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 Preface to a report of the United States 
 
 3 1924 013 849 330 
 
PREFACE TO A 
 REPORT 
 
 OF THE 
 
 UNITED STATES 
 FOOD ADMINISTRATION 
 
 HERBERT HOOVER 
 
 April, 1920 
 
The original of tiiis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924013849330 
 
PREFACE TO A 
 REPORT 
 
 OF THE 
 
 UNITED STATES 
 FOOD ADMINISTRATION 
 
 HERBERT HOOVER 
 
 April, 1920 
 
PREFACE TO THE REPORT OF THE FOOD 
 ADMINISTRATION. 
 
 Introduction. 
 
 March 27, 1920. 
 
 The United States Food Administration in partial activities 
 covered a period of approximately twenty-four months from 
 August, 1917, to August, 1919. The controls over distribution 
 and speculation put into force in October, 1917, were relaxed 
 immediately after the armistice in November, 1918, under the 
 direction of the Government. Some outstanding contracts and as- 
 surances given producers were safeguarded until July, 1919. The 
 wheat guarantee was transferred to the Wheat Director July 1, 
 1919. In- December, 1918, and January, 1919, the staff was , 
 largely demobilized or merged into the economic controls in- 
 stituted in Europe under the Food Administrator, and these latter 
 continued until the signing of peace in July, 1919. 'All the appro- 
 priations expired June 30, 1919, and it is therefore improbable 
 that a proper report will ever be prepared by the heads of the 
 Administration, as the staff was immediately dissolved into pri- 
 vate life. 
 
 These notes were prepared as a summary and guide to such 
 a report. The work of the Food Administration gave it an insight 
 into the faulty character of American food distribution that should 
 have been preserved, in record. These things are not to be perma- 
 nently remedied by temporary war regulation. The agricultural in- 
 dustry, no less than the consumer, is vitally interested in remedy- 
 ing the unnecessarily wide margin of cost that exists between 
 producer afld consumer. 
 
 The duty of the Food Administration fell into two parts : 
 First, to organize the service and self-denial of the American 
 people so as to supply the Allies with foodstuffs during the war 
 and all Europe after the armistice; second, to control, so far 
 as its authority extended, the distribution of foodstuffs at home 
 and to limit speculation in them. 
 
 During the twelve months of controlled distribution and 
 long after it was demobilized, an illusion existed in much of the 
 public mind as to the ability of the Food Administration to re- 
 duce the price of products to the consumers and coincidently to 
 increase the price of food to the farmer. Its powers in this par- 
 
ticular gave it no control over retail prices and extended only to 
 the regulation of wholesale distribution, to the reduction of spec- 
 ulation, and to stabilizing the price of food commodities where 
 government competition and export buying might disrupt the 
 market. The fundamental conflict of interest as to price between 
 producer and consumer naturally brought upon the administra- 
 tion the pressure and criticism from some individuals of both 
 sides that usually, passes directly from one side to the other. The 
 scales by which success or failure of such administration must 
 be weighed in war are simply: (a) Did food production increase? 
 (b) Did the cost of living remain sufificiently stable to prevent 
 loss in industrial efificiency due to strikes and industrial disloca- 
 tion? (c) Was the food supply so distributed as to carry our 
 own people and the Allies in health, strength and morale to vic- 
 tory? 
 
 That the argicultural industry prospered, that prices remained 
 more stable than the inevitable inflation of currency and credit 
 would lead one to expect, that the whole period was one of in- 
 dustrial tranquillity without resort to government food sub- 
 'sidies as in Europe, and that no one suffered for lack of food, 
 must be the answers. Individual farmers and consumers did 
 suffer from inevitable dislocation, but the patriotism with ,which - 
 all sides met the necessary sacrifices is beyond praise. 
 
 Food Situation at Our Entry in the War. 
 
 During the three years prior to our entry into the war Europe 
 had mobilized 60,000,000 men from production to armies and 
 munitions— nearly one-third of .the theoretical labor strength of 
 all the states in conflict. Despite the efforts of their women a 
 steady decrease in their food production was inevitable from the 
 beginning. 
 
 The situation of the Allies had been further jeopardized be- 
 cause former sources of supply, from Russia, Roumania Bul- 
 garia, Serbia and Turkey had been cut off by the enemy armies- 
 supplies, .such as sugar directly from enemy countries, had been 
 stopped; shipping had been destroyed to so large an extent as 
 in a measure to necessitate the reduction of transport from far 
 distant markets, such as Australia, China, and the Argentine- 
 
the food consumption in certain commodities required for armies, 
 and the extra exertion of their civil population had increased. 
 Thus, if these countries were to continue in the war, the sup- 
 plies from North America — the nearest market and the only 
 producer capable of expansion — must be enormously increased. 
 At ovir entry into the war Allied stocks of many essential foods 
 had been reduced to six or eight weeks' supplies. 
 
 No problem existed as to supply of food for the American 
 people except as to imports of sugar, vegetable oils, and coffee, 
 for otherwise we produce in any circumstance a surplus. The 
 sole question, aside from these few import commodities, was in- 
 creased supplies for the Allies. 
 
 During the year prior to our entry into the war, that is the fis- 
 cal year 1916-17, the exports from the United States under 
 Allied buying had been far larger than our normal production 
 wpuld warrant. As a result our carry-over of bread grains — the 
 national reserve — had been reduced from 153,000,000 bushels at 
 July 1, 1916, to 43,800,000 bushels at July 1, 1917, and through 
 over-slaughter our stock hogs had been reduced from 65,645,000 
 at September 1, 1916, to 60,218,000 on September 1, 1917. 
 
 The result of the Allies bidding against each other and our 
 own consumers, and the heavy exports and consequent depletion 
 of stocks had raised prices in the United States greatly and in- 
 duced widespread speculation and profiteering. The statistics of 
 the Department of Agriculture show that while the index of farm 
 products had in two years increased from the basic 100 of 1913 to 
 but 117 at July, 1916, it mounted 118 points further to 235 during 
 the year to July 1, 1917. The profits earned by food concerns 
 expanded enormously during the year ending July 1, 1917, before 
 the existence of the Food Administration. A single instance of 
 this may be cited in that the Department of Agriculture shows 
 that the farmer received from the 1916 harvest an average of 
 $1.42 per bushel for his entire crop, whereas the price of wheat 
 rose in May, 1917, to $3.25 a bushel, and the public paid an aver- 
 age price for flour during the whole year that would have war- 
 ranted an average of $2.00 per bushel to the farmer. Or, con- 
 versely, the consumer paid over $2.50 per barrel more for 90,- 
 000,000 barrels of flour than was warranted by the price of wheat. 
 The enemy was receiving indirect food support from the 
 United States in large volume during the period prior to our 
 
6 
 
 entering into the war ; for although the Allies had established a 
 blockade upon the enemy, it had not been entirely effective because 
 the neutrals upon enemy borders were largely free to export their 
 own production to the enemy and directly or indirectly, to import 
 United States supplies for themselves. Thus not only were 
 our supplies diverted from the Allies to neutrals, but also the 
 Germans were indirectly benefitted. 
 
