This particular one is a crooked, crooked beet
     - The Clash, 1980

For part 1 of Sugar! see Oddsconsin 47. For part 2 see Oddsconsin 48.

Following the Spanish-American War of 1898, one of the biggest threats to the emerging US beet sugar industry was the production of cane sugar by the country’s newly acquired territories of Puerto Rico and the Philippines, as well as Cuba, which was briefly a US protectorate. Cane sugar in these areas was cheaper to produce than domestic beet sugar, and thus every increase in cane sugar output made the domestic beet sugar industry more precarious. There was tension between expansionists, who wanted to acquire even more foreign territory to grow more cane sugar, and sugar beet protectionists, who wanted tariffs, not free trade, between the US and its new territories.

US tariffs on imported sugar were first imposed in 1883 at 2.25 cents per pound [1]. The goal was to stimulate the US sugar industry by artificially increasing the cost of imported sugar. But, in 1902, the US granted a twenty percent reduction in tariffs on sugar imported from Cuba, to stimulate the Cuban cane sugar industry. The Reciprocity Agreement with Cuba helped ensure the flow of sugar from Cuba to fill US demand. It also helped satisfy corporations that were heavily investing in Cuba after the Spanish departed at the end of the Spanish-American war.

The 1902 Reciprocity Agreement helped initiate a huge increase in Cuban sugar production. In 1904, Cuba produced one million tons of sugar. By 1925, it was producing five million tons, almost a quarter of the world’s total. [2] 

Over ninety percent of Cuba’s sugar was exported to the US. The increasingly affluent US population gobbled up as much Cuban sugar as it could get. It was hard for domestic producers to compete, since production costs in Cuba were much lower than in the US. Investors went where returns were the highest. The investment capital to develop the sugar industry went to Cuba rather than staying in the US.

Through the early part of the twentieth century, and especially under the administration of President Woodrow Wilson, sugar tariffs progressively decreased. The tariff rate dropped from 2.25 cents per pound in 1883 to 1.0048 cents per pound under the Wilson-Underwood Tariff of 1913. The sugar tariff was scheduled to be abolished altogether by 1916. [1]

Thus by 1913, the US sugar industry fully expected to be competing via free trade with Cuba and other sugar-producing countries. This was a constant source of anxiety. Sugar producers argued that if the tariff was removed in 1916, as the Wilson administration planned, sugar factories would go idle. And in fact, both the Janesville and Madison factories were shuttered during the 1914 season. [3][4]

More ominously, it was thought that the domestic sugar industry would completely collapse. Beet sugar producers were angry. “We warned the country … what would happen to the great sugar beet industry if sugar were put on the free list …. And our words were discounted as being a bluff.”  [5]

The saving grace – if we can call it that – was the First World War, which began in late 1914 in Europe. The war interrupted European sugar production, ramping up demand for American sugar. More important, perhaps, the provision to abolish the sugar tariff in 1916 was suspended, as the federal government anticipated it might need the revenue if it was drawn into the conflict. The Madison and Janesville factories reopened in 1915. 

US beet sugar production continued to increase during the 1920s, but its share of total US deliveries continued to fall. Beet sugar comprised almost a quarter of total domestic sugar deliveries in 1921, but bottomed out at less than fifteen percent only six years later. At the same time, Cuban sugar imports as a percentage of total domestic deliveries increased from 45 percent to 55 percent. [2] 

To make matters worse, the 1920s witnessed a sharp decline in sugar prices, which fell from 5.03 cents per pound in 1923 to 2.24 cents in 1925. Attempts to increase the tariff rate on Cuban sugar only had the effect of stimulating investment in Puerto Rico, Hawaii and the Philippines, which, as US territories, paid no tariffs at all. [2]

Rumors that the Madison factory would shut down for good first surfaced in early 1924. In April, it was official. Profits were low and the sugar market was volatile. A lease agreement for the Madison factory, which provided working capital for its operations, was dropped and the factory closed its doors for good. [6] [7]

Today, the US beet sugar industry, under a different regulatory regime and economic environment, has resurged. Production is now more centralized. Sugar beets are mainly grown and processed in a few key states: Michigan and Minnesota in the Midwest, North Dakota and Nebraska in the Great Plains, Idaho, Montana, Wyoming and Colorado in the Mountain West, and the Pacific Coast states of Washington, Oregon and California. [8] Wisconsin produces only a limited supply of sugar beets today.

Whether you like it or not, beets are probably part of your daily diet. [9] Since over 50 percent of US sugar comes from beets, the next time you bite into a Kwik Trip Glazer or an Original Cream Puff at the State Fair, there’s a greater than 50-50 chance you are consuming a little Beta vulgaris var. saccharifera. 

Sources and Notes

[1] Douglas A. Irwin, 2014, Tariff Incidence: Evidence from U.S. Sugar Duties, 1890-1930. National Bureau of Economic Research, Cambridge, MA. 

[2] Brian H. Pollitt, 1984, The Cuban Sugar Economy and the Great Depression, Bulletin of Latin American Research, 1984, Vol. 3, No. 2, pp. 3-28.

[3] Wisconsin State Journal, Nov. 21, 1913, p. 7.

[4] Wisconsin State Journal, Nov. 22, 1913, p. 5.

[5] Wisconsin State Journal, Nov. 21, 1913, p. 10.

[6] Capital Times, April 28, 1924, p. 3.

[7] The shuttering of the Madison sugar factory affected the local economy in a significant way. Stein Brothers Stores in Madison, for example, held a large close out sale on overstocked merchandise. They sold off everything from pajamas and union suits to infants’ rubber pants and children’s wool four-piece suits. (Wisconsin State Journal, Nov. 23, 1924, p. 11)

[8] The Sugar Association, Where in the US Does Sugar Come From? https://www.sugar.org/wp-content/uploads/U.S.-Sugar-Map-1.pdf

[9] Attitudes toward sugar a hundred years ago were different than they are today. A 1916 article in the Wisconsin State Journal quotes Mel Shepperd – “one of the greatest runners that ever wore a shoe” – as saying he was “at his best when he ate a lot of sugar.” As a boy in Philadelphia, Shepperd worked in a sugar factory and used to “dip into the barrels and got into the sugar eating habit,” adding “that must be the reason I had so much endurance.” After he left the sugar factory, he said, “running was not nearly as easy.” Scientists apparently approved of the idea of athletes systematically including sugar in their everyday diet, claiming that “sugar was one of the best producers of energy.” (Wisconsin State Journal, Jan. 7, 1916, p. 11)