"'Destruction of buildings and industria_Harper's Pictorial Library of the World War, Volume XII

$1,000,000,000, and in France $700,000,000. The destruction of

agricultural buildings and implements, of raw materials, of

crops and live stock, has been estimated at a sum of

$780,000,000 in Belgium and $680,000,000 in France. Roads were

destroyed frequently by the retreating troops and have been

seriously damaged by heavy gun fire and excessive use. The

losses from destruction of railway bridges, etc., have been

estimated in Belgium at $275,000,000 and in France at

$300,000,000.

"'In the Eastern theater of the War Germany has been invaded

only in eastern Prussia, where the agricultural population has

been seriously impaired. Heavy damage was inflicted upon

bridges, roads, and governmental property, including railroads.

The direct cost to Germany through the loss of agricultural

products, of manufacturing products, as well as in interest on

investments abroad, of earnings from shipping and banking

houses, and profits of insurance and mercantile houses engaged

in business abroad has been enormous'."

ECONOMIC LOSS OF MAN-POWER

The same expert goes on to figure out the economic value of the loss of

human life:

"Mr. M. Barriol, the celebrated actuary, gives the following

figures as the capital value of man: in the United States,

$4,100; in Great Britain, $4,140; in Germany, $3,380; in

France, $2,900; in Russia, $2,020; in Austria-Hungary, $2,020

or an average capital value for the five foreign nations of

$2,892.

"The number of men already lost is 8,509,000 killed and

7,175,000 permanently wounded, or a total of 15,684,000. Thus

society has been impoverished through the death and permanent

disability of a part of its productive man-power to the extent

of $45,000,000,000.

"The loss of men, measured in terms of the capital value of the

workers withdrawn from industry, is offset in some degree by

the enhancement of the capital value of the remaining

producers.... This loss of man-power is also partly offset by

the large contingents of women drawn into industries. In

England, out of a female population of 23,000,000, about

6,000,000 were engaged before the outbreak of the war in

gainful occupations. Since the war broke out no less than

1,500,000 women have been added to the ranks of wage-earners,

an increase of fully 25 per cent. Moreover, about 400,000 women

have shifted from non-essential occupations to men's work. In

the United States, approximately 1,266,000 women are now

engaged in industrial work, either directly or indirectly

necessary to carry on the war.

EFFECTS ON POPULATION

"The physical and moral effects of the war, the moral strain to

which the nations have been subjected, the 'shell-shock' which

has reacted upon the population at home as well as upon the

soldiers on the battlefield, the undernourishment and

starvation of children as well as adults, all have resulted in

a lowered vitality, the ill effects of which, especially in the

countries of the Central Powers, are already seen in an

increase of the death rate, in a spread of epidemics and

diseases that have taxed the medical resources of all

countries.

The lowered vitality of the race, which is still further

aggravated by the millions of incapacitated soldiers and the

premature and excessive employment of children and women in the

industries, will eventually make for a lower standard of

efficiency in all human activities, or a retardation of human

progress. Authoritative statements are to the effect that in

Belgium in the earlier period of the war, the deaths of women

and children far outnumbered those of men. Annual deaths among

the German civilian population have increased by a million

above the normal.

"Besides the loss in actual population there is a loss of

potential population. Carefully compiled figures show that by

1919 the population of Germany will be 7,500,000 less than it

would have been under ordinary circumstances. The people in

Austria in 1919 will be 8 per cent. less in numbers than in the

year before the war. Hungary will be still worse off; it will

have a population of 9 per cent. lower than in pre-war days."

CARNEGIE ENDOWMENT'S ESTIMATES

The Carnegie Endowment for International Peace made public in November,

1919, an elaborate report on the cost of the World War in human life and

in property and the consequent economic losses. The chief conclusions

derived from this intensive study of all the conditions may be

summarized as follows:

All the wars of the nineteenth century from the Napoleonic down

to the Balkan wars of 1912--1913, show a loss of life of

4,449,300, according to the report, while the known and

presumed dead of the World War reached 9,998,771. (See Vol.