 A survey of the Allied necessities for the first harvest year 
 after our entry into the war, that is to July 1, 1918, was made 
 upon the ground by my colleagues and myself in April and May, 
 1917. This study disclosed that their national diets had become 
 even more predominantly breadstuffs — bread ranging from 
 55 per cent, to 65 per cent, of their total food as compared with 
 30 per cent, of the American diet. Therefore, supplies of bread- 
 stuffs were of first concern. The Allied herds were diminishing; 
 but more important still. Allied food animals had always been 
 dependent largely upon imported feed, and the reduction in these 
 feed imports, due to shortage in shipping, had greatly decreased 
 the dairy and meat production. It was evident that if reduction 
 of shipping continued, the transport of feed might have to be 
 entirely abandoned. Such an event meant further decrease in 
 animal products and a slaughter of underweight animals, and 
 necessitated provision for a great increase in exports of animal 
 products from the United States. 
 
 The large sugar supplies from Germany to the Allies were 
 already cut off, and the gradual reduction of shipping threw an 
 increasing drain directly upon the Western Hemisphere, through 
 the abandonment of East Indian supplies. 
 
 It was determined to further curtail allied rations of meats \ 
 and fats, and to substitute other cereals "for wheat in bread, yet 
 despite these measures the minimum necessities from the United 
 States were estimated for the harvest year ending July, 1918, as 
 follows : 
 
 Tons 
 
 Animal products (including all fats) 1,850 000 
 
 ^^^^^^^ 8,800,000 
 
 ^"^^'' 1,500,000 
 
 12,150.000 
 
Aside from this immediate programme, we had of necessity 
 to anticipate for the following year the new impulses to be given 
 to American agriculture, that is, to concentrate on an increase 
 in production of breadstuffs, meats, fats, and sugar because fur- 
 ther decline in Allied production was certain. An increase in 
 grain production was entirely possible through direct expansion 
 of the wheat and corn areas at the expense of fallow and 
 pasture. The only food animal possible of increase within that 
 period was the great corn product — the American hog — as cattle 
 would require three years to yield any considerable increase. The 
 only area in which appreciable sugar increase was possible was 
 the West Indies. 
 
 Our ability to meet the immediate situation of larger food 
 exports, that is, from July, 1917, to August, 1918, pending the 
 increase in production, which could only arrive with the 1918 har- 
 vest, was discouraging. No efifective stimulation to production was 
 possible during the short period between the time we entered the 
 war and the 1917 planting. Not only had the previous year's 
 drain depleted our usual grain reserves and diminished our 
 breeding hogs, as shown above, but also the 1917 wheat harvest 
 was much below normal and did not afford any practical surplus 
 for export. The drought in the wheat areas, the failure of the 
 corn to mature, and the initial shortage of animals created an 
 alarming situation. 
 
 It was evident that we could only succeed in maintaining the 
 Allies over the 1917 harvest year by a very considerable decrease 
 in our consumption and waste. The drainage of supplies upon 
 an even greater scale than the previous year, with less resources 
 to draw from, promised us even greater dangers of rising prices 
 and speculation than before. Moreover, the increasing irregular- 
 ity of transport, due to war interruptions, threatened periodic 
 gluts which would cause violent fTuctuatiojis of farm prices below 
 and above production costs, thus discouraging production and 
 stimulating speculation and industrial unrest. 
 
 Problems Confronting the Government. 
 
 The problems which confronted the Government, if the war 
 was to be fought without collapse of food supplies to the armies 
 
8 
 
 and civilian population of the Allies, and without economic dis- 
 turbance at home could, therefore, be summarized : 
 
 1. To increase American exports of the critical commodities 
 mentioned above. 
 
 , (a) By the immediate reduction of waste and con- 
 sumption in all commodities and by substitution of surplus 
 commodities for those particularly required abroad; 
 (b) By the increase of production. 
 
 2. To reduce speculation and profiteering during so great a 
 drainage of supplies, and to assure stability in prices so far as 
 possible, and thus to stimulate production and to secure greater 
 internal economic stability. 
 
 3. To control these food exports and imports . for the pur- 
 pose of : 
 
 (a) Directing maximum supplies to the Allies; 
 
 (b) Protecfing our own import supplies ; 
 
 (c) Securing fair return in services for supplies to 
 neutrals and to eliminate those neutrals who 
 
 could obtain supplies elsewhere; 
 
 (d) Minimizing the leakage from neutrals to Ger- 
 
 many ; 
 
 (e) Controlling all buying in our markets as a means 
 
 of supporting assurance given our farmers, 
 and prevention of profiteering. 
 
 Organization of the Food Administration. 
 
 To effect these purposes, the Lever Act (August 10, 1917), 
 the Food Survey Act (August 10, 1917), and the Embargo Acts 
 (June 15, 1917, and October 6, 1917), were passed by Congress 
 as war measures. i 
 
 The Food Administration was created by Executive Order 
 /August 10, 1917. The plan of organization adopted was to as- 
 semble, as far as possible, the voluntary service of individuals in 
 admmistrative work and the voluntary co-operation of the house- 
 holders, farmers and the food trades. The results amply demon- 
 strated the high sense of service in our people, as it proved that 
 measures of legal force were needed for an infinitesimal per 
 
cent. The central administration was divided roughly into di- 
 visions of Cereals, Meats and Fats, Vegetables and Fruits, Sea 
 Food, Dairy Products, Sugar, Enforcement of Regulations, Ex- 
 ports and Imports, Storage, Conservation, Railway Transporta- 
 tion, Overseas Transport, Distribution, Co-ordinated Allies Army 
 and Navy Purchases, States Relations, Licensing, Statistics, 
 etc. Some dozen of inter-departmental boards were set up to 
 secure co-ordination between the Food Administration and other 
 departments of the Government. Joint boards for co-05-di nation 
 of activities with the Allies were established to determine needs, 
 programmes and policies. Some hundreds of voluntary commit- 
 tees of women, scientists, farmers, stockmen, dairymen, and the 
 food tradesmen, were set up for advice and co-operation in 
 various lines of activity. With the approval of the Governor, 
 a Federal Food Administrator was appointed in each State, and 
 he, in turn, selected a local administrator in every county and 
 large city. An Advisory Board of farmers was created with di- 
 visions devoted to grain, live stock and dairy produce. Special 
 Committees of Cotton Seed, Rice and Sugar Growers in different 
 parts of the country were similarly created. 
 
 The state, county and city Food Administrators created nu- 
 merous advisory cominittees in matters of distribution, produc- 
 tion, conservation, fair price determination and control of specula- ' 
 tion. Especially noteworthy were the joint committees of con- 
 sumers and distributers established in practically every city with 
 useful achievements in many directions. 
 
 Altogether, some 8,000 volunteers gave their entire time to 
 the Administration. Some 3,000 persons, chiefly clerical assist- 
 ants, were employed at salaries, and it is estimated that part time 
 service was given by 750,000 members of committees, principally 
 women. The whole nation was invited to become members of the 
 Food Administration, in one activity or another, and a wealth of 
 co-operation developed beyond any anticipation. 
 
