Chapter XIV: Section 14: of the Lever Bill, which became the Food Control (6)

The campaign was carried through in a veritable ecstasy of delight. Where before there had been the spirit to give in order to wage the war to any length, here was the spirit to bring the end swiftly and splendidly, to crown the triumphs of our arms abroad with another triumph at home. In truth, the prospect of impending triumph at first almost defeated the need of a campaign. The enthusiasm during the period of the drive transcended everything ever seen in this country before. The result reflected it: In an issue of $6,000,000,000 there was an oversubscription of $933,073,250 and the total number was the 22,777,680 which will stand as the high mark of Americanism for many generations to come.

AROUSING THE HALF-HEARTED

It has been set forth here that all appeals were based on arousing the emotions of the people. This was necessary because, had the offerings gone before the public solely on their practical value as investments, the results would have been considered abroad as another demonstration of our sordidness. Had the people of the United States been sordid, it is certain that they might have obtained better investment values. That they were not touched by selfish instincts is further proved by the fact that all through the drives the bonds of the previous issues had been quoted below par, due to the machinations of a group that never could be lifted above self-interest. The public, in full realization of this apparent depreciation, fought it out and showed their utter contempt for the manipulators by subscribing in greater force and for greater amounts to each subsequent issue.

It has been said before that the feeling of the public toward the war was made clear in the First Loan. It became the problem of the Second and the succeeding drives to organize enthusiasm so that through contagion the more resistant types might be affected. This compelled an organization of psychology. Back of each demonstration there were stage managers. These managers of psychology worked upon the public through the newspapers, through advertising, through "stunts," and generated a force of example which affected the whole community in which they were expressed.

For instance, a parade always has the effect of stirring people; feelings deep-hidden cannot be well concealed when, in war-time, marching men stride past. Unconsciously there comes to the mind of people the question: "What will become of these fine boys when they reach France?" There is the wish to help them, and the means to help them has been before their eyes for days in the Liberty Loan publicity. That is what is meant by stage management.

Through all the Loans it was necessary to manipulate the emotions first, to bring to the consciousness of the people in the news reports the facts and purposes of the loans; secondly, to carry the "urge" to them through the advertising; and thirdly to work upon their feelings through spectacles, meetings, aeroplane flights, sham battles, motion pictures of actual warfare, and like accelerants. It was necessary to infect them in the mass so that as individuals they might infect others with the fever to buy bonds.

All this work had to be carried through and was carried through with brilliant success in the four war-time loans. The Army, the Navy, the stage women's committees, police organizations, Boy Scouts, foreign language groups, all played a part. When the call came for the Fifth Loan, practically everything that had been done before had to be scrapped. It was all part of the war equipment and would help little in getting over another loan when people were striving with every fiber to get away from the thought and the sacrifices of the war.

"FINISH THE JOB"

We had to deal, then, with a people who were beginning to adjust themselves to peace, who were consoling themselves with the thought that they had done their part and should not be called upon again. It looked like a hopeless prospect from the vista presented at the close of the Fourth campaign to expect the same response for a peace campaign. The one optimistic fact that stood out was that the people had proved their patriotism, and such patriotism never dies. The Fifth Loan based its appeal solely upon patriotism's one expression in peace, duty.

During the Victory Loan Drive, Park Avenue, just above the Grand Central Station, was shut off and devoted to propaganda for the drive. The photograph shows a pyramid of captured German helmets.]

"Finish the Job" was the slogan of the Fifth Loan. The country was told that the war was not ended until its debts were paid, that we should feel gratitude in the lives spared by its sudden end. The Liberty Loan workers had to create a new state of mind, to begin a new education--for this time the issue was in Victory notes instead of bonds--and to arouse the people to new emotions through spectacles, parades and other features. It may be mentioned here that the greatest parade of the entire war was held in New York in this Fifth Loan, when the different branches of the army showed in procession the men and weapons they had employed to win victory.

The call was for $4,500,000,000 and the answer was subscribed in notes by 12,000,000 persons, who paid in $5,249,908,300.

WAR SAVINGS CAMPAIGN

In between the drives there was a lesser drive constantly carried on among people who were not able to participate in bond buying. This was the War Savings campaign which was a part of the Government Loan enterprise. Newsboys, bootblacks, shop-girls, clerks and others who had been unable to participate in the Loan drives or who wanted to prove again their devotion to their country answered this appeal. In these savings there was collected for the country up to the date of the armistice $932,339,000 and the number of persons hoarding in small sums was far beyond a million.

LIBERTY LOAN FIGURES
Entire Country
| | | No. of
Quota |Am't Subscribed| Allotted |Subscribers
First Loan |$ 2,000,000,000|$ 3,035,226,850|$ 2,000,000,000| 4,500,000
Second Loan| 3,000,000,000| 4,617,532,300| 3,808,766,150| 9,500,000
Third Loan | 3,000,000,000| 4,170,069,650| 4,170,069,650|17,000,000
Fourth Loan| 6,000,000,000| 6,993,073,250| 6,993,073,250|22,777,680
Fifth Loan | 4,500,000,000| 5,249,908,300| 4,500,000,000|12,000,000
+---------------+---------------+---------------+----------
Totals | 18,500,000,000|$24,065,810,350|$21,471,909,050|65,777,680

