their aggregate estimate of potential production for export by British and East African colonies and nonregulated countries. Consumption is not likely to reach the pre-war rate for several years, but the Netherlands Indies may require a similar period before their output approaches the pre-war normal. India and Ceylon, however, showed during the war years that they were capable of producing well above their estimated normal production, and in time the teas of the nonregulated countries will once more seek international markets.

SUGAR, WHEAT, AND COFFEE I. C. A.'s

More comprehensive and ambitious but far less successful I. C. A.'s were adopted in the 1930's for sugar and wheat. Two of these were distinctive in including numerous net-importing countries along with net-exporting countries. A five-country interim agreement on wheat, replacing the short-lived one of 1933-34, became effective late in June, 1942; it has thus far proved of slight consequence. Very little of the elaborate Draft Convention, designed for submission to a more representative International Wheat Conference, has been brought into force. Late in 1940, under the influence of wartime conditions, the United States concluded a coffee agreement with the fourteen Latin-American coffee-producing countries; this has virtually ceased to be operative since VJ-Day. The outbreak of war in September, 1939, interrupted efforts to formulate an I. C. A. among cotton-exporting countries; these were resumed in the spring of 1945, but suspended late in February, 1946, without significant results. These four agricul tural products are often-though by no means accurately-spoken of as characterized by "chronic surplus." In all cases, it is worthy of note, governmental policies in one or more countries have been primarily responsible for recurrent or persistent surpluses.

SUGAR

One of the most important I. C. A.'s before World War I was the (Brussels) Sugar Convention of March 5, 1902, which was nominally in effect for seventeen years after September 1, 1903. It was designed to curb a seriously objectionable practice in international competition. All the principal beet-sugar-producing countries except Russia (which adhered with reservations in 1908) agreed to abandon export and production bounties on beet sugar, which had been carried to gross excess, and to penalize or prohibit imports of "bounty-fed" sugar from nonparticipating countries." This convention is said to have been "the first to give an international committee power to dictate policy" "-though this statement implies too much. For a few years, amid many difficulties, it achieved its purpose. Even before World War I, however, the execution of the agreement was weakened; and under the pressures of war and protectionist policies it became largely inoperative several years before it was dissolved in 1920."

Two quite different I. C. A.'s for sugar were adopted between the two world wars: (1) the Chadbourne Agreement among sugar-producers' associations in seven sugar-exporting countries, which was signed on May 9, 1931, and broke down before it formally expired on May 31, 1935, and (2) the International Sugar Agreement among twenty-one exporting and importing countries, which was signed on May 6, 1937, and is still nominally in effect. In both instances the administrative body was called the "International Sugar Council."

The Chadbourne Agreement, though not intergovernmental in form, initially had the support of the governments of the participating countries: Cuba, Java, Germany, Belgium, Czechoslovakia, Hungary, Poland, and eventually Peru and Yugoslavia also. By drastic export and production restrictions, not only under the agreement but supplementary to it, most of the surplus sugar stocks in the

References to this and earlier agreements relating to drawbacks and bounties on sugar are given in ILO, ICCA's, p. 26 n. On the Brussels Convention, see also H. C. PrinsenGeerligs, The World's Cane Sugar Industry, Past and Present (Manchester, 1912), pp. 34 f., 371-377: and its supplement, H C. and R. J. Prinsen-Geerligs, Cane-Sugar Production, 1912-37 (London, 1938), pp. 16-18 and Jacob Viner, Dumping: A Problem in International Trade (Chicago, 1923), pp. 178-186.