 Two corporations were created: First, the Grain Corpora- 
 tion with a capital of $150,000,000 for the purchase and sale of 
 food under the Lever Act ; and second, the Sugar Equalization 
 Board with a capital of $5,000,000 to co-operate with the Allies 
 in the purchase of Cuban sugar and to control its distribution in 
 the United States. 
 
 Several hundred agreements looking toward assurance of pro- 
 
10 
 
 duction, stabilization of price, and the control of profits,^elimina- 
 tion of waste of distribution and trade practices, were entered 
 into with representatives of farm and trade organizations. 
 
 An extended series of regulations was promulgated limiting 
 the margins between purchase and sale of foodstuffs together 
 with other measures to control speculation and profiteering. 
 
 The entire amount of Congressional and Presidential appro- 
 priations expended by the Food Administration from beginning 
 to end was $7,862,669. The $155,000,000 of capital of the two 
 corporations was not only handed on intact at the close of the 
 Administration, but large profits were earned by them. The 
 neutral countries insisted upon advancing the charges for ship- 
 ping by 1,000% over pre-war averages and the Food Administra- 
 tion considered that in depriving our own people of food in order 
 to protect life in neutral countries we were at least entitled to 
 recover a small portion of the excess charges on shipping. The 
 profits of the Grain Corporation and Sugar Board during the 
 period of the Food Administration in operation at home and 
 abroad exceeded $60,000,000. Therefore the Administration cost 
 the Government over $50,000,000 less than nothing. 
 
 SxiMUiATION TO PRODUCTION. 
 
 As stated above, at the time of our entry into the war in April, 
 1917, planting was already over to a considerable degree, and 
 effective measures in ground production could not be brought into 
 fruition before the 1918 harvest. The duty of stimulating produc- 
 tion was naturally assigned to the Department of Agriculture, 
 whose great service and abilities cannot be over-estimated. The 
 activities of the Department had necessarily to take the form of 
 advice and patriotic appeal to the farmers and in the latter the 
 Food Administration also joined, through its large voluntary 
 organization. The Food Administration, however, had an equally 
 important field in stimulation to production through its ability to 
 influence prices. The guarantee of a minimum price on wheat, 
 the assurance of stabilized prices on hogs, sugar, vegetable oils, 
 and dairy products, through the control of foreign buying and by 
 internal agreement with producers' associations, were deliberately 
 guided by a policy to encourage production in all of these staples. 
 
11 
 
 In August, 1917, the determination of a fair price of wheat 
 was referred to a commission comprised in majority of farmers 
 and fixed by them at a twenty-cent increase over the Con- 
 gressional guarantee of $2.00 at terminal markets for the 1918 
 and 1919 crops. The agreement was maintained through buying 
 at terminal markets of any surplus offered at this price. Rye 
 being a complement of wheat and substituting for it, naturally 
 followed the prices and results of the Wheat Guarantee. The 
 comparative production of wheat and rye has been : 
 
 Wheat Rye 
 
 bu. bu. 
 
 Harvest, 1916 640,000,000 (not guaranteed) 47,400,000 
 
 Harvest, 1917 636,655,000 (not guaranteed) 62,933,000 
 
 Harvest, 1918 921,438,000 (guaranteed) 91,041,000 
 
 Harvest. 1919 940,987,000 (guaranteed) 88,478,000 
 
 In November, 1917, the Food Administration gave an assur- 
 ance to the farmers on hogs (based on its control of export 
 buying) set out more fully elsewhere. The number of hogs 
 slaughtered in public markets is as follows : 
 
 1916-17 (fiscal year) 40,201,018 
 
 1917-18 (fiscal year) 35,543,037 
 
 1918-19- (fiscal year) (assured) 44,398,389 
 
 It will be noted that this increase in slaughter was secured 
 in the face of a decrease of 5,000,000 stock hogs at the start of 
 operations. The guarantee given in the fall of 1917 could not 
 and did not affect production until the spring of 1918, and of 
 course realized its full effects in the heavy marketing season, 
 1918-19. 
 
 Owing to the shortage of labor, it was impossible to secure 
 any considerable increase in domestic sugar production and spe- 
 cial attention was devoted to stimulation of West Indian products. 
 In August, 1917, the sugar prodi'^-ers of Cuba and the United 
 States were assured a basis of $7.35 per hundred pounds refined 
 sugar Atlantic seaboard basis, this amount being increased in 
 September, 1918, to $8.49 seaboard basis for Cubas and $8.82 
 for the United States sugar, and so held until September, 1919. 
 The total sugar produced in American territory and Cuba has 
 
 been as follows: 
 
 Tons 
 
 Harvest, 1915 (not assured) 4,627,000 
 
 Harvest, 1916 (not assured) .' 5,326,000 
 
 Harvest, 1917 (not assured) 5,159,000 
 
 Harvest, 1918 (assured)... 5,500,000 
 
 Harvest, 1919 (assured) 6,052,000 
 
12 
 
 Vegetable oil producers (cottonseed and peanut) were as- 
 sured in September, 1918, of Vjy, cents per pound crude oil, 
 which was maintained until July 1, 1919. The supply of all kmds 
 
 of vegetable oils was : 
 
 Lbs. 
 
 ,916 1,745,574,000 
 
 Jqiy ; 1,742,931,000 
 
 1^1^::::::::::;:::::::::::::.... 1,911,917,000 
 
 Stabilization arrangements were also entered into with rice 
 producers, effective over the 1918-19 harvests, in an effort to 
 reduce our imports and thus our expenditure abroad. The pro- 
 duction was: 
 
 Bushels 
 
 1916-17 40,861,000 
 
 1017 1 a 36,278,000 
 
 {qIsiq 38,606,000 
 
 1919-20 .■.■.■.■.■.■.■.■;.■.■.■.■.'.'.'.'.'.'.'■■." 41,059,000 
 
 Owing to the commandeering of deep-sea fishing trawlers and 
 crews by the Navy, more than one-half of our fish supply was cut 
 off and was bound to increase our domestic consumption of other 
 primary commodities. To remedy this, agreements were entered 
 upon with all the seaboard states suspending the restrictions on 
 fishing within bays, and the three-mile limit and organized stimula- 
 tion given to coast fishing. A large amount of propaganda was 
 initiated to secure the substitution in consumption of littoral for 
 deep sea fishes. The fish supplies were maintained at normal, 
 although with great difficulty. 
 
 Reduction in Waste and Consumption. 
 