Federal Reserve District of New York

First Loan |$ 600,000,000|$ 1,191,992,100|$ 617,831,650| 978,959 Second Loan| 900,000,000| 1,550,453,500| 1,164,366,950| 2,259,151 Third Loan | 900,000,000| 1,115,243,650| 1,115,243,650| 3,046,929 Fourth Loan| 1,800,000,000| 2,044,901,750| 2,044,901,750| 3,604,101 Fifth Loan | 1,350,000,000| 1,762,684,900| 1,318,098,450| 2,484,532 +---------------+---------------+---------------+---------- Totals |$ 5,550,000,000|$ 7,665,275,900|$ 6,260,442,450|12,373,672

BENEFITS DERIVED FROM LOAN CAMPAIGNS

The benefits derived from the Loan campaigns were many. Prominent among them was the growth of thrift among the American people. The growth of this habit will be an important factor in the future greatness of this country.

A lasting monument to the war spirit of those who had to stay at home is the fact that more than a million persons, men, women and children, were engaged actively in the promotion of the five loans. In other words, one person in every hundred in the United States was a part of the organization, and each induced twenty other persons in that hundred to buy bonds. This colossal force did not work in haphazard fashion nor scatter its energy but acted under a definite plan of campaign in which each had an assigned part and in which each worked according to a method that would avoid duplication or extra expense.

The five campaigns which united such an aggregation of workers and which produced such remarkable results were carried forward with a minimum of expense. Never before in the history of finance had such widespread exploitation been accomplished at so low a cost. Of the million workers all but a small nucleus were volunteers; the resources of the country were thrown open to the organizers with unexampled prodigality, mediums of flotation in a veritable flood being contributed without cost to the officers in the Liberty Loan Army.

A single purpose animated the whole nation. Party lines, race prejudice, creed distinctions, social barriers, all were wiped out in these loan drives. The whole country formed itself into an All-American team that rushed onward irresistibly. The closest approximation to a common brotherhood had been achieved. War, with its terrible losses, with its impairment of lusty young men, with its heartbreaks and agonies, surely had not been waged in vain when it brought about such a unity.

The United States in waging the war for democracy had won that democracy for herself at home.

VIII--FOOD AND THE WAR

How Scientific Control and Voluntary Food-Saving Kept Belgium from Starving and Enabled the Allies to Avert Famine

By VERNON KELLOGG

Member of the Commission for the Relief of Belgium

America was made familiar with a slogan during 1917 and 1918 which declared that "Food Will Win the War." The European Allies became familiar from the very beginning of the war with the fact that without much more food than they could count on from their own resources they could not hope to win the war. And it became equally obvious to Germany and her associates that if their normal food resources were materially impaired they also could not hope to win the war.

So there arose almost from the beginning of the great military struggle an equally great struggle to get food and to keep food from being got. The Allies, devoting their manpower to fighting and munitions-making, saw their farms doomed to neglect and their food reduction doomed to lessen. And they began their call on America for food in such quantities as America had never dreamed of exporting before. In the last years before the war we had been sending about five million tons of foodstuffs a year to Europe. In 1918 we sent over fourteen million tons. Also the Allies began trying, by their blockade, to prevent the Central Empires from adding to their own inevitably lessened native production by importations from without.

On the other hand, Germany and her associates began to husband carefully their internal food supplies by instituting a rigid, or would-be rigid, control of internal marketing and consumption, and to collect from any outside sources still accessible to them, such as the contiguous neutral lands, whatever food was possible. Also they had strong hopes of preventing, by their submarine warfare, the provisioning of the Allies from America and other overseas sources.

Thus, from the beginning of the war, and all through its long course, food supply and food control were of the most vital importance. If our epigrammatic slogan, "Food Will Win the War," was, like most epigrams, not literally true, it was, nevertheless, literally true that there was always possible to either side the loss of the war through lack of food, and it is literally true that the food victory of the Allies was a great element in the final war victory. Germany's military defeat was partly due to food defeat, and if a military decision had not been reached in the fall of 1918, Germany would have lost the war in the spring of 1919 anyway from lack of food and raw materials.

ECONOMIC SELF-SUFFICIENCY

The great struggle for food supply and food control involved so many and such complex undertakings that it is hopeless to attempt a detailed account of it in any space short of a huge volume. Yet the very limitations of the present discussion may have its advantages in compelling us to concentrate our attention on the most important aspects of the struggle and to try to sum up the most important results of it. Some of these at least should not be forgotten, for they have a bearing on the peace-time food problem as well as the war-time one. Fortunately the war-time food situation has developed in us a national and an individual food consciousness that will certainly not disappear in this generation at least.

The first important lesson that has been learned is that it is of great value to a nation to be able to provide in its own land its own necessary food supply. For although in times of peace and usual harvests international food exchanges enable a country, such as England or Belgium, highly industrialized and of large population in proportion to area, to make up without much difficulty its deficit as between production and consumption, the moment the great emergency arrives there is the utmost danger for its people. The history of the "relief of Belgium" during the war will illustrate this.

$600,000,000 WORTH OF FOOD SUPPLIED

This little country, famous through all past history as a battleground and now famous for all future time for its heroic and pathetic rôle in the World War, found itself at the very beginning of the war faced with a food problem that seemed at first insoluble, and which, if not solved, meant starvation for its people. It is a country highly industrialized, and with an agriculture which, though more highly developed as to method than that of almost any other country, was yet capable of providing but little more than a third of the food necessary to its people. It depended for its very life on a steady inflow of food from outside sources. But with its invasion and occupation by the Germans this inflow was immediately and completely shut off. Belgium was enclosed in a ring of steel. What food it possessed inside this ring disappeared rapidly.

