Chapter VI: Introduction: By PROFESSOR IRVING FISHER (4)

" ... About half the annual production of silver throughout the
world is absorbed by the East, meaning principally India and
China. It has to be borne in mind that prices in the East have
advanced as well as in Europe and the two Americas, and,
consequently, more token money is required there as well as
here. Silver is the standard of value, and not token money at
all, in China; and in India, while gold is nominally the
standard of value, the rupee is the actual coin in which the
Indian natives, as distinct from mere government officials,
reckon their wealth. Now, as one result of the war, nearly all
the governments forbid the export of gold; consequently, India
requires a steadily increasing supply of silver, not merely to
do the work that silver did before the war, but, in addition,
to supply the void created by the prohibition of the export of
gold."

STOCK EXCHANGE WAR

The accompanying diagram showing how military operations in Europe affected the average prices of fifty stocks, half industrial and half railway, was published in the _New York Times Annalist_:

The wider black area shows the high and low average prices of
the twenty-five industrials included in the fifty, and the
white area the corresponding figures for the twenty-five rails.
The lines begin at a time when Germany was suffering severely
from her failure at Verdun and from losses in men and territory
from the great Allied Somme offensive. The subsequent rapid
decline (November to February) embraces the period of
Bethmann-Hollweg's sensational peace offensive, followed a few
weeks later by Germany's intensified submarine warfare. The
lowest point of all (December, 1917) was reached after
Germany's successful counter-thrust for Cambrai, her "peace
offensive" with the Bolsheviki at Brest-Litovsk, and the taking
over of our railroads by the government.--_Literary Digest_,
October 19, 1918.

A further indication of how military operations reacted on Stock Exchange quotations was shown in the decided improvement that took place since the end of July, 1918, after the Germans were pushed back in their drive towards Paris. The most direct way of measuring this influence is to take the quotations for the bonds and notes of the Allied Governments dealt in at the New York Stock Exchange since 1915:

"The lowest quotations for these bond and note issues were
reached in 1917, when the cause of the Allies assumed a gloomy
appearance. The depression was aggravated by the general
decline of the entire securities market in the later part of
that year. Some recovery occurred by the end of last year, but
the beginning of 1918 saw them still depressed. Last March,
April, May and June, when the great German drives were in
progress, they showed little disposition to break, but after
the active participation of the American Army in the fighting
began and news came that the counter-offensive had assumed a
decided and successful phase, an assertion of strength took
place in foreign government bonds, carrying quotations 'not
only to the highest of the year, but in some instances to the
best figures attained since they first made their appearance in
the American market.' The following tabulation is presented by
_Bradstreet's_ as giving the range of prices for the most
prominent bonds and short-term notes of foreign countries
during 1917 and 1918, with the quotations for them on August
22nd:

/---1917----\ /---1918----\ Aug. High Low High Low 22 Am. For. Sec. 5s. 1919 97-7/8 90 98 94½ 97½ Anglo-French 5s. 1920 95 81-7/8 95 88¼ 94¾ Canada 5s. 1926 100 89 95 90-7/8 92 Canada 5s. 1931 100¼ 87½ 94 88-7/8 92-3/8 Fr. Republic 5-1/2s. 1919 101 91½ 99 94 98-7/8 U. Kingdom 5s. 1918 98-5/8 95½ 100 97 99-7/8 U. Kingdom 5-1/2s. 1919 98-7/8 93¼ 99¼ 95¼ 98¾ U. King. 5-1/2s, new 1919 101-9/16 95¼ 100 9¾ 99-5/8 U. Kingdom 5-1/2s. 1921 98½ 84½ 95¾ 91-5/8 95-3/8 _French Cities_ Paris 6s. 1921 96-7/8 73½ 92-1/8 81-5/8 91-7/8 Bordeaux 6s. 1919 96-7/8 74 95½ 84 94-7/8 Lyons 6s. 1919 96-7/8 74 95½ 84 94¾ Marseilles 6s. 1919 96-7/8 74 95½ 84 94¾ _Russian Govern._[6] External 6½% 98¾ 45 64½ 33 61 External 5½% 1921 98-5/8 36 60½ 34½ 57

[6] Curb market quotations.

(See explanation on page 32)]

"British issues, as shown above, declined least of all, 'and
consequently had less ground to regain in the rise,'
_Bradstreet's_ adds:

"The feeling of confidence in England's credit has all along
been a factor in connection with its American obligations. This
will doubtless be strengthened by the announcement made this
week that the United Kingdom secured 5 per cent. notes, due
September 1, 1918, will be paid at their maturity on that date.
There were originally $250,000,000 of these notes, which were
sold in our market in 1916; but the outstanding issue has been
reduced to about $180,000,000 by purchases in the market for
redemption. French obligations have been one of the chief
features of the advance. As will be seen from the above table,
the French Republic 5½ per cents., due 1919, have risen 6
points from the low figures of the year. The 6 per cent. notes
of the French cities, Paris, Lyons, Bordeaux, and Marseilles,
with rises of about 10 points each, are conspicuous examples of
the good effects following the checking of the German advance
and the counter-offensive launched by the Allies and the
American Army. No division of this part of the bond market has,
however, shown such a marked improvement as the Russian
external or dollar bonds, which though not listed at the Stock
Exchange, are dealt in extensively on the New York Curb
market'."

GERMAN PROPERTY IN AMERICA

Until the United States entered the war with Germany it had never been realized that an enormous share of the economic wealth of the country was under German control. Attorney-General Palmer, in an address at Detroit, estimated this share to be about two billion dollars in money value, with an economic and political value far greater:

"Furthermore, this structure was 'designed so to hold American
industry as to frustrate the organization of our resources in
case of war.' With two hundred American corporations controlled
by the financial and military power in Germany, we had a
situation that 'might easily have been fatal in America had it
not been discovered in time.' When the war began in 1914 the
structure 'had become so large and powerful and was so firmly
entrenched in the industrial life of our country that its real
commanders in Germany cherished the hope that it would prove
the make-weight which would keep America out of the war, or,
failing in that, constitute a powerful ally of the German cause
in our very midst.'" Mr. Palmer added:

"'During the last twenty-five or thirty years Germany had built
up upon American soil a structure reaching into every part of
the country and stretching its arms across the seas to fasten
upon Porto Rico, the Virgin Islands, Hawaii, and the
Philippines. Congress has declared that all these enemy
properties shall be managed and administered by the Alien
Property Custodian with all the powers of a common law trustee,
the proceeds to be distributed after the war in such manner as
the Congress may determine. This means that the final
disposition of the properties or the funds realized from their
sale will be a topic for discussion and a subject for
settlement at the council table of the nations at which
permanent peace shall be restored to the world.