 The broad fact that, due to the war, the food supplies of the 
 world were gradually shrinking, rendered it imperative to elim- 
 inate all waste and to reduce consumption further in the partic- 
 ular commodities needed abroad. This necessity was so great 
 that our Allied colleagues considered it our duty to impose a com- 
 pulsory ration upon the American population. My colleagues and 
 myself, however, believed that the spirit of self-sacrifice of the 
 American people could be relied upon for so great a service as to , 
 accomplish the necessary results upon a voluntary basis. To have 
 rationed the whole American population would have required the 
 service of thousands of personnel, drawn from production and 
 
13 
 
 war, and would have entailed" the greatest difficulties and expense. 
 Voluntary action has the great value of depriving those who can 
 afford it, not those who have no margins for sacrifice; The women 
 of the country were called upon for this service, and under the 
 leadership of the very able women who headed the Conservation 
 Division in Washington, directors were appointed to collaborate 
 with the state and county administrations and a network of com- 
 mittees was established engaging several hundred thousand 
 women. A campaign secured, from 14,000,000 fairiilies, 7,000 
 hotels and eating places and 425,000 dealers in food, signed 
 pledges to carry out the Conservation programmes suggested by 
 the Food Administration from time to time. 
 
 Various restrictions were imposed on the use of food in manu- 
 facturing trades, such as suppression of distillation and later of 
 brewing, of manufacture of candy and sweet drinks, and other 
 forms of non-essential use and waste in manufacturing trades 
 of all kinds. 
 
 The conservation movement was in full force from Septem- 
 ber, 1917, until November, 1918, when it was dissolved soon 
 after the armistice. The proof of its results lies in many direc- 
 tions. The tangible results show that in the volume of exports 
 maintained during the first harvest year after we came into the 
 war, despite the exhaustion of reserves and decreased production 
 of the 1917 harvest year, was the salvation of the Allied situa- 
 tion. 
 
 The food exports as compared with pre-war normal are indi- 
 cated by the following table : 
 
 Average of 
 Commodity 3 Pre-war 
 
 Years 1917-18 1918-19 
 
 Tons Tons Tons . 
 
 Wheat and Rye 3,720,398 4,590,928 10,382,094 
 
 Other Cereals '..... 1,607,296 4,584,633 3,221,624 
 
 Pork 498,115 868,551 1,472,154 
 
 Beef 93,187 350,983 551,133 
 
 Vegetable Oils 165,116 75,732 148,910 
 
 Dairy Products 13,019 306,940 439,294 
 
 Sugar* 511,884 1,279,351 1,893,914 
 
 Fruits and Vegetables 350,040 269,796 558,255 
 
 Totals 6,959,055 12,326,914 18,667,378 
 
 * Including exports to Europe from Cuba. Cuba is included because 
 the drain of sugar therefrom was a direct reduction of American supplies. 
 
14 
 
 Stabilization of Prices. 
 
 Under conditions of short world supply and interference 
 with the balance wheel of overseas flow through the breakdown 
 of the channels of transport, great fluctuation in price was in- 
 evitable. Inflation of credits with consequent rise in price is a 
 part of war finance and such general rise gave every oppor- 
 tunity to speculation. Without restraint such a situation would 
 result in great privation to the poorer sections of the commu- 
 nity and by the stimulation of speculation result in the stifling of 
 production. In conditions of rapid fluctuations, falls in price are 
 promptly reflected onto the producer, while rises are largely 
 absorbed by the trades. Another result of fluctuation would be 
 the unbalance of wage equilibrium, strikes, and other loss of pro- 
 duction at a time when every productive -energy of the whole na- 
 tion was needed. For example, before the administration was es- 
 tablished in the 1916 harvest year the total world wheat supplies 
 were normal, yet the price fluctuated from 98 cents to $3.25 per 
 bushel. As stated before, the farmer received an average of but 
 $1.42 a bushel, yet the consumer paid an average for the year of 
 over $2.50 a barrel more than the farmers' price warranted. 
 
 It was obvious from European experience prior to the crea- 
 tion of our administration that attempts to control prices by sheer 
 fixing of maximum prices by law were not only economically 
 unsound, but carried with them the most serious results by stifling 
 production, interrupting distribution, withholding supplies by 
 prodvicers, and the stimulation of clandestine profiteering.- We 
 therefore determined upon an entirely diflferent economic course, 
 founded upon the ability of the government to influerice the vol- 
 ume of demand and to control the price offered by dominant 
 buyers in many commodities. Our objects were two-fold. First 
 to secure a stability to prices by preventing undue fall for the 
 farmer, thus stifling production, and "at the same time avoiding 
 undue rise in price and speculation against the consumer. If 
 this be done by commercial operations of purchase and sale 
 and regulation of the normal processes of distribution, dis- 
 turbance to the normal business of the country could be 
 avoided. In the face of enormous inflation of war finance it 
 was inevitable that prices must rise or production would be 
 stifled. But it was vital that such rise should be orderly and 
 
IS 
 
 without speculation and the consequent widening of margins 
 between the producer and consumer. 
 
 The trend of such inflation is well indicated by the rough ap- 
 proximation of the progress of production and the deposits iii 
 commercial banks during the past five years. 
 ( 
 
 ♦Total Commercial 
 
 Production, Per Cent. Bank Per Cent. 
 
 Tons. Increase. Deposits. Increase. 
 
 1913 1,081,293,417 100.0 $11,390,918,596 100.0 
 
 1914. 1,019,018,207 94.2 11,974,760,593 105.1 
 
 1915 1,073,472,988 99.3 12,282,097,638 107.8 
 
 1916 1,162,895,530 107.5 15,398,090,701 135.2 
 
 100.0 
 
 $11,390,918,596 
 
 '94.2 
 
 11,974,760,593 
 
 99.3 
 
 12,282,097,638 
 
 107.5 
 
 15,398,090,701 
 
 114.8 
 
 18,444,103,496 
 
 115.4 
 
 20,425,067,839 
 
 103.3 
 
 24,971,784,000 
 
 1917 1,241,173,806 114.8 18,444,103,496 161.9 
 
 1918 1,247,787,883 115.4 20,425,067,839 179.3 
 
 1919 1,117,181,233 103.3 24,971,784,000 219.2 
 
 * Includes coal, steel, iron, cement, agricultural produce. 
 
 Our second objective was' to control the margins between pur- 
 chase and sale in each trade so as to prevent the widening of the 
 margins between the farmer and consumer through speculation 
 and marking up of goods on the shelf. 
 
 As the need of increased supplies to the Allies was largely 
 concentrated upon breadstuiifs, pork products, beef products, 
 fats, sugar, preserved fruit and some dairy products, these were 
 obviously the commodities that were most afifected by the inter- 
 national demand. Moreover, a study of the following table in- 
 dicates the relative importance of various human foods in our 
 national consumption and, therefore, the commodities of principal 
 interest in this connection : 
 
 Per Cent, of Total Nutrition. 
 