The terrible situation was met in a way of which Americans may be proud. For the Commission for the Relief of Belgium, which was the agency that solved Belgium's great problem, was an American organization with a staff composed chiefly of young Americans, most of them from American colleges and universities, headed by an American, Herbert Hoover, of great organizing and diplomatic genius, and with the large heart of a world philanthropist. In the four and a half years from November 1, 1914, to May 1, 1919, which was the period of activity of the Commission, Belgium depended upon it for the supplying of three-fourths of the food of its people, over seven million in number. This amounted to about one million tons a year. In addition, the Commission supplied the food through practically all this period for the maintenance of the nearly two million unfortunate people in the German-occupied area of France. This amounted to a total of about one million tons. The total value of the food supplied to Belgium and occupied France was about six hundred million dollars, which was provided by the Governments of Belgium, France, England, and America, and the private charity of the world.

THE FOOD PRODUCTION OF GERMANY

For another impressive war-time food problem--which did not have the same solution as Belgium's--let us take that of Germany. In peace times the Germans produce about 80 percent. of the total food annually consumed by them. But their tremendous military effort necessarily entailed some reduction in their capacity for food production, although they also made a tremendous effort to stimulate and direct into most effective channels the native production of food.

Although it is true, as already stated, that Germany normally produces about 80 percent. of her food needs, making it seem possible for the nation to meet the blockade emergency by repressing consumption by 10 per cent. and increasing production by 10 per cent. this does not mean that they normally produce 80 per cent. of each kind of food consumed by them. As a matter of fact, they produce more than their total needs of certain kinds of food, as sugar, for example, and less than 80 per cent. of certain other kinds. And while there is a possibility of substituting, within certain limits, one kind of food for another, so that a shortage of wheat might be made up by an abundance of rye, or a shortage of bread-grains in general be made up, in some degree, by increasing the ration of potatoes, if they are available, this substitution cannot go to the extent of substituting pure carbo-hydrate or starchy foods like potatoes, which simply produce heat or energy for the body, for the protein foods like meat, fish, eggs and dairy products which produce not only energy but new tissues. A child must have protein food in order to grow; an adult must have it in order to replace the tissues worn out by daily work. Also, there are certain peculiar and so far little understood elements, called vitamines, found only in certain kinds of food, notably fats, milk and the green vegetables, which are essential to the proper metabolism of the body.

The Battle Scene at Home

During the war the Allies called on the United States for food in far greater quantities than we had ever dreamed of exporting. For example, in the last years before the war we had been sending yearly to Europe about five million tons of food. In 1918 alone we shipped more than fourteen million tons of foodstuffs overseas.]

GERMANY'S FOOD PROBLEM

Now in the light of these needs for proper feeding, and in the light of the special conditions produced by the war, what was Germany's food problem through the war? It was that of attempting to increase production when the men and work animals had been sent to the fighting lines, of repressing consumption when both men in the army and the men in the war factories had to be well fed in order to fight well and work well, of attempting to get in food from outside the country when a blockade was steadily closing the borders ever and ever more tightly, and finally, of trying to get the people to modify their food habits in the way of accepting substitutes and using strange new semi-artificial foods in place of the familiar staples.

In 1916 the potato crop of Germany was a failure--but the turnip crop was enormous. So turnips were substituted largely for potatoes, and for many other kinds of food as well. Even marmalade and coffee substitutes were made from them, and turnip meal was mixed in the already too coarse and too much mixed flour. The Germans will never forget that terrible _kohl-rüben zeit_, or turnip time, of late 1916 and early 1917. And it was just after this time that the effects of Germany's great food difficulties began to show in a really serious way; they began to undermine the strength and health of the people. Those diseases like tuberculosis, which can rest in incipient or suppressed form for years without becoming serious as long as the body is well nourished, began to develop rapidly and dangerously. The birth rate decreased and the death rate increased. The physical and mental and moral tone of the whole nation dropped.

THE SUGAR SHORTAGE

Belgium and Germany illustrate a special food situation created by the war, namely, one in which a country, which relied on outside sources for a greater or lesser part of its food needs, had access to these sources suddenly and almost completely shut off. But grave food problems also confronted the countries which were not blockaded in so specific a way. England and France, with full access to all the great food-producing lands overseas (except to the extent that the submarines reduced this freedom of access), nevertheless had food problems hardly less serious than those of the more strictly blockaded countries. Their difficulties arose primarily from the fact that there was only so much shipping in the world and that the war conditions created suddenly a need for much more shipping than existed. The transference of large numbers of troops with their necessary equipment and munitions from the distant colonies to the European seat of fighting, and of other numbers from the mother countries to extra-European battlegrounds, made great demands on the shipping available to these nations. At the same time, the reduction of their native production increased largely their needs of food importations.

