Fighting the Sugar Trust: A Question of Liberty

Claus Spreckels’ decision to erect the world’s largest sugar refinery in Philadelphia and to fight the Sugar Trust face-to-face is one of the most exciting chapters of late nineteenth-century American business history. Although the conflict first emerged in the early 1880s, the 1889 document shows Spreckels’ perception of his position as an outsider and decisive challenger of the Sugar Trust. The document also reveals the growing relevance of public relations for economic endeavors: By attacking the Sugar Trust, Claus Spreckels changed his public image from monopolist to champion of consumers and American values.

From: [Examination of Mr. Spreckels], in Report in Relation to the Sugar Trust and Standard Oil Trust by the Committee on Manufactures. House of Representatives, Fiftieth Congress, First Session (Washington: Government Printing Office, 1889), 171-199, here 180, 181, 183-184.

“Q. We are here for the purpose of investigating at present this sugar trust that has been formed in New York. What information have you to impart to the committee upon that subject?—A. I don’t know anything about it. They wanted me to become one of the trust, and I refused, and said no. That is all the information I have on that subject.”

The examination stated a rise of the sugar prices after the formation of the Sugar Trust. “Q. Then the trust has been a good thing for you?—A. We do not know yet. I am going to start a refinery here. When they are fighting me there they may say, ‘We will undersell him and crush him out,’ and they may hold the sugar at 5 cents a pound. I will come here and start a factory, so that I will get my share here.…

Q. The purpose of this investigation is based upon the idea that these trust combinations are injurious to the interests of the great mass of people who consume sugars, and the object of the investigation is to ascertain whether the tendency of these combinations is in this direction. Now, I desire to ask you whether it is not true, in your opinion and from your observations as a competitor with these combinations, that as a matter of fact their effect has been to produce competition, and in producing competition to lessen the price of sugar instead of producing an opposite effect?—A. I do not agree with you there; I do not think so. Q. Did I not understand you, in your previous testimony, to express the opinion that such was the effect as you experienced it on the Pacific Coast?—A. Do you mean by competition? Q. Yes, sir.—A. We have experienced that. Q. Will not such combinations and the contest which will follow have the effect in the future to cheapen the prices of refined sugars and so benefit the consumers?—A. I do not think so; it will be higher, in my opinion. They ain’t going for the trust. They will not work for the people. Q. Will not this be the effect, that you gentlemen, who are now testing your strength in this competition, will be either driven from the market or will be merged within the trust combinations?—A. I do not think I will ever be merged in the combination. These gentlemen know something about it. If they are going to form a trust, of course only one or two men will rule it. How about all the stock in there? They virtually hold that stock, and they would not acknowledge that Spreckels or anybody else has anything to say. You give all your property, say, to one or two men. I came to this country from Germany for liberty, and liberty I shall maintain. (Applause) Q. You consider, then, as I understand, that the so-called sugar trust is an injury to the consumer rather than a benefit, even at the present time?—A. That is what I believe. Q. It is stated, and you also, I understand, have stated, that you are proposing the erection of a refinery in the Atlantic States in opposition to the so-called trust?—A. Yes, sir. Q. Now, if you do, and the other refiners not at present in the trust join you in the combination to fight the trust, there will be one combination fighting the other, will there not?—A. Yes, sir; but then, perhaps there will not be any fighting to speak of. The trust will have to take care of it. They have enough on their shoulders; but when they get more powerful and can make some $15,000,000 or $20,000,000 more, in a year or two I do not know what they will do. So I want to make myself felt. I do not know what they ae going to say. They may put sugar at 5 cents and run Spreckles [sic!] out. I am not going into the trust. I am coming here. If they make money here I will likewise; so I will balance it; that is my idea. Q. If this combination becomes powerful in the near future, as it has in the past, aggregating to itself more than two-thirds of the sugar refineries of the United States, will this not on the end drive you, the weaker, from the market if you don’t unite in the trust combination?—A. Very likely, it may be; but I do not think so. It would not drive me from it. I have another source to depend upon, what I have commenced and what I will go on with. We are going to raise our own sugar here in America, and this is about the time to do it.”