tell whether the markets are out of line, or to
what extent, it is necessary to determine on a differential to
represent the normal difference between the two markets. There is no
one figure, however, that will satisfy all conditions at all times, for
the reason that there are various freight rates between the Seaboard
and Chicago. It is inaccurate, for instance, to use 63c as the basis
for the normal differential. The 63c rate is one rate--the all-rail
freight rate from New York to Chicago.

Other important routes and rates are as follows:

Routing: Freight Rate:

New Orleans--Chicago (barge and rail) $0.50[1]
New York--Chicago (rail and lake) .58
New Orleans--Chicago (all rail) .60
Philadelphia--Chicago (all rail) .61
New York--Chicago (all rail) .63
Savannah--Chicago (all rail) .63
Boston--Chicago (all rail) .63

[1] The cheapest routing (48c) takes about two weeks' more time
in transit than the New York all-rail routing (63c). Interest
charges on finances involved, etc., for this extra period will
bring the expense of this routing to approximately 50c.

After a study of the amounts of sugar shipped over these various routes
we have arrived at an arbitrary figure to represent the normal
differential between refiners' prices and exchange quotations. We
believe that 57c will serve as a safe basis for calculation, but 58c or
59c might be equally--or more--accurate. In fact, anyone is entitled to
an opinion. 57c is our opinion. It is not an average of freight rates,
but is an arbitrary figure.

When the markets are in line, using 57c as a basis for calculation, 2%
should be deducted from refiners' prices, and 57c added to determine
what Exchange quotation should be. Conversely, 57c should be deducted
from Exchange quotations and 2% added to determine what refiners'
prices should be.

If you are willing to accept 57c as a safe figure, you may find the
following chart useful in determining the condition of the market:

ARE REFINERS' PRICES AND EXCHANGE QUOTATIONS IN LINE?

Based on a 57c differential and 2% cash discount

When Exchange
Refiners' Quotations
Prices Are Should Be

4c 4.49
4.05 4.54
4.10 4.59
4.15