Take, for example, the case of the sugar supply for England and France. England is accustomed to use about 2,000,000 tons of sugar a year but she does not produce, at home, a single ton. She had relied before the war chiefly on importations from Germany and Austria with some little from Belgium and France. But with the outbreak of the war, she could get none from the Central Empires, and none from Belgium, while France, instead of being able to export sugar, suddenly found herself with her principal sugar-producing region invaded by the Germans and able to produce hardly a third of her former output. In fact, France herself was suddenly placed in the position of needing to import nearly two-thirds of the supply needed for her own consumption. So England and France had to turn to Cuba, the nearest great sugar-producing country, and ask for large quantities of her output. But the United States has always depended on Cuba for a large part of its own needs. Consequently there was a sugar problem for our own country as well as for England and France long before we entered the war.

The situation was serious; the demands on Cuba were much larger than she could meet, although she was able under this stimulation of demand to increase materially her sugar crop in the years following the first of the war. One way of meeting this problem, which was promptly resorted to, was to cut down the consumption of sugar in the countries involved. In England and France sugar was strictly rationed; and in America the people were called on to limit their use of sugar by voluntary agreement. England cut her sugar allowance per capita from about seven and a half pounds a month to two, and France from nearly four to one. In America we reduced our per capita consumption by legally restricting the making of soft drinks and candy and by the voluntary restriction of the home use of sugar by about one-half. All this lessened the demand on Cuba, and also the demand on shipping.

NATIONAL TASTES IN FOOD

In this discussion of the war-time sugar problem one may be struck by the fact, as noted, that the people of France were normally accustomed to eat much less sugar than the people of England, indeed only about one-half as much. This introduces a subject of importance in any general discussion of the world food problem. It is that of the varying food habits of different peoples, even peoples living under very similar climatic and general physical conditions. For example, the people of Germany are accustomed to eat twice as many potatoes as the people of England, who in turn use more than three times as many as the people of Italy. On the other hand, England uses twice as much sugar as Germany, although she produces no sugar and Germany produces much sugar. The Italians eat only a third as much meat as the English and the French only half as much. But the English eat only two-thirds as much bread as the French.

These differences in food use, established by long custom, have to be taken into account in all considerations of the world's food supply. They are differences which cannot be easily or quickly changed, even under circumstances which such great emergencies as war may produce. For example, we in America are accustomed to eat corn as food in the form of green corn, corn meal, corn flakes, etc. And in Italy one of the great national dishes is _polenta_ (corn meal cooked in a certain way). But when the Commission for the Relief of Belgium tried to introduce corn as human food in Belgium, because of the large amount that could be obtained from America when wheat and rye were scarce, it met with great opposition and but little success. To the Belgians, corn is food for animals.

SCIENTIFIC CONTROL OF FOOD

An important point brought out by the war-time food problem is that of the "scientific" make-up of the personal ration. Not only are the national food habits of a people often difficult to understand from a point of view of taste, but they are often of such a character as to lead to a most uneconomical use of food. The exigencies of a world food shortage and a shortage of shipping for food transport have made it necessary for food ministries and relief organizations to give careful consideration to the most economical selection of foods for import and distribution, both from the point of view of economy of space and weight and lack of deterioration during shipping and storage, and from that of concentrated nutritional values and proper balancing of the ration.

Food provides energy for bodily work and maintenance. It is the fuel for the human machine. Scientific students of nutrition measure the amount of energy thus provided, or the amount needed by the body, in units termed calories. Physiologists have determined by experiment the different amounts of calories produced by different kinds of foods and the varying amounts needed by men at rest, at light work, at hard work, by women and by children. By analyzing the make-up of a given population as to proportions of men, women and children, and of work done by them, it is possible to express the total food needs of the population in calories and to arrange for the most economical provision of the total calories necessary.

But the simple provision of the total sum of calories may by no means satisfy the real food needs of the population. For example, all the calories might be provided by potatoes alone, or grains alone, or meat or fats alone. But the population would starve under such circumstances. Food provides not merely the energy for the body, but the substances from which the body adds new tissue to itself during growth and reproduces its constantly breaking down tissues during all of life. Now while all kinds of food produce energy in greater or less quantity, only certain kinds are the source of new tissues. Hence there must be in the personal or national ration a sufficient proportion of the tissue-producing foods, the protein carriers, as well as a sufficient amount of the more strictly energy-producing foods, such as the fats and carbohydrates. And there is necessary, too, in any ration capable of maintaining the body in properly healthy condition, the presence in it, in very small quantities, of certain food substances called vitamines which have an important regulatory effect on the functioning of the body. These substances occur only in certain kinds of food.

All these things had to be taken into account in the war-time handling of food. So important was a proper knowledge of scientific food use and application of this knowledge, in connection with the efforts of the various countries to feed themselves most economically and to best effect in the light of their possibilities in the way of food supply, that every country concerned called on its scientific men to advise and help control the obtaining and distribution of its national food supply. For example, America and the Allies (England, France, Belgium and Italy) established an Inter-Allied Scientific Food Commission composed of experts who met at various times at London, Paris, and Rome, and on whose advice the determination, both as to kind and quantity, of the necessary importations of food from overseas to England, France, Belgium and Italy was largely made. Thus the war has done more to popularize the scientific knowledge of food, and to put into practice a scientific control of food-use than all the efforts of colleges and scientific societies and food reform apostles for years and years before. Calories, proteins, carbohydrates, fats and vitamines have been taken out of the dictionary and put into the kitchen.

A Community Conference on Food-Saving

The importance of work of this kind increased after the signing of the armistice, because the Poles, the Belgians, and other peoples whom we could not reach during the war needed every pound of food we could spare.]

