Economic Development in Denmark Before and During the World War/Legislative Measures rendered necessary by the War
Legislative Measures rendered necessary by the War
It is not surprising that the government was now forced into a series of encroachments upon the economic life of its subjects. Denmark was living under the same conditions as most of the other countries, and was having, on the whole, the same experiences. Immediately after the outbreak of the war an act was issued (August 6, 1914), whereby the Minister of Justice was authorized temporarily to prohibit the exportation of certain goods. On the following day a provisional act was promulgated authorizing the government to take steps to regulate the price of foodstuffs and other commodities, and permitting it, after full compensation, to take over such supplies as were necessary for the life of the nation. On the following day, again, a Price Regulating Committee was appointed with authority to take such measures as it deemed necessary to supply the country with essentials. In this way there was initiated a state socialism of which nobody could have dreamed before. At the same time need was felt of taking other measures which completely overturned all previous ideas. To prevent runs on the savings banks, as well as on the other banks, an act of August provided that the Secretary of Commerce could limit strictly the amounts which might be paid out on pass-books or deposit-vouchers; and since a run was made on the National Bank by people anxious to exchange notes for gold, so that the square in front of the building was literally jammed, another act was passed on the same day suspending the obligation of the National Bank to redeem the notes, leaving it to the discretion of the bank to redeem them or not. The first of these two acts soon became superfluous; for as soon as the people had recovered from their first panic, money flowed into the banks to an extent never known before.
The neutrality of Denmark during the World War created for her unique economic opportunities. There was a great demand for goods which she had on hand or could readily procure. Shrewd merchants and manufacturers recognized their opportunity, and in a very short time many of them made large fortunes. But this was not to the advantage of the majority. In the eager race to purchase the commodities which Denmark was able to deliver, prices rose and the populace was in danger of serious privation. It required an enormous amount of negotiation with the belligerent countries to secure export licences for the goods which Denmark needed in return for those which she was able to deliver, and it was not an easy task for the representatives of commerce and trade on whom it devolved to conduct these negotiations to make satisfactory arrangements.
The measures taken to secure the necessary goods for the population brought forth a steady stream of export prohibitions, besides an extraordinary number of price regulations. In most cases these regulations established maximum prices, sometimes by agreement with the manufacturers concerned. But it is obvious that such measures could not be satisfactory in the long run. Once a scarcity of goods is felt, fixed prices are of no use; and confusion necessarily results when there is no rise in price, as in a free market, to bring about the balance between the supply and demand. Various regulating measures on the part of the state became necessary, and such measures characterized the whole period of the World War, as well as the first period following its termination. When to all other difficulties was added the bad harvest of 1917, one can readily understand the many reasons for the socialistic policy that was adopted. But in reality the policy of Denmark did not differ from that of other countries in which the populations were living under similar circumstances.
Very soon the scarcity of various foodstuffs was felt. As early as the end of August 1914, the state felt obliged to take over the stores of wheat in the capital, after making due compensation to the owners, and a few days later these stores were handed over to the municipality of Copenhagen. At the end of the year the state took over large quantities of rye, and early in 1915 a shipment of wheat flour from abroad. But this was not enough; the freedom of the farmers was early interfered with, and after consultation with existing organizations of farmers it was voted to prohibit the use of rye and wheat for fodder and for spirituous liquors. The first of these prohibitions was issued in September, 1914; they were later extended to include sugar and sugar-beets. Moreover, the production of rye and wheat bran was restricted. In the autumn of 1915 an assessment upon grain was levied; a certain part of the rye and wheat harvested was reserved for human food, every farmer being notified of the quantity he was bound to deliver. Pursuant to an act of April 3, 1917, the state took over the whole crop of rye and wheat, with the exception only of the quantity necessary for each farmer's household. This was consequent upon the rationing of bread and flour which had begun on April 1, 1917, and which allowed a rather large quantity for each person. The system involved the well-known apparatus of bread-cards. A Corn Act of August 3, 1917, authorized the Secretary of the Home Office to take over all the rye and wheat of the uncommonly poor harvest of that year, as well as a portion of the barley and oat crop. It further authorized him to command every municipality to purchase potatoes for its inhabitants, even if it were necessary to compel the farmers to sell. The quantity of grain to be surrendered was calculated according to the value of land as tillable soil. The arrangement had its drawbacks, as, for instance, it might follow that farmers could scarcely get the necessary fodder for their horses. But here, as wherever regulations were made, a series of committees was appointed; one Permanent Agricultural Committee, the members of which were for the most part elected by the organizations; a general Food Council and local Food Councils for each separate district.