"'This being so, it seems to me to be an important part of our
work to capture the army which Germany skilfully and craftily
planted midst the busy wheels of American industry, and to
break, never to be again repaired, the industrial and
commercial chain which Germany has stretched across the
American continent and our insular possessions. I would let
Germany understand now that her plan has dismally failed. I
would let her understand now that no matter how long she
fights, or what sacrifice she makes, or what price she pays,
however much territory she may occupy, or whatever worlds she
may conquer, there is one place which she will never soil again
with the tramp of the marching legions of her industrial army.
That is the United States of America. I would divorce utterly
and forever all German capital from American industry'."

II--WARTIME FOOD AND PRICE PROBLEMS

Intricacies of a Perplexing and Critical Situation Which Taxed the Ingenuity of Statesmen of All the Belligerents

Europe was financially plunged into anarchy in August, 1914. All the exchanges were demoralized, checks were not cashed, the five-pound note became a worthless scrap of paper. The only thing that counted was gold and goods. Prices advanced to prohibited levels. England, in danger of a food famine, set up a Food Control Committee. Then the discovery was made that the country was short of sugar. This shortage was due to the fact that the war broke out when supplies from Cuba and elsewhere were stopping and when the German imports had not begun. Sugar was bought to the value of $86,000,000 from every country which had it to sell. When the sugar merchants began to put the price up, purchasing was stopped for the time. Later the Government managed to secure the quantity required, because it became the only sugar importer. It also supplied the French Government with sugar at cost price. Any further difficulties with the sugar supply were due to freight shortage. By this system sugar was cheaper in England than in any other belligerent country and the Exchequer took in $34,000,000 in the way of taxes, after raising the rate from 45¢ per hundred weight to $3.36 per hundred weight.

In its control of the meat situation, the Government put itself in a dominating position by seizing all steamers that had refrigerating space. Enormous quantities of canned meats were imported from the United States from the American packing firms, but the Government practically created a state monopoly in frozen meat. This product was distributed by it to all the other belligerents, except Russia. The purchase of wheat was entrusted to a large importing house, which acted as an agent of the Government. For supplying the fish market, a service of fishing boats was maintained and a deal with Norway was made by which the whole Norwegian fish supply was secured:

"The British Government went into the beef business in order to
supply the troops at home and overseas with chilled meat. It
did so at an average cost of 12 cents per pound. It also
supplied all meat of this kind required by the French Army, the
Italian Army, the Belgians, and the Serbians. The amount of
meat required for the British and French armies was over 50,000
tons per month; for the Italian Army about 10,000 tons per
month. These quantities increased proportionately with the
additions to the forces. Having created a state monopoly in the
importation and control of chilled meat, the Government had to
make provisions for domestic supplies outside the Army. The
Board of Trade arranged to sell to British firms the surplus
meat at market prices. They obtained a small commission, lower
than it hitherto received from traders. Sales to speculators
were prohibited.

"Wheat was quite as important as sugar and beef, although there
was less risk of a world-corner. Wheat was purchased for
Government account on somewhat similar lines as beef. One of
the largest importing houses was commissioned to do all the
purchasing, while the other houses held off, and it was four
months before the corn trade, on the selling side, discovered
that purchases were made for the state. Naturally the
commission which the state paid on such transactions was
nominal. The British Government organization bought and shipped
wheat, oats, fodder, etc., for Italy. The French Government
bought their civil _ravitaillement_ wheat through the Hudson
Bay Company. Large purchases were made in Canada on behalf of
the Italian Government."

UNITED STATES AS FOOD PRODUCER

"It is hard to realize that the United States was in 1917 much
less favorably situated for producing a huge food surplus than
it was thirty years before. In the interim industrialism had
made huge strides in the land, and a great urban population has
risen to eat up a large part of the surplus of food produced by
the farms. This change is indicated by a growth of the urban
population in the twenty years from 1890 to 1910 from
22,720,223 to 42,625,383, or more than 80 per cent., while
rural population during the same period increased from
40,227,491 to 49,348,883, or less than 25 per cent. If the same
ratios have been maintained since 1910 urban population has now
become one-half of the whole. In terms of food production
decidedly more than one-half of our population now produces a
very insignificant part of the food which it consumes, for the
rural population includes all who live in towns of less than
2,500. The significance of the change is indicated by the
following figures of the production, export, and consumption
of typical food products. The comparison is between the average
of the five-year period ending in 1895 and that ending in 1914.
The average production of wheat per year for the former period
was 476,678,000 bushels; for the latter 697,459,000 bushels, an
increase of 46 per cent. Between these periods domestic
consumption increased from 310,107,000 to 588,592,000 bushels,
or about 90 per cent., while exports decreased from 166,571,000
to 104,945,000 bushels, or 37 per cent. The average production
of corn for the former period was 1,602,171,000 bushels; for
the latter 2,752,372,000 bushels, or an increase of 72 per
cent. Consumption increased from 1,552,003,000 to 2,790,962,000
bushels, or 79 per cent., while exports decreased from
50,168,000 to 41,509,000 bushels, or 17 per cent. The figures
upon sugar, beef, pork, and other staples lead to similar
conclusions. The growth of industrial centers has given us an
increasingly urban population which has been consuming a larger
and larger part of the food surplus."

THE FOOD CONTROLLER

No policy of _laissez-faire_ for handling the food situation was possible. The need of direction was paramount and required administrative talent of a high order. Fortunately the United States met this demand.