GOVERNMENT REGULATIONS

America's special relation to the world's war food problem was primarily that of a provider of the Allies, but in order to insure that this provision should be sufficient to keep the Allied soldiers and war workers up to full fighting and working strength and their families in full health, it was necessary for America to stimulate its own production, repress considerably its consumption and cut out all possible waste in food handling. To do this there was needed some form of governmental food control and a nation-wide voluntary effort of the people. Each of the Allied countries had established governmental food control early in the war under the direction of a "food controller" either attached to an already existing government department of agriculture or commerce, or acting as an independent food minister.

On the actual entrance of America into the war in 1917, governmental food control was vested in a "United States Food Administration" with powers given it by Congress to control all exports of food and all food-handling by millers, manufacturers, jobbers, wholesalers, and large retail dealers. But no retail dealer doing a business of less than $100,000 a year, nor any farmer or farmers' coöperative association came under the Food Administration's control. Thus the American food administration differed from that of most European countries in that it had no authority to fix the prices at which the actual producers should sell their products or the small retailers should charge the consumers.

But, indirectly, it was able to do, and did, a good deal in this direction. By its direct control of exports, and of the millers, manufacturers and large dealers, it was able to cut out a great part of the middleman profits, and reduce wholesale prices for most staple foodstuffs, especially that most important one, flour. By publicity of prices and by indirect pressure through the wholesaler it was also able to restrain the further sky-rocketing of retail prices.

NATION-WIDE FOOD SAVING

But if the Food Administration was limited in what it could effect by legal authority, there was no limit to what it could do by calling on the voluntary action of the people of the country, except by the possible refusal of the people to help. So there was set in movement a nation-wide propaganda for food-production and food-saving which resulted in the voluntary acceptance of wheatless and meatless days, voluntarily modified hotel and restaurant and dining-car meals, and the adoption of household pledges, taken by more than 12,000,000 American homes, to follow the Food Administration's suggestions for food-saving. All this, and the many other things which the Food Administration asked the people to do, and which the people did, resulted in accomplishing a very necessary thing. It enabled America not only to meet all those ever-increasing absolutely imperative calls of the Allies for food for their armies and people through 1917 and 1918, but to supply its own army and people sufficiently well to carry on the war effectively. The more food sunk by submarines, or prevented from coming to Europe from distant food sources, as Australia and Argentine and India, the more we provided by saving and increasing our production.

A few figures will illustrate the actual results of the call for food conservation. We entered the crop year of 1917 (July 1, 1917, to July 1, 1918), with a wheat supply which gave us only about 20,000,000 bushels available for export. By December 1, 1917, our surplus had gone overseas and an additional 36,000,000 bushels had been shipped to the Allies. In January we learned of the further imperative need of the Allies of 75,000,000 bushels. We responded by sending 85,000,000 bushels between the first of the year and the advent of the new crop. When the crop year ended we had sent in all about 136,000,000 bushels of wheat to Europe. We were assisted in these operations by the importation of 28,000,000 bushels of wheat from Australia and the Argentine to supplement our domestic supply, but the outstanding fact was the saving in our domestic consumption, most of which was accomplished in the six-months' period from January 1 to July 1, 1918.

AMERICAN RELIEF ADMINISTRATION

But the cessation of the war did not produce food for the war-ravaged countries of Europe. The newly liberated peoples of Central and Eastern Europe found themselves, at the time of the Armistice, facing a period of starvation until their 1918 harvest could come in. Something to save these peoples had to be done quickly and on a large scale. The situation was met by the establishment of a new American governmental organization called the American Relief Administration which, with Mr. Hoover as director-general, worked in connection with the Inter-Allied Supreme Economic Council. Representatives of the A. R. A. were sent at once into all the countries crying for help to find out the exact food situation, and to arrange with the respective governments for the immediate beginning of the importation and distribution of staple foodstuffs. Programs for a food supply sufficient to last until the 1919 harvest were determined on a basis of minimum necessity, and provision for sufficient shipping and rail transportation was arranged by international agreement.

Modern war has thrown the spotlight on food. It has partly realized that famous prophecy of the Polish economist, Jean Bloch, who wrote, twenty years ago: "That is the future of war, not fighting, but famine." In the World War of 1914--18 there was fighting on a scale never before reached, but there was also famine, as never before dreamed of.

IX THE HIGH COST OF LIVING

A Study of the Extraordinary Conditions Subsequent to the Armistice

By THE DIRECTOR OF THE COUNCIL OF NATIONAL DEFENSE

On August 9, 1919, Grosvenor B. Clarkson, Director of the Council of National defense, submitted to the Secretary of War, a report entitled "An Analysis of the High Cost of Living Problem." This report was the result of much careful study and investigation. It is non-academic in form and by omitting details presents a "panoramic view of the problem." It laid chief stress upon conditions since the armistice.

In the report the problem of the high cost of living is viewed as a permanent one. It was, in other words, not peculiar to past war conditions. Careful investigation by the Council has resulted in the following analysis of the problem.

THE ESSENCE OF THE HIGH COST OF LIVING SITUATION

"1. The only complaints of the high cost of living which have
justification are those which are based upon inability of the
present income to maintain previous or reasonable standards of
living at present prices--such well-founded complaints mean
that increase of income has not kept pace with increased cost
of living, and therefore imply enforced reduction in standards
of living.