10 L. A. Mander, Foundations of Modern World Society (Stanford University, Calif., 1941), p. 237. 11 Of the same general-nature as the Brussels Sugar Convention of 1902, though of negli gible importance, was an international agreement on hides, skins, and bones, effective in October 1929, under which 18 states jointly renounced export prohibitions and accepted limitations on export duties on these products (see League of Nations, Economic Financial, and Transit Department, Commercial Policy in the Interwar Period: International Pro posals and National Policies, 1942 ((Geneva, 1942), p. 35). Of experience under this I have been able to get no evidence.

participating countries were worked off. The more fundamental objective of raising depressed sugar prices to remunerative levels was not attained. Further declines in most series of sugar prices occurred in 1932, and sharp fluctuations continued in several markets in 1933 and 1934. London wholesale prices of raw sugar, in terms of sterling and United States currency, were below the 1931 average until early in 1937 and again through most of 1938. The guilder price of sugar in Java, until 1939, averaged lower than in 1931. It was not until the middle of 1934 that Cuban raw-sugar prices, in terms of depreciated United States currency, ruled consistently above their 1931 average. Cuban sugar prices were actually higher in the interval between the two agreements than under either agreement.

During 1931-35, moreover, sugar production outside the Chadbourne countries was expanded, notably in India and the Japanese empire, formerly large importers from Java, and in the United States and its overseas sugar territories, thus leading to reduced American imports from Cuba. For Java and Cuba, the two lowest-cost producing countries, the consequences of this outside expansion were disastrous, because their volume of exports was greatly reduced, while their export prices remained below levels considered remunerative, despite their low production costs.

The International Sugar Agreement of 1937 was not merely a fresh attempt to achieve success where the Chadbourne plan had failed. It was the most matured product of thought and efforts on I. C. A.'s that were intensified during the great depression and forwarded by the abortive World Monetary and Economic Conference of 1933. Its signatory countries produced 85-90 per cent of the world's sugar, as compared with about 40 per cent in the Chadbourne agreement.

The International Sugar Conference that convened in London on April 5, 1937, was called only after "careful exploration" gave reasonable assurance that "absolute barriers" to reaching an agreement no longer existed. This conference was summoned by Prime Minister Ramsay Macdonald, "on the instruction" of Dr. H. Colijn, Netherlands Minister of Colonies and president of the Economic Commission "to whom the Bureau of the World Monetary and Economic Conference had entrusted the prosecution of certain economic questions." In opening the conference, from whose month's work in London the new agreement emerged, Mr. Macdonald said:

"We are met to consider whether something can be done towards removing the troubles which have beset the world's sugar producers for many years. Today, the position is much better than it was, say four years ago; production has been brought to a reasonable relation with consumption; stocks have been reduced to manageable proportions and world prices have apparently, for the first time for many years, taken a definite upward turn in the last few months. But production in some of the greatest sugar-producing countries remains at only about 50% of its former level. In many others, production has been sustained only by special measures of assistance which remain a heavy burden on Government finances or on sugar consumers. There still is in the world a capacity to produce far in excess of present demand. The improved world price is still only just remunerative to the cheapest producers and, while unused capacity exists and is ready at any moment to be freed, there can be no security of obtaining even that modest return.

"Many of the past difficulties of the industry have been due to lack of cer tainty as to what world production was going to be, and a failure to coordinate the sugar policies of different countries. It seems to me therefore that perhaps the best service can be rendered now to the world's sugar industry is to give it some assurance of stability and order. That, I think, should be the fundamental object of an Agreement.

"It is owing to the decisive influence of State action that this Conference is composed of delegates to Governments not of the producers themselves. Too many factors are involved for the terms of an effective sugar regulation agreement to be settled by producers alone. It is necessary to add to a mere regulation of supplies some provisions designed to prevent disturbance by further uncoordinated Government intervention.

"But, while we are aiming primarily at safeguarding producers against disastrously low prices, we have to remember the interests of consumers. The United Kingdom is itself a very large consumer and we are naturally not in favour of anything being done to raise prices above a just economic level. We seek to bring order into the industry so as to be fair to both producers and consumers. In considering this problem, we should not forget that, today, con

sumption is kept down in some countries by the maintenance of high retail prices."

,, 12

13

The resulting sugar agreement was extremely detailed and in many respects very ambitious, but it contained no provisions enabling the International Sugar Council to go to the heart of the world sugar problem-nationalistic measures promoting high-cost production and restriction of sugar consumption in many coun tries. It merely "aimed at equating the exports of cheap sugar to the import demands limited by the protection granted to high-cost producers.' The two years before war came upon Europe were too short for adequate test of its limited potentialities.