The work of Herbert M. Hoover was one of the main factors in securing the Allied victory. This was recognized by as conservative an organ of public opinion as the London _Economist_, which speaks of him as an unimpeachable authority and as the organizer of the Allied victory. His experience is a tribute to the wonderful readiness and self-sacrifice shown by the Americans in the matter of food consumption and to the untiring and increasing success of our fleet in combating the submarine.

How much success in the war depended upon food supplies may be gauged from the panicky feeling prevailing in Government quarters in England when it was reported in the winter of 1917--18, that the American wheat surplus had been used up. Lord Rhonda, the British Food Controller, cabled to Mr. Hoover--"We are beaten, the war is over." Then began the era in the United States of wheatless days and war bread. The result of this period of national abstinence enabled the exportation to Europe of about 150,000,000 bushels of wheat. A British member of the Allied Food Commission said it was very remarkable to see a whole nation denying itself of all wheat products, "not because it was short but because it wanted to assist." This rationing was accomplished with very little exercise of authority, and the peril of the defeat of the Allies by famine was averted.

AMERICA'S CONTRIBUTION IN FOOD TO THE ALLIES

Mr. Hoover in a letter to President Wilson stated that the total value of American food shipments to Allied countries for their armies, for the civilian population, Belgium relief and Red Cross, amounted to about $1,400,000,000 for the fiscal year, 1918:

"Shipments of meats, fats, and dairy products were as follows,

Pounds.
Fiscal year, 1916--17 2,166,500,000
Fiscal year, 1917--18 3,011,100,000
Increase 844,600,000

"'Our slaughterable animals at the beginning of the last fiscal
year were not appreciably larger in number than the year
before, and particularly in hogs; they were probably less';
so, as Mr. Hoover points out, 'the increase in shipments is due
to conservation and the extra weight of animals added by our
farmers.' Our shipments of cereal and cereal products have
been,

Bushels.
Fiscal year, 1916--17 259,900,000
Fiscal year, 1917--18 340,800,000
Increase 80,900,000

"The total shipment of wheat from our last harvest was about
141,000,000 bushels, with 13,900,000 of rye, a total of
154,900,000 bushels, of prime breadstuffs. Mr. Hoover notes a
remarkable achievement in connection with the wheat shipments:

"'Since the urgent request of the Allied Food Controllers early
in the year for a further shipment of 75,000,000 bushels from
our 1917 wheat than originally planned, we shall have shipped
to Europe, or have _en route_, nearly 85,000,000 bushels. At
the time of this request our surplus was already more than
exhausted.

"'This accomplishment of our people in this matter stands out
even more clearly if we bear in mind that we had available in
the fiscal year 1916--17 from net carry over and a surplus over
our normal consumption about 200,000,000 bushels of wheat,
which we were able to export that year without trenching on our
home loaf. This last year, however, owing to the large failure
of the 1917 wheat crop we had available from net carry over and
production and imports only just about our normal consumption.
Therefore, our wheat shipments to Allied destinations represent
approximately savings from our own wheat bread.'

"The effort and sacrifice made by our people to do this are
more fully appreciated when we consider that last year's wheat
crop was a small one and that the corn failed to mature
properly. Mr. Hoover concludes his letter with these words of
warm appreciation of the people who have made up the army of
which he has been the commanding general:

"'I am sure that all the millions of our people, agricultural
as well as urban, who have contributed to these results should
feel a very definite satisfaction that, in a year of universal
food shortages in the northern hemisphere, all of these people,
joined together against Germany, have come through into sight
of the coming harvest, not only with health and strength fully
maintained, but with only temporary periods of hardship. The
European Allies have been compelled to sacrifice more than our
own people, but we have not failed to load every steamer since
the delays of the storm months of last winter.

"'Our contributions to this end could not have been
accomplished without effort and sacrifice, and it is a matter
for further satisfaction that it has been accomplished
voluntarily and individually. It is difficult to distinguish
between various sections of our people--the homes, public
eating places, food trades, urban or agricultural
populations--in assessing credit for these results, but no one
will deny the dominant part of the American women'."

AGRICULTURE AND THE WAR

The significance of the strides made in agricultural productivity by which Mr. Hoover's food campaign was made possible and successful is brought out in the report of the Secretary of Agriculture for 1918:

"The efforts put forth by the farmers and the agricultural
organizations to secure increased production can perhaps best
be concretely indicated in terms of planting operations. The
size of the harvest may not be the measure of the labors of the
farmers. Adverse weather conditions and unusual ravages of
insects or plant diseases may partly overcome and neutralize
the most exceptional exertions."

ACREAGE UNDER CULTIVATION

"The first year of our participation in the war, 1917,
witnessed the Nation's record for acreage planted--283,000,000
of the leading cereals, potatoes, tobacco, and cotton, as
against 261,000,000 for the preceding year, 251,000,000 for the
year prior to the outbreak of the European war, and 248,000,000
for the five-year average, 1910--14. This is a gain of
22,000,000 over the year preceding our entry into the war and
of 35,000,000 over the five-year average indicated. Even this
record was exceeded the second year of the war. There was
planted in 1918 for the same crops 289,000,000 acres, an
increase over the preceding record year of 5,600,000. It is
especially noteworthy that, while the acreage planted in wheat
in 1917 was slightly less than that for the record year of
1915, it exceeded the five-year average (1910--14) by 7,000,000;
that the acreage planted in 1918 exceeded the previous record
by 3,500,000; and that the indications are that the acreage
planted during the current fall season will considerably exceed
that of any preceding fall planting."