 Wheat and Rye 29.5 
 
 Pork Products ... ; 15.7 
 
 Dairy Products 15.3 
 
 Beef Products 5.3 
 
 Corn Products 7.0 
 
 Sugar Products 13.2 
 
 Vegetable Oils 3.6 
 
 89.6 
 
 All other, including potatoes 10.4 
 
 100.0 
 
16 
 
 It will be seen by the above that not only did foreign demand 
 concentrate upon certain commodities but also that much the 
 same commodities comprise 90 per cent, of our national diet. 
 These were, therefore, obviously the key commodities. A study 
 of them will show that they are to a great degree interdependent 
 in price. For instance, the consumption of other cereals will 
 lessen or increase when they exceed or fall below the 'price of 
 wheat. The price of corn depends to a great degree upon the 
 price of the dominant consumer — hogs. If pork is cheaper 
 Hhan beef, the consumption of the former will replace the latter 
 and the prices somewhat equalize. Cottonseed oil will displace 
 lard and the prices react upon each other. Therefore, if certain 
 key commodities are stabilized, it tends to stabilize the others. 
 In the matter of stabilization, the commodities such as wheat, 
 rye, barley, pork products, canned fish and condensed milk 
 were exported in such a proportion to the total, that control 
 of the price and the volume of export by foreign buyers would 
 exert great influence in stabilizing prices. In the matter of sugar, 
 a control of international buying in foreign as well as domestic 
 markets could be made efifectual. In the matter of some other 
 commodities, such as rice, cottonseed oil, seed cake, dried fruits 
 and city milk, the trades are so organized that stabilization agree- 
 ments could be made between producers and distributors that 
 would protect both sides and the public. 
 
 By stipulating the margins in each link of the distribution 
 chain the possible spread was greatly reduced. By the control of 
 storage, the limitations upon speculative action in the produce 
 exchanges and by direct action against profiteering, powerful in- 
 fluences in prevention of great price fluctuation were brought to 
 bear. Finally, by voluntary conservation and the regulation of 
 foodstuffs consumed in non-essential industries, the demand for 
 certain commodities could be reduced and speculation prevented. 
 
 The net result of such arrangements was to secure a great 
 measure of stability in price in the key staples. Given this stability 
 at the source, the provisions of the food law controlled the 
 growth of undue margins between purchase and sale in neces- 
 sary stages of manufacture and wholesale. No attempt was made 
 to fix prices of retailers by European methods but simply to 
 give stability to the markets and eliminate speculative profits 
 through these indirect means and in every case to take represen- 
 
17 
 
 tatives of the producers into council in order to maintain such 
 prices as would stimulate production. 
 
 The economic policy of the administration was therefore to 
 stabilize prices and reduce speculative profits by purely com- 
 mercial pressures and business methods as distinguished from 
 legal regulation. Such a policy allowed broad response to the 
 underlying change in values such as those due to inflation of cur- 
 rency and credit but acted to prevent rapid fluctuations that would 
 on one side discourage production and on the other would prevent 
 sudden rises that would precipitate labor difficulties in wage. 
 The greatly increased production mentioned above is proof of the 
 just treatment of the farmer. 
 
 It is interesting to note a comparison of relative movement 
 in farmers' returns and wholesale prices of food as shown in 
 three periods by the Department of Labor price indices — which 
 are based upon the year 1913 as 100. The food law gave no 
 power to' control retail profit margins except so far as it could 
 be accomplished by voluntary means. 
 
 Points Rise. 
 
 Wholesale 
 Farmers' Food 
 
 Returns. Prices. 
 
 Twelve months prior to the Food Administration. . . 81 73 
 
 First 12 months of the Food Administration 25 6 
 
 Twelve months subsequent to Food Administration. 22 22 
 
 It is obvious that prices must rise with inflation, but despite 
 this a steadying effect was maintained by reducing the margins 
 between farmer and consumer and thus good resiilts were 
 obtained without penalizing the farmer, yet protecting the con- 
 sumer. 
 
 Then results were, however, more in the negative field, for 
 without the control of margins and profiteering we should, in the 
 face of inflation, have repeated the experiences before and after 
 the administration. 
 
18 
 Control of Profiteering. 
 
 The great bulk of our food is of seasonal production. The 
 farmer must in the majority of instances find immediate market 
 and the food trades must acquire it in a short period and dis- 
 tribute it over twelve months. The food distribution system is 
 therefore inherently a speculative business at best. The proper 
 discrimination as to the speculative profit necessary, for in- 
 stance, to induce that in any one year or term of years eggs be 
 placed in storage in April for sale the following January, is not 
 of easy determination. The methods adopted to curtail illegiti- 
 mate speculation, and thus keep down the margins between 
 farmer and wholesale consumer, were as follows : 
 
 (a) Margins between purchase and sale or maximum profits 
 on sale were established in practically all branches of food man- 
 ufacture and wholesale distribution. Such margins were neces- 
 sary in times when demand exceeded supply, but the determina- 
 tion of these margins led to great difficulties. The larger 
 establishments can do business on narrower margins than the 
 small establishments. To have fixed margins too narrow during 
 the war would drive the smaller concerns out of business, leaving 
 us at the mercy of large monopolies after the war. In any 
 event, margins must be fair to distributors not only as a matter 
 of justice but as a stimulation to their proper economic functions 
 and the healthy condition of the trades. Authority to fix mar- 
 gins to retail dealers was not included in the food law. 
 
 (b) By securing economy in consumption where short sup- 
 plies existed through the various devices of elimination ol waste, 
 voluntary conservation, or semi-rationing (as in the case of 
 sugar), speculation was directly reduced as speculators only 
 enter the scene when there is no fear of artificial curtailment of 
 demand. 
 
 (c) By limiting the trading in- futures on produce exchanges, 
 speculation was greatly hampered. In those cases where the 
 actual commodities delivered as a result of such trading repre- 
 sented but a small percent of the total transactions, such as sugar, 
 cottonseed oil, butter, etc., the exchanges were closed altogether. 
 In other commodities, like corn, where the trading in futures is 
 the foundation of our method of distribution, the quantity that 
 could be sold under any given contract to any one firm was 
 
19 
 
 limited by co-operation of the exchanges so as to destroy any 
 possible attempt at market manipulation. As the Government 
 bought and sold wheat, the dealing in futures was absolutely 
 prohibited, as it was not essential to distribution and it was im- 
 portant that there should be no possibility of collusion with Gov- 
 ernment activities. 
 
 (d) By limiting the period and volume of holdings of food 
 in storage without special permit and by prosecution of hoarders, 
 the trades were not able to hold commodities for speculative rise. 
 
 (e) Detailed regulations were made in the different trades 
 requiring that all food distribution should pass in straight lines 
 to destination. For instance, a miller could sell only to a whole- 
 saler, a retailer, or a consumer. A wholesaler could buy only 
 from a miller and sell only to a retailer or consumer. These 
 measures were applied to alf food commodities and greatly re- 
 duced inter-trading and speculation. 
 
 (f) The embargo on exports -without permit made any spec- 
 ulation in export food a futile operation. Such permits were 
 refused a few times early in the war to obvious speculative hold- 
 ers and had a salutary effect. 
 
 (g) The stabilization of prices was a most effective imple- 
 ment in reducing speculation. For instance, the ability of the 
 Food Administration to advise the public that over considerable 
 periods flour should be about $12.50 per barrel retail, and sugar 
 about ten cents per pound, brought public opinion into play and 
 placed all distributors on guard, for any profiteering stood out 
 in the community like a sore thumb. 
 