Ratification by all the signatory countries was not effected by September 1, 1937, as had been expected. Only six, indeed, had deposited ratifications by that date, but thirteen more did so in the next ten months. Three-China, France, and Yugoslavia-never did ratify. Formal differences arose over bringing the agreement into legal force among those which had ratified it. On July 22, 1942, when it was about to expire, it was agreed by fifteen governments (excluding the signatories Germany, Hungary, Poland, and India, but including the Philippines) that the agreement "shall be regarded as having come into force" in respect of these governments on September 1, 1937, and that it should continue in force through August 31, 1944. Its formal existence was later extended for one year," but under war conditions its existence was essentially nominal. Its present legal status is unclear, but presumably it will be revived in due course.

In its initial period the International Sugar Council lacked a solid foundation for its existence. Its powers with respect to changes in what proved excessive basic quotas were limited in any case. An able Dutch participant in this and other I. C. A.'s, the late G. H. C. Hart, nevertheless asserted that the sugar agreement "proved of great importance" from its signature until World War II broke out, and even afterward."7 Protracted discussions among representatives of the ratifying countries yielded decisions by which export regulation was car ried out. At best, however, the operations did not prevent further recessions in sugar prices, and the agreement made no demonstrable contribution toward price recovery or a sound readjustment in world sugar production."

WHEAT

An International Wheat Agreement was sigued in London in the summer of 1933, after a series of conferences initiated before the World Monetary and Economic Conference convened and continued beyond its end. Of the twenty-two signatory exporting and importing countries, all but one (Eire) ratified with or without reservations." Export-quota restrictions were agreed to, but no effective machinery for enforcement was created. Although total exports in the first year 1933-34) fell short of the aggregate quota. Argentina's exports moderately exceeded her quota. Her crop greatly exceeded forecasts made in the summer of 1933, as did European wheat production. The Argentine ministry of agriculture who had favored the agreement died, and his successor was cold toward it. Efforts to get quotas readjusted were unavailing. Argentine spokesmen plausibly argued that North American producers had failed to fulfil badly worded commitments to reduce their wheat acreage for 1934. Inability to reach agreement within the international Wheat Advisory Committee forced virtual suspension of the scheme after the initial season.

League of Nations, International Sugar Conference (Geneva, October 27, 1937), p. 26. This document is one of the best in the whole field of I. C. A.'s and could well be taken as a model for reports on similar conferences. Unfortunately, nothing like it is available for other conferences that either led to I. C. A.'s or failed to do so. By comparison, the published report of the Washington Wheat Meeting of 1941-42 is disappointingly meager. 13 I. L. O., I. C. C. A.'s, pp. 26-45. For further background see also Foreign Agriculture (U. S. Department of Agriculture, June, 1937), I, 299-310.

14 Economist (London), June 16, 1945, p. 818.

15 I. L. O., I. C. C. A.'s, pp. 45-46.

10 Department of State Bulletin, October 29, 1944, p. 526: April 29, 1945, p. 836. 17 G. H. C. Hart, Towards Economic Democracy in the Netherlands Indies [New York]: Netherlands and Netherlands East Indies Council, Institute of Pacific Relations, 1942). p. 117.

18 Cf. P. Lamartine Yates, Commodity Control: A Study of Primary Products (London, 1943). chap. iii.

19 The twin agreements and certain reservations are given in I. L. O., I. C. C. A.'s, pp. 1-10. The experience is analyzed in J. S. Davis, Wheat and the AAA (Washington, D. C.: Brookings Institution, 1935), pp. 303-43, 416-17; and more briefly in J. S. Davis, New International Wheat Agreements ("Wheat Studies of the Food Research Institute," Vol. XIX [Stanford University, Calif., November, 1942]), p. 26.

