Report on Sugar Refining under Bond, dated 22nd December, 1848. Having had an opportunity of seeing the process of sugar refining at four refining houses in London, we now proceed to offer a few observations on the practicability of establishing a system of survey, under which the sugar duty could be secured by an equivalent charge on the refined products; but in order that the bearing of these remarks may be more distinctly seen, we beg to submit, first, a brief account of the process. The raw sugar is emptied from the original package into a cistern, where it is mixed with water, a small quantity of blood or other albuminous substance, and occasionally with lime water; the mass is heated by steam until all the sugar is dissolved and partially clarified. The syrup is then conveyed to a range of filters, formed of bags of coarse cotton cloth, from which it passes into a second cistern, perfectly freed from all feculent matter, but of a reddish brown colour. This brown transparent syrup is then carried by pipes to a filter of animal charcoal, through which it percolates slowly into a third cistern, and is then nearly colourless. The next step is the concentration of the clarified syrup, which is generally effected by Howard's vacuum pan. From the pan it passes into an open granulating vessel, and from thence it is carried to inverted conical moulds, arranged on the floor in rows. After the syrup has become in some measure solid the moulds are each placed, apex downwards, upon a jar into which any uncrystallized syrup in the mould is allowed to drain, and the loaves are further purified by causing a saturated solution of sugar in water to percolate through each. When sufficiently dry, the base of the loaf is scraped to an even surface, and the top is applied to a kind of lathe, in which any part that is damp or discoloured is cut off in such a manner that the loaf retains its conical shape, and the end is left white and smooth. The coarser loaves, instead of being turned, have the damp ends chopped off, so as to reduce them to the form of truncated cones, and the process is finished by drying the loaves in a stove heated to 130° or 140° F. The finer syrups which have run from the loaves are passed through filters, and used in certain proportions in subsequent boilings of the syrup from raw sugar. The coarser syrups, or refuse, are collected and formed into coarse loaves called bastards, and the syrup which drains from these coarse loaves, being incapable of further crystallization, is called treacle. Such is an outline of the process, and any approach to a system of survey which will check fraud, secure the duty, and protect the honest trader, requires-1st. An exact account of raw materials. 2nd. Means of raising a presumptive charge at different stages. 3rd. Means of stocktaking. 4th. Means of obtaining an exact account of the quantity and quality of the refined sugar delivered for home use, or deposited in a customs' warehouse for exportation. Whether these or any of them are attainable without imposing restrictions of such a nature as would more than counterbalance any benefit the scheme offers to the refiner, is the subject of inquiry. The first point is of easy attainment; an account of the weight and quality could be sent with each parcel of sugar delivered from the customs' warehouses, which would enable the officer at the refining house to keep an exact account of the raw sugar received; but this regulation, simple as it looks, involves the constant attendance of an officer at the refinery; or the trader must be bound to give a certain number of hours' hotice before he receives any sugar. The second point is the means of raising a presumptive charge at different stages of the process. The charge must either be raised from the quantity of raw sugar dissolved, or from the quantity and gravity of the syrup when it has passed through the filters; and it would be necessary to the proper working of the regulation, that notice should be given of each boiling, of the particular casks or other packages of sugar to be used, and that each operation should be kept distinct until it is finished. It is scarcely necessary, however, to pursue this subject further, as the enforcement of such regulations would subject the refiner to extensive alterations of his premises, considerable interference with the process of manufacture, and large increase of expense. The very nature of a presumptive charge also implies that it is possible to calculate the quantity of refined sugar obtainable from any given quantity of raw sugar, or from any given quantity of syrup of a known gravity; but the most experienced refiners state that it would be difficult to approach to accuracy in predicting the probable produce. The third point, viz., the means of stock-taking, seems to be equally unattainable. The processes are continually going on, and the materials are found in every possible form, and in a vast number of separate quantities; for instance, there would always be raw sugar, syrups, brown and clear, loaves, in various stages of purity and dryness; bastards of many different kinds, and thousands of jars, each containing a small quantity of syrup or treacle. But the difficulty of stock-taking is apparent, from