimore. This means that, at a time when shipping is at a premium, raw sugar takes a long voyage up the dangerous coast rather than a short hop from Cuba to Florida--or taxes the railroads with a double haul.

Alcohol & Allies make the sugar difficulty worse. At least 800,000 tons of our Cuban sugar is now earmarked for alcohol. The grain bloc in Congress is howling for alcohol from corn or wheat instead--though that bloc also objects to letting Commodity Credit Corp. sell its grain stocks below parity (which makes grain alcohol cost more than sugar alcohol). This proposal runs smack into trouble from the industrial alcohol industry because only 40% of the whiskey distillers are equipped to make 190-proof alcohol. The other 60% can make only 140-proof, which would then have to be raised to 190 by the industrial alcohol producers, who much prefer their present, more profitable, sugar-into-alcohol conversion. The proposal also runs into the internal revenue laws on alcohol production (which are, however, being revised) and into more transportation problems, since the low-proof distilleries are in the East and Southeast, the high-proof plants mainly in the Midwest.

Nonetheless, grain alcohol will probably help to relieve the sugar shortage. It may also be relieved, paradoxically, by the shipping shortage. Of the sugar which the U.S. has bought from Cuba, 1,500,000 tons is earmarked for Lend-Lease shipments to the Allies. If the shipping is not available to carry it across the oceans, some of it may take the shorter route to the U.S.

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