war-time prohibition pending demobilization of the army, and
beginning on July 1 1919. This, however, was a measure of prohibition
for protection of the soldiers and not a food control measure.
The use of food in other manufacturing trades was also controlled and
restricted by the regulations of the Food Administration, particularly
the use of sugar in the manufacture of candy and other non-essential
sweets. The conservation programme was in full force from Sept.
1917 until Nov. 1918, when it was withdrawn shortly after the Armistice.
The results show that after the United States came into the
war, and notwithstanding the exhaustion of its reserves and the
decrease of its basic supplies, the volume of food exports to the Allies
in these critical months was such that it saved the Allied situation.
Without very much more than the usual shipments from the United
States the food supply of the Allies would have been reduced below
the danger point. In the three years before the war the average food
exports were 6,959,055 tons. In the fiscal year 1917-8 the exports
were 12,326,914 tons, and, in 1918-9, 18,667,378 tons.
Stimulation of Production.—The Department of Agriculture exercised its great influence and used its machinery to reach the farms of the United States with patriotic appeals and advice for the stimulation of production. Response to these appeals, which were disseminated also by the Food Administration, resulted in a considerably increased crop production of 1918. The most important instrument of the Government for stimulating production, however, was the power of the Food Administration to influence prices. This power enabled the Government to guarantee a minimum price to the farmers for wheat, and to assure, though not to guarantee, stabilized prices for hogs, cottonseed products, other vegetable oils, sugar and dairy products. These prices were controlled by the Food Administration through its control of Allied, neutral and Government purchases in the domestic market, supplemented by agreements with the producers of the commodities controlled. In Aug. 1917, a commission composed of representatives of various interests of the population, consumers and producers (though the farmers were given a majority representation), was appointed by President Wilson to determine a fair price for the 1917 crop of wheat. The price agreed upon was $2.20 per bus., which was a 10% increase over the minimum price fixed by Congress in the Lever Act for the 1918 and 1919 crops. This price was then maintained through the Food Administration Grain Corp., which bought at terminal markets any surplus offered at the agreed fair price. The price guaranteed for the 1919 crop was $2.26 per bushel. The effect of these measures was shown in a greatly increased acreage planted in wheat. In 1918 there were 59,181,000 ac. yielding 921,438,000 bus., and in 1919, 73,243,000 ac. yielding 940,987,000 bus., as compared with 52,316,000 and 45,089,000 ac. producing 636,318,000 and 636,655,000 bus., in 1916 and 1917 respectively, when there had been no guarantee. In Nov. 1917 the Food Administration gave an assurance to the farmers of a minimum price for hogs, calculating this price on the basis of the price of corn, the principal hog-feed. Despite the fact that there had been already a decrease of 5,000,000 stock hogs at the beginning of this attempt at stimulation, the number of hogs slaughtered in public markets in the fiscal year 1916-7 was 40,201,018, in 1917-8, 35,543,037, and in 1918-9, 44,398,389. The assurance given in the fall of 1917 did not affect production until the spring of 1918, and showed its effect most clearly in the heavy marketing season in the fall of 1918. Producers of vegetable oils (from cottonseed and peanuts) were assured in Sept. 1918, of 17½ cents per lb. for their crude oil, and this price was maintained for them until July 1 1919. The supply of all vegetable oils in the United States was in 1916, 1,745,574,000 lb., in 1917, 1,742,931,000 lb., and in 1918, 1,911,917,000 lb. It was not possible to secure any great increase in domestic sugar production because of the labour shortage, and special attention was therefore devoted to the stimulation of West Indian production. In Aug. U.S. and Cuban producers were assured of $7.35 per 100 lb. refined, Atlantic seaboard basis; this was increased in Sept. 1918 to $8.49 for Cuban and $8.82 for U.S. sugar, and this price was held until Sept. 1919 by the Sugar. Equalization Board. In 1917 the total sugar produced in American and Cuban territory was 5,159,000 tons, in 1918, 5,500,000 tons and in 1919, 6,052,000 tons. These statistics of increased production of wheat, hogs, vegetable oils and sugar show that the producers of the United States responded quite as effectively as did the consumers to the appeals of the Government for war service in the matter of food.
Price Stabilization.—Under the highly artificial and unusual conditions of world supply and of concentration of demand upon the U.S. markets there was constant danger of wide and rapid fluctuations in the prices of affected commodities. One of the principal problems of the Government was the prevention, or at least mitigation, of fluctuations of prices for food products in order, first, to safeguard farmers against sudden and disastrous reductions of price such as would discourage production; second, to protect consumers against undue rises which would bring hardship to wage-earners and the industrial population generally, cause strikes and impair war-time efficiency. Again the United States profited by the experience of European Governments and avoided the difficulties which had been found to follow attempts to secure price stabilization by fixing maximum prices. With the Government's control over the large purchases, and the consequent power to influence the demand and the price at which the dominant buyers bought, it was found possible to secure the desired stability by the commercial operations of purchase and sale and the regulation of distributors without unduly disturbing the normal business methods of the country. The direct control for stabilization purposes was largely confined to breadstuffs (wheat and rye), pork products, beef products, sugar, preserved fruits, and certain dairy products; as it was evident that if the prices of these basic commodities for which there was the greatest demand could be held at a stabilized level, the prices of other commodities connected with them could not fluctuate. For example, if the price of pork products was held stable, the price of corn, which is chiefly consumed by hogs, could not vary from its proper relation to hog prices. Indirect control over the prices of certain products such as wheat, rye, barley, pork products, canned fish and condensed milk, was in the hands of the Government through its control over the foreign buying, because these commodities were exported in such quantities that the power to determine the export price practically determined the price in domestic markets. In the case of sugar, agreements were executed with the Allied Governments which gave a joint commission control of the buying in Cuban and Porto Rican markets, and this arrangement combined with the Government's powers in regard to producers, gave effective control over this commodity. With reference to rice, canned sardines, cottonseed products, dried fruits and city milk, agreements were reached with producers and manufacturers that provided for the maintenance of such stabilized prices as would protect producers and the public. With basic prices thus controlled, the inflation of prices in the hands of the distributors between the producer and consumer was prevented chiefly by fixing for each link in the chain of distribution a maximum margin of profit. This was possible with wholesale distributors because they were licenced by the Food Administration and required to observe its rules and regulations. Retailers of less than $100,000 gross business annually, being exempt from licence, were not subject to regulations, except indirectly through the wholesalers. The most effective method of control devised for the retailers was the publication of a “fair price list” in the local papers of each city and town, stating what was considered a fair maximum price for each of the principal commodities. These prices were determined by Fair Price Boards made up of local business men and women selected by the Food Administration's representatives. Care was taken to keep each local Fair Price Board correctly informed as to basic prices so that the maximum prices fixed for its locality would differ from those elsewhere only in so far as costs were increased or decreased by local conditions. The principal feature of this control and stabilization of prices for food products in the United States as distinguished from that in Europe is that control in the United States was exercised through the ordinary machinery familiar to the trade, that is, through the pressure of sales and other business methods, supplemented to only a slight extent by legal regulations as such. The particular advantage of this policy was that it allowed prices to respond to the real changes in value brought about by the inevitable war-time expansion of currency and credit and the increase of production in other lines, while it prevented rapid fluctuations from local and fleeting causes. The success of this control is apparent from the small rise in food prices during the war period, particularly in comparison with the rise both preceding and succeeding the control period. The chief aim of the control, namely, the protection of both the consuming public and the farmer, was shown to have been successful by the industrial peace and prosperity during the war and the increased production of the farmer.
Control of Speculation and Profiteering.—In addition to the measures above described as “price stabilization,” the Food Administration had special rules and regulations governing food distributors which were particularly aimed at the prevention of profiteering and speculation under war conditions. Food distribution inevitably is a speculative business. The great supply comes on the market during a comparatively short period of the year, and the function of the distributor is to hold and distribute this supply throughout the year. A part of the distributor's profit must be regarded as an allowance for the speculative risk he necessarily takes in respect to his future market. This, like the other factors of his profit, is ordinarily regulated by competition under the law of supply and demand, but in time of war, when the demand was practically unlimited, the Food Administration had to interpose further checks. The principal measures were the following:—(1) As stated above, maximum margins were established for licenced dealers; that is, a fixed percentage of profit was prescribed which the licensee was forbidden to exceed. The determination of these margins was one of the most difficult problems of the food administrator, particularly because a margin sufficient for the large-scale operator, whose turnover was large and efficiency high, would not provide any profit for the small operator with higher costs. To have driven the small operator out of business would have deranged the competitive system after the war and left the public exposed to the danger of control of food supplies by a few large concerns. (2) The trading in futures on produce exchanges was restricted, and for some commodities, (sugar, cottonseed oil, butter, etc.) entirely eliminated. In the case of other commodities like corn, where the trading in future supplies is an indispensable part of the system of distribution, the quantity that could be sold under any one contract to any one firm was limited through the coöperation of the exchanges. The fact that the