the fact that some refiners do not take stock, and those who are more accurate in their accounts, find it necessary to suspend their works for two or three weeks for that purpose. With respect to the fourth point, viz., the means of obtaining an exact account of the quantity and quality of the refined products sent from the refinery, there are also many difficulties. A scale of duty ranging from the finest loaf to the coarsest brown bastard would be required, and an officer always on the spot, capable of applying that scale with unfailing accuracy to every shade of colour. This arrangement would not be satisfactory to the trade, and it would not afford sufficient security to the revenue. A refiner, it is true, might be required to deposit all the products in warehouse, but if the warehouse be on the premises, the officer in attendance would still be the sole judge of the quality; and if the goods were required to be sent to a public warehouse, where a number of qualified officers and brokers might have an opportunity of determining the rate of duty payable, objections would be raised by the refiners on account of the damage the goods might sustain in the removal, or from imperfect stowage, and the additional expense of weighing, cartage, and delivery, which would be incurred. It thus appears, that of the four points which we consider essential to an effective survey, the three last cannot be obtained, viz., the proportion of refined producible from any given quantity of raw sugar; a frequent and accurate account of the stock, and satisfactory means of estimating the quantity and quality of the various refined products sent from the refinery. We are therefore not aware by what means the duty could be levied on the refined products with security to the revenue, unless the refiner be subjected to much additional expense and many harassing restrictions. We are, &c., (Signed) To John Wood, Esq., Chairman, &c., Dec. 22, 1848. S. G. Exrs. JAMES STEEL, Memorandum on Refining Sugar in Bond, dated May 3, 1862. The privilege of refining sugar in bond for exportation was in operation for many years, and the only conclusion that can be drawn from the experience then obtained is, that the concession was unreasonably expensive to the Crown and comparatively of small value to the trade, almost every firm that tried it having, after a time, abandoned it. The expense to the Crown may be taken to have been from 200l. to 350l. per annum for each refinery, according to the salaries of the officers at the port. The object for which the privilege was originally granted was not to confer any boon on the West Indian trade, but, on the contrary, to counteract the effect of the protection afforded to that branch of the sugar trade, by permitting the refiner to use foreign sugars in the preparation of his goods for foreign markets, and so to enable him to compete with the foreigner on equal terms. To open foreign markets to our refiners, the system of bounties or drawbacks was first resorted to, but as it was impossible to say from what sugar the refined had been made, so long as there was a differential duty on sugars, the produce of different countries, it was necessary that the duty drawn back on exportation should not exceed the lowest rate payable on importation, and accordingly the amount of drawback was made equivalent only to the lower or colonial import rates, which left the refiner who used the sugars liable to the higher or foreign rate, minus the difference of duty, and as this difference was formerly very considerable, it became a complete prohibition as regarded the use of such sugars for refining, except when the price in any particular market might be exorbitantly high. The system of drawback thus failing to admit our refiners into the foreign markets, the only alternative left was to admit foreign sugars to be used in refining for exportation under such restrictions as might secure the Crown from any loss. To effect this object an Act was passed (in 1828), 9 Geo. IV., c. 93, which permitted limited quantities of foreign sugar, or sugar the produce of the East Indies, to be taken for refinement upon payment of 278. per cwt. duty (the amount then levied on British plantation, muscovado, and clayed sugar), and an increased rate of 1s. for every 3s. above the average price of West India sugar, on bond being given that the whole of such sugar should be subjected to the refining process, and that the products should be exported or deposited for exportation in a regular bonded warehouse, within four months, according to the following scale; viz. For every cwt. of raw sugar not exceeding the average price of West Indian, 61 lbs. refined, in loaves or lumps; 18 lbs. bastards; 28 lbs. treacle. These quantities to fluctuate for every shilling of value above such average price as follows; viz.