 (h) Flagrant cases of profiteering and hoarding were pros- 
 ecuted either by or upon instructions from the Enforcement Divi- 
 sion in Washington. The penalties for the violation of the law 
 against profiteering were stricken out by Congress and therefore 
 legal action became a matter of withdrawal of license or some 
 public expression of contrition or some sale of food at nominal 
 consideration to the Government departments such as the army or 
 navy or the Grain Corporation. Such contributions to the Red 
 Cross and other charities exceeded $500,000 and the value of 
 food sold to Government departments at a nominal consideration 
 exceeded $1,000,000. The flour millers entered into agreement 
 to turn over any profitsjn excess of agreed amount by a nominal 
 sale to the Grain Corporation and such receipts exceeded $6,000,- 
 
20 
 
 000. Altogether, 8,800 cases were handled by the Enforcement 
 Division at Washington in which some penalty was inflicted. 
 
 (i) The state and county food administrators were in touch 
 with the entire trade and being periddically informed from Wash- 
 ington of proper price levels, they were able by a simple warning 
 to defeat the great majority of efforts at illegitimate profits in 
 the wholesale trades. The fair price committees, created under 
 their direction in every important town, carried the co-operation 
 of honest traders and served warning upon dishonest ones. The 
 Food, law gave no authority over retail dealers' margins but the 
 daily fair price lists served as a, guide to householders and 
 through them attention was directed to ofifenders. The number 
 of warnings issued by national, state and county administrators 
 during the twenty months runs into several thousands. 
 
 I cannot close this discussion without recording two convic- 
 tions : First, of the 400,000 firms engaged in food distribution, 
 99 per cent, are honest and wish to comply in every way with 
 the law and public good (the remaining Ifo are as obnoxious to 
 the trades as to the public, for* they cast discredit upon the entire 
 system) ; second, the control of profiteering in times of inflation 
 or in periods of short supply cannot be affected by threats or by 
 occasional sensational prosecution of corner grocerymen. It 
 can only be controlled by rendering speculation useless by reduc- 
 ing the opportunity for it ; by elaboration of what just profits 
 are; by the co-operation of the legitimate traders to keep the 
 illegitimate ones in order. During the war such efforts must 
 be concurrent with inflation of currency and credit and the con- 
 sequent rise in commodity values necessarily greatly assists 
 speculation and renders its total suppression impossible. The 
 greatest peace remedy for speculation is deflation and increased 
 world production. 
 
 Control of Exports. 
 
 One of the important roles of the Food Administration lay 
 in this field and the first embargo under the law was issued at 
 the request of the Food Administrator. In the development of 
 machinery^ for the administration of embargoes and for the 
 co-ordination of embargoes issued on other commodities, it 
 
21 
 
 became necessary to establish the War Trade Board, comprised 
 of representatives of various government departments, including 
 the Food Administration. The determination of fact and policies 
 on food exports necessarily remained in the Food Administration. 
 The first objective sought was to divert American food ex- 
 ports as fully as possible to the Allies, thus forcing neutrals to 
 seek the more distant markets for all commodities obtainable 
 elsewhere. For such commodities as they could not otherwise 
 obtain, we sought to reduce neutral supplies to the least amount 
 compatible with humane tr^eatment, and to require return service 
 from them to the countries at war with Germany in consideration 
 of such supplies. 
 
 The success of the first policy is indicated by the following 
 comparison of destinations of United States exports the years 
 before and after adoption of these policies : 
 
 Percentage of Total Exports of Important Pood Commodities Going to 
 Allied and Neutral Destinations. 
 
 Fiscal Year Ending Fiscal Year Ending 
 Export July 1,1917 July 1,1918 Gain in 
 
 of ' * ' ' — * — ^ Favor of 
 
 Neutrals Allies Neutrals Allies Allies 
 
 Wheat and Rye 29.1% 70.9% 7.1% 92.9% 22.0% 
 
 Other Cereals 17.8 82.2 3.1 96.9 14.7 
 
 Pork Products 6.1 93.9 1.8 98.2 4.3 
 
 Beef Products 12.2 87.8 1.4 98.6 10.8 
 
 Dairy Products 10.8 89.2 5.2 94.8 5.6 
 
 Vegetable Oils 49. S 50.5 13.0 87.0 36.5 
 
 Sugar 15.1 84.9 7.7 92.3 7.4 
 
 The second objective lay in tightening the food blockade 
 against the enemy by prevention of direct or indirect leakages. 
 An instance of indirect leakage was the large importation of feed 
 supplies by neutrals from the United States, by which their herds 
 were greatly increased during the war and a large part of the 
 resulting animal products shipped to Germany. 
 
 Both our own and the Allied populations were denying them- 
 selves food, coal and other commodities in order to further their 
 efforts in a struggle to maintain civilization. It seemed obvious, 
 therefore, if we were to make still further sacrifices in order to 
 provide food or to coal ships to carry food for neutrals, that we 
 
22 
 
 should have adequate assurance that the utmost economy would 
 be exercised in their consumption, that these supplies should not 
 directly or indirectly b.enefit the enemy, and that we should receive 
 some service in return. 
 
 The Food Administration maintained' an organization at home 
 and representatives in each neutral country in Europe and South 
 America for determination of neutral production and of the 
 actual minimum consumption necessary, and thus the deficiencies 
 in their supply that we should provide. It was further necessary 
 to insist upon measures of rationing among neutrals in order to 
 keep down their consumption. 
 
 No neutral suffered privation, yet subsequent investigation in 
 Germany shows that, under this pressure, the German supply 
 from adjoining neutral sources fell from 77,000 million calories 
 per month in4917, to 38,000 million calories per month in 1918. 
 This change represented the difference between comfort and dis- 
 comfort to many million Germans. Furthermore, as a consid- 
 eration of such supplies of food and other commodities obtained 
 from the United States, upwards of 1,000,000 tons of neutral 
 shipping were forced directly into Allied service.' 
 
 The third objective of export and import control was its 
 important bearing on speculation and profiteering, and protection 
 to our farmers and consumers. As dealers could never know in 
 advance the shifting policies of the Government, they could not 
 intelligently and did not often attempt speculation in export 
 commodities. In several instances export permits were refused 
 to firms for commodities which were the subject of speculative 
 action. The control of all foreign buying of food was the most 
 important feature of export regulation. Arising out of the neces- 
 sity of foreign governments to ration their populations, and the 
 governmental control of their shipping, so as to force transport 
 of essential foods from the nearest markets, there grew up the 
 necessity for them to displace merchant trading by purchasing 
 their whole supplies directly on behalf of their governments. The 
 Allied governments very early consolidated their buying agencies, 
 in order to avoid competition with each other, and at times even 
 acted on behalf of neutrals. There thus arose a consolidation of 
 buying power that was able to dominate the prices in the American 
 markets in the great export staples as, for example, in wheat and 
 pork. We early decided that the control of such a power must. 
 
23 
 
 in the interest of both our producers and consumers, rest in our 
 government. By imposing conditions in export permits the 
 policies of buying were administered under the direction of the 
 Food Administration and were directly used to stabilize prices in 
 protection of our consumers and to maintain assurances given to 
 our farmers. The control of this buying greatly contributed to 
 nullify possibilities of speculation. 
 