AMERICA'S PRODUCTIVE CAPACITY

"2. America's industrial and economic achievements during the
war, notwithstanding depleted man power and diversion of
productive effort to war purposes, demonstrate the ample
ability of the Nation to sustain its population according to a
standard of living equal to or above standards of living which
obtained previous to or during the war.

"3. The fundamental basis for the maintenance of national
standards of living is adequate production, economical
distribution, and fair apportionment among the various economic
groups which constitute our society. With the exception of
agricultural activity, production since the armistice has shown
evidence of curtailment, and has in general been abnormally
low. Normal consumption can not continue unless an adequate
rate of production is maintained.

FOOD SITUATION AND READJUSTMENT

"4. Food production and the facilities for food production were
improved rather than injured during the war. Moreover, the
program with respect to food production since the signing of
the armistice has been one of vigorous expansion of the means
of providing raw food products. The actual consumption of
wheat, as shown by the Grain Corporation's report of May 25,
1919, had for the previous ten months averaged 37,700,000
bushels per month, as against 39,000,000 bushels for the
previous twelve months. This does not necessarily imply reduced
consumption of cereals.

"The number of cattle slaughtered in the period January to May,
1919, was 3,803,000, as against 4,204,000 for the corresponding
period of 1918, though the national reserve of cattle on farms
had increased during the war. The swine slaughtered January to
May increased from 18,260,000 in 1918 to 20,500,000 in 1919.

CLOTHING SITUATION

"5. The production of civilian cloths and clothing suffered
some reduction during the war, and has suffered heavy
curtailment for many months since the signing of the armistice.

"Boot and shoe production for civilian use was unfavorably
affected by the war and has likewise undergone extreme
curtailment since the signing of the armistice.

HOUSING PROBLEM

"6. Housing facilities developed acute shortage through
curtailment of building during the war and, due to curtailment,
for many months following the armistice, of the production of
building material and of building construction, housing is
still far below normal. Rents continue to rise.

PROVISION OF NEW CAPITAL

"7. The first half of 1919 shows diminished production of raw
materials and subnormal construction of new capital, and thus
indicates failure to utilize an adequate proportion of our
productive forces in the preliminary processes of provision to
meet future requirements. In fact, due to business uncertainty
and hesitation and tendencies to disagreement between
productive groups, retailers, wholesalers, manufacturers,
labor, etc., there ensued after the armistice a disuse of a
large proportion of America's productive capacity. Unless this
slump in production is atoned for by consistent future
activity, and unless production is constantly maintained on an
adequate scale, reduced standards of living will become
inescapable, regardless of prices, whether they rise or fall.

"8. The very fact that prices of finished commodities,
consumption goods, so called, have risen to an extent out of
proportion to the rise in prices of raw materials and perhaps
out of proportion to the rise in general wages, indicates that
production and distribution carried on under these conditions
is, in general, yielding profits abnormally high."

In corroboration of the preceding analysis, the report cites statistical data gathered from various sources. The relation of currency and credit to prices is admirably epitomized in the following extract:

CURRENCY AND CREDIT

"The manner in which the volume of circulating credit and
currency is related to the war-time rise in prices is about as
follows:

"The outbreak of the war brought to America urgent government
orders for munitions and supplies. Inasmuch as the belligerent
governments could not brook delay they were obliged to pay the
increased prices which American producers found it possible to
demand, and thus the wave of war prices was started in America.
When America entered the war it required, in order to perform
its part, almost boundless quantities of equipment and man
power. Producers naturally took advantage of the extremely
urgent character of these demands in order to increase their
prices, and, as a natural sequence, wages began to advance.
These increased prices and wages of course necessitated larger
expenditures by the government.

"Increased prices also necessitate the employment of larger
funds in the conduct of a business. A larger volume of credit
is required at higher prices to take care of bills for raw
materials, and more money is necessary to meet increased
payrolls. As a consequence, therefore, of increased prices,
business men required increased credit if they were to avoid
curtailment of operations and reduced production. Due to higher
prices, therefore, the banks were under the necessity of
meeting the business demand for expansion of credit."

INFLATION

The inflation process is described as follows:

"In pre-war times every dollar finding its way to the market
was supposedly the counterpart of some commodity or part of a
commodity also appearing in the market. Funds expended for the
purchase of food, clothing, and for the payment of rentals
were assumed to have been earned by some productive
contribution to the general supply of commodities. With the
outbreak of war there began to appear in the market, funds
derived from wages, profits, etc., which had been paid out in
connection with nonproductive activities of war, and which
therefore implied no corresponding contribution to the market
supply of commodities. The producers of, and the dealers in,
the decreased quantity of commodities brought to market
increased the prices of these commodities to the point where
they might absorb all the purchase money that became available.
These increased prices and wages have required increased
circulating medium. This requirement has been met primarily by
increased credit and the increased use of bank checks as an
instrument of payment. As to the currency situation, the total
money in the United States in 1900 amounted to $2,340,000,000.
According to a statement issued by Governor W. P. G. Harding,
of the Federal Reserve Board, the amount of money in
circulation has varied during the last five years as follows:

July 1, 1914, $3,419,108,368, or $34.53 per capita.
April 1, 1917, $4,100,976,000, or $37.88 per capita.
December 1, 1918, $5,129,985,000, or $48.13 per capita.
August 1, 1919, $4,796,890,000, or $45.16 per capita.