YIELDS OF PRINCIPLE CEREALS

"In each of the last two years climatic conditions over
considerable sections of the Union were adverse--in 1917
especially for wheat and in 1918 for corn. Notwithstanding this
fact, the aggregate yield of the leading cereals in each of
these years exceeded that of any preceding year in the Nation's
history except 1915. The estimated total for 1917 was
5,796,000,000 bushels and for 1918, 5,638,000,000 bushels, a
decrease of approximately 160,000,000 bushels. But the
conclusion would be unwarranted that the available supplies for
human food or the aggregate nutritive value will be less in
1918 than in 1917. Fortunately, the wheat production for the
current year--918,920,000 bushels--is greatly in excess of that
for each of the preceding two years, 650,828,000 in 1917 and
636,318,000 in 1916, and is next to the record wheat crop of
the Nation. The estimated corn crop, 2,749,000,000 bushels,
exceeds the five-year pre-war average by 17,000,000 bushels, is
3.4 per cent. above the average in quality, and greatly
superior to that of 1917. It has been estimated that of the
large crop of last year, approximately 900,000,000 bushels were
soft. This, of course, was valuable as feed for animals, but
less so than corn of normal quality. It should be remembered,
in thinking in terms of food nutritional value, that, on the
average, only about 12 per cent. of the corn crop is annually
consumed by human beings and that not more than 26 per cent.
ever leaves the farm. It should be borne in mind also that the
stocks of corn on the farms November 1, 1918, were 118,400,000
bushels, as against less than 35,000,000 bushels last year, and
93,340,000 bushels, the average for the preceding five years.
It is noteworthy that the quality of each of the four great
cereals--barley, wheat, corn, and oats--ranges from 3 to 5.4
per cent., above the average.

"The tables printed below may facilitate the examination of
these essential facts:

NEED OF FOOD CONSERVATION

Statistics have not yet been published as to the comparative food production before the war and during the war years. Statistics of this kind would go a long way towards settling the question whether high prices were due to currency inflation or due to a scarcity of food. It must be remembered that the arguments on both sides are expressed very dogmatically. Take, for example, the following passage from an address by Mr. Moulton: "The food problem," he says, "goes much deeper than conserving the use of an existing stock of foodstuffs. The real food problem is how to secure a supply of food large enough to meet the continuous requirements of this nation and our Allies. This is more a question of production than of consumption. That is to say, conservation in consumption is less important than large production. There is no possible escape from a substantial shortage of the necessities of life."

========================================================================= ACREAGE OF CROPS IN THE UNITED STATES. [Figures refer to planted acreage.] ------------------------------------------------------------------------- | 1918, | 1917, | | | Annual Crop |subject to |subject to | 1916 | 1914 | average | revision | revision | | | 1910--1914. --------+-----------+-----------+-----------+--------------+------------- CEREALS | | | | Corn |113,835,000|119,755,000|105,296,000| 103,435,000| 105,240,000 Wheat | 64,659,000| 59,045,000| 56,810,000| 54,661,000| 52,452,000 Oats | 44,475,000| 43,572,000| 41,527,000| 38,442,000| 38,014,000 Barley | 9,108,000| 8,835,000| 7,757,000| 7,565,000| 7,593,000 Rye | 6,119,000| 4,480,000| 3,474,000| 2,733,000| 2,562,000 Buckwheat 1,045,000| 1,006,000| 828,000| 792,000| 826,000 Rice | 1,120,400| 964,000| 869,000| 694,000| 733,000 Kafirs | 5,114,000| 5,153,000| 3,944,000| | --------+-----------+-----------+-----------+--------------+------------- Total |245,475,400|242,810,000|220,505,000|[7]208,322,000[7]207,420,000 ========================================================================= VEGETABLES | | | | Potatoes| 4,113,000| 4,390,000| 3,565,000| 3,711,000| 3,686,000 Sweet | 959,000| 953,000| 774,000| 603,000| 611,000 Potatoes| | | | | --------+-----------+-----------+-----------+--------------+------------- Total | 5,072,000| 5,343,000| 4,339,000| 4,314,000| 4,297,000 ========================================================================= Tobacco | 1,452,900| 1,447,000| 1,413,000| 1,224,000| 1,209,000 Cotton | 37,073,000| 33,841,000| 34,985,000| 36,832,000| 35,330,000 --------+-----------+-----------+-----------+--------------+------------- Grand |289,073,300|283,441,000|261,242,000|[7]250,692,000[7]248,256,000 Total.| | | | | --------+-----------+-----------+-----------+--------------+-------------

[7] Excluding kafirs.

PRODUCTION IN THE UNITED STATES
[Figures are in round thousands; i. e., 000 omitted.]

====================================================================== Crops | 1918 | 1917, | 1916 | 1914 | Annual |(unrevised| Subject | | | average | estimate | to | | |1910--1914 | November |revision.| | | | 1918). | | | | -------------------+----------+---------+---------+---------+--------- CEREALS | | | | | Corn | bush| 2,749,198|3,159,494|2,566,927|2,672,804|2,732,457 Wheat | do| 918,920| 650,828| 636,318| 891,017| 728,225 Oats | do| 1,535,297|1,587,286|1,251,837|1,141,060|1,157,961 Barley | do| 236,505| 208,975| 182,309| 194,953| 186,208 Rye | do| 76,687| 60,145| 8,862| 42,779| 37,568 Buckwheat | do| 18,370| 17,460| 11,662| 16,881| 17,022 Rice | do| 41,918| 36,278| 40,861| 23,649| 24,378 Kafirs | do| 61,182| 75,866| 53,858| | |-----+----------+---------+---------+---------+--------- Total | do| 5,638,077|5,796,332|4,792,634|4,983,143|4,883,819 |======================================================== VEGETABLES | | | | | Potatoes | bush| 390,101| 442,536| 286,953| 409,921| 360,772 Sweet | do| 88,114| 87,141| 70,955| 56,574| 57,117 potatoes| | | | | | Beans | do| 17,802| 14,967| 10,715| 11,585| (commercial)| | | | | | Onions, fall | do| 13,438| 12,309| 7,833| [8] | commercial| | | | | | crop| | | | | | Cabbage | tons| 565| 475| 252| [8] | (commercial)| | | | | | FRUITS | | | | | Peaches | bush| 40,185| 45,066| 37,505| 54,109| 43,752 Pears | do| 10,342| 13,281| 11,874| 12,086| 11,184 Apples | do| 197,360| 174,608| 204,582| 253,200| 197,898 Cranberries, | bbls| 374| 255| 471| 644| 3 States| | | | | | MISCELLANEOUS | | | | | Flaxseed | bush| 14,646| 8,473| 14,296| 13,749| 18,353 Sugar beets | tons| 6,549| 5,980| 6,228| 5,585| 5,391 Tobacco | lbs| 1,266,686|1,196,451|1,153,278|1,034,679| 991,958 All hay | tons| 86,254| 94,930| 110,992| 88,686| 81,640 Cotton |bales| 11,818| 11,302| 11,450| 16,135| 14,259 Sorghum sirup|galls| 29,757| 34,175| 13,668| | Peanuts | bush| 52,617| 56,104| 35,324| | Broom corn, 5| tons| 52| 52| 39| | States| | | | | | Clover seed | bush| 1,248| 1,439| 1,706| | ----------------------------------------------------------------------