 The control of exports was removed by the government 
 Board during the early part of 1919 and in some commodities 
 against the protest of the Food Administration on the ground 
 that in the end, it would only facilitate speculation that would 
 grow out of over-exporting our food for commercial purposes. 
 
 Control of Imports. 
 
 We are dependent upon imports for the supply of all or part of 
 several important food commodities — sugar, coffee, _ vegetable 
 oils, rice, cocoa. The price of these commodities was influenced 
 to a great degree by co-operation with the Allied governments to 
 eliminate competition against each other in purchases in common 
 foreign markets. Prices of these commodities were thus kept to 
 reasonable figures to our consumers and the expenditure of our 
 national resources in foreign remittances reduced. Through the 
 drain of shipping to more direct war purposes, our import sup- 
 plies were seriously threatened and at times even cut off. To rem- 
 edy this, it was necessary to create a Shipping Division in the 
 Food Administration and to secure definite assignments to the 
 Food Administration of ships for import transportation. The 
 small vessels and sailing ships not capable of trans-Atlantic trans- 
 port were mobilized for these purposes. Arrangements were made 
 with committees of the various trades to assign space to their 
 members and to issue import permits only through such organiza- 
 tions and upon undertakings eliminating international competition 
 and to control the profits to be realized by trades upon such im- 
 ports. Something over 5,200,000 tons of incoming food was 
 transported through the Food Administration. 
 
24 
 
 Co-Oedination of Government Purchasing. 
 
 The concentration of enormous food purchases in the hands 
 of foreign government agents, and in the hands of our own 
 war and navy departments, and then the competition with each 
 other, produced an initial situation in the spring of 1917 of acute 
 speculation and "kiting of prices. The purchases of many of 
 these agencies were larger than the ability of any one trader to 
 supply, and a request for bids in such volume resulted in traders 
 endeavoring to secure supplies from each other in order that they 
 might offer to these buyers. Thus a double speculation was 
 created. 
 
 The Food Administration therefore recommended the crea- 
 tion of the War Food Purchase Board, comprised of representa- 
 tives of these various large buyers, and through this board the 
 needed supplies were allotted to manufacturers at prices calcu- 
 lated, by the Federal Trade Commission accountants, to cover a 
 reasonable margin of profit over raw material and manufacturing 
 costs. In some cases where the products absorbed were of such 
 large proportion as to diminish the civilian supply below normal, 
 the manufacturers were brought into agreement to supply the 
 trades at prices agreed upon with the War Food Board. In 
 numerous cases, substitution of different specifications to meet 
 seasonal changes in production were effected in purchase pro- 
 grammes, particularly in beef and canned goods. These changes 
 materially stabilized the market and protected producers and the 
 public. Inspection by the agents of the Department of Agri- 
 culture assured the quality of supplies furnished. 
 
 Supplies of cereals, flour, and sugar were provided to 
 the various purchasing agencies through the Grain Corporation 
 and Sugar Board, either as the sole buyer and seller in their 
 behalf, or by purchases made under the supervision of the two 
 corporations. The Grain Corporation supplied, directly or indi- 
 rectly, not only foreign buyers and the army and navy, but also 
 the civilian trade with such amounts of grain as were necessary 
 to maintain stability of prices and the guarantees. 
 
 The total volume of purchases of all supplies thus made 
 under the co-ordination of the agencies set up by the Food Ad- 
 ministration aggregated over $7,250,000,000 during the course 
 of its existence. These' operations had a marked bearing upon 
 the stabilization of prices, elimination of speculation, the protec- 
 
25 
 
 tion of the consumer and the assurances given to producers re- 
 ferred to elsewhere. 
 
 Railway Co-operation. 
 
 The great pressure upon our railways rendered it necessary 
 to determine priorities in railway movement of commodities. 
 The priorities and embargoes initiated by the railways produced 
 acute shortages and gluts in internal food movements and greatly 
 influenced prices and speculation against both farmer and con- 
 sumer. 
 
 In order to maintain an even flow of food commodities from 
 farm to market and at the same time to economize in the use 
 of railway rolling-stock, a, Railway Transport Division was 
 erected by the Food Administration with representatives in the 
 regional offices of the Railroad Administration, from which 
 permits were expeditiously issued for essential food movements. 
 Beyond this, the flow of food to seaboard was organized by a 
 series of Food Administration permits, so as to accommodate 
 itself to the arrival of shipping and thus prevent undue accumula- 
 tion at the ports and delay in discharge of cars. Ultimately the 
 great movements of grain and meats were organized into full 
 special train services from the interior with great economy and 
 saving in time of seaboard movement. 
 
 Breadstuffs. 
 
 As stated above, the national stocks of bread grains had been 
 reduced from 153,000,000 at July 1, 1916, to 43,800,000 bushels 
 —less than one month's supply— at July 1, 1917. The wheat 
 harvest of 1917 proved' far below normal at 636,000,000 bushels. 
 On the basis or normal consumption, there was no available ex- 
 port surplus, more especially in view of our depleted stocks. This 
 is well demonstrated by the fact that the unrestrained home 
 consumption during the 1918 crop year about equaled the 
 whole 1917 crop. In the face of this situation, we were called 
 upon to find, during the crop year, more than 100,000,000 
 bushels for the Allied civil population and armies. 
 
26 
 
 During the six months prior to the creation of the Food 
 Administration, wheat was the center of enormous speculation, 
 having risen since the previous harvest from 98 cents to $3.25 
 per bushel, with flour $17.50 per barrel to the consumer in the 
 Spring of 1917. The Department of Agriculture shows that 
 the farmer received $1.42 per bushel for the entire "harvest. 
 Because he is compelled to market his wheat mostly in the Fall, 
 he does not proportionally benefit by speculative Spring rises. 
 As about four and one-half bushels are required to make a' 
 barrel of flour, the farmer's average share of the flour price 
 was therefore about $6.50 per barrel. The margin between 
 him and the consumer was consequently at one time $1 1 per 
 barrel. The result of this speculation was that for the whole 
 fiscal year's flour the consumer had paid an average of over 
 $2.50 per barrel on the 90,000,000 barrels annual consumption 
 more than he should have or, alternatively, the farmer had 
 received about sixty cents per bushel less than the consumer's 
 average price warranted. 
 
 These were the results of the isolation of our markets from 
 the balance wheel of the world market through war dislocation 
 and our over-export. It was certain that the previous year's - 
 experience would repeat itself with more violence the next 
 year in view of the shortage in the crop and the necessity for 
 deducting from consumption so large an amount for the Allies. 
 The President therefore called a commission, of which the major- 
 ity were representatives of the farmers' organizations, and on 
 August 30, 1917, that commission recommended a stabilization of 
 prices in the interest of both farmer and consumer. After a study 
 of farmers' costs and fair profits, they recommended a stabilized 
 price of $2.20 per bushel Chicago basis, No. 1 Northern, or equal 
 to an average for all wheat of about $2 at the farm. To carry 
 out this operation, to execute the minimum guarantee on the 
 succeeding corp and to carry out other provisions of the Lever 
 Act, the Food Administration Grain Corporation was created 
 with a capital of $150,000,000 subscribed by the government. 
 The recommended fair price was made effective by suspending 
 exchange speculation in wheat, the Grain Corporation purchas- 
 ing at the fair price at the terminals and where necessary re- 
 selling to the trades. Agreements were entered into with the 
 millers limiting their profits to a maximum of 25 cents per barrel 
 
they agreeing to pay any excess that might eventuate to the 
 Grain Corporation. Jobbers', storage, commission merchants, 
 wholesalers', and bakers' margins were fixed and an appeal 
 made to all these trades- to assist in holding down the price of 
 bread. Active conservation was undertaken as previously out- 
 lined. 
 
