Chapter VII: Introduction: By PROFESSOR IRVING FISHER (5)

In order to remedy the generally inadequate food supply, it became necessary to treat such a standard food as the potato according to newly devised methods by which it could be stored for permanent use and widely distributed. In a lecture in Economics given to a class of the National City Bank, it was stated that, since the war began, it was found practicable so to preserve the potato by grinding and drying as to transform it from a local and perishable commodity to one which could be produced in almost unlimited quantities and distributed to any part of the world:

"The potato can be grown in almost any temperate zone area, but
theretofore nine-tenths of the world's crop of 6,000,000,000
bushels is grown in a half-dozen countries, and almost
exclusively in Europe and North America. Germany, Russia,
Austria-Hungary, France, Great Britain, and the United States
have produced in favorable years about 5,000,000,000 bushels,
while the remainder of the world produced only 1,000,000,000.
These six countries that produced five-tenths of the world's
potato crop have only 450,000,000 peoples, while the potatoless
world has a population of over 1,200,000,000, from which it
appears that 'fully two-thirds of the population of the world
live outside of the area.'

"Germany is by far the largest potato grower of the world,
producing about 2,000,000,000 out of a world crop of
6,000,000,000 bushels, using them as a food for man and animals
and the production of alcohol for use in her industries, and
for the production of heat and power when necessary. Next in
line is European Russia, with an annual crop of about
1,000,000,000 bushels; Austria-Hungary, 600,000,000; France,
500,000,000; United States, 450,000,000, and Great Britain,
300,000,000 bushels.

"This new system of turning the potato into a condition in
which it can be readily distributed has, quite naturally,
developed in the country which has the largest potato
production of the world, Germany. Factories for the crushing
and drying of the potato and turning the product into flour for
man, flakes and cubes for animals, or alcohol for the chemical
industry and also as a substitute for petrol, have grown from
about a dozen a few years ago to over 400 in 1914 and 840 in
1916, with a capacity to turn into this condensed form more
than 1,000,000,000 bushels of potatoes a year. The reduction in
weight is about 60 per cent., while the product can be
preserved almost indefinitely.

"The value of our own potato crop in the United States last
year was approximately $540,000,000 at the place of production,
and yet the amount entering international trade was only
$4,000,000. Our potato crop averages about 90 bushels per acre,
that of European Russia 100 bushels; France 135 bushels;
Austria 150 bushels; United Kingdom 124 bushels, and Germany
200 bushels and upward per acre, her large flavorless potato,
grown chiefly for alcohol, having reached and sometimes
exceeded 500 bushels per acre."

FUEL CONTROL

The coal industry was the one basic war industry. Food and munitions were dependent upon the coal supply. It is not necessary to elaborate this argument; it is patent to every one. The following table gives a view of the coal production of the most important countries:

COAL PRODUCTION IN THE LEADING COAL-PRODUCING COUNTRIES OF THE WORLD

========================================================================= Country | 1913 | 1914 | 1915 | 1916 | 1917 -------------+-----------+-----------+-----------+-----------+----------- United States|570,048,125|513,525,477|531,619,487|585,372,568|621,409,629 Great Britain|287,698,617|265,664,393|253,206,081|256,348,351|248,473,119 Germany |278,627,497|245,482,135|235,082,000| | Austria-Hungary59,647,957| | | 30,896,388| 28,558,719 France | 40,843,618| 29,786,505| 19,908,000| 21,477,000| 28,960,000 Russia | 35,500,674| | 27,820,632| 13,622,400| 13,266,760 Belgium | 22,847,000| | 15,930,000| | Japan | 21,315,962| 21,293,419| 20,490,747| 22,901,580| India | 18,163,856| | 17,103,932| 17,254,309| China | 15,432,200| | 18,000,000| | Canada | 15,012,178| 13,637,529| 13,267,023| 14,483,395| 14,015,588 Spain | 4,731,647| 4,424,439| 4,686,753| 5,588,594| Holland | 2,064,608| | 2,333,000| 2,656,000| =========================================================================

THE COAL SHORTAGE

A rapid advance in coal prices was inevitable under war conditions of unceasing demand and diminishing supply. Says Mr. William Notz in an article in the _Journal of Political Economy_, June, 1918:

"The question of war-time coal prices offers many angles of
interest. Everywhere prices have increased far above pre-war
levels. Voluntary agreements on the part of producers and
dealers to limit prices and profits have failed without
exception. In all the leading coal-consuming countries of the
world maximum prices had to be fixed sooner or later by
government action. In every case the maximum mine prices are
considerably above the average scale of prices obtaining in the
years immediately prior to the war. In every country where
maximum sales prices at the mines were fixed, liberal
allowances were made for wage increases to mine workers. In
Great Britain present maximum mine prices approximate 6s. 6d.
above the average mine price which obtained during the year
ending June 30, 1914. In the United States special mine prices
have been fixed for each state, and in many cases also for
certain coal fields within a state. The f.o.b. price for
bituminous coal in Pennsylvania was in 1913 $1.11 and in 1918,
$2.60. Anthracite increased to $4.00 ($4.55 for white ash
broken).

"In Germany the total increase in mine prices of the
Rhenish-Westphalian Coal Syndicate from the beginning of the
war to January, 1917, approximated $1.25 per ton.

"While a certain degree of uniformity is noticeable in the rise
in price levels for coal at the mines in the countries where
maximum prices have been fixed, an entirely different picture
presents itself if we compare the maximum retail coal prices
obtaining under government regulations in different sections of
the same country. In most countries the national coal
controller has established a uniform maximum margin of profit
for all retail coal dealers, while local authorities have fixed
maximum retail coal prices for their communities. By reason of
the fact that in establishing maximum retail consumers' prices
allowances had to be made for increased handling expenses,
freight rates, middlemen's profits, war taxes, etc., retail
coal prices at the present time universally show a very heavy
increase over pre-war prices."

FUEL CONSERVATION MEASURES

American Fuel Control had to grapple drastically with a situation of shortage so dangerous that a catastrophe might have been precipitated at any moment. Fuel Administrator Garfield issued orders for coal conservation of a most startling and unusual character. Factories east of the Mississippi were ordered shut down for five days beginning January 18, 1918. Monday, furthermore,

"was decreed a holiday for ten weeks on which offices,
factories, and stores, except drug and food stores, must use
only such fuel as is necessary to prevent damage. The order
under which these restrictions were made, according to the Fuel
Administration's statement to the press, was 'designed to
distribute with absolute impartiality the burden,' and it added
that the Fuel Administration 'counts upon the complete
patriotic coöperation of every individual, firm, and
corporation affected by the order in its enforcement.' We read
further that the government aims to carry out its plan without
'undue interference with the ordinary course of business' and
earnestly desires to 'prevent entirely any dislocation of
industry or labor.'

SHUT-DOWN OF INDUSTRY TO SAVE COAL

"Fuel Administrator Garfield hoped to save 30,000,000 tons of
coal and to give the railroads a chance to straighten out the
transportation tangle in the eastern states, according to a
Washington correspondent of the New York _Tribune_, who notes
that the measures were taken by the President and the
government heads 'as a desperate remedy.' The closing down of
the greater part of the nation's industries, trades, and
business, says the New York _Sun_, is the 'fruit of the insane,
criminal starvation of the railroads by the government for a
generation'; yet regardless of what it may cost any individual
or group of individuals, the order is to be 'greeted without
protest.' A surgeon was more welcome than an undertaker, in the
view of this daily, and a disaster of the second degree and a
temporary one is better than a disaster of the first degree and
a permanent one. If the five-day term clears the railroads and
the Monday holidays set the trains running with their former
clocklike regularity, the _Sun_ added, we can resume being the
'busiest nation on earth, instead of being an industrial
paralytic.' While recognizing that the order struck Utica and
all cities in the designated territory 'a staggering blow,' the
_Utica Press_ holds that there is really nothing a patriotic
city could do about it save to accept the situation with as
good grace as possible, and if the result hasten the end all
will agree that it was a good investment. The Chicago _Herald_
considered the order 'a tremendous decision' carrying with it a
'tremendous responsibility,' and while the chief industries of
the principal part of a nation can not be stopped even for a
day without disorganization and loss, still the country is
willing to pay the price 'if it is the necessary cost of
preventing the suffering of hundreds and thousands, perhaps
millions, of individuals and of keeping certain indispensable
war and public functions going at their accustomed speed.'"

=Harry A. Garfield=

As Fuel Administrator during the war he issued orders for coal conservation of a most startling character. Factories east of the Mississippi were ordered shut down for five days beginning January 18, 1918. Monday was decreed a holiday for ten weeks "on which offices, factories and stores must use only such fuel as is necessary to prevent damage."]

THE GOVERNMENT'S EXPLANATION

From Fuel Administrator Garfield's explanation of the necessity of the order the following passage is taken:

"The most urgent thing to be done is to send to the American
forces abroad and to the Allies the food and war supplies
which they vitally need. War munitions, food, manufactured
articles of every description, lie at our Atlantic ports in
tens of thousands of tons, while literally hundreds of ships,
waiting, loaded with war goods for our men and the Allies, can
not take the seas because their bunkers are empty of coal. The
coal to send them on their way is waiting behind the congested
freight that has jammed all the terminals.

"It is worse than useless to bend our energies to more
manufacturing when what we have already manufactured lies at
tidewater, congesting terminal facilities, jamming the railroad
yards and side tracks for a long distance back into the
country. No power on earth can move this freight into the war
zone, where it is needed, until we supply the ships with fuel.

"Once the docks are cleared of the valuable freight for which
our men and associates in the war now wait in vain, then again
our energies and power may be turned to manufacturing, more
efficient than ever; so that a steady and uninterrupted stream
of vital supplies may be this nation's answer to the Allies'
cry for help....

"This is war. Whatever the cost, we must pay it, so that in the
face of the enemy there can never be the reproach that we held
back from doing our full share. Those ships, laden with our
supplies of food for men and food for guns, must have coal and
put to sea."

GARFIELD'S PLAN FOR FUEL ECONOMY, 1918--19

After the trying experiences of the winter of 1918, the Fuel Administration began to prepare in the following summer for another prospective shortage in coal supply. Fortunately the following winter was remarkably mild throughout the country. But the plans outlined by the Fuel Administration are more than useful as a matter of record. They may be used as a model under other conditions of fuel shortage. The following passage from the Fuel Administration _Bulletin_ illustrates the plan of campaign:

"Fuel economy is being given intensive study in connection with
steam plants and industrial uses. An organization is already in
existence, provided with engineers and inspectors who will
visit every one of the two hundred and fifty thousand
steam-producing plants in the country with a view to the
improvement both of equipment and firing practice. This is
expected to save twenty million tons of coal.

"The economical use of power in factories will be in the hands
of organized shop committees. The power loads of the public
utilities throughout the country are being studied with a view
to readjustments which will result in large saving.

"In many cities the isolated power plants which use an extravagant
amount of coal in proportion to the power produced will be urged to
obtain more economical power from large producing stations.

"The introduction of 'skip-stop' schedules on all the street
railways is expected to save a million tons of coal. The
consolidation of ice plants will yield a still larger tonnage.
Unnecessary outdoor lighting, including advertising signs and
display illumination, will be reduced. Hotels, office
buildings, apartment houses, and public buildings are being
asked to join in rigid economy of light and heat.

"Every American citizen will be asked to clean his furnace,
keep it in repair, and study economical firing. Instructions
prepared by the highest authority will be furnished by the Fuel
Administration.

"If every one joins in this movement, from the owner of an
industrial plant to the householder with his furnace and cook
stove, if indoor and outdoor lighting is reduced to the amount
absolutely needed, if houses are not overheated, the furnace
dampers properly adjusted, and the ashes sifted, it will be
possible to save from fifty to seventy-five million tons of
coal without serious inconvenience to the American people."

DIFFICULTIES OF FUEL CONTROL

Some conception of the difficulties involved in the work of fuel control was set forth officially in a paper published by the Fuel Administration called _Fuel Problems in War Time_. The production of coal, it pointed out, stands on a different basis from that of any other major industry of the country. The differences are illustrated in the following paragraphs:

"As an illustration, consider the cotton crop with its millions
of bales. Every bale of cotton raised in the country last year
amounted to no more than the coal moved in one and one-third
days. Or take the wheat crop for comparison. We hear of the
immense preparations made during the fall months for moving the
wheat crop; yet the weight of America's enormous wheat crop of
1917 is equaled by the coal mined and transported every eight
days.

"Every year the miners go into the ground and dig out coal and
the railroads ship it for hundreds of miles, dragging back the
empty cars, until the amount mined equals two and one-fourth
times the earth and rock removed in digging the Panama Canal.
_It took sixteen years to dig the Panama Canal. Our miners will
dig two and one-half Panama Canals this year._

"In the mining of coal we are dealing with a task so gigantic
that the wonder is not why we have not increased production to
meet the demand, whatever that might be, but how, with the men
and equipment overtaxed by the multiplicity of the demands of
the war, we were able to increase the output fifty million tons
in 1917, and will be able to add a probable fifty million tons
to that high record the present year.

"The wonder is increased when we note that every other
coal-producing country now in the war found it impossible to
maintain the pre-war production of coal. In every case the
output is less now than before the war. In England seven and
one-half per cent. less coal was produced the first year of the
war than in the previous year and five per cent. less than this
reduced output in the following year. America alone has been
able to increase its production of coal in addition to meeting
the thousands of other increases demanded by war preparation.

COAL AND THE STEEL SUPPLY

"As every one knows, coal mining is very largely a matter of
coal transportation. The most difficult task involved in an
increase must fall upon the railroads. The wonderful work these
railroads are doing is brought into bold relief when we
remember that in 1914, when the great war started, the output
of bituminous coal in the United States was 423,000,000 tons,
and that in 1918 it promises to be nearly 200,000,000 tons
greater.

"Apparently, this country today can furnish the steel required
if only it can get the necessary coal. The work of the Fuel
Administration during many months has been directed toward
increasing coal production. These efforts have borne much
fruit, miners are approaching one hundred per cent. service,
while the railroads are outdoing themselves expediting the
movement of coal cars from the mine to the consumer and back
again.

"But war's demands mount so rapidly that even with full speed
ahead production can not make the pace. _A fuel deficit can be
averted only by the most intensive conservation._ Conservation,
economy, savings, sacrifice must fill the gap between the
possible increase of production and the greater increase of
demand. If every user of coal will join the army of fuel
conservationists, realizing that the need for steel to carry on
this war is practically unlimited and that every ton saved
means an additional five hundred pounds of steel, there is
prospect--the figures show it--that the work of the miners will
not be in vain. Our increased production, plus conservation,
the Fuel Administration believes, can furnish the coal, and
hence the steel needed for the war, and still leave none of our
people cold."

SIDE ISSUES OF FUEL CONTROL

Economizing coal involved all kinds of unexpected side issues. As an illustration of the far extended reach of the Fuel Administration there was the example of the skip-stop plan in street railway traffic enforced by the Federal administration. A writer in the Chicago _Engineering and Contracting Journal_ suggested, September 4, 1918, that the Government should adopt and extend the policy of compelling individuals and corporations to use economic methods and machines:

"Conceive, if you can, what could be accomplished in America in
the way of increased productivity and economy if our Federal
Government had the authority to make every individual and every
company adopt any method or device that had been proved to be
economic. No engineer acquainted with the application of the
principles of the science of management can doubt that if the
universal adoption of those principles could be forced upon
producers in general, this nation could increase its
productivity fully 25 per cent. That would alone add more than
twelve million dollars annually to the national income. But
that is not all. The application of the principles of the
science of management is only a fraction of the total enginery
at our disposal. We have literally countless labor and
material-saving machines and appliances that are scarcely used,
although many of them are generations old. Does this sound
incredible? Certainly not to any engineer who has a wide
acquaintance with the literature of engineering.

"Take so simple a thing as the heat insulator for steam pipes
and boilers. It has been known to engineers for nearly a
century that by encasing boilers and pipes with magnesia or
other suitable insulators, practically all heat radiation and
conduction losses could be stopped. Furthermore, it has been
known to engineers that the saving in fuel thus effected would
pay an annual interest of 20 per cent. on the cost of the heat
insulator. But go into the basements of steam-heated residences
if you want to get a conception of how rarely this knowledge is
applied. The landlord may know that heat insulators would earn
a big return on their cost, but since they would earn it for
the tenant and not for himself, he does not cover the boiler
and pipes adequately, if at all. The tenant, even if he knows
the economics of heat insulating, will not spend the money for
insulators whose use he may not enjoy for more than a year or
two before he moves out. For similar reasons very few houses
have double windows, although double windows will save fully 15
per cent. of the fuel required to heat the average house. On
these matters the Fuel Administration has power to act, and it
should act."

FUEL CONTROL IN GREAT BRITAIN

Coal mining was always one of the most significant elements in British trade. Before the war 270,000,000 tons of coal were produced in the mines of Great Britain. Parliamentary legislation of a most radical character dealing with the ownership and operation of coal mines was passed. The main provision of this legislation was described in the following passage from the London _Morning Post_:

"Briefly, the main provisions of the bill are the following:
Under the present Finance Act the state takes 80 per cent. of
the profits in excess of those made in the two best of the last
three pre-war years, or above 9 per cent. of the capital
employed. The new scheme deprives owners of these statutory
rights. It does away altogether with the percentage standard.
Output is made the chief determining factor in the regulation
of the profits to be retained by the coal owner. The production
of a colliery working under normal conditions during the two
pre-war years, which has already been adopted under the Finance
Act for the purposes of the Excess Profits Duty, is adopted as
the standard output. If that output is maintained in any
accounting period under the new bill, the colliery owner will
be guaranteed a profit equal to the average profit made in the
standard period, whether he makes it or not. If his trading
profits in the accounting period are greater than those in the
standard period, the treasury will take its 80 per cent. of the
difference under the authority of the Finance Act, the
Controller will retain 15 per cent. of it in order to create a
fund for the compensation of the less fortunate collieries and
the administration of his department, and the coal owner will
be allowed to retain 5 per cent. of the excess. Thus a colliery
company with a profits standard of £50,000 will, if it maintain
its standard output, continue to receive £50,000; if such
company make, say, £70,000, it will be permitted, generally
speaking, to retain only 5 per cent. of the extra £20,000, that
is to say, £1,000, plus the statutory £200, or £51,200 in all;
but in no case shall the retainable profits exceed five-sixths
of the profits standard. In that illustration the scheme is to
be seen at its best, and, under the conditions, it is not
unreasonable."

Drying Fruit and Vegetables to Save Tin and Glass

Conservation became a great watchword during the World War. Mr. F. P. Lund of the U. S. Department of Agriculture showed women how tin and glass could be saved by drying fruit instead of canning it.]

OTHER FORMS OF CONSERVATION

The War Industries Board worked out a program for clothing conservation that showed a positive genius for detail. The most technical directions were issued regarding clothing. Double breasted coats, for example, were eliminated and the Board urged the wearing of sack suits only. Even the complicated subject of handling women's attire had no terrors for the experts employed by the Board. The characteristic features of its order can be judged by the following extract from the directions published on this subject:

"All shoes, both leather and fabric, shall be restricted to
black, white, and two colors of tan (the two colors of tan to
be dark brown or tan and a medium brown or tan).

"Patent leather shall be black only. These color regulations do
not apply to baby shoes made of fabrics.

"Shoe-manufacturers shall not, for the next six months,
introduce, purchase, or use any new style lasts. They may
replenish to cover wastage or to meet requirements on present
lasts now in use in the manufacture of shoes. This is to be
effective at once. By new style lasts is meant any lasts which
have not actually been used for the manufacture of shoes in the
past season.

"The use of leather as a quarter lining in oxfords and low
shoes is permitted only when used in skeleton form with fabric.
Leather linings will be permitted in evening slippers where
uppers are made of fabrics. We advocate the use of full fabric
linings for low shoes wherever possible.

"The maximum height of women's shoes, both leather and fabric,
shall not exceed eight inches (measured from breast of heel at
side to center of top at side of finished shoes), size 4B to be
the base measure.

"The maximum height of misses' shoes, size 1½, shall not exceed
6½ inches (measured as above).

"The maximum height of children's shoes, sizes 8½-11, shall not
exceed six inches.

"The maximum height of boys' and youths' shoes shall not exceed
5½ inches.

"The maximum height of infants' shoes, sizes 4-8, shall not
exceed 5½ inches.

"The maximum height of button shoes for women shall not exceed
6½ inches.

"The maximum height of all women's overgaiters shall not exceed
eight inches, measured from breast of heel at side to center of
top at side.

"The maximum height of misses' overgaiters shall not exceed 6½
inches (measured as above)."

LEATHER CONSERVATION

Germany was not the only country prepared to employ substitutes. When the National Army in the United States was organized the _Wall Street Journal_ predicted that on account of the large consumption of leather for military purposes, the civilian population would be obliged to have thinner soles and probably to use leather substitutes:

"Price fixing on leather is still 'in the air.' It is not an
easy proposition, in view of the complexity of grades and the
variations in quality. The most practicable arrangement would
be a series of general price standards, with allowance for
deviations. Unlike other commodities, leather trading is a very
flexible affair. The trade is confident of fair price maxima in
relation to recently fixed hide quotations; possibly, in view
of higher labor and other costs, of somewhat more liberal rates
than hide prices, which have just been modified upward
somewhat.

"Leather prices have been tending upward all round. Heavy sole
leather, which did not recede nearly as much as lighter grades
in the slump of last winter, are now nearly back to the high
point of early last fall. Union sole has advanced four cents
since May 1, and for some varieties of leather above No. 9 iron
the market is around eighty cents, against sixty-five cents
earlier this spring.

"In leather it is a case of all-round conservation, plus
intensive effort for maximum output with government aid. Export
license-restrictions have just been tightened, and most of what
is shipped now goes to England. Neutrals must wait. In nine
months to April 1st we exported but 20,342,101 pounds of sole
leather, against 84,267,573 a year before. In March we shipped
only 490,000 pounds to other countries than England, against
1,945,000 a year earlier. Hardly any is now moving save on
British government order.

"Men's shoes of higher quality and price will be affected
chiefly by the requirement to carry soles as light as women's
wear. This will involve either more frequent buying or more
resort to tapping. Cheapest grades of shoes will be least
affected, being almost wholly outside the military scope. In
fact, some manufacturers of low-priced shoes have lately been
enabled to use better material than usual, thanks to army
'leavings.' It is the urgent advice of the Government and
tanners that shoe manufacturers promptly conform to the new
program and that consumers cheerfully accept it. Meanwhile,
experiments are continuing under government direction as to
further extension of the use of composition or even of wooden
soles to help meet the increased demand and short supply
equation in leather."

FAIR PRICE LISTS

"Back on the Farm"

The number of slaughterable animals decreased in the United States and in Europe during the war. The shortage of fats was helped by the production of more animals, increasing the weight of those slaughtered, and by changed methods of cooking, including the substitution of vegetable oils for butter.]

One of the plans to prevent the discontent arising from food speculation promoted by retailers and profiteers, was the preparation of fair price lists to protect the consumer. Every week new price lists were prepared so as to cover new fluctuation of cost to the retailer. These lists were given to the newspapers so that the consumer might be steadily informed and advised as to what he ought to pay the retailers in his city or town. It was shown how the patriotic retailer gained by the protection that this list afforded him against the danger of unpatriotic profiteering. The United States Food Administration explained in a public statement the significance of the fair price lists. "They were nothing more," it said, "than bulletins to inform the public of the prices the retailer has to pay for certain foods, and the price he has to sell them to the consumer.

"Such a bulletin at one stroke does away with all the obscurity
which too often veils the price increase which takes place at
the hands of the retailer.

"To give an example, it shows at just what price a retailer is
able to buy oatmeal and at just what price he is entitled to
sell it. If any retailer decides to set upon the food he has
for sale a higher price than that which brings him a fair
profit, he is labeling himself 'Profiteer.' And thereafter it
depends upon the public's own choice whether they shall trade
with him or not.

"In accordance with the plans of the Food Administration such a
system of fair price lists is now in operation throughout the
country. Every week new price lists are prepared so as to cover
new fluctuations of cost to the retailer. And these
up-to-the-minute fair price lists are given to the newspapers
to print so that the consumer may be steadily informed and
advised as to what he ought to pay the retailers in his city or
town."

HOW FAIR PRICE LISTS ARE MADE UP

"In theory the plan is the simplest imaginable. But it is
complicated by the size of this country and by the variety of
local food conditions which are bound to affect the price at
which the retailer can buy and sell his foodstuffs. It would be
utterly impossible to set forth one fair price list which would
_be_ fair for every spot in this country at any one time. A
grocer in Calais, Maine, may be able to buy potatoes at a lower
rate than a grocer in Snohomish, Washington. And the grocers of
Red Oak, Iowa, may have to pay a different price from either.
Obviously, each locality must determine its own fair price
list.

"This is done by establishing in every community or county
where fair price lists are to be put out a Price Interpreting
Board, consisting of representatives of wholesale grocers,
retailers, and consumers. The County Food Administration or his
representative should act as chairman of this board. Such
boards include representatives of both 'Cash and Carry' stores
and 'Credit and Delivery' stores. These boards secure from
wholesale representatives the prices charged to the retailer
for various staple foods. With this as a basis, plus their
knowledge of local conditions, and guided by a schedule of
maximum margins submitted to them by the Food Administration at
Washington, they determine what is a reasonable profit at which
the retailer may sell to the consumer. Thus the retailer does
not have a scale of selling prices arbitrarily thrust upon him;
he helps determine them himself."

PROFITEERING

The natural and inevitable results of war on living conditions with food shortage and high prices were an unfamiliar factor in American experience for two generations. The artificial product of war time industry, "profiteering," was hard to be evoluted and caused resentment against those responsible for the practice. To deal with profiteers was no easy matter. How can profiteering be discriminated from legitimate profit-taking? How, too, can its existence be proved, for high fixed prices are not always an evidence of profiteering methods. The complexities of the various trade practices lumped together under the term profiteering are illustrated in the pamphlet on _Profiteering_, issued by W. B. Colver, Chairman of the Federal Trade Commission, in the form of a letter submitted on request to the U.S. Senate:

"Survey of the petroleum field shows that the market, when
under the control of dominating factors, such as Standard Oil,
can be one of huge profits without the device of the high fixed
price. No price for the public has been fixed upon petroleum
and its products by the government. Unlike the situation in
steel, flour, and coal, there has been as yet no government
interference with the law of supply and demand except in the
instances of government purchases. Under that law large profits
may eventuate through the bidding up of prices by anxious
buyers. And, moreover, even in the absence of this element,
prices may be forced up by spreading false and misleading
information concerning the condition of supply and demand.
Reports, for instance, have been circulated that the supply of
gasoline was endangered for the purpose of maintaining the high
price of that product and the heavy profits from it. At
different stages of the oil industry different products of
petroleum have yielded the heavy profits. Kerosene was once the
chief profit producer. Gasoline followed and superseded it as
the chief producer of profits. Enormous profits are now being
made in fuel oil, with the advantage to the refiner that the
high price of that product meets no popular challenge. Gasoline
is maintained at its present high price and produces heavy
profits for the low cost refiners."

PROFITEERING IN THE MEAT INDUSTRY

"Similarly, the power of dominant factors in a given industry
in maintaining high prices and harvesting unprecedented profits
is shown in a survey of the meat packing situation. Five meat
packers, Armour, Swift, Morris, Wilson, and Cudahy, and their
subsidiary and affiliated companies, have monopolistic control
of the meat industry and are reaching for like domination in
other products. Their manipulations of the market embrace every
device that is useful to them, without regard to law. Their
reward, expressed in terms of profit, reveals that four of
these concerns have pocketed in 1915, 1916, and 1917,
$140,000,000. Comparisons between their present profits and
those of the pre-war period are given below. However delicate a
definition is framed for 'profiteering,' these packers have
preyed upon the people unconscionably. They are soon to come
under further governmental regulation approved by Executive
order."

PROFITEERING IN THE MEAT INDUSTRY

Some further details on the methods of securing huge profits in the meat packing industry are given in the following:

"An exposition of the excess profits of four of the big meat
packers (Armour, Swift, Morris, Cudahy, omitting Wilson as not
comparable) is given in the fact that their aggregate average
pre-war profit (1912, 1913, and 1914) was $19,000,000; that in
1915 they earned $17,000,000 excess profits over the pre-war
period; in 1916, $36,000,000 more profit than in the pre-war
period; and in 1917, $68,000,000 more profit than in the
pre-war period. In the three war years from 1915 to 1917 there
their total profits have reached the astounding figure of
$140,000,000, of which $121,000,000 represents excess over
their pre-war profits.

"These great increases in profits are not due solely to
increased volume of business. The sales of these companies in
this period increased 150 per cent., much of this increase
being due to higher prices rather than to increased volume by
weight, but the return of profit increased 400 per cent., or
two and one-half times as much as the sales.

"The profit taken by Morris & Co. for the fiscal year ended
November 1, 1917, is equal to a rate of 18.6 per cent. on the
net worth of the company (capital and surplus) and 263.7 per
cent. on the three millions of capital stock outstanding. In
the case of the other four companies the earned rate on common
capital stock is much lower--from 27 per cent. to 47 per
cent.--but the reason for this is that these companies have
from time to time declared stock dividends and in other ways
capitalized their growing surpluses. Thus Armour in 1916 raised
its capital stock from twenty millions to one hundred millions
without receiving a dollar more of cash. If Swift, Wilson,
Cudahy, and Armour had followed the practice of Morris in not
capitalizing their surpluses (accumulated from excessive
profits), they too would now show an enormous rate of profit on
their original capital."

JUGGLING OF ACCOUNTS--HUGE SALARIES

Mr. Colver gives information supported by trustworthy data on other devious and subtle types of profiteering practices:

"In cases where the government fixes a definite margin on
profit above costs, as in the case of flour, there is a
considerable incentive to a fictitious enhancement of costs
through account juggling. This has added to the volume of
unusual profits. Increase of cost showing on the producers'
books can be accomplished in various ways. The item of
depreciation can be padded. Officers' salaries can be
increased. Interest on investment can be included in cost. New
construction can be recorded as repairs. Fictitious valuations
on raw material can be added, and inventories can be
manipulated.

"The Federal Trade Commission has been vigilant and untiring in
its exclusion of these practices. An instance of this practice
was afforded by the Ismert-Hincke Milling Co., of Kansas City,
Mo. This company padded its costs by heavily increasing all its
officers' salaries and by manipulating the inventory value of
flour bags on hand. As evidence of the length to which padding
can be carried, it may be added that this company even included
in its costs the gift of an automobile which it charged to
advertising expenses. This case was heard of by the commission
for the Food Administration. The commission recommended
revocation of license and the recommendation was followed.

"Payment of extraordinary salaries and in some instances
bonuses to executives of corporations have been found by the
commission during its investigations."

WAR COST OF LIVING

A complete synopsis of the cost of living situation in the United States, during the four years' period July, 1914, to June, 1918, was issued by the National Industrial Conference Board after a country-wide survey. The basis taken was that of family budgets divided under five heads: food, shelter, clothing, fuel and light, and sundries. The average increase for the period was shown to be between 50 and 55 per cent. The most marked advance was in clothing, 77 per cent. But the food advance of 62 per cent. was really more important because food represented 43 per cent. of the average expenditure, while clothing represented only 13 per cent. Wholesale prices, the report pointed out, are not to be relied upon in estimating the cost of living, because many articles enter only indirectly into the family budget. Often, too, wholesale prices are not reflected in retail prices until months later. The estimates given by the Board were based upon the expenditures of eleven thousand families:

"In reaching 52.3 per cent. as the amount of increase in the
cost of living for the four years' period, the expenditures of
11,000 families were considered. Following is a table in which
besides the 52.3 per cent. for all items entering into the
family budget, the percentage for rent, clothing, fuel, and
light, and sundries are given:

Per Cent. Per Cent.
Per Cent. Inc. in Cost Increase
Distribution Dur'g War as Related
Budget of Family Period to to Total
Item Expenditure June, 1918 Budget

All items. 100.0 52.3 Food 43.1 62 26.7 Rent 17.7 15 2.7 Clothing 13.2 77 10.2 Fuel and light 5.6 45 2.5 Sundries 20.4 50 10.2

The figures examined prove that there was a fair similarity of
increase in the different sections of the country. The advance
in rent in the dwelling places of the average wage earner was
put down at 15 per cent.

"A general summary is given of changes in the cost of living
among industrial workers as presented by the Railroad Wage
Commission for the period between December, 1915, and the end
of April, 1918, as follows:

Per Cent.
For families with incomes up to $600 43
For families with incomes from $600 to $1,000 41
For families with incomes from $1,000 to $2,000 40

"By the Brotherhood of Locomotive Firemen and Enginemen the
advance in living costs between 1914 and 1917 was placed at 43
per cent. Conditions among ship-building workers on the Pacific
coast, as arrived at by the United States Shipping Board,
indicated that between June, 1916, and February, 1918, living
costs had gone up 46 per cent. A table is given which shows
relative increase in the cost of food as measured by wholesale
and retail prices for the past six years."

Relative Relative
Year and Month Wholesale Price of Retail
Farm Food, Price of
1913 Products Etc. Food
Average for year 100 100 100
January 97 99 98
April 97 96 98
July 101 101 100
October 103 102 104
1914
Average for year 103 103 102
January 101 102 104
April 103 95 97
July 104 103 102
October 103 107 105
1915
Average for year 105 104 101
January 102 106 103
April 107 105 99
July 108 104 100
October 105 104 103
1916
Average for year 122 126 114
January 108 114 107
April 114 117 109
July 118 121 111
October 136 140 121
1917
Average for year 188 177 146
January 147 150 128
April 180 182 145
July 198 180 146
October 207 183 157
1918
January 208 188 160
April 217 179 154

CIVIL WAR COST OF LIVING

The Civil War years of the United States were always remembered as the era of high prices. Yet it is interesting to know that the increase in living cost after the United States had been in war one year was greater than the increases in the fourth year of the Civil War. During the Civil War prices rose from 100 to 117 per cent., but necessities were relatively cheaper than at present because the currency was depreciated. In January, 1864, gold was at a premium of 52 per cent.

Emerson David Fite, assistant professor of history in Yale University, describes "Social and Industrial Conditions During the Civil War" as follows:

"The situation in New York City at the end of the year 1863 is
typical of the period. Eggs had then reached 25 cents per
dozen, from 15 cents in 1861; cheese, 18 cents from 8 cents;
potatoes, $2.25 from $1.50 per bushel, and for all the
necessities of life there was an advance ranging from 60 to 75
and in some cases even 100 per cent. Wages, on the other hand,
lagged behind; the blacksmith's increase was only from $1.75 to
$2 per day, that of common laborers from $1 to $1.25, that of
bricklayers from $1.25 to $2, and the average increase in all
the trades was about 25 per cent., or less than one-half the
increase of prices. The winter of 1863--64 and the ensuing
months were accordingly a time of unusual industrial unrest,
which increased in severity as the discrepancy between wages
and prices continued. The dollar was slowly but surely
diminishing in value, and labor engaged in a determined
struggle to force wages up, capital to keep them down. The
advantage lay with the employing classes, but labor in 1864
recovered much of the ground that had been lost in the two
previous years, and the war closed with wages much nearer
prices than a year earlier. It was generally agreed at the time
that prices during the entire war period advanced approximately
100 per cent. and wages from 50 to 60 per cent."

WHERE THE COST OF LIVES WEIGHED THE MOST

The rapid rise in the cost of living was much more severely felt by the classes of the population dependent upon small or less rigid incomes. In many industries wages increased faster than average living expenses. Figures published by the New York Labor Bureau show that the sum distributed in wages to industrial workers was substantially doubled in the four years of warfare. Investigation conducted by the National Industrial Board of Boston showed that there had been an increase of 50 to 55 per cent. in the budget of the average wage earner from July, 1914, to June, 1918.

"The increases for the different items are given as follows:

Food 62%
Rent 15%
Clothing 77%
Fuel and light 45%
Sundries 50%
Average increase (depending on apportionment
of these respective items in the
family budget) 50% to 55%

In explanation of these figures the report goes on to say:

"'In combining the percentages of increase for the respective
items, in order to determine the average increase for the
budget as a whole, food was taken as constituting 43 per cent.
of the total family expenditure, rent 18 per cent., clothing 13
per cent., fuel and light 6 per cent., and sundries 20 per
cent. Applying the Board's percentages of increase for the
respective items to this distribution of the budget, the
average increase is 52 per cent. The distribution of budget
items just given is an average based on cost of living studies
made by several United States Government bureaus and other
agencies, covering in all 12,000 families.

"The proportions of these major items of expenditure can be
varied within narrow limits, but no reasonable arrangement
would cause a wide change in the increase in the total cost of
living as given above. For instance, if, instead of this
average distribution of the budget, food be allocated as much
as 45 per cent., rent and clothing 15 per cent. each, fuel and
light 5 per cent., and sundries 20 per cent., the indicated
increase in the total cost of living, using the Board's
percentages of increase for the respective items, would be 54
per cent."

All articles of food, we are told, show a considerable increase
in price since 1914, exceptional advances being recorded in the
case of flour, lard, and cornmeal. The item of rent, says the
report, "showed such wide variation that no general average
applicable to all sections of the country could be reached,"
but the 15 per cent. estimate "is apparently ample to cover the
increase in wage-earners' rents in New York, Chicago,
Philadelphia, Boston, and St. Louis, which alone include
several millions of the country's industrial population." Of
the increase in clothing prices we read:

INCREASED COST FOR WEARING APPAREL

"Information secured from retail stores in cities well
distributed throughout the country indicates increases in
prices of the most common articles of wearing apparel, ranging
from 50.5 per cent. for women's dollar blouses up to 161 per
cent. for men's overalls. Striking increases occurred in the
prices of certain yard goods, where advances in cost over 1914
prices amounted, in a number of cases, to more than 100 per
cent.

"Men's hosiery, selling for 15 cents in 1914, cost in June,
1918, usually not less than 25 cents, and women's hosiery,
selling for 25 cents four years ago, brought 45 cents in June
of this year. Knit underwear, the report finds, had increased
nearly 100 per cent. Women's shoes of a standard grade
increased 88.5 per cent.; men's 69 per cent. Women's kid gloves
which in 1914 cost $1 averaged more than $2 in June, 1918.

"The report places the average rise in the total clothing
budget since 1914 at 77 per cent. This increase compares with
an increase of 51.33 per cent. between 1914 and 1917 for
families in the ship building districts of Philadelphia and an
increase of 54.21 per cent. among similar families in the ship
building district of New York, as reported by the United States
Bureau of Labor Statistics. The difference between these
increases and the Board's figure of 77 per cent. is largely
explained by the difference in the period of time covered;
clothing prices have continued to advance since 1917. Further
increases in the fall of 1918 were, moreover, clearly indicated
by the statements of retail dealers."

WAR PRICES AND LUXURY IMPORTS

In spite of the contention that war-time conditions led to an increased standard of luxurious living, statistics of imports indicated a rapid fall in articles of luxury brought into the country. In the fiscal year, 1918, there was a material decline compared with the preceding year and a marked decline when compared with the year before the war:

"A recent compilation by the National City Bank shows this in
practically all imports usually classed as luxuries. That the
imports should be less than before the war was quite natural by
reason of the fact that many articles of this character
originated in European countries, some in countries with which
we are now at war, and some with our Allies who are otherwise
too busily employed.

"In art works, for example, the value of the imports of 1918
was only about $11,000,000 against $23,000,000 in 1917, and
$35,000,000 in the fiscal year 1914. In automobiles the value
in 1918 was about $50,000 against nearly $2,000,000 in 1913,
and more than $2,000,000 in 1912, while the average value per
machine imported in 1918 was less than one-half what it was
before the war. Decorated china imported in 1918 was about
$3,500,000 in value against practically $8,000,000 in 1914. Of
cotton laces imported in 1918 the value was about $10,000,000
against $16,500,000 in 1917, and nearly $34,000,000 in 1914. Of
silk laces the 1918 imports were valued at little more than
one-half those of 1914. Of cotton plushes and velvets the
quantity in 1918 was less than 1,000,000 yards against more
than 3,000,000 in 1917, and practically 5,000,000 in 1914. Of
ostrich feathers, in 1918 the imports were valued at nearly
$1,000,000 against nearly $4,000,000 in 1914 and over
$6,000,000 in 1913. In precious stones the total for 1918 was
only about $32,000,000 against $47,000,000 in 1917 and
$50,000,000 in 1913; while of pearls alone the value in 1918
was less than $2,000,000 against over $8,000,000 in 1917, and
more than $10,000,000 in 1916.

"In articles of food usually classed as luxuries there was also
a marked fall. Cheese imported in 1918 amounted to about
9,000,000 pounds against 15,000,000 in 1917, and 64,000,000 in
1914. Of currants the imports of 1918 were over 5,000,000
pounds against 25,000,000 in 1916 and 32,000,000 in 1914, and
of dates only 6,000,000 pounds in 1918 against 34,000,000 in
1914; while olives and olive oil showed totals in 1918 of about
one-half those of the year before the war."

Under the Lever Bill, which became the Food Control Law after the United States declared war, the President was authorized to fix a reasonable guaranteed price for wheat.]

GOOD EFFECTS OF PRICE CONTROL

It became accepted on all sides that price control was the one method to correct the inequalities of war conditions. It was necessary to prevent the poorer classes in the population from having an inadequate consumption of wealth. There was the political side, too. Price control had an effect on the morale of large strata of the population. It acted as a bulwark against the rising tide of discontent and internal dissension incident to warfare on a democratic scale. Mr. Sydney Webb, a well known English student of labor problems, conceded that the British government had by its system of price control been fairly successful in staving off any general fall in the standard of life in its people. How the system worked is summarized by him in the following passage:

"What has been successful in Great Britain in economizing
supplies has been a widespread appeal to the whole nation to
limit its consumption of wheaten bread (4 pounds per week),
meat (2½ pounds per week), and sugar (¾ of a pound per week) to
a prescribed maximum per person in the household; and to make
up the necessary subsistence by the use of substitutes, such as
fish, other cereals than wheat, and other vegetables than
potatoes, of which the crop throughout all Europe has largely
failed. More efficacious still has been the absolute government
monopoly of sugar, secured at the very beginning of the war,
and the drastic restriction of the total quantity allowed to be
issued from store, the aggregate reduction being thus
infallibly secured, and the retailers being left to share what
sugar they obtained among their customers. It has been found
useful, too, to make the wheaten flour go farther by compelling
all the millers to include both an increased proportion of bran
and a certain proportion of other cereals. More drastic
measures are near at hand."

STAY-AT-HOMES WHO MADE MONEY

The important effort, as seen by the _Economist_, was to back up the armies at the front by a policy of self-sacrifice at home, and it spoke in drastic terms of the constant evidence of profiteering among certain classes in England. The contrast in the attitudes of those at the front and those active in business life is set forth in the following words:

"One of the most curious and interesting psychological facts of
the war is the manner in which one man goes to the front and
becomes a hero and a _preux chevalier_, while another, just
like him in training and blood and outlook, stays at home and
works for spoils, whether in wages or profits, resenting
taxation, grumbling about his food, and seeming to think that
this war for justice was invented to increase his wealth and
comfort."

PRICE CONTROL IN UNITED STATES