The signatory net-importing countries ander the 1933 agreement made several promising commitments. In particular, they undertook to lower their wheatimport duties when a selected basic price had ranged for 16 weeks above 63 gold cents per bushel. Actually, despite the near approach to the planned compliance with export restrictions, wheat prices declined instead of rising; hence this commitment did not become effective. The others led to no significant actions. The production-control provisions also were given no real test. A suc-. cession of short wheat crops in 1934-36, due to low yields, permitted absorption of surplus stocks and eventually marked advances in prices.

The Wheat Advisory Committee survived the demise of the scheme and kept alive the possibility of a new and tighter international agreement, including minimum-price provisions. Negotiations to this end were in active progress n 193839, after the bumper world crop of 1938 had reconstituted a world wheat surplus. War broke out before these had reached their final stage. In 1941-42 they were resumed in Washington among five allied and neutral countries with major interests in wheat.

These negotiations eventually resulted in an elaborate Draft Convention intended for submission to a subsequent general International Wheat Conference, and in an interim agreement, effective June 27, 1942, among the five governments whose representatives participated in the Washington wheat meeting: the United Kingdom, Canada, Argentina, Australia, and the United States.20 The Draft Convention called for an extremely ambitious I. C. A. The interim agreement brought a little of it into effect.

The Wheat Advisory Committee, though not yet formally terminated, was in effect replaced by an International Wheat Council, with its seat in Washington for the time being." It has met at least twice a year since August, 1942, and its Executive Committee has met more frequently. In the absence of annual reports, which the council has chosen not to publish (despite specific provision to this effect), it is difficult to evaluate actions that may have been taken, particularly along the lines of influencing the direction of national policy in the respective countries; but evidence of any significant influence is lacking. With the cessation of hostilities, the council was faced with a number of problems that put the interim agreement to a test. Thus far (March 1, 1946), it has been found wanting. In default of anticipated agreement on schedules of maximum and minimum prices, individual wheat-exporting nations are determining their own prices. Most of the wheat for relief is being handled without obvious reference to the agreement. No appreciable co-ordination of production and export policies has been undertaken, except in limited degree through the Combined Food Board. The International Wheat Council seems impotent. If and when an International Wheat Conference is called, it may well view with favor an agreement very different from that presented in the 1942 Draft Convention.

COFFEE

The Inter-American Coffee Agreement (1940) was born of wartime economics and high politics." In the preceding quarter-century, Brazil had conducted several coffee "valorization" and "defense" operations. These involved holding back coffee when surplus supplies depressed prices, releasing stocks after price recovery, and eventually huge destruction of surplus stocks (at the peak in 1937, over seventeen million bags were destroyed) without eliminating the incubus. Under this Brazilian policy, competing coffee-producing countries expanded their production and their share of the world market at Brazil's expense. Several Brazilian efforts to get an I. C. A. for coffee failed; but, in consequence of a resolution of the First Pan-American Coffee Conference at Bogotá in October, 1936, eight of the more important producing countries jointly established a Pan-American Coffee Bureau in New York City. Early in November, 1937, Brazil undertook to regain her former share of the world market by selling her coffees for what they would bring. In the ensuing "coffee war," Brazilian coffee sold at heavy price discounts, the larger because in the period of restricted Brazilian exports 20 Reprinted in I. L. O., I. C. C. A.'8, pp. 10-25, and analyzed in Davis, New International Wheat Agreements, pp. 25-84.

On this paragraph see J. S. Davis, Wheat under International Agreement (American Enterprise Association, "National Economic Problems," No. 410 [New York, (April), 1945]); and Dominion Bureau of Statistics, Monthly Review of the Wheat Situation, XVI, No. 2 (October, 1945), 1-3.

See I. L. O., I. C.' O. A.'8, pp. 59-68; and V. D. Wickizer, The World Coffee Economy, with Special Reference to Control Schemes ("Food Research Institute, Commodity Policy Studies," No. 2 [Stanford University, Calif., 1943]).

the coffee trade and consumers had developed their preferences for other coffees of the "mild" types, in which Colombia led. Nevertheless, the international coffee situation was in a fair way to readjustment when war developments created serious new problems.