-3 lbs. more of refined; 1 lb. less bastards; 2 lbs. less treacle. And upon exportation or delivery into warehouse the duty so paid was to be returned; but no merchant was allowed to have in his possession at any one time more than 1000 cwts. for every pan actually at work on the premises. In 1833, the Act of 3 & 4 Will. IV., c. 61, permitted the delivery, duty free, of any quantity of foreign sugars into bonded refineries, approved for the purpose, there to be refined and afterwards exported in the various states of the products of such process, viz., refined, bastards, and treacle, and this privilege was continued by subsequent Acts up to the year 1854. Several firms at different times availed themselves of the privilege in the port of London, but the number was reduced to one in 1854. All differential duties on sugar (as regards produce) having ceased in 1854, the object for which this privilege was originally conceded no longer existed, and it was accordingly withdrawn in that year by the 17 & 18 Vict., c. 29; and it may be presumed that drawback on exportation is amply sufficient to meet the exigencies of the case as regards foreign markets, and as the refiner has the opportunity thus afforded him of taking his goods either into the home or export market, there does not appear to be any good or sufficient reason for renewing the privilege of refining in bond, far less for extending it to sugar refined for the home market. The only advantage which could accrue to the refiner from such extension being less demand upon his capital, as he would not be required to pay duty on the sugar intended for the home market until it had been actually refined and sold, and he would be saved the necessity of paying duty at all on what he exported, in lieu of advancing the duty on the sugar when cleared from the docks, and getting it repaid in case of exportation, the interval between which may be some weeks; but this advantage, by which the public generally would not benefit in any way, could only be obtained by an immense expense for the attendance of the officers necessary to protect the revenue. A differential duty in favour of West Indian sugar might certainly prove advantageous to that interest by inducing the refiner to take advantage of the lower cost; but it is difficult to see how West Indian sugar could be benefited by allowing the refining in bond, where all sugars by being taken in the first instance without duty are put upon the same footing, and seeing that the clayed sugars are said to be so far superior for this process. The refining of sugar in bond differs most materially from the system of allowing imported merchandize generally to be deposited in bonded warehouses. In the latter case the exact quantities are all taken to account, and those quantities must be shown on delivery, and the stocks can always be checked in the warehouse, the law compelling the warehouse-keeper to produce any package or parcel of goods the officers may at any time call for, under a penalty of 5l. per package if failing to do so. Such warehouses are also open only during a few hours of the day, in many places being kept locked excepting during deliveries, and at all others they are closed at the end of the official hours, so that one officer can attend to several warehouses; but with sugar refineries it is quite different, although the exact quantities allowed to be received in bond might be taken account of, still as all the packages are, on receipt, immediately emptied into the pans, and as different sugars will yield different products, and even different refiners will produce different results from the same quality of sugar, there can be no other means of securing the Crown from fraud than keeping a constant and strict watch over the premises from the time of receiving the raw sugar, until the whole is refined and delivered; and as the process of refining is continued night and day, a relay of officers is necessary, so as never to leave the premises unguarded, and hence the great expense to the Crown. As the sugar houses are generally situated at a distance from the landing places both in London and at the outports, such supervision would require a distinct body of officers for the especial purpose, and as the duties required of them would be altogether more in consonance with those usually performed by the Inland Revenue than by the Customs, it has been deemed fit that, if the system of refining in bond for home consumption should ever be permitted, it should be placed under the control and supervision of the Inland Revenue department. In the usual bonding warehouses the advantages are public, as any merchant may avail himself of them; but in sugar refineries the proprietor alone can derive any benefit or profit from the indulgence, and there does not appear to be any valid reason peculiar to the sugar trade, why the country at large should be burdened with such heavy expenses solely for the individual profit and advantage of the members of any one class of traders, more particularly as the majority of refiners do not wish it, as they feel that the system of survey to which, for the protection of the revenue, they must necessarily be subject, would be so objectionable and vexatious as to counterbalance any advantage they might derive from the system. Custom House, May 3, 1862. SUGAR, 1801-1861. AN ACCOUNT showing the Quantity of SUGAR annually Consumed in the UNITED KINGDOM, with the Average Rate and Aggregate Amount of DUTY collected thereon; also the AVERAGE PRICE, inclusive and exclusive of the Duty, and the Average Quantity Consumed by each Individual of the Population, from 1801 to 1861 inclusive. |