Sweet Squawk

If National Biscuit Co., with its innumerable packaged, trademarked lines, outmoded the old-fashioned cracker barrel, then American Sugar Refining Co. must be credited with overturning the oldfashioned sugar barrel. In both these grocery store revolutions Earl D. Babst played a spotlight role. A lawyer-turned-merchandiser, Sugarman Babst learned about trademarking as National Biscuit's general counsel, a job which involved hundreds of infringement suits, and in his Manhattan office today he has two shelves of calf-bound law books recording his legal commercial victories. Later as a Biscuit vice president, he learned about packaging, advertising, national markets, consumer acceptance. And in 1915 when he was made president of American Sugar, Mr. Babst set out to persuade U. S. housewives to ask the grocer for Domino instead of plain sugar.

Eminently successful was Mr. Babst, for American Sugar in 59 grades and 269 different kinds of packages now sells around one-third of all sugar in the big U. S. bowl. Nevertheless, while Mr. Babst has changed U. S. sugar from a bulk to a packaged commodity in his long patriarchal rule, he has not forgotten his early law. Last week he mailed to his 21,000 stockholders an annual report which looked and read like a legal brief.

Dismissed in two pages of text and a few tabulations were the commercial results of 1936. The company made $6,510,000, as against $3,500,000 in 1935, which was its worst year since 1924. For the rest of his 68-page report Mr. Babst confined himself largely to a heavily-documented squawk about the Government's sugar policy.

Sugar is now a well-regimented industry. The Secretary of Agriculture sets quotas on all imports and also on domestic production of both cane and beet sugar.

That, in effect, sets limits on the amount of sugar U. S. refiners may refine. The price of raw sugar is affected directly by tariffs, which are not uniform, Cuba getting a preferential per lb. levy, other foreign countries paying 1.875^, while U. S. insular possessions like Hawaii and the Philippines ship in sugar duty free.

But in all this sweet confusion there is one thing that makes Mr. Babst fairly boil--importations of refined sugar. Up to about ten years ago, virtually all imports were raw sugar, and Mr. Babst and his fellow sugarmen refined it in the U. S.

Then smart entrepreneurs started building refineries in the tropics, shipping the finished product instead. The tariff on raw and refined was approximately the same, while labor and taxes were lower than in the U. S. By 1934 these tropical refiners were supplying nearly one-tenth of the 6,000,000-odd tons oi sugar annually consumed in the U. S.

At that point, inscead of hearkening to Mr. Babst's preliminary squawks, the New Deal froze the situation by dividing import quotas between refined and raw sugar. Mr. Babst was thankful to have the growth stopped but now with the Jones-Costigan Sugar Control Act coming up for extension, he wants the tropical refineries cut off altogether. Three U. S. refineries have been closed, says he, and most of the rest are operating far short of capacity.

Using every appeal from health & sanitation to defense of the U. S. laboring man, Mr. Babst has carried his case to the public in speech, statement, advertising and labeling. In his brief to his stock-holders last week he argued principally on the ground of national safety. "In spite of war or drought, civil disturbance or disaster, the home refineries always have been able to obtain raw sugar in some quarter of the globe out of which to make the refined sugar requirements of the Nation," rumbled Mr. Babst.

To all Mr. Babst's patriotic appeals the public has remained apathetic. The entire U. S. cane sugar refining industry, highly mechanized as it is, employs less than 15,000 workers. Housewives and voters are likely to feel that sugar is basically the same whether it comes in barrels or packages, whether it comes from a refinery in Brooklyn or Cuba. Moreover, some 80% of the refined imports flow from the Caribbean, minimizing the probability of interruption of the nation's sugar supply in case of war.

Not apathetic to the Babst propaganda is big Hershey Chocolate Corp. which refines sugar for its candy on its own plantations in Cuba, hence wants no change in tariff or quotas. When the Babst brief appeared last week, Hershey's P. A. Staples, in Cuba inspecting his tropical refineries, hopped to a telephone with a derisive counterattack to U. S. editors. "For the last several years we have been treated to the spectacle of the domestic refiners masquerading as farmers and trying to hitchhike on the farm relief wagon, although all refiners of sugar are solely middlemen who have no more to do with production than laundrymen have to do with cotton planting,'' cried Chocolateer Staples. "For the domestic refiners to dramatize themselves as doughty defenders of the American sugar bowl is child's play. Mr. Babst, head of the largest American refinery concern, complains about a loophole in the tariff. It is also a loophole through which the American people can shoot at the target of monopoly."

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