ON FEBRUARY 8th last, I sent to the Congress a message setting forth certain facts and problems pertaining to the sugar industry. I said then that "the problem is difficult but can be solved if met squarely and if small temporary gains are sacrificed to the ultimate general advantage."
I have today signed H. R. 8861 which I am advised will permit a rapid approach to the solution of the many vexing and difficult problems within the industry. I hope that this Act will contribute to the economic improvement in Hawaii, Puerto Rico, the Virgin Islands, the Philippines, Cuba and among continental sugar producers. These are the objectives outlined in my message to the Congress last February.
Under the terms of the Act, the rate of the processing tax shall not exceed the amount of the reduction on a pound of sugar raw value of the rate of duty in effect on January 1, 1934, as adjusted by our commercial treaty with Cuba.
Acting upon the unanimous recommendations of the United States Tariff Commission, I have today signed a proclamation, under the so-called flexible tariff provisions of the Tariff Act of 1930, reducing the rate of duty on sugar. Using 96 degree Cuban sugar as the unit of measure, this results in a reduction of the duty from 2 cents to 1 1/2 cents a pound on that sugar. The rate of the processing tax must not exceed the amount of the reduction as adjusted to this unit of measure.
This means that the processing or compensatory taxes will not increase, in themselves, the price to be paid by the ultimate consumers and at the same time our own sugar producers will have the opportunity to obtain in the form of benefit payments, a fairer return from their product.
To cooperate with the Secretary of Agriculture in carrying out the provisions of this Act, I have designated an informal committee' from the Cabinet. This committee includes the Secretary of Agriculture; the Secretary of the Interior, who is charged with the administration of Hawaii and the Virgin Islands; the Secretary of War, who is charged with the administration of Puerto Rico and the Philippine Islands; and the Secretary of State, who is charged with the conduct of our negotiations with Cuba.
Those engaged in this industry have an opportunity to improve their economic status through operation of this Act. I urge their cooperation in carrying out its provisions.
NOTE: The foregoing statute was enacted pursuant to recommendations made by me to help the sugar industry (see Item 21, this volume). The comprehensive program established under this Act had the following six principal objectives:
1. To assure fair returns to domestic sugar-beet and sugar-cane producers by crop adjustment programs and by benefit payments to be paid from funds derived from a processing tax on sugar.
2. To assure laborers in the sugar-beet and sugar-cane industries a share in the benefits of the program, by making benefit payments conditional upon the elimination of child labor and the payment of
fair and equitable wages to field laborers.
3. To stabilize the price of sugar at levels profitable to producers by limiting the marketing of sugar to estimated consumption requirements, and by fixing a quota for each sugar-producing area within the continental United States, its insular possessions, and foreign countries exporting sugar to the United States.
4. To stabilize sugar production in the Philippines, Hawaii, Puerto Rico, and the Virgin Islands at levels in keeping with the consumption requirements of the United States and harmonious with the economic welfare of those insular areas.
5. To arrest the decline in Cuban sugar imports to the United States so as to increase the Cuban market for American exports of other products to Cuba.
6. To enable the Secretary of Agriculture to mediate in disputes between growers and processors, and growers and laborers, with respect to contractual relationships.
The quotas for 1934 for all sugar-producing areas were announced on June 12, 1934. Production adjustment programs also were developed in the sugar-beet and sugar-cane areas of the United States and in the sugar-producing areas in the insular possessions.
The Act authorized the Secretary of Agriculture to purchase surplus beet sugar from proceeds of the sugar-beet processing tax for the relief of the unemployed. The Federal Surplus Relief Corporation, pursuant to this authority, did purchase a great deal of surplus stocks of sugar and used it in processing foods to be distributed among the unemployed.
During the period of approximately eighteen months in which the full sugar program operated under the Jones-Costigan Act, real results were accomplished. The large surplus of sugar was practically entirely eliminated. The income of growers was materially improved with higher prices for sugarbeets and sugar-cane, resulting from marketing stabilization supplemented by benefit payments. Sugarbeet growers, for example, who had received $5.26 per ton in 1932 and $5.13 in 1933, obtained an average return, including benefit payments, of $6.91 per ton in 1934 and $6.90 in ’935 Net returns to processors also increased substantially from the low point of 1933.
The income of field laborers was raised, partly through the increased ability of producers to pay better wages and partly through the establishment of minimum wages by the Secretary. Child labor was practically eliminated in the continental United States is a factor in sugarcane and sugar-beet production.
In the interests of consumers, the price of sugar was stabilized at levels comparable to prices prior to the depression.
The Cuban income from sugar sales in the United States increased by 125 percent from 1933 to 1935 inclusive. This fact, together with the reduction of Cuban duties on American imports under the reciprocal trade agreement, resulted in an expanded Cuban market for American agricultural and industrial products. In fact, United States exports to Cuba increased 140 percent from 1933 to 1935 inclusive.
The decision of the Supreme Court of the United States in the case of the United States vs. Butler, 297 U S. 1, on January 6, 1936 (see Introduction to Vol. IV), invalidating the processing tax and production-control features of A.A.A., brought to an end the sugar program except for the quota provisions. To remove any doubt about the quota provisions, the Congress enacted a statute approved June ig, 1936, reaffirming the quota powers previously granted to the Secretary. (Pub. Res. 109; 49 Stat. 1539.)
Unfortunately, experience since the decision of the Supreme Court has shown that sugar price protection, based only upon a quota system, falls far short of the achievements of the more complete program as it existed under the Jones-Costigan Act. Betterment of laboring conditions became impossible with the removal of the production-adjustment powers; the consumer has not benefited materially in price by the removal of the processing tax; considerable revenue has been lost; and the processor is receiving substantially the same price for sugar without having to advance the amount of the processing tax.
Franklin D. Roosevelt, Statement on Signing Sugar Industry Legislation. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/208680