[8] no estimate

The same point of view is expressed in the following extract:

"It is not usually understood that the chief cause of the
enormously high prices of the necessities of life at the
present time is their relative scarcity. The supply of
necessities in this country has not materially increased, but
the demand for them, owing to the requirements of our Allies,
has enormously increased. We can prevent a still further
soaring of prices only by increased production of
necessities--increased production to be accomplished, let it be
repeated through a diversion of productive power from the
non-essential lines.

"The wealthy have often been urged since the war started to
spend lavishly on luxuries and to economize on necessities in
order that the necessities will remain for consumption by the
poor. This is sheer shortsightedness; for the energy devoted to
the production of luxuries for consumption by the wealthy
would, if diverted to the production of essentials, give us a
sufficient supply of the necessities of life that all might
have them in relative abundance. The result of a policy of
spending lavishly on luxuries is an inadequate production of
necessities and hence prices so high as to cause real privation
among the masses. Those engaged in producing luxuries obviously
cannot at the same time be engaged in producing necessities."

In a war of attrition, physical deterioration of the masses of society in consequence of inadequate nourishment was certain to result in a serious decline in national morale, and this was a decided factor in the final outcome of the struggle. Food and other physical necessities would win the war. Mr. F. A. Vanderlip used the same argument for economies:

"Thus the diversion of productive resources to public ends
requires of each of us a voluntary or compulsory rearrangement
of individual and household budgets and radical changes in the
habits of our lives. We must encourage direct diversion by
reducing to a minimum our consumption of articles which can be
used by our soldiers. But it is even more important that we
give up the consumption of non-essential things in order that
the productive energy which they embody be devoted to the
accomplishment of the purpose in hand. The amount which we are
forced to give up or voluntarily surrender constitutes a
surplus over private consumption that measures the extent of
our ability to wage war. We are fighting a nation which
continues to be willing to reduce private consumption to the
barest subsistence minimum. Unless a large surplus is produced
we can gain no active participation in war and cannot hope for
a victorious peace. The larger the surplus the shorter the war
will be, and the nearer we are to victory."

GREAT BRITAIN'S FOOD DANGER

Under the long rgime of free trade Great Britain depended upon other countries for its food supply. To offset the submarine campaign earnest appeals were made to make England self-supporting in this respect. The appeals were answered and were given enthusiastic popular support. What strides were made in England's agriculture since the war began can be seen from a paragraph in the London _New Statesman_:

"In 1918, as against 1916, the acreage (England and Wales)
under oats is up by 35 per cent.; that under wheat by 38 per
cent.; that under barley by 11 per cent.; that under other
grain by 69 per cent.; that under potatoes by 50 per cent. The
number of allotments (1,300,000) has increased by 140 per cent.
The Report of the Food-Production Department ... is as
satisfactory as we could wish; the number of acres under
cultivation in the United Kingdom has gone up by over four
millions in two years, all records being broken.

"This figure ignores the great increase in gardens and
allotments, and it is estimated that, on the present scale of
consumption, this year's home harvest will be sufficient to
feed the population for forty weeks. The supply before the war
was only enough to meet a ten weeks' consumption. Breadstuffs
are not everything; and even of them one-fifth still has to be
provided. But granted that we can keep this rate of production
up, and--in spite of the drains of the Army upon our
labor--can, with the help of women and prisoners, save what we
produce, the wolf has now been driven a considerable distance
from the door. With sinkings diminishing and ship-building on
the increase, we can, we think, congratulate ourselves on the
final failure of the German attempt to starve us out."

ACREAGE INCREASE DUE TO WOMEN'S LABOR

"Much of the increased cultivation has been done by women, we
are told, and Mr. Prothero, the British Minister of
Agriculture, had a cheerful picture to paint when appealing for
recruits for 'the Women's Land Army.' As reported by the London
_Morning Post_ his speech ran:

"'Today (1918) the acreage under wheat, barley, and oats is the
highest ever recorded in the history of our agriculture. That
is one of the finest achievements of the war. In the same
period the number of allotments has been increased by 800,000,
which means something like 800,000 tons of produce raised
additionally a big saving in transport, and an improvement
socially and morally. This advance has been effected in spite
of the fact that there are 500,000 fewer laborers on the land.
It is because of that decrease of labor that the appeal is
being made for more women. I do not believe that any assembly
of British farmers will hold back men who can possibly be
spared when the alternative is our troops being driven back by
overwhelming numbers and butchered on the beach by German guns.
The promise of the harvest is not yet fulfilled, and there is
much to be done. Women's work on the land is a vital necessity.
I know the work they are asked to do is hard, bringing with it
discomforts, and, comparatively speaking, is poorly paid. Life
on the land is not luxurious, but it brings health with it, and
the women have the conviction that they are doing something in
one of the most important fields to make victory sure.'"

EVIDENCES OF FOOD SHORTAGE

One of the by-products of the food situation in England was the suffering occasioned by the scanty food supply on the canine population of the island. The London _Times_ of June, 1918, contained the following pathetic paragraph:

"Considerable alarm has been caused among dog owners by the
intimation that stocks of biscuits are practically exhausted.
Not only is this the case, but the prospects of more flour
being released for their manufacture are also remote unless
some action is taken by the government to insure further
importations of low-grade flours suitable for the purpose.