"This shows an increase during our war period of $7.28 per
capita. The amount of money in the Treasury and in Federal
Reserve Banks is not in circulation, and is, therefore not
included in the figures quoted from Governor Harding's
statement.

"In regard to the part played by national credit in meeting the
situation growing out of the extraordinary requirements of the
government and the rise in prices which the urgency of demands
made possible, it is to be noted that government bonds had to
be sold to pay for a large proportion of the goods which war
activities were consuming. In consequence the national debt up
to August 1, 1919, had been increased by $24,518,000,000, or
approximately $230 per capita. Of course, government bonds are
always good security for bank credit."

FOOD SUPPLY--WHEAT, CORN AND SUGAR

Despite the fact that we sent large shipments of food to our Allies, our supply at the close of the war was not seriously diminished. The 1919 crop, while not expected to be large, was amply sufficient to prevent a real shortage. This is supported by the following extract from Mr. Clarkson's report:

"The wheat crop for 1918 amounted to 917,000,000 bushels, as
compared to an average for 1910--14 of 728,000,000 bushels; and
the probable harvest in 1919 is 1,236,000,000 bushels. Our
supply of wheat in elevators, mills, etc., on May 9, 1919, was
96,000,000 bushels, as against 34,000,000 bushels the year
before. Our flour mills, whose capacity is estimated at
something like double their usual output, were milling week by
week during 1919 considerably more flour than the year before.
They produced for the week ending May 9, 1919, for example,
2,553,000 barrels as against 1,569,000 barrels for the
corresponding week of 1918. Notwithstanding large exports, our
wheat supply is obviously adequate. In 1918, a record year, we
exported 21,000,000 barrels of flour. In 1915 our wheat exports
reached their maximum--206,000,000 bushels.

Will There Be Enough to Go Around?]

"The corn crop of 1918 was likewise sufficient. The supply of
corn on hand on May 1, 1919, was 23,000,000 bushels, as
compared with 16,000,000 bushels May 1, 1918, and 7,000,000
bushels on May 1 of both 1917 and 1913. Though the 1919 corn
crop is not expected to be unusually large, there is no
prospect of real shortage. And the situation with respect to
the other cereals is generally very good.

"The sugar industry of the United States passed through the
period of the war with a tendency to increased production,
notwithstanding shipping difficulties. Though present stocks
are somewhat low in the United States, our exports during 1919
have been unusually large. The future is normally provided
for."

THE MEAT SUPPLY

The meat situation is described as follows:

"America emerged from the war producing meat at a rate far
above pre-war figures, and yet possessing in reserve a larger
number of animals on the farms than we had before the heavy war
drafts upon our supplies began. The number of cattle
slaughtered in 1918 was 11,000,000, as compared with 6,978,000
in 1913. Swine slaughtered were 41,214,000 in 1918 and
34,163,000 in 1913. The cattle slaughtered in 1919,
January--May, were 3,803,000, as against 4,204,000, January--May,
1918. The swine slaughtered January--May, 1919, made an increase
over the 1918 record, the figures being 20,500,000 for the
present year, as against 18,260,000 for the corresponding
interval last year. Although exports of hams and shoulders for
1918 approximately doubled previous records, amounting to
518,000,000 pounds, as against 172,000,000 pounds for 1913, and
exports have continued large during 1919, there is no doubt
that our productive capacity is vastly more than ample to meet
our requirements."

HIGH PRICE OF FOOD

In view of the apparent abundance of food it is interesting to know the reason for the high price of foodstuffs. The Council of National Defense is of the opinion that the probability that the production of garden products in war gardens had fallen far below that of 1918, when, it is estimated, to have reached the value of $525,000,000, would not account for the high prices. Exportation and storage had not depleted our stock sufficiently to affect prices abnormally. In regard to the question of exports the report gives the following illuminating figures:

"Present food prices are not to be accounted for largely on the
basis of heavy exports. Exports of beef, canned, fresh, and
pickled, for example, have been less for 1919 than in the
previous year, the quantity amounting to 23,499,000 pounds in
May, 1919, as compared with 82,787,000 pounds in May, 1918. The
May figures for exports of hog products show 125,937,000 pounds
in 1919, as against 201,279,000 pounds in May, 1918. The
monthly exports of beef and pork show a declining tendency
during the first five months of 1919, contrary to the tendency
in 1918, the total amounting to 1,090,000,000 pounds in 1919,
as against 1,122,000,000 pounds for the corresponding period of
1918--less than the amount of all meats in cold storage on July
1, 1919, which was 1,336,000,000 pounds."

Concerning storage the same report states that:

"Even the fact that the report of goods in cold storage shows
an increase of over 9 per cent. in the quantity of all meats
held on July 1, 1919 (1,336,000,000 pounds), as compared with
the figures for July 1, 1918, is, though very important, not a
matter of significance for any considerable period of time.
Storage poultry July 1, 1919, was 48,895,704 pounds, or 181 per
cent. above last year; cheese, about 25 per cent.; butter,
about 75 per cent.; and eggs, about 25 per cent. above July 1
last year. There was a decrease of frozen fish of about 13 per
cent. from last year. Taken in connection with the evidence of
relatively abundant reserves of live animals and large crops
for the current year, it would seem that some relief from high
prices of food should be possible."

