History of Saginaw County, Michigan; historical, commercial, biographical, Volume II, Part 53

Author: Mills, James Cooke
Publication date: 1918
Publisher: Saginaw, Mich., Seemann & Peters
Number of Pages: 838

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The proper course to pursue, as advocated by Samuel G. Higgins, who was one of the earliest promoters of the beet-sugar industry in Saginaw Val- ley, was to educate the farmers as to the best methods of raising beets, by giving practical instruction in the field by expert agriculturists in planting, cultivating and harvesting of the beets. It was important also to show that the sugar-beet is one of the best rotation crops the farmer can have, and should not be grown on the same land oftener than once in four years. It does not require a rich soil, as many persons believed. as it contains less impurities than when richly fertilized. While sugar-beets will grow well on almost any soil, it reaches a perfect growth in sandy loam deep enough to allow the

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HISTORY OF SAGINAW COUNTY

CROS

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BEET WAGONS WAITING TO UNLOAD AT MERRILL WEIGH STATION

roots to reach down into the soil. Favorable results, the experts contended, might be expected from planting in marsh land, if the soil be well drained and tilled.

Practical Experiments Made

Early in 1897 the whole matter reached a stage where practical experi- ments in sugar-beet culture were undertaken in Saginaw County on a large and comprehensive scale. To finance the operation a fund was created largely through the efforts of Harry T. Wickes. Thomas A. Harvey and George B. Morley, together with a number of prominent citizens. It was planned to secure the services of an expert agriculturist and chemist, procure a supply of proper beet seeds, and to interest by personal solicitation as many farmers as possible in making careful experiments. To this end a Mr. Lenders, a chemist well versed in the art of growing sugar-beets, was brought here and, in association with Samuel G. Higgins, commenced an active cam- paign.

By the influence of the publicity already given the whole matter, and the promise of successful results, six hundred farmers in this county were induced to plant, thin and cultivate small plots of ground to sugar-beets. From time to time during the Summer they were given instruction in the field as to the proper methods of cultivation, and otherwise aided in the experiments : and further publicity was given the project by Mr. Higgins in valuable articles to the press. The results from the crop, by analysis of specimen beets from each plot, showing an average of sixteen per cent. of sugar content, with some beets going as high as twenty per cent .. far exceeded the expectations of the promoters, and awakened the farmers and capitalists to the great possibilities of a new industry for Michigan, and particularly for Saginaw Valley.

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THE BEET-SUGAR INDUSTRY

The climax of the experiments came in October, when in a vacant store on the south side of Genesee Avenue, between Washington and Franklin Strets, an exhibition was held of the best specimens taken from the beet crop. In all there were five hundred and twenty-seven separate specimens, well illustrating the scope and thoroughness of the experiments, and proving beyond reasonable doubt this valley to be a rich field for growing of the sugar-beet. The exhibition opened the eyes of the community to the pos- sibilities of beet-growing and sugar-making, and exerted a greater influence than anything else, except the experiments themselves, in establishing the industry in this section of the State.

These experiments, financed by Saginaw business men, were the most systematic that had ever been conducted in this country, and the satisfactory results led Mr. Higgins to declare that "three crops of beets produced in consecutive years are worth as much as one crop of pine trees, which have been growing for one hundred years or more." The building of small sugar factories was not advocated ; although the cost of a large mill and refinery necessitated large capital, and it was believed that a plant with slicing capa- city of five hundred tons of beets a day, would meet the requirements of the company which was to be organized with a capital of five hundred thousand dollars.

Bay City Capitalists Erect the First Factory

While the experiments in beet culture were being made in Saginaw County, preliminary to starting the industry here, Bay City capitalists, be- coming convinced of the practicability of beet sugar-making, organized the Michigan Sugar Company and erected a large factory at the lower end of the river. This was the first beet-sugar factory in Saginaw Valley, and, indeed in the State, and it commenced slicing beets on October 14, 1898, from an acreage which had been contracted among the farmers near that city. So successful was the venture that three other companies were quickly organ- ized, one being a co-operative concern capitalized by influential farmers ; and the industry soon became well established in Bay County.

