Turning the pages back... April 28, 1887 (04/26/98)

Turning the pages back...

April 28, 1887

The first industrial monopoly established in Ukraine was the Syndicate of Sugar Manufacturers, set up on April 28, 1887, at a conference of sugar producers in Kyiv with the assistance of the Russian imperial government.

Led by Polish, Russian, Jewish and Ukrainian businessmen, the syndicate was based in Kyiv and had a branch office in Warsaw. It did not issue shares or keep a common capital base, so it was something between a pool and a cartel. At the height of its power in the early 1890s, its members owned over 90 percent of all sugar refineries in the Russian Empire.

Its primary purpose was to prop up sugar prices on the domestic market, a goal that was supported by the imperial government through excise taxes. The poverty of Ukrainian and Russian consumers was such that demand was fairly low, and the pace of modernization and growth in the sugar industry soon produced massive surpluses. One industrialist had some of Kyiv's streets heaped with sugar so that his daughter, whose wedding day was in the summer, could enjoy a connubial sleigh ride.

In order to maintain high prices, the syndicate's members agreed to export up to 25 percent of their production, which was then dumped on the international market at artificially low prices.

Since the syndicate's founding agreements pertained to overall prices, but not market share or the volume of production of any particular member, this resulted in sometimes hysterical competition for sales among producers. In 1895, when the quarrels among the industrialists began generating too much adverse publicity, the government passed legislation limiting sugar production and assigned production quotas to individual producers.

That year, the syndicate was transformed into a committee of sugar refiners, who held congresses and acted as intermediaries between the government and industry until 1917.

Source: "Syndicate of Sugar Manufacturers," Encyclopedia of Ukraine, Vol. 5 (Toronto: University of Toronto Press, 1993).