"The state of things is undoubtedly acute. Until the food
economy campaign set in early last year most households
provided enough waste to feed a dog, and where more than one
was kept butchers' offals could be had for a few pence. These
sources of supply having now vanished, much ingenuity will have
to be exercised in order to preserve the family friend and
guard from extinction. Blood, steamed until it is of a solid
consistency, fish heads, and the heads of poultry offer some
alternatives. Rice, oatmeal, and other cereal products may not
be used.

"The whole question of dogs is engaging the closest attention
of the authorities. Admittedly the problem of reducing the
numbers is beset with difficulties, and, whatever is done, it
is extremely unlikely the one-dog owner will be disturbed, the
government recognizing the sentimental forces involved, to say
nothing of the utility value of many breeds."

Girls weeding frames in which cauliflower plants were set out to be ready for market in the early spring.

Copyright by Underwood & Underwood]

But while English dogs were threatened with starvation, dogs of Germany were having a still worse time. Numerous cable paragraphs were published giving the price of dog flesh in various German cities.

Indeed, from all over Germany, at the closing period of the war, the hope of drawing upon Russian food supplies was seen to be illusory. There was much talk of getting food from the Ukraine, but this was probably used to keep up popular morale. The situation in the Ukraine did not encourage German hopes. This was frankly admitted by the _Frankfort Zeitung_:

"The stores and warehouses in the Ukraine are almost emptied.
The peasants' stocks are depleted, while the best seed corn has
been used to feed cattle or to supply a secret still, which
nearly every household possesses.

"The outlook for next harvest is most unpromising. The peasants
have plundered the estates, destroyed farm buildings and
machinery, and have stolen or slaughtered most of the cattle.
No labor is available for cultivation, and there are no
facilities for harvesting the next crop, while the sugar
industry is confronted with ruin, owing to the decrease of beet
cultivation."

FOOD CONTROL FOR NEUTRALS

It is interesting to study the effect of the war on the food situation of the neutral powers. In Scandinavia, there was at first a panicky feeling of a world-wide catastrophe; then there came the realization of an unparalleled chance for making profit. The international shortage of tonnage made freight rates soar. Shipping shares became attractive. Then came the submarine sinkings, and the refusal of the Allies to allow goods to be imported into Scandinavia for the sole purpose of selling them to the Central Powers. Imports fell off rapidly. Everything which could be sold had been sold in the beginning of the war. The next step was the placing of an embargo on exports by the Scandinavian governments:

"The index of the Swedish official list of laws, dated October
31, 1916, forbidding exports, mentioned more than 1,100
articles, and even that was expressly called only a help to
find the commodity looked for and did not pretend to be a
complete index. The result was, of course, that trade, compared
to former volumes, decreased very considerably, and the energy
as well as the wealth actually earned was turned towards
speculation on the local exchange.

"To supply all the people of Scandinavia with the necessities
of life was a problem. Law upon law, one governmental decree
after the other, tried to regulate the distribution of
commodities as well as their prices. The majority of the people
were in actual need. Prices soared, and it really did not
matter to the ordinary man whether the cause of this rise in
the cost of living was a too big circulation of paper currency
or a limited supply of goods. What confronted him was the fact
itself, not theories, and he realized all too well that he
could not make 'both ends meet.' There was, generally speaking,
no doubt that under normal circumstances the laws of supply and
demand will work satisfactorily to the community and that
artificial interference was only harmful. The supply being
short, consequently the demand and the consumption must be
controlled to secure a fair distribution. Sugar cards, which
had been used in Sweden for months, and which were decreed in
Denmark to go into force January 1, 1917, were an example of
the means employed to control the distribution and to prevent
waste to supplies.

"While on the one hand one saw new millionaires permit
themselves to indulge in the most senseless luxuries, which
incidentally added considerably to the high cost of living
under circumstances like these, the less well-to-do actually
were without many things formerly considered necessities.
Collections of money and foodstuffs were made all over
Scandinavia to help the less fortunate through the winter. The
poorer population of the cities was especially considered. It
was even difficult to get a roof over one's head. Proposals and
counter proposals to remedy the evil were forthcoming, but no
real remedy seemed to be in sight."

FEEDING EUROPE'S STARVING MILLIONS

A preliminary accounting was rendered on December 1, 1919, by Herbert C. Hoover, covering the $100,000,000 fund appropriated by Congress for the relief of starving Europeans. From Mr. Hoover's report it appears that in payment for relief supplied to eight European countries Mr. Hoover decided to accept their notes bearing 5% interest. Mr. Hoover's report stated:

"About 88 per cent. of the relief supplies furnished were sold
under contract to the various Governments in the relief areas.
For all such sales these Governments gave their special
treasury notes in a form approved by the United States
Treasury, bearing 5 per cent. interest, due June 30, 1921, to
June 30, 1924. It was impossible to obtain reimbursement in
cash because the currency in the countries to which these
supplies were sent was impossible to convert into foreign
exchange, except in comparatively insignificant amounts.

POLAND THE BIGGEST DEBTOR

"I give herewith approximate list of the notes of each
Government, which we expect to turn over to the United States
Treasury.

Poland $57,000,000
Czechoslovakia 6,750,000
Armenia 10,000,000
Russia. 5,000,000
Esthonia 2,300,000
Latvia 3,000,000
Lithuania 700,000
Finland 4,000,000

Total $88,750,000

"The remaining 12 per cent. of the supplies was donated in
assistance to private organizations set up in each country
under direction of the American Relief Administration for the
purpose of furnishing food on a charitable basis to
undernourished children. For such supplies it was, of course,
impossible to obtain reimbursement. This service has
contributed greatly to stabilizing the situation in those
countries, aside from the physical benefits to more than
3,000,000 undernourished children, to whom the war threatened
serious and permanent injury. Certainly this service is one for
which the name of America will always be held in deepest
gratitude."