The rush of the Bay City people to get into sugar-making was due to two causes. At the time there was much idle capital in Saginaw Valley, accumulated by the closing up of extensive lumbering operations ; and it was generally believed that the sugar industry offered the best opportunity for large investments. Then, too. the Yonman's Beet-Sugar Law, passed by the State Legislature in 1897, which granted a bounty of one cent a pound upon all sugar made in Michigan from beets grown in this State, was a great incen- tive to prompt action. The old lumbermen in turning to sugar-making as a means of employing their idle capital, had in mind the experience with the salt bounty law which had been enacted forty years before, and repealed before the salt makers could derive any benefit from it, and they feared a like action with the sugar bounty. If they were to take all the risks of starting the new industry, they naturally wanted all the bounty money they were entitled to, and therefore lost no time in organizing their companies, con- tracting for beets very largely with Saginaw County farmers, erecting factories and beginning the manufacture of sugar.

The Youman's Beet-Sugar Bounty Law

The beet-sugar bounty law provided that "the manufacturer shall pro- duce good and sufficient receipts and vouchers to show that at least four dollars per ton of twenty hundred pounds, has actually been paid for all beets purchased, containing twelve per cent. of sugar," and "a sum proportionate to that amount for all beets containing a greater or less per cent. of sugar."

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HISTORY OF SAGINAW COUNTY

The benefit to the farmer, which was one of the primary objects of the law, lay in the requirement of the manufacturer to pay the following prices for beets in order to obtain the bounty :

For beets containing 10 per cent. of sugar, $3.3313 per ton. For beets containing 11 per cent. of sugar, 3.6633 per ton. For beets containing 12 per cent. of sugar, 4.00 per ton.

For beets containing 13 per cent. of sugar, 4.3313 per ton. For beets containing 14 per cent. of sugar. 4.6033 per ton. For beets containing 15 per cent. of sugar. 5.00 per ton.

For beets containing 16 per cent. of sugar, 5.33!3 per ton.

The law made no discrimination as to co-efficient of purity of beets, the same price being stipulated for beets with purity of seventy-five as for those of a purity of eighty-five, should the percentage of sugar content be the same. By co-efficient of purity was meant the percentage of saccharine mat- ter contained in the beet that would crystalize into sugar, the remainder working up into molasses or other sweet stuff. The co-efficient varied greatly in the beets, some of high sugar content showing comparatively low co-efficiency, or from fifty to sixty, while other beets of less percentage of saccharine matter showed a high co-efficient of purity.

As a result of the failure of the law to recognize the co-efficient of purity, the manufacturers were often compelled to pay a higher price for poor beets than for good ones. The loss to the manufacturer extended in inany cases to the farmer, inasmuch as at the price stipulated by the law for beets of high sugar content but of low co-efficient of purity, say at fifty, the beets could not be made into sugar at a profit, and were therefore rejected at the factory, entailing a direct loss to the grower. If the co-efficient of purity had been recognized in the law, and the prices based on it as well as on the percentage of saccharine matter, the manufacturers would probably have accepted the poorest beets in cases such as stated, and paid what they were worth to them, thereby saving the farmer from loss.

In other respects the sugar bounty law worked out very satisfactorily, the experience of the first Bay City factory, in 1898, showing that the bounty earned, amounting to fifty thousand dollars, turned an apparent operating loss of eight thousand five hundred dollars, into a profit of more than twenty per cent. of the capital invested. The bounty, however, was deemed by some legislators as unnecessarily high, though the correct position seemed to be that as to the existing factories, or those projected, the bounty should not be changed. For new companies to be organized later, some modification of the bounty seemed advisable, since the pioneers in the industry took risks that those who came later and had the benefit of the former's experience, did not have to assume to so great an extent. In a few years, however, when nine- teen factories were in operation, or in course of construction, the sugar bounty law was repealed; and the industry has since stood entirely upon its own merits and resources.

