This prompt response to a sudden demand shows how great is the refining capacity of the United States. It seems probable that it could supply on short notice 1,000,000 tons more than its average output, if the demand were made.

In spite of these various war influences, all of which tend toward a greatly increased price of sugar, the price of refined sugar in the United States has remained lower than that established by the government commissions in the war zone or by refiners in other foreign countries under private competition. This fact seems to indicate that the system in the United States of the great combination and its other powerful competitors working in large units has secured better results for consumers as well as for producers than would have been possible under a system of competition working in small units.

Perhaps the most accurate way to estimate the influence of any industrial combination upon prices, especially if the combination to a considerable extent leads the market, is to examine the purchasing power of a unit of that commodity in terms of general commodities. The index numbers compiled by the United States Bureau of Labor and similar numbers compiled in other countries give one as accurately as may be a general average price for commodities. In Chart II is represented the course of prices of refined sugar from 1900 to 1914, referred to a base of an average price for the years 1895 to 1900 inclusive. This relative price is represented by the line A on the chart. Line B represents the course of prices of general commodities as indicated by the American index number. By dividing the index number by the relative price of

sugar we obtain in general terms the amount of commodities that can be bought by a unit of sugar. Line C then represents this purchasing power. In a similar way is indicated in the lines D, E, and F the price of sugar, index number and purchasing power of sugar in Great Britain; while lines H, K, and L represent similarly sugar in Germany. Line C shows that the purchasing power of sugar in the United States has declined in the years 1900 to 1914 inclusive, about thirty-two points. The line F shows that the purchasing power of sugar in Great Britain has declined only twenty-three points. If we exclude definitely the influence of the war by making the comparison only through the year 1913, we find that the purchasing power decreased twenty-eight points.

It is not possible to get the index number for Germany beyond the year 1912, but from the beginning of 1900 through the year 1912 the purchasing power of sugar in Germany decreased some fifteen points.

The total result seems to indicate that if the sugar combination in the United States has had any direct influence upon the price of sugar, it has been rather to reduce that price than to increase it, inasmuch as this comparison of the price of sugar with the prices of other commodities in the same country indicates that in every year since 1900 a pound of sugar in the United States purchased less of other commodities than it would purchase in 1900. In both Germany and Great Britain, the purchasing power of sugar has decreased since 1900, to a much smaller extent.

The charts seem to show that the sugar combination has had little if any effect toward steadying prices.

The fluctuations in the price of sugar and in the margin seem to be as frequent and as great on the whole since the formation of the combination as before. These fluctuations are clearly greater than those in the German market, and it may be said that they are also somewhat greater than those in the English market.

At the times when the sugar combination has been investigated by the Industrial Commission and other governmental agents, the assertion has been frequently made by its defenders that the price of sugar would have been higher if it had not been for the formation of the Trust. This assertion seems to have a partial justification in the figures printed and in the chart. The chart does make it perfectly clear that during the periods of the most vigorous competition the sugar refineries did their work on a very low margin. Moreover, when we consider that during the years immediately preceding the organization of the Trust, eighteen out of some forty refineries failed, the implication seems clear that the margin was ruinously low, and that, although the weakest competitors were forced out of business, the presumption is that so much good capital was wasted that there was a decided injury to the country. When an industry is of the nature of sugar refining, one requiring the investment of large capital in order that production may be carried on economically-a capital of perhaps $2,000,000 or $3,000,000 for a single refinery of the best type we can see that it is possible for competitors of substantially equal strength to carry on their fight until all of them are running at a loss for a considerable period before finally several of them fail. If business is carried on under such circumstances, it is certain that whenever

there comes a failure of several of the competitors, or whenever instead of failure there comes a combination of rivals, prices will be put back to a figure decidedly above the competitive rates, in order that the great losses may be recouped. Unrestricted competition among powerful rivals in an industry of this character would thus lead, it would seem, to very great fluctuations in prices as the years go by, from those abnormally not to say ruinously low, to those abnormally high. If, on the other hand, there should be more or less of an understanding among the refiners, it is probable that prices would be somewhat steadier, and the margin a medium one, between the lowest and the highest.

There can be no doubt that the sugar combination has at various times been able to influence prices with, relatively speaking, little reference to the cost of refining; but it seems also clear that, although they have made excellent profits during the last few years, the margin certainly during the last three or four years can hardly be said to be abnormal. It should be remembered that, with this decreasing margin, there can be no doubt that the cost of refining during the last few years has quite materially increased. The cost of materials used in building refineries and the cost of boneblack have both increased. There has also been a tendency for wages to increase, and it is probable that the cost of refining is as much as 8 or 10 cents a hundred more than it was during the period of low prices in the late 90's or in the first three or four years of the present century. During the war period the cost has increased much more, justifying in good part, if not indeed entirely, the increased margin.