FOOD CONDITIONS AFTER THE ARMISTICE

It is impossible in words to show what the food conditions were in Europe after the armistice was signed. The United States Food Administration issued a statement that there were 420,000,000 people in Europe with food supplies sufficient to last only until next harvest for a small proportion of them. Some countries had to be supplied at once; others, it was believed, could help themselves temporarily, provided they could be given guarantees of food for the future. Many countries were devastated, undernourished and stripped bare of food and agricultural equipment because of enemy occupation. A graphic picture of the situation was presented by the Food Administration in the Hunger Map of Europe.

NEW FACTORS AFTER NOVEMBER, 1918

An official survey of how cessation of active fighting introduced new factors in the food situation is presented in a publication of the Agricultural Department, July, 1919.

"With the signing of the armistice and the cessation of active
fighting, new factors were introduced which affect the food
situation. One of these was the step taken to release shipping
as rapidly as possible, with the probable result that the
agricultural products of the more distant producing countries
will again largely appear on the markets of Europe. The
channels of trade are being reëstablished and food supplies
will be sought wherever they can be secured most cheaply.

"A provision of the armistice required the immediate evacuation
by the Germans of a large area in Belgium, France,
Alsace-Lorraine, Luxemburg, and other territory. As a result
many millions of people have been added to those that must be
aided and fed by the Allies, and a material increase in the
amount of foodstuffs to be imported has been made necessary. It
may be found, too, that Turkey, Austria, and even Germany will
have to draw on outside supplies to meet their needs.

"The demobilization of the European armies will permit men to
return to the farms, and it may be expected that under the
stimulus of an urgent demand for food an attempt will be made
this year to increase food production in all the affected
European countries. The devastated regions will be slow in
recovering. Much time and labor will be required to construct
necessary homes and farm buildings, level the ground, remove
obstructions, and in other ways prepare for a resumption of
regular agricultural activities. But it must be remembered that
as compared with the whole of the countries concerned these
areas are small and should not affect the results in any large
way.

"In many sections of Europe there is a shortage of horses and
other work stock, farm machinery, seeds, and fertilizers. In
these localities a normal production should not be expected,
but it is evident that under favorable conditions a material
increase over the past year will be secured.

CEREAL REQUIREMENTS FOR 1919

"The following table presents estimates of the cereal
requirements for 1919 and shows the world balance as deficit or
surplus. Figures for the cereals, except rice, represent
millions of bushels.

==========================================================
Import Requirements |Wheat| Rye|Barley| Oats| Corn| Rice,
| | | | | | Hulled
--------------------+-----+----+------+-----+-----+-------
EUROPE | | | | | |_Million_
| | | | | | _pounds_
Allies | 525| 25| 50| 150| 220| 1,945
Neutrals | 124| 40| 30| 38| 78| 302
|-----+----+------+-----+-----+-------
| 649| 65| 80| 188| 298| 2,247
|-----+----+------+-----+-----+-------
Germany | 68| | 149| 3| 32| 438
Austria-Hungary | 11| | | 2| 15| 183
|-----+----+------+-----+-----+-------
Total Europe | 728| 65| 22| 193| 345| 2,868
|-----+----+------+-----+-----+-------
Other countries | | | | | | 7,411
|-----+----+------+-----+-----+-------
Grand total | | | | | | 10,279
|=====================================
Surplus (estimated):| | | | | |
Canada | 100| | 50| 75| |
Argentina | 185| | | | 90|
Australia | 210| | | | |
India | | | | | | 18,000
Other countries | | | | | | 7,400
(pre-war) | | | | | |
|-----+----+------+-----+-----+-------
Total, except United| 495| | 50| 75| 90| 25,400
States | | | | | |
|=====================================
Net deficit | 233| 65| 179| 118| 255|
|=====================================
UNITED STATES, 1918 | | | | | |
Production | 917| 89| 250|1,538|2,583| 1,123
Consumption | 640| 32| 130|1,254|2,730| 816
|-----+----+------+-----+-----+-------
Surplus | 277| 57| 120| 284| | 307
Deficit | | | | | 147|
|-----+----+------+-----+-----+-------
WORLD | | | | | |
Surplus | 44| | | 166| | 14,428
Deficit | | 8| 59| | 402|
|-----+----+------+-----+-----+-------

NOTE.--Estimates of European crop and live-stock production,
consumption, and stocks on hand, surplus or deficiency, are based on
incomplete data, which are subject to change as more complete data
become available.

"The figures on import requirements of the Allies and neutrals
are those estimated for 1917--18, while the estimated
requirements of Germany and Austria are pre-war net imports.

"The rice surplus might be required in the Orient for countries
whose crops may have failed.

MISCELLANEOUS CROP REQUIREMENTS, 1919.

================================================================= Import requirements of-- | Cotton (500| Tobacco| Flaxseed |pounds bales).| (million| (million | | pounds).| bushels). ----------------------------+--------------+----------+---------- EUROPE | | | Allies, including Japan | 8,058,000| 340| 21.6 Neutrals | 720,000| 150| 7.9 Germany and Austria-Hungary | 2,932,000| 355| 15.7 (pre-war boundaries) | | | Other countries | 1,200,00| 17| ----------------------------+--------------+----------+---------- Total requirements | 13,010,000| 1,022| 45.2 |==================================== SURPLUS (ESTIMATED) | | | Countries, except United | 2,680,000| | 40 States, recently reported | | | (1918) | | | Average, 1900--1913, for | 500,00| 650| [9]5.7 other surplus countries | | | |--------------+----------+---------- Total, except United States | 3,180,000| 650| 40 UNITED STATES | | | Production, 1918 | 11,700,00| 1,340| 14.7 Consumption | 6,600,000| 720| 26.7 Surplus | 5,100,000| 620| Deficit | | | 12 WORLD | | | Surplus | | 148| Deficit | 4,730,000| | 17.2 ----------------------------|--------------+----------+----------

[9] Russia

NOTE.--The figures are based on pre-war averages, 1909--1913, which may be considerably changed by post-war conditions.