WHY FOOD PRICES WERE HIGH

The explanation of the post-war high prices of food is given as follows:

"It is true that food is, by comparison, plentiful. But it is
also true that money or other circulating medium is
unprecedently plentiful. The fact that food prices are
relatively high and that the prices of chemicals, metals,
lumber, etc., are relatively low, though their supply is
relatively small, may be due to a concentration of purchasing
power upon food, and the general direction of the flow of
currency toward the purchase of immediate consumables. Some
relatively minor luxuries such as jewelry (and perhaps
automobiles should also be included here as the semi-luxury of
greater magnitude) find favor with purchasers, but the main
trend of purchase seems to bear toward demand for the
necessities of life now in a finished state or nearly so, with
a relatively weaker tendency toward demand of capital goods. If
the supply, and also the production, of raw materials has been
relatively small, and if the prices at which they have
exchanged have also been relatively low, it seems obvious that
the proportionate amount of currency and credit engaged in
their purchase must be abnormally small, thus accounting for
the ability of the producers and purveyors of food to demand
abnormally high prices regardless of the relative plentifulness
of their goods."

CONDITIONS FAVORABLE TO PROFITEERING

"The conditions just described are highly favorable to both
speculative profiteering and wasteful distribution, through the
intervention of supernumerary middlemen and caterers. In fact,
the statistics published by the New York Industrial Relations
Commission seem to indicate an unusually large increase of
persons engaging in certain kinds of salesmanship after the
armistice. It should, however, be remembered that even though
it may smack of profiteering to produce a very large crop and
sell it at abnormally high prices, this is a kind of
profiteering which deserves unstinted praise as compared with
that other species of profiteering which deliberately reduces
output in the expectation that the extortionate prices which
the reduced product will command may more than make up to the
producer or speculator for the portion of production withheld
or the percentage of hoarded goods condemned to spoil and be
lost to the nation."

OTHER COMMODITIES

The price of commodities other than foodstuffs was influenced in 1919 by the inadequacy of supply and the curtailment of production. This was especially true of woolens, as stated by the Council:

"The most obvious explanation of the high prices of woolens is
the glaring fact of the extreme reduction in output which
ensued after the signing of the armistice and the completion of
Army orders, which practically ended in January, 1919.

"The war came to an end with the supply of civilian woolens
unprecedentedly low. The total quantity of wool available for
civilian fabrics between April and November, 1918, was probably
somewhere in the neighborhood of 75,000,000 pounds, an amount
perhaps a little more than sufficient to meet the demands of
normal manufacture for civilian consumption for one and
one-half months.

* * * * *

"In consequence of the general situation the total consumption
of wool in manufacture during first five months of the year
1919 amounted to but little more than one-half the amount
consumed during the corresponding months of the previous year.
The proportion of looms, 50-inch reed space and over, idle
increased from 21 per cent. in November, 1918, to 52 per cent.
idle in February, 1919, and these looms were still 39 per cent.
idle in May, 1919. Of worsted spindles, 27 per cent. were
reported idle in December, 1918, and 52 per cent. idle in
March, 1919, and 26 per cent. were still idle in May. In the
meantime an extraordinary number of textile workers were
condemned to idleness, their productive capacity perishing day
by day and week by week, while the deficiency in the supply of
clothing was developing to such a point that it became possible
for the wholesale index number of the prices of cloths and
clothing to rise to 250 in June."

The production of cotton and cotton goods also was far below normal. To quote again from the report:

"When the war ended the world's cotton supply was understood to
be below normal. The supplies of cotton goods were also
reported low. The acreage planted to cotton was in 1919
approximately 9 per cent. less than for 1918. The present
prospects are that the cotton crop will be small, and published
articles are appearing expressing gratification over the
prospectively large commercial returns which the cotton
producers may be able to command because of the high prices
which may be had for the reduced cotton output. The forecast of
the cotton crop for 1919 is 10,900,000 bales--about 10 per
cent. below that of recent years and but little over two-thirds
as large as the record crop of 1914."

"OUTPUT AND MORE OUTPUT" ABANDONED

"In regard to cotton manufacture, it may be recorded that the
situation is less unsatisfactory than as regards wool
manufacture. In this industry, as in most of our industries,
the economic watchword of war-time, which was 'Output, and more
output' (the necessary condition of full prosperity in peace,
as well as of success during war), was not heard after the
armistice. There soon developed, on the contrary, groundless
doubts about future demand, and hints of unhealthy fears of
'overproduction.'

"Notwithstanding the release of labor, if it were needed, by
demobilization, and notwithstanding adequate supplies of raw
cotton to meet the season's requirements and the lack of any
important difficulties in the way of reconversion to peace-time
products, and with low supplies of finished goods in stock, the
cotton industry kept more spindles idle during the first five
months of 1919 than were idle during the corresponding period
for 1918. The amount of cotton consumed in the United States
during the nine months ending with April, 1919, was
approximately 12 per cent. less than for the corresponding nine
months of 1918. The prices of cloths and clothing, as above
mentioned, show in June, 1919, an increase of 150 per cent.
over 1913 prices."

The boot and show industry showed a marked decline after the signing of the armistice. This, too, was borne out by the investigations of the Council.

"The production of boots and shoes for the first quarter of
1919 was reported as about 60 per cent. below the production
for the last quarter of 1918. Plants were partially closed and
in some cases it is reported that machinery was returned to the
Shoe Machinery Co. All in all, there were 75,000,000 less pairs
of shoes produced in the first quarter of 1919 than in the last
quarter of 1918.