Why Saginaw Was Backward

During 1898, when there was such activity in Bay City in starting the beet-sugar industry, the business men of Saginaw still held up the organiza- tion of a sugar company here. They were entirely satisfied that the proper quality of beets could be grown here in sufficient quantity to make the business a success, but were willing, nevertheless, to let their neighbors down the river make the first manufacturing experiments, from the experience of which they would profit by. A more logical cause, however, for the delay was a statement made by Professor Smith, of the Michigan Agricultural College, at a meeting of Saginaw business men, that Saginaw River water,

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from the presence of saline held in solution was a bar to the manufacture of sugar. This was a serious problem and was given thorough consideration by local investors before definite plans were formulated.

To determine the truth or falsity of this statement, which was a decided blow to the prospects of the infant industry, Joseph Seemann wrote to Doctor H. W. Wiley, chief of the Division of Chemistry, Washington, D. C., for advice in the matter, and in due course received the following reply :

"Dear Sir: I am in receipt of your letter concerning the introduc- tion of beet-sugar manufacturing in the vicinity of Saginaw.

"Experience has shown that in the manufacture of sugar common salt in small quantities is not objectionable. The objection to most of the common saline impurities of water is that they prevent the crystali- zation of sugar. This is not the case with salt, as it is practically neutral so far as impeding or favoring crystalization is concerned."

(Signed) "H. W. WILEY. Chief of Division."

This letter was published by the local press in the hope of correcting the unfavorable impression which existed regarding our water supply, and in a measure accomplished its purpose.

The quantity of water required daily for a sugar factory of six hundred tons capacity, which it was proposed to erect here, is about three million gallons, about one tenth of which is used in direct processes of manufacture, and must be filtered. Since no process of filtration will remove salt or other impurities held in solution, the old impression that Saginaw River water was entirely unsuited for making sugar still persisted, and it was necessary to settle the question before attempting to organize the first sugar company here. The problem was at length solved to the satisfaction of all concerned by sending various samples of river water to Doctor Wiley, at Washington. for analysis and further advice in the matter. After complete analysis of the waters had been made, Doctor Wiley declared very positively that the salt contained in the waters of Saginaw River would not interfere in the slightest degree with its use in manufacturing sugar.

CARROLLTON PLANT OF THE MICHIGAN SUGAR COMPANY

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HISTORY OF SAGINAW COUNTY

Saginaw Sugar Company Organized

This decision of an authority on the subject left no doubt as to the entire practicability of sugar-making in Saginaw, and early in 1899, when the success of the first Bay City factory was assured, local capitalists, headed by W. V. Penover, an up Huron Shore lumberman, organized the Saginaw Sugar Company with a capital of five hundred thousand dollars. A site for the factory was soon after selected on the H. P. Smith property, at the corner of South Jefferson Avenue and Sidney ( Rust) Street, plans were prepared, and the foundation for the main buildings laid in the Fall of that year.

The erection of a modern sugar mill and refinery on the most economic basis requires about one year, so that it was in October, 1900, that the work of construction of the new factory was completed, and the machinery put in condition for operation. Ample acreage had been contracted among the farmers of this county, and late in September deliveries commenced at the huge beet sheds on South Jefferson Avenue. It was a novel and interesting scene when several hundred farmers' teams congregated at this point, deliver- ing the first crop of succulent beets to the initial sugar company of Saginaw. The run that year and the one of 1901 were entirely successful, and great hopes were expressed for the ultimate expansion of the industry so auspici- ously begun.

The success of this company, however, was of short duration, and the fourth year of its operation was the last. The factory was not well located, for one thing, being nearly a mile from its source of water supply-the river, entailing a heavy ontlay for extra piping and sewage systems, and additional expense for pumping. There was only one railroad connection with the plant, although another road passed close by, and an unnecessary burden for switching charges was put upon it. The plant itself was of small capacity, compared with the successful sugar factories elsewhere, and mis- fortune seemed to follow its operations. The management. moreover, was in the hands of men who had made fortunes in turning the pine tree into marketable lumber; and, as everyone knows, lumbering methods are the most wasteful of all American industries.

In general the sugar business in Michigan was conducted on much the same lines as success had been made in lumbering. Economics of industry did not seem to enter into the equation at all. A long time was required for the process of shaking down to an economic basis of operation. While this change was going on the pioneers of the industry learned many things about the business, including the policies of the eastern sugar magnates, and met their losses without quibble or complaint.