"The cotton table is based upon normal industrial conditions in
all the consuming countries and upon the restoration of the
spinning industry in the devastated regions. If conditions do
not reach normal, and if the industry is not restored, the
consumption of cotton will be substantially less. With
practically complete restoration, cotton consumption may well
be expected to equal the normal or pre-war times on account of
the present shortage of cotton goods in various countries. The
economies which the peoples of Europe must practice for some
years to come must be considered."

CENTRAL EUROPE IN DIRE WANT

News from Europe showed everywhere acute suffering from lack of food; even in France the country districts were badly off. A member of the Federal Food Administration reported that bread was practically the only food that anyone could afford. President Wilson referred to this subject in the address with which he accompanied his announcement of the terms signed by Germany. He definitely took a stand in favor of provisioning the country, explaining that by use of the idle tonnage of the Central Empires it ought presently to be possible to lift the fear of utter misery,

"'from their oppressed populations and set their minds and
energies free for the great and hazardous tasks of political
reconstruction which now face them on every hand. Hunger does
not breed reform; it breeds madness and all the ugly distempers
that make an ordered life impossible.

"'For with the fall of the ancient governments which rested
like an incubus on the peoples of the Central Empires has come
political change not merely, but revolution.'

"Putting this danger into a nutshell, the _Wall Street Journal_
asks whether Central Europe shall have 'bread or Bolshevism?'
This strong exponent of a firm social order is of the opinion
that 'we must recognize the fact that hunger breeds anarchy,
and that the most effective weapon against Bolshevism is a loaf
of bread.' Victory has made the Allied peoples, 'through their
governments, responsible for world conditions,' in the opinion
of this paper as well as of the Montreal _Star_ quoted above,
and Food Administrator Hoover declares that 'the specter of
famine abroad now haunts the abundance of our tables at home.'"

TO PREVENT FAMINE IN GERMANY

Both in England and in France there was official recognition of the need of preventing famine conditions in Germany. It was believed that large imports of wheat could be brought from Australia and India. The _Times_ (London) said:

"Mr. Hoover expects that enough wheat will be brought from
those countries to permit reduction of the percentage of
substitutes now required in bread, and thus release fodder
grain for dairy use. The change, it is said, may take place
within three months. But it will not reduce the total of
foodstuffs which we must supply. He predicts that 'our load
will be increased,' and that there will be a greater demand for
economy.

"The available quantities of grain are sufficient. From our
great crop of wheat we can spare more than 300,000,000 bushels.
Canada, with a yield almost equal to last year's, has a
surplus. While our crop of corn shows a decline of 441,000,000
bushels from that of a year ago, it is very near to recent
averages and of very good quality. The output of home gardens,
increased by one half, is not included in official reports,
although its value exceeds $500,000,000. Australia has on hand
the surplus of three wheat crops, India is said to have
120,000,000 bushels for shipment, and much can be taken from
Argentina. As a rule, our war partners in Europe increased
their crops this year. England gains 30,000,000 bushels of
wheat, Italy 24,000,000, and France 35,000,000. But other crops
in France are short, and the nutritive value of the entire
yield is less than that of last year's harvest. It is well
known that the Central Powers have very little food; and no
help can come to them from the East. Before the war Russia
exported a large surplus of wheat. Many of her people are now
starving. So far as can be learned, she has no grain to sell.
Bulgaria and Rumania have the smallest crops in fifty years.
Germany and Austria can get no grain from the northern
neutrals; we are sending wheat to them. There is food enough to
supply the wants of our European friends and foes until the
next harvest if it can be carefully distributed. But if the
plans for helping those who have fought against us, as well as
our partners in the war, are carried out, the American people
must practice economy and submit to restrictions for some time
to come."

A Food Riot in Sweden

News from Europe immediately following the armistice showed everywhere acute suffering from lack of food. A member of the Federal Food Administration reported that bread was practically the only food that anyone could afford.]

SUGAR DISTRIBUTION

Among the multiform activities of the American Food Administration, the distribution of sugar was most difficult. America had to supply sugar to the Allies and retain enough for the use of its own people. The matter of the feeling of personal self-sacrifice was difficult enough but there was the further question of how to organize and allocate distribution. The government had to decide the amount to be distributed to sugar-using industries. These industries had to be classified. For the manufacture of soft drinks it was decided to allow only one-half of the sugar used in normal times. Bakers were given a 70 percent. allotment and hotels were permitted three pounds of sugar to every ninety meals served, including cooking.

The sugar resources of the country, both cane and beet-root, were regulated by the so-called Sugar Equalization Board. The operation of this body was explained officially in the _Literary Digest_:

"This board is a part of the Food Administration and approved
by the President. Its purpose is to equalize the cost of
various sugars and to secure better distribution. It can also
coöperate with the Allies in the procurement of sugar for them
and in the adjustment of overseas freight rates. Through
capital supplied by the President through his special funds, it
is enabled, when desirable, to buy up all available sugars at
different prices and resell them at one fixed and even rate.

"In other words, it provides a sort of vast storehouse of
sugar, which may be doled out where it is most needed, at a
price secure from the fluctuations otherwise inevitable in war
time."

KEEPING DOWN THE PRICE

What might happen without this Sugar Equalization Board is illustrated by the Civil War, when sugar, because of speculation, went as high as thirty-five cents a pound. And at _that_ time there was no world shortage of sugar. If there were no sort of sugar control today, it may readily be believed that the consumer might have to pay sugar prices soaring far above those Civil War levels.

"It costs more to produce and market some sugars (such as
domestic beet sugar and Louisiana cane) than it does others,
such as Cuban cane sugar. But that is no reason why the sugar
manufacturer, whose production costs are high, should suffer,
even to the extent of being forced out of the market. Nor can
the country afford to have this happen under present war time
shortage of nearby supplies. Consequently, when it becomes
necessary, the Sugar Equalization Board through its purchasing
powers can insure fair profits to the manufacturers. Then the
Board may resell this sugar, so that it reaches the public at a
price lower than what the maximum would otherwise be."

POTATO ECONOMY