In the following year another Corn Act was passed. It authorized the Secretary of the Home Office, after agreement with the farmers, to cause potatoes to be raised, and it permitted the state to take over all sugar beyond what was necessary for the population. Further, it made provision for supplying pork to the people. As stated above, the number of hogs had very greatly diminished during the war, and the most sparing consumption of pork was enjoined. By an act of December 10, 1917, the Secretary of the Home Office was authorized to take measures for rationing pork, and the ensuing measures interfered greatly with the independence of farmers. In August 1918 it was decided that slaughtering at the farm could be allowed only on certain conditions and exclusively for household consumption.
The supplies of butter and milk were no less guarded. At the close of 1917 butter had to be rationed. A note of October 20 fixed a maximum price considerably below the export price; and later on there was a further reduction. An act of December 10 of the same year provided that the state should pay the expense of the rationing system arising from the sale of butter at the reduced prices. The milk supply was regulated by the establishment of an export duty on milk, cream, and cheese. An act of December 21, 1917, which was to remain in force until the end of October 1918, secured a certain quantity of milk for each individual at a fixed price, the state granting a subsidy of 8,000,000 kroner to be distributed among the communities according to their population. This act was replaced in November 1918 by a new act to supply butter, milk, cheese, and pork on the same system; and a tax was also planned upon cream sold within the country.
In order to insure the meat supply for the home market at a moderate price, an export duty on live stock was established by a note of July 7, 1916. The duty was to be levied at such a rate that meat in the home market might be sold at a reasonable price. The arrangement was laid down in an act of July 23, 1918. It is tempting to have to remind of 'dumping', only the home price in this case is lower than the export prices.
The list of such measures on the part of the state is by no means exhausted. Directly it was attempted to influence the supply of necessary goods, for instance, by encouraging the production of food at home, one effect of that policy was to increase the production of fuel at home. By an act of April 20, 1917 (amended on March 20, 1918), the Secretary of the Home Office was authorized to enjoin an increased felling of trees on all forest lands. Indirectly the aim of government was to increase the producing power of agriculture through the importation of fertilizers. The Secretary of the Home Office was authorized to purchase Norway saltpetre for the account of the state and to sell it to consumers at a considerably reduced price (act of March 7, 1918). The government also subsidized fishing to a considerable extent, so as to reduce the cost of fish. Various commodities, such as petroleum and oil, as well as technical fats, soap, tea, coffee, and sugar, were placed under control. At the close of the year 1916 the state took over the expense arising from the sale of sugar at a considerably lower price than it could be imported for, and after February 9, 1917, sugar was rationed.
All these provisions, the preparation and application of which necessitated the creation of many committees and councils, as well as the building up of a considerable administrative apparatus, was necessarily distasteful, of course, to a large part of the population, even though it be admitted that Denmark was better off than most of the neutral countries. The pressure was most severely felt by agriculture, which is the true stronghold of individualism. One of the beneficial, though indirect, results of the restrictions was the falling off in the production of spirits consequent upon the scarcity of grain. While the champions of liberalism maintain that prohibition or limitation of spirits was not according to reason, it is nevertheless a fact that sentiment against alcoholism, which has been growing in Denmark during the last decade, has been greatly increased by the experience during the war.
While the Danish population was thus obliged to submit to a number of restrictions, the fact must not be overlooked that the various trades worked hand in hand with the government, and that their organizations were allowed to take many independent measures designed to control the supply of goods to individual traders. This was especially the case with the 'Joint Council of Trades', formed in February 1917, and consisting of members elected by the organizations of agriculture, commerce, shipping, and industry. This Joint Council brought about co-operation between these trades: e. g. the Textile Manufacturers' Association undertook to import cotton; the Industrial Council established a Coal Distribution Office for industries working conjointly with two coal councils appointed by government, one for English, the other for German coal. Moreover, the Joint Council succeeded in bringing about the importation of a quantity of turpentine, which was then distributed among painters, etc. This voluntary action was quite on a par with the action of the state.