Dark Days for the Industry

The result of these conditions was that after the fourth year of operation the Saginaw Sugar Company was in precarious financial position. After a time it was reorganized, and a consolidation arrangement entered into with the Valley Sugar Company, of Carrollton, whose plant had been built two years before in a very favorable location for permanent succcess. The business was thus put on a better economic and industrial basis, and con- tinned operations, under the name of Saginaw-Valley Sugar Company, for several years, the old Valley plant of the company still being in use.

The old Saginaw plant, which was so badly located and of capacity which could not be operated at a profit except at large expenditure for additions. was sold, dismantled in 1905, and removed to Sterling, Colorado. The price realized from the sale was hardly more than one-third of the original cost

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of the plant, the Penoyers losing, it was said, about one hundred and eighty thousand dollars by the deal, while other stockholders in the company lost as much more.

Many other troubles that came to the sugar industry in its early days were due to avoidable causes. The business was overdone in the Saginaw Valley almost from the start, factories springing up with mushroom growth, and with little or no regard for location so as to permanently control good beet-growing territory. In three years six large factories were erected in Bay City and Saginaw, within a radius of about eight miles, and, although the shipping facilities were unexcelled, it was impossible at the time ( 1899 to 1903) to secure enough beet tonnage to supply them all to full capacity. Other factories were built at Caro, Sebewaing, Alma, Owosso, St. Louis, Mt. Pleasant and Lansing, all of which drew beet supplies from the natural territory of the Saginaw and Bay City factories.

Although the leading farmers of this section, especially the German- American class, have been enthusiastic growers of sugar-beets and have profited thereby, the great majority of farmers in Michigan have never been very staunch advocates of beet-growing, and their education to the advan- tages of the industry has been a long and expensive one. In recent years, however, the price paid to the farmers for beets has risen to a point where very few progressive farmers, situated near a sugar factory, can ignore the attractive beet contracts, and few there are who do not grow a more or less extended acreage of sugar-beets.

Utilization of Beet Pulp

Another element of uneconomic management was the great waste of beet pulp, which in the early days of the industry was handled as a waste product. It was sold to the farmers at a very low price or thrown away in order to be rid of it. After six or eight years of harrowing experiences the leading companies began installing pulp dryers to convert the hitherto useless pulp into a valuable by-product. This is a light flaky substance packed in bags for the market, and is shipped to all parts of the country. It is especially valuable as a feed for dairy herds, and when fed to milch cows increases the yield of milk not less than a gallon, and in many cases to two or three gallons, a day, within ten days after beginning its use. It has also been known to start cows which had dried up. Its fattening qualities for steers is remarkable, a herd after forty-eight days gained one hundred and thirty-three pounds per head on seventy pounds of pulp per day, and five pounds of hay for cud. Cattle men claim that pulp-fed steers make firmer and tenderer, and better colored beef.

Opposition of Eastern Sugar Magnates

The troubles at home, which for a time threatened to wreck the industry, were not the only difficulties that vexed the beet-sugar companies. They had to contend with the bitter opposition of the eastern sugar magnates, who exerted every effort to ruin the infant industry. The control of the market in the Middle West and Western States, which the so-called "sugar trust" had enjoyed for many years, was jeopardized by the quantities of beet-sugar which at certain times flooded the market: and retaliatory tactics were resorted to in order to thwart the ambitious designs of the promoters of home industry. As a result of the most unscrupulous methods employed by the eastern refineries, the beet-sugar men met opposition at every turn in the marketing of their product.

One of the chief weapons of offense used by the old sugar crowd was its vigorous attack on the protective tariff on raw sugars. This tariff was, and is, the very life and backbone of the struggling beet-sugar industry. It was

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HISTORY OF SAGINAW COUNTY

used very effectually by the combatants as a "big club," by agitating a reduc- tion in the schedule, or its entire removal. They claimed that the tariff had much to do with high prices of sugar, and that it was a "wicked tax" as it hit the workingman as it did his rich neighbor, since both consume practically the same quantity as a household necessity. "They pay not according to their ability, but according to their needs, thus reversing the elemental principle of taxation," they said.

A moderate tariff on raw sugars imported from Cuba and abroad is absolutely necessary, it is contended, if the beet-sugar industry is to prosper in this country. This is because it costs much more to produce beet-sugar, at prices paid for beets which will induce farmers to grow them, than it does to produce cane sugar at the average cost of raws, made by the cheap native labor of Cuba and foreign countries. As a matter of fact the American farmer receives more for the sugar in the beets than the refiners pay for the raw sugar laid down in New York. As it costs nearly five times as much to extract the sugar from the beets as it does to simply refine the raw sugar, the beet-sugar manufacturers must have a differential to cover the high relative price paid the farmer for the beets, or quit the business. Even with the present duty added to the raw sugars, the beet sugar costs on the average .08 of a cent more per pound than refined cane sugar.

The "Trust" Control of Beet-Sugar

When the old sugar magnates in the East had conducted their bush war- fare against beet-sugar for three or four years, and had helped to reduce the struggling industry to a pitiable condition, they appeared openly on the scene, in the guise of friends, as benefactors, to put the beet-sugar business on its feet again. Beet-sugar stocks were almost worthless, farmers who grew beets were dissatisfied with conditions, and the operators were almost ready to quit. By the use of large sums of money, in buying up stocks here and there, and by loaning large amounts to conduct the campaigns of 1904 and 1905, these shrewd financiers gained the confidence and good will of the western sugar men, and incidentally gained for themselves absolute control of the industry.

In the process of rejuvenation they instilled into the corporate system something of the element of success that had previously marked the sugar refining business; and today no one doubts the stability and value of the industry to the whole people. About 1910, when the sugar magnates had given their lesson to the westerners, and there was no prospect of expansion of the beet-sugar industry, the "Trust" began gradually to withdraw. The following year it was estimated that the trust holdings of Michigan stocks was only thirty-four per cent. of the total capitalization. Today very little Michigan Sugar stock is held directly by the Trust.

Value of Beet-Sugar Industry to Country

The relinquishment of control of beet-sugar was a good thing for the whole country. This fact was emphasized by the effect of throwing the new sugar stocks of 1911 on the market. During September of that year the "trust" had boosted the price of sugar throughout the country to the almost unheard of figure of seven eighty-five per hundred, wholesale, which meant a retail price of nine or ten cents to the housewife. The Michigan crop of sugar-beets was the largest in the history of the industry, and when, on October 12, the new supplies of beet-sugar were placed on the market, the trust price at once fell to five fifty-five per hundred, wholesale, and the retail price to about seven cents.

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THE "SCROLL" OR WORM CONVEYOR WHICH LIFTS THE BEETS FROM FLUME INTO FACTORY

The practical benefit and value of beet-sugar competition is not confined to Michigan or the Middle West, but is shared in equal measure by the whole people. This is due to the fact that the wholesale prices of the various grades of sugar, as set by the Trust, are practically the same at all points in every State and territory. The consumer in California pays on a given day approximately the same price as the consumer in Maine or New York. and the consumer in Florida the same as the consumer in Oregon. Thus, when the new stocks of beet-sugar came on the market, the high and unwarranted Trust prices were broken, and retail prices quickly fell about three cents a pound in every city, town, hamlet and corner of the country. This was true at places far beyond the zone of shipment of beet-sugar itself. and proved the influence of Michigan beet-sugar in the market.

Trip Through the Carrollton Factory

The Valley Sugar factory, now the Carrollton plant of the Michigan Sugar Company, was built in 1901 and put in operation late in October of that year. It ran successfully during the campaigns of 1902 and 1903, but in the following year, when the company consolidated with the old Saginaw Sugar Company, it was closed down. In 1905 the original Saginaw plant was torn down and the machinery moved away. Since that time the Carrollton plant, with a rated capacity of eight hundred tons of beets a day, and the only sugar factory in Saginaw County, has worked up beets grown on six to eight thousand acres each year.

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History of Saginaw County, Michigan; historical, commercial, biographical, Volume II, Part 53

Author: Mills, James Cooke Publication date: 1918 Publisher: Saginaw, Mich., Seemann & Peters Number of Pages: 838

Author: Mills, James Cooke
Publication date: 1918
Publisher: Saginaw, Mich., Seemann & Peters
Number of Pages: 838