 During the 1917 crop year, the Grain Corporation bought 
 and exported to the Allies approximately 22,700,000 barrels of 
 flour and 28,000,000 bushels of wheat. Due to the co-opera- 
 tion' of our women, and all the handling trades, we completed 
 the crop year on a consumption of 27,000,000 barrels less flour 
 than normal, thus tiding our Allies over the most critical winter 
 of the war. During the year a stable, price of $12.50 per barrel 
 was maintained to the consumer and an average of $2 per 
 bushel on the farm to the farmer. The consumer's price was 
 therefore $5 per barrel less than that of the Spring of 1917 and 
 the farmer received an average of nearly 60 cents per bushel 
 more than the previous year. It is important to note that the 
 farmer's price for the year was 143%, that the retail flour price 
 was 108%, and the bread price 73% over pre-war normal. The 
 average of all wholesale commodities, as shown by the Depart- 
 ment of Labor, was 86% over pre-war normal and thus the 
 farmer was above the general level, while the elimination of 
 speculation, and economies brought about in marketing protected . 
 the bread consumer from the high level established for the 
 farmer. 
 
 The crop of 1918 was guaranteed at $2.26 per bushel, being 
 26 cents above the Congressional minimum and as the crop 
 was equal to requirements no attempt was made to stabilize the 
 price except as to the minimum. The jrop was 921,000,000 
 bushels; the turn over of the Grain Corporation during the 
 crop year amounted to 400,000,000 bushels and 301,000,000 
 bushels were exported. As the carry-over was about the 
 same, the year's consumption amounted to about the equal of 
 the crop of 1917. Had it not been for the guarantee, prices 
 would have gone far below the minimum, because the Allies 
 transferred their demands to Argentine and Australia for cheaper 
 wheat for a period of three months after the armistice, during 
 which time the Grain Corporation absorbed a great glut. Millers 
 and other buyers were free to purchase at any price. The 
 
28 
 
 statement that the Food Administration made the minimum 
 price the maximum for the 1918 crop is therefore incorrect, 
 The price remained near the minimum solely for reasons of de- 
 mand and supply. The situation for the 1917 crop was very 
 different and if the price that year had not been stabilized and 
 bread and flour had been allowed to fluctuate during the crop 
 year in the presence of insufficient home supplies, after feeding 
 the Allies, in all probability we should have seen the $35 flour 
 prophesied by the trades. The country would have had an 
 'epidemic of strikes and reduced production, and in the end the 
 farmer would have gained little from the rise, and the speculator 
 much. 
 
 In making purchases of the 1918 crop, the Grain Corpora- 
 tion resources of $150,000,000 were totally inadequate. It is 
 very doubtful if legislation could have been secured to increase 
 the resources, although the duty of protecting the guarantee 
 was laid on the Grain Corporation; but the confidence in the 
 personnel and policies of its president and the fourteen zone 
 vice-presi4ents enabled it to borrow at one time as high as 
 $385,000,000 additional. 
 
 For the period from August, 1917, to July 1, 1919, during 
 which time the Grain Corporation was administered by the 
 Food Administration, its ascertained net profits, carried forward 
 as earned surplus, amounted to approximately $24,000,000. Of 
 this, approximately $4,500,000 was a refund of millers' profits, 
 in excess of 25 cents per barrel, from the 1917 crop and an 
 additional $3,500,000 has been collected from that source by 
 the corporation since the date of the accounts. There was 
 also carried forward a liberal sum as reserve for contingent 
 liabilities, part of wjiich has been developed as profits The 
 profits were mostly earned from neutral trade, as it was con- 
 sidered that as neutrals were charging us several times pre-war 
 rates for shipping, they should be charged a profit for our 
 wheat. During this period, the estimated profits on business 
 with neutrals amounted to $20,000,000. Proper allowance for 
 interest to the national treasury, on capital actually employed, 
 would have amounted to about $10,000,000. The total operat- 
 ing expenses of the Grain Corporation to Tune 30 1919 
 amounted to $3 424,071.08. The actual turnover in food-stuff^ 
 Dought and sold amounted to about $5,500,000,000. 
 
29 
 
 Several interesting minor phases occurred in this period. 
 The Grain Corporation, in co-operation with the State Adminis- 
 trators, set up in the grain harvesting States a campaign of 
 instruction in better threshing methods, and it is reUably esti- 
 mated that 30,000,000 bushels of grain, valued at approximately 
 $60,000,000 were saved to the producers at an expense to the 
 Grain Corporation of about $60,000. 
 
 Since December, 1917, the Grain Corporation, first in con- 
 junction with the Department of Agriculture and after July 1, 
 1919, at its own expense, has kept in the field a corps of experts 
 on fire and dust explosion prevention, who have inspected prop- 
 erties, made suggestions, demonstrated hazards, and educated 
 warehousemen in the elimination of these hazards. The total ex- 
 pense of this service to July 1, 1919, was negligible, and the value 
 of it can be estimated when the statement is made that from 
 December, 1917, when this work was taken up, to July 
 1, 1919, the Grain Corporation lost not a single dollar in fire 
 or explosion; although') .under hazardous war conditions, it 
 had at times as high as $500,000,000 worth of foodstuffs ex- 
 posed in the various warehouses of the country. This edu- 
 cational work, plus the experience and care and energy of the 
 practical men in charge of the various zones, is the explanation. 
 The corporation carried no insurance, but at normal rates, pre- 
 miums during this time would have exceeded $2,000,000 which 
 was saved to the government. 
 
 Sugar Operations. 
 
 Our situation in this commodity differed from most others, 
 because we are dependent upon imports — largely from Cuba— 
 for one-half of our supply. As stated, the Allied supplies for- 
 merly came from enemy territory and the East Indies, and ship- 
 ping had become so short as to limit their receipts from the 
 East. The Allies, therefore, came into competition with us for 
 Cuban sugar and there were insufficient supplies to maintain 
 anything like normal consumption among the peoples fighting 
 against Germany. Owing to this shortage and competition, we 
 were faced not only with short supplies, but sharply ascending 
 prices. 
 
30 
 
 The policies therefore adopted were: (a) To control the 
 price and distribution of domestic sugar by voluntary agreement 
 with domestic producers, (b) To control manufacturers' and 
 distributors' profits, (c) To purchase the Cuban sugar jointly 
 with the Allies, (d) To reduce consumption, especially in the 
 sweet drