Sugar protectionism

The laws of 4 February 1876, 18 May 1881 and 22 March 1886 exempted Madeiran sugar imported into Portugal and the Azores from the payment of duties, the first two for five years and the last for three years. True sugar protectionism, however, began only with the publication of the decree of 30 December 1895. This decree obliged the factories that registered to pay farmers for their cane at the price of 400 and 450 réis (old Portuguese money of account; 1$000 = 1,000 réis, 1:000$000 = one conto = 1,000,000 réis) per 30 kilograms. In compensation for this burden, it granted those factories the privilege of paying a duty of 30 réis, instead of 60 réis per kilogram, on molasses imported for making alcohol for wines. Madeira sugar, which under the preliminaries of the 1892 tariff paid a quarter of the rate on the mainland and in the Azores, was freed from that municipal levy (imposição).

The decree of 24 September 1903 added 50 réis to the minimum prices for 30 kilograms of cane, in exchange for new concessions to the factories. The law of 24 November 1904 then turned the sugar and alcohol industry in Madeira into a true monopoly, vesting the exercise of this industry in the registered manufacturers W. Hinton & Sons and José Júlio de Lemos.

The decree of 1903 mentioned above lowered the duty payable by the manufacturers on foreign molasses from 30 to 6 réis per kilo. At the same time it granted them ‘the right to extract from this raw material, before the distillation of alcohol for wines, the little sugar still usable, to be consumed in Madeira. This, however, would be deducted from the total extracted from the cane, and the deducted portion, if it were also exported instead of being sold on the island, would pay the duties and other general taxes at the customs houses of destination’.

Under this decree, Madeiran sugar lost its free entry into the Azores, to which some had been exported until 1903.

The monopoly established by the law of 24 November 1904, which the law of 9 September 1908 did not significantly alter, was to last 15 years. However, the firm of Wm Hinton & Sons lodged a complaint against a provision of the regulations of 11 March 1909 that restricted the sale of alcohol for the treatment of wines. After long and protracted negotiations, the Government was forced to publish the decree of 11 March 1911, intended to resolve the awkward situation created by that firm’s demands.

The complaint to which we refer was not the last. The one that arose from the disclosure of the provisions of clause 23 of the law of 15 August 1914 became notorious because of the stir it caused throughout the country.

The decree of 11 March 1911 established four zones based on the strength of the sugar-cane juice, kept the prices of 450 to 500 réis (old Portuguese money of account; 1$000 = 1,000 réis, 1:000$000 = one conto = 1,000,000 réis) set by the decree of 1903, and exempted from all duties Madeiran sugar destined for mainland Portugal. It taxed foreign sugars once again and allowed the registered factories (fábricas matriculadas) to import up to 550 tonnes of sugar a year from the colonies with a 50 per cent reduction in the corresponding duties.

Other concessions were made to the registered factories. The same decree, which was to remain in force until 31 December 1918, also laid down, however, that the quantity of alcohol needed to fortify wines would be 55 litres per pipa (wine cask and measure, c. 400–500 litres) of 500 litres.

The regulations for implementing the decree with force of law of 11 March 1911 were approved by the decree of 15 May 1912.

Although the former Companhia Fabril de Açúcar Madeirense set prices of 550, 600 and 650 réis per 30 kilograms of cane in 1872, it is well known that these prices were not maintained and that, before protectionism was decreed, the product was rarely sold for more than 300 or 320 réis.

Under the protectionist measures we have mentioned, the situation of many landowners and farmers improved considerably, since growing cane had become much more profitable. However, as these same measures did not also fix the price of sugar, this basic necessity grew steadily dearer in Madeira. It even came to the rather curious situation that, for a long time, the refineries on the mainland bought Madeiran sugar at lower prices than consumers in Funchal paid.

The manufacture of sugar was declared free from 1 January 1920 by Decree no. 5492 of 2 May 1919. This decree contains certain provisions of evident usefulness, but, as we have already had occasion to say on p. 226 of volume 1 of this work, it also contains others that pleased neither industry nor agriculture. Decree no. 6521 of 9 April 1920 modified or eliminated some of these provisions, and finally Decree no. 8089 of 3 April 1922 entrusted the administration of Madeira’s sugar regime (regímen sacarino, the legal regime governing sugar and alcohol production) to the Agricultural Station of the 9th Region, except for the [functions relating to] sugar and alcohol reserved to the Ministry of Finance. Under the same decree, the technical commission for the supervision of Madeira’s sugar regime consists of the director of the Agricultural Station of the 9th Region, the engineer of the Industrial District and the head of the District Inspection Department.

In May 1922 an attempt was made to revive the protectionist regime, or at least to guarantee a remunerative price for cane, in return for authorising the old registered factories (fábricas matriculadas) to sell sugar at 1.65 escudos (the Portuguese currency from 1911: 1 escudo = 100 centavos = 1,000 réis). Although things seemed to be going well at first – the Government even went so far as to prohibit the clearance of about 600 tonnes of sugar arriving from Brazil – in the end nothing was decreed in the sense desired by the owners of those factories. A major contributing factor was the campaign waged against this claim by an important Lisbon newspaper and also by various classes in Madeira which, not living from agriculture, wish only that sugar should be sold at prices within the reach of every purse.