In the first few months after Germany invaded Poland, prices of mild coffees fell sharply. They fell still lower, and Brazilian prices weakened further, after the German invasion of the Low Countries in the spring of 1940. With the fall of France, the loss of Continental European markets, which normally accounted for 40 percent of the world absorption, threatened further price declines below the very low levels reached in the summer of 1940. The international situation was so dangerous that the United States took active steps to promote Pan-American political solidarity and to strengthen the economic position of Latin-American nations. Following a series of conferences in June-November, 1940, an InterAmerican Coffee Agreement (I. A. C. A.) was signed by the United States and fourteen Latin-American coffee-producing countries. After receipt of essential ratifications and the passage of supporting legislation in the United States, this went into effect April 16, 1941, and was made retroactive to October 1, 1940. The central feature of the I. A. C. A. was a system of export quotas, for which basic schedules were agreed upon after negotiation and compromise. The only ones that have had practical significance were the individual-country quotas for export to the United States-normally the consumer of over half the world's coffee which the United States agreed to enforce by import controls. The administering body, the Inter-American Coffee Board, was set up in April, 1941, with its seat in Washington and the American member as chairman. The board was empowered to fix and alter export quotas within prescribed limits. The coffee-exporting countries were interested in having these export quotas fixed in order that cutthroat competition should be prevented and that American coffee prices should rise to profitable levels; and the United States, in effect, indicated its willingness to facilitate such rise in the interest of inter-American solidarity. Speculative activity, strongly reinforced by rising minimum export prices set by Colombia (which had shrewdly accepted an export quota to the United States that was low compared to her recent exports) even before the agreement was formally ratified, raised coffee prices sharply. Representative import prices in New York roughly doubled between August, 1940, and August, 1941, moving from the lowest prices in a decade to the highest." Late in May, 1941, the board raised the United States quotas by 5 per cent and, to permit speeding-up of imports threatened by impending scarcity of shipping, authorized exports of additional amounts not to be entered for consumption until after October 1. At the board meeting in July, the American chairman stated that further increases in coffee prices were unwarranted under present conditions; and in August the United States exercised its right to declare an emergency 24 and increased quotas by 20 per cent. These moves effectually prevented further price advances and resulted in prices receding slightly from the peaks of the summer months.

Shortly after the Pearl Harbor attack, the Office of Price Administration established price ceilings for green coffees at about the levels then current. schedule was revised on December 29, 1941, and further amended and expanded in August, 1942. By and large, however, the ceilings of December, 1941, were adhered to until mid-November, 1945, despité vigorous and persistent efforts on the part of the coffee-producing countries, especially in 1944 and 1945, to get them raised.25

In April, 1942, shrinking stocks of imported coffee due to shipping shortages forced the imposition of restrictions on coffee distribution in the United States. and the Coffee Board removed all restrictions on coffee shipments to the United States for storage here. Another emergency increase in coffee quotas was made in July. The Commodity Credit Corporation arranged to absorb certain war

23 Eurico Penteado. Brazilian member of the Coffee Board and chairman of the Board of Directors of the Pan-American Coffee Bureau, said of this in a review of "The Facts on the Coffee Situation," Tea and Coffee Trade Journal (New York), LXXXVII (December, 1944), 18b-c: "The coffee market slowly recovered and prices reacted in a healthy manner until they reached, late in 1941, a level which was then acceptable or even satisfactory when compared to the disastrous depths to which they had fallen in 1940." 24 Under Art. VIII of the Agreement, the United States could outvote the producing countries at any time if it considered a shortage of supplies imminent in the United States. Otherwise, quota changes could be made in amounts not greater than 5 per cent and not oftener than once every six months.

25 Penteado. "The Facts on the Coffee Situation," op. cit.: Department of State Bulletin. March 25, 1945. pp. 512-13: and Coffee (New York). IV, No. 4 (April, 1945), 3, and No. 9 (September, 1945), 2-24. Such efforts were natural in view of notable inflation of prices and wages in Latin-American countries, coupled with maintenance of dollar-exchange rates.