III, pp. 403-5.) The monetary value of the individuals lost to

each country is estimated, the highest value on human life

being given to the United States, where each individual's

economic worth is placed at $4,720, with England next at

$4,140; Germany third, at $3,380; France and Belgium, each

$2,900; Austria-Hungary at $2,720, and Russia, Italy, Serbia,

Greece, and the other countries at $2,020.

With a loss of more than 4,000,000 the estimate puts Russia in

the lead in human economic loss, the total being more than

$8,000,000,000; Germany is next with $6,750,000,000; France,

$4,800,000,000; England, $3,500,000,000; Austria-Hungary,

$3,000,000,000; Italy, $2,384,000,000; Serbia, $1,500,000,000;

Turkey, almost $1,000,000,000; Rumania, $800,000,000; Belgium,

almost $800,000,000; the United States slightly more than

$500,000,000; Bulgaria, a little more than $200,000,000;

Greece, $75,000,000; Portugal, $8,300,000, and Japan, $600,000.

On this basis the total in human life lost cost the world

$33,551,276,280, and the loss to the world in civilian

population is placed at an equal figure.

The attempt to determine property losses is the least

satisfactory, as it is the most difficult. The destruction and

devastation in the invaded areas of Belgium, France, Russian

Poland, Serbia, Italy and parts of Austria are probably

incapable of exact determination, and it may well be doubted if

the exact losses will ever be known.

The total property loss on land is put at $29,960,000,000,

one-third of which was suffered by France alone, its loss being

given as $10,000,000,000, with Belgium next at $7,000,000,000,

and the other countries following as follows:

Italy, $2,710,000,000; Serbia, Albania, and Montenegro,

$2,000,000,000; The British Empire and Germany, each,

$1,750,000,000; Poland, $1,500,000,000; Russia, $1,250,000,000;

Rumania, $1,000,000,000, and East Prussia, Austria, and Ukraine

together, the same amount.

[Illustration: Copyright by Central News Service

Launching the Quistconck at Hog Island

According to the report of the Carnegie Endowment the cargo loss at sea

was $3,800,000,000, the total tonnage and cargo loss being

$6,800,000,000. To offset the Allied loss in shipping, ship-building in

the United States was rushed at topmost speed.]

In the property losses on sea, that is, to shipping and cargo,

the report estimates that "the construction cost of the tonnage

loss can scarcely be estimated at less than $200 a ton, and the

monetary loss involved in the sinking of this 15,398,392 gross

tons may, therefore, be placed at about $3,000,000,000." To

this is added loss of cargo, which is estimated at $250 a ton,

giving a cargo loss of $3,800,000,000, and a total tonnage and

cargo loss of $6,800,000,000.

Among the indirect costs of the war, loss of production is

placed at $45,000,000,000. In arriving at this figure an

average of 20,000,000 men are counted as having been withdrawn

from production during the whole period of the war, and their

average yearly productive capacity is placed at $500. War

relief is another indirect cost which totalled up to

$1,000,000,000; and the loss to the neutral nations is given as

$1,750,000,000.

With the total direct costs of the war amounting to

$186,336,637,097 and the indirect costs to $151,612,542,560,

the stupendous total of $337,946,179,657 is reached. Finally,

the report says:

"The figures presented in this summary are both

incomprehensible and appalling, yet even these do not take into

account the effect of the war on life, human vitality,

economic well-being, ethics, morality, or other phases of human

relationships and activities which have been disorganized and

injured. It is evident from the present disturbances in Europe

that the real costs of the war cannot be measured by the direct

money outlays of the belligerents during the five years of its

duration, but that the very breakdown of modern economic

society might be the price exacted."

THE WAR AS A PRODUCT OF HIGH PRICES

All of the great wars in European history have been followed by periods

of increased production and economic expansion. Experts are convinced

that the World War will prove no exception to the world's previous

experience. Wars have been the principal influence that have determined

the course of commodities and prices. In the Napoleonic Wars the index

number rose seventy-two points in twenty years, but during the four

years between 1914 and 1918 there was a rise of one hundred and eight

points in four and a half years, a movement which Edgar Crammond, widely

known British expert in economic and financial affairs, declared to be a

movement to which there was no precedent in point of rapidity or

magnitude. In an address outlined in the New York _Journal of Commerce_

this authority estimated the direct cost of the war to the Allies as

being roughly $145,000,000,000. The Central Powers had spent about

$60,000,000,000. The total cost in dollars he estimated at

$260,000,000,000. The upheaval caused by the war was manifested,

according to the same authority, in the rise of the cost of living and

in the universal increase of wages. Other economic consequences will be

more gradually unfolded. Prospects of fall in the price of commodities

and wages as the result of peace, he thinks, will be arrested for two

reasons: First, the vast increase in the amount of paper money; second,

the huge amount of public debts to the belligerents. He saw an

additional psychological cause in the attitude of the laboring classes

to maintain wages at a higher level than before the war and to improve

the standard of living.

Reduced production is sufficient to account for all the economic

disturbances that were produced during the war, according to the London

_Statist_, which says:

"It is enough to say that production is reduced almost to a

minimum, while consumption is going on at a most extravagant

rate. Those who wish to pose as economists without competent

knowledge are telling the public that all the evil is due to

this, that, and the other thing--such, for example, as

inflation, the rise in prices, the enormous loans raised, and

several other fads. It is pure moonshine. The world is

impoverished, firstly, because so much of the world's manhood

is withdrawn from production to consumption; and, secondly,

because reduction in production is so serious that very little

has been saved either by the belligerents or the neutral

countries of Europe, at all events. International trade is

really carried on by barter. It is true that money is

frequently paid. At the present time money has in some markets

to be paid because credit has been injured, and those who

possess wealth are not as willing as they used to be to trust

to mere credit."

QUESTIONS OF INFLATION

The enormous advance of prices in England was synchronous with the issue

of currency notes to an excess of £700,000,000 beyond the gold reserve.

High officials in British administration ascribed this rise to the

increased consuming capacity. According to the British Board of Trade a

sovereign could purchase no more during the war time than eleven

shillings would just before the war started. A writer in the

_Fortnightly Review_, Mr. W. F. Ford, quotes Jevons' remark in his

classical book on money in explanation of the phenomenon. "A number of

bankers all trying to issue additional notes resemble a number of

merchants offering to sell corn for future delivery, and the value of

gold will be affected as the price of corn certainly is. We are too much

inclined to look upon the value of gold as a fixed datum line in

commerce, but in reality it is a very variable thing." Substitute today

the word Government for bankers and one can see the reason for the

upward rise in prices. This rise would take place apart from any

questions of war waste, profiteering, difficulties of transport by sea

or land or shortage of labor. All the countries involved have followed

the same policy of inflation. The operation is depicted in the following

passage:

"The inevitable result of extensive note issues by a number of

Governments was that prices were irresistibly impelled upwards

in all belligerent countries--apart from any questions of war

waste, profiteering, difficulties of transport by sea or land,

or shortage of labor. Belligerent countries became

extraordinarily good markets in which to sell goods; and a

golden harvest was temptingly displayed to neutral nations, in

whose favor enormous trade balances rapidly grew up. In large

part these balances were met by payment in gold.... But just as

gold substitutes in the shape of paper money swelled the

currencies and increased prices in the belligerent countries,

so also the large quantities of gold coin sent to neutral

States in payment for goods supplied to the warring nations

swelled the currencies and increased prices in the neutral

states themselves. The withdrawal of gold set up a natural

tendency for prices to fall in the countries from which it had

been exported; but not only was this tendency overcome, but the

upward movement of prices was continued by the action of the

several Governments in placing still further issues of

inconvertible paper money on their respective markets. The net

results have been that currencies have been inflated and prices

forced up all over the world, that inconvertible paper money is

tending more and more to drive out gold from the currencies of

the states that issue it, and that the gold so driven out is

being absorbed into the currencies of the neutral nations.

Between August, 1914, and the date of her own declaration of

war, America increased the amount of her gold currency by

approximately £200,000,000 sterling. No real benefit has

accrued.

"The currencies of the whole world have been artificially

inflated to the extent that, under the most favorable

circumstances existing in any part of the world, £5 are now

needed to do the work in circulation that before the war was

accomplished by £3. The loss to people with fixed incomes, the

disturbance of trade, the potential labor difficulties are

stupendous. And as a result of purchasing war material at

excessively high prices, the dead weight of debt incurred by

all the countries at war is very much greater than it need have

been had currencies been kept within reasonable bounds."

CURRENCY EXPANSION IN GREAT BRITAIN

In Great Britain £200,000,000 worth of new paper currency was placed in

circulation and there was a considerable expansion in the use of

banknotes, silver and copper coinage. Proposals were made that the

famous English Bank Act should be repealed and that excess issues of

banknotes should be made legal on the payment of a tax. But apart from

these theories of involving the banking system there was a good deal of

adverse criticism.

"Mr. Herbert Samuel made a masterly attack upon the vicious

system of War Finance, by which no less a sum than £196,170,000

is added to the expenditure by bonuses and increases of wages,

which, in their turn, only force prices still higher and raise

the cost of living. Lives have been conscripted; incomes have

been conscripted; the only thing which has not been conscripted

is labor. If the Government had at an early stage of the war

had the courage to fix wages, instead of prices, the cost of

living would then have been regulated by supply and demand. By

fixing prices of commodities, after they had risen to almost

famine figures, we have the maximum of loss and inconvenience,

high wages, dear food, and a war bill that increases day by

day. Despite Mr. Bonar Law's assurance that the bill of the

year would not be so high as he expected, we have the fact that

we are spending over seven millions a day. The satire of 'the

cheap loaf' consists in its cost to the nation at large of

£45,000,000 a year. Bonuses to munition workers amount to

£40,000,000, bonuses to miners come to £20,000,000, to railway

workers £10,000,000, to potato growers £5,000,000. Is this

anything else but a system of gigantic corruption? In order

that artisans and agriculturists may be kept in good humor with

the war, they are bribed with bonuses and allowed to buy food

at prices which are partially paid by the rest of the

community. If ever there was a case of robbing Peter to pay

Paul it is here."

AMERICA'S EXPERIENCE WITH INFLATION

Protests against war inflation were not confined to British specialists

in finance. What is inflation? As used by the more careful writers on

the subject today, it is taken to signify the increase of bank credits

not represented by any immediate addition to current wealth. For

example, if the Government borrows by an issue of bonds, such bonds

taken by the banks, and payment for them made in the form of bank credit

which is at once transferred to individuals who have furnished labor or

supplies, it is evident that there has been a net addition to the

purchasing power of the community not represented by any corresponding

addition to wealth whether of a saleable or available form. Mr. Delano,

a member of the Federal Reserve Board, said that the war had produced a

world inflation the like of which had never occurred before--"The usual

symptoms of such methods of inflation are the disappearance of metallic

money and the general advance in the prices of commodities." He gives

the following illustration of what has taken place in this process of

inflation:

"Prior to our entry into the war, when the European nations

were buying heavily in the United States, they paid largely in

gold for what they bought, and as a result about a billion

dollars in gold coin came to this country in the period of two

and one-half years. The reason the European nations were able

to send us their gold was that they printed paper money for

their own use, releasing gold for us. But that gold inflation

in this country is one explanation of the general advance in

prices of all commodities, although undoubtedly it is not the

only explanation; for it must be freely admitted that prices

have been affected, first, by scarcity, occasioned by increased

demand from Europe for many articles produced by us; second, by

reason of the fact that increases in taxes and wages of labor

have entered into the cost of production and sale of all

articles and account for a share of the increased prices of

commodities."

CIVIL WAR INFLATION.

The United States had large experience with inflation during the Civil

War. Some $500,000,000 were in this way added to the cost of the war

which might have been avoided. A plain statement of the real incidents

of inflation is given by Mr. A. C. Miller of the Federal Reserve Board

in his _Financial Mobilization for War_, in the following passage:

"For let it not for a moment be overlooked that inflation, in

its effects, amounts to conscriptive taxation of the masses. It

is, indeed, one of the worst and the most unequal forms of

taxation, because it taxes men, not upon what they have or

earn, but upon what they need or consume. The only difference

for the masses between this kind of disguised and concealed

taxation and taxes which are levied and collected openly is

that in the case of the latter the government gets the revenue,

while in the former case it borrows it, and those to whom it is

eventually repaid are not those, for the most part, who have

been mulcted for it. Inflation therefore produces a situation

akin to double taxation in that the great mass of the consuming

public is hard hit by the rise of prices induced by the

degenerated borrowing policy and later has to be taxed in order

to produce the revenue requisite to sustain the interest charge

on the debt contracted and to repay the principal. The active

business and speculative classes can usually take care of

themselves in the midst of the confusion produced by inflation

and recoup themselves for their increasing outlays. Indeed

inflation frequently makes for an artificial condition of

business prosperity. That is why war times are frequently

spoken of in terms of enthusiasm by the class of business

adventurers. But it is a prosperity that is dear-bought and at

the expense of the great body of plain living people. It would

be a monstrous wrong if in financing our present war we should

pursue methods that would land us in a sea of inflation in

which the great body of the American people, who are called

upon to contribute the blood of their sons to the war, were

made the victims of a careless or iniquitous financial policy."

INFLATION ILLUSTRATED.

One of the ways in which inflation was caused in the United States

during the war period was the plan adopted by the banks of financing the

loan directly by means of bank credits to the buyers. According to Mr.

Carl Snyder the banking officials roughly agree that on the first

Liberty Loan for $2,000,000,000 the banks may have loaned somewhere near

half the total and on the second loan even more. Of course, this means a

heavy expansion of bank credit. Economists are generally agreed that the

flooding of the country with paper money brings about an enormous rise

in prices. They differ chiefly in regard to the degree of inflation. The

most accepted statement of inflation is that prices vary directly as the

volume of the actual currency employed and its rate of turn over or

velocity, and inversely with the volume of trade. The effect of bank

credits is exactly that of an excessive issue of notes; that is, if they

are expanded more rapidly than the actual volume of business there is a

rise in prices, that is to say there is inflation.

The situation of the country during the war in regard to business was

put plainly by Mr. Snyder in the following words: "Railroads cannot haul

any more goods. The government is already stepping in to shut down on

shipments on certain lines of industry. We can not get any more coal

unless labor is drafted from other industries, and as a whole we cannot

get any more labor as is evident from the fantastic wages that are now

being paid. In a word, production and therefore the actual volume of

exchange is practically at the limit and has been for a year or more. No

expansion of bank credits can put this production any higher. It

follows, therefore, as a practical fact that _any expansion of bank

loans now means inflation_--to all practical intents dollar for

dollar." Because of the introduction of a billion dollars worth of gold

into the country, prices have risen nearly one hundred percent. The

expansion of bank credits increases the cost of living and the cost of

the war will be doubled.

Some bankers estimated that if the war lasted the expansion of bank

loans might reach $50,000,000,000. The progress of these loans was

encouraged by the cutting of the required metallic reserve under the new

Federal Reserve system and the system of book credits with the Federal

Reserve banks allowed to the banks that are members of the system. The

following is Mr. Snyder's description of the way the inflation was

encouraged.

"Every dollar of gold may become three dollars of Federal Bank

credits and each dollar of this may in turn become the basis of

eight dollars of credits for the Central Reserve cities, ten

dollars for the smaller cities and fifteen dollars for the

country banks, which works out to a practical average of ten

dollars for all the banks in the Federal Reserve system."

He then went on to speak of the possibilities of this inflation and

uttered a warning of the danger, because the only obstacle in the way

was the good sense and conservatism of the American banks. Some

authorities hold that a war cannot be fought without inflation. Mr.

Snyder thought that the United States with large ante-war income could

and should have tried the experiment. People want easy money and flush

times. If credit were contracted there would be tight money and a high

interest rate. Mr. McAdoo and the Administration at Washington feel

highly elated when they roll up five billion of statistics, half of

which are merely bank rolls. It seems not to matter that all this may

add two or three billion to the already swollen credit currency and that

the millions of poor people, small investors and life insurance holders

who cannot expand their income in any adequate way must pay the piper.

These are the millions who rarely have any voice in national affairs,

and all the more so because they are for the most part ignorant. It

seems an idle consequence that we may spend perhaps ten long weary years

of hard times, of falling prices, declining business and sharp distress,

paying for the orgy of inflated prices, waste and extravagance in which

we are now indulging.

[Illustration: Photo by Paul Thompson

Ship-building at Camden, N. J.

One of the financial effects of the war was the transformation of the

United States from a debtor to a creditor nation. Immense private

fortunes were made. In no industry was there a greater boom than in

ship-building.]

CREDIT EXPANSION

The wide expansion of credit can be studied by making a comparison of

the gold holdings of the leading nations. For example, in 1914 just

before the outbreak of the war, the amount of cash held by all the banks

of the United States was estimated at about $1,639,000,000. Of this

amount about $913,000,000 was in the form of gold or gold certificates.

Upon this basis there rested a structure of credit amounting to

$21,351,000,000. In other words the gold basis of the country's deposit

credits amounted to 4.27 percent.

In 1916 the cash held was $1,911,000,000; about $1,140,000,000 was in

gold; and on this basis there rested a credit structure of

$28,250,000,000.

UNITED STATES A CREDITOR NATION

One of the financial effects of the war was the transformation of the

United States from a debtor to a creditor nation. The reconstruction

period in finance is certain to bring about a situation described by a

writer in the _Wall Street Journal_ as one of the most interesting

developments known in financial history. Financial waste in emergency

measures was a superficial side of America's part in the World War. But

this writer considers that what happened during the war was not

altogether financial waste:

"A great upheaval took place in the world of finance. Credit

resources were brought to the fore and nations established on a

financial basis of far-reaching importance, but of a kind that

had only a secondary place before.

"The war has turned the United States from a debtor to a

creditor nation. Formerly we owed abroad something like

$4,000,000,000, about three-quarters of which sum we have

bought back. Moreover, Europe now owes us about

$9,000,000,000--on private account; about $2,000,000,000 in

securities; in United States Government obligations over

$7,000,000,000. The world is under obligations to us in

interest alone of between $400,000,000 and $500,000,000 a

year."

After the United States took an active part in the war large credits and

loans were made in behalf of other countries as the following excerpt

shows:

"A total appropriation of $7,000,000,000 has been made,

$3,000,000,000 by the Act of April 24, 1917, and $4,000,000,000

by the Act of September 24, 1917. Under these authorizations

credits have been established in favor of the governments of

Great Britain, France, Italy, Russia, Belgium, and Serbia.

These loans, up to January 17, 1918, are given in the following

table:

Loans and Balances

Country Credits Agreed Loans Under-Established

Upon Made Credits

Great Britain $2,045,000,000 $1,985,000,000 $60,000,000

France 1,285,000,000 1,225,000,000 60,000,000

Italy 500,000,000 450,000,000 50,000,000

Russia 325,000,000 187,729,750 137,270,250

Belgium 77,400,000 75,400,000 2,000,000

Serbia 6,000,000 4,200,000 1,800,000

Totals $4,238,400,000 $3,927,329,750 $311,070,250

"On the basis of the requests being made on the Treasury, it is

estimated that credits aggregating approximately $500,000,000

per month will be required to meet the urgent war needs of the

foreign governments receiving advances from the United States.

At this rate approximately the entire appropriation authorized

by Congress will be accredited to our Allies by the close of

the present fiscal year (June 30, 1918).

"A significant feature of the loans floated in this country in

the last three and a half years has been the fact that many

states and municipalities which formerly went to London to sell

their securities have recently been financed through the United

States. About $150,000,000 of the Canadian loans went to

provinces and municipalities, and many of the South American

obligations were contracted for municipal improvements. The

neutral nations of Europe have also sought accommodation in the

American money market. Loans have been made to the city of

Dublin, Ireland, the London Water Board, and the French cities

of Paris, Bordeaux, Lyons, and Marseilles."

DISAPPEARANCE OF GOLD CURRENCY

During the war gold almost ceased to be currency in all the Allied

countries. The Central Powers at the end of the struggle had

comparatively little. Of the total gold production the United States

produced about twenty-five percent., while the British Empire produced

nearly sixty-four. A writer in the _Edinburgh Review_ proposed to take

the opportunity of creating a standard price for gold. For example, if

the standard price of gold were reduced to half, the prices of all

commodities would come down in sympathy. We must take advantage of the

fact that we are working with a paper currency, and all authorities

agree that financial stability is only secured by the backing of as much

gold as possible against paper securities and emergencies.

The plan involved an increase of the standard price. The success of the

scheme depends upon the concordant will of the United States and Great

Britain to adopt it as the following article suggests:

"Obviously if Great Britain or any other country _alone_

attempted to alter the standard price of gold, and therefore

the value of the present sovereign (or its equivalent), the

currency would be debased, instead of being enhanced. It would

also in effect amount to a partial repudiation of national

debt. A standard ceases to be a standard if _one_ nation can

arbitrarily alter it, but surely there can be no argument

against the creation of a new standard sanctioned by the whole

civilized world for their mutual advantage. If Great Britain

and the United States were to proclaim their desire to adopt my

scheme it is hardly likely that any country other than the

Central Powers would fail to welcome it. Spain, for instance,

has increased her gold reserve to about £80,000,000 and greatly

enhanced the value of her currency thereby. Would she fail to

grasp the happy chance of making this £120,000,000, and would

any country continue to part with its gold at £4 per ounce when

it could get £6 or £8?"

WAR'S EFFECT ON SILVER

Along with all other commodities, that cinderella of

finance--silver--had a share in the general rise in prices. One of the

reasons is the enormous falling off of silver production in Mexico,

where one-third of the total world supply is produced; another is the

great demand for silver. Prior to the war, the use of silver plate by

the wealthy classes had largely fallen off; but the war, because of the

rise in wages, brought about a largely increased demand for silver to be

used in ornaments:

"The war has brought into the market a vast number of new

buyers for ornaments, whose demand in the aggregate is

estimated to more than compensate for the falling off in the

purchases by the wealthy classes of silver plate. Wages

everywhere, not merely in England, but practically all over the

world, have advanced, and particularly in Western Europe;

moreover, immense numbers of women, and even children, are

being employed who were not employed before, and those who were

employed before have a larger income, particularly amongst the

wage earning classes, than has been the case in this country

for many years past."

The use of silver in coinage, too, was notably increased. Gold

disappeared in countries where gold coins were used; paper money and

silver token money took its place. Another reason for the advance in

silver is connected with the demand for the metal in eastern countries.

According to the _London Statist_:

" ... 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.

[Illustration: Diagram Showing the Effect of the War on the Prices of

Stocks

(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.

[Illustration: Centres of Live Stock Production Throughout the World]

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

--------+-----------+-----------+-----------+--------------+-------------

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

--------+-----------+-----------+-----------+--------------+-------------

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

--------+-----------+-----------+-----------+--------------+-------------

[7] Excluding kafirs.

PRODUCTION IN THE UNITED STATES

[Figures are in round thousands; i. e., 000 omitted.]

======================================================================

Crops | 1918 | 1917, | 1916 | 1914 | Annual

| estimate | to | | |1910--1914

| 1918). | | | |

-------------------+----------+---------+---------+---------+---------

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

|========================================================

Potatoes | bush| 390,101| 442,536| 286,953| 409,921| 360,772

Sweet | do| 88,114| 87,141| 70,955| 56,574| 57,117

Beans | do| 17,802| 14,967| 10,715| 11,585|

Onions, fall | do| 13,438| 12,309| 7,833| [8] |

Cabbage | tons| 565| 475| 252| [8] |

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|

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| |

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."

[Illustration: Members of "The Women's Land Army" in England

Girls weeding frames in which cauliflower plants were set out to be

ready for market in the early spring.

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

[Illustration: A Map Issued by the Food Administration to Show Food

Conditions in Europe After the Signing of 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.

==========================================================

--------------------+-----+----+------+-----+-----+-------

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

|=====================================

Canada | 100| | 50| 75| |

Argentina | 185| | | | 90|

Australia | 210| | | | |

India | | | | | | 18,000

Other countries | | | | | | 7,400

|-----+----+------+-----+-----+-------

Total, except United| 495| | 50| 75| 90| 25,400

|=====================================

Net deficit | 233| 65| 179| 118| 255|

|=====================================

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|

|-----+----+------+-----+-----+-------

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."

[Illustration: Copyright Underwood & Underwood

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

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.'"

[Illustration: Copyright by Underwood & Underwood

=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."

[Illustration: Photo by P. Thompson

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

[Illustration: Photo by P. Thompson

"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.

"'Destruction of buildings and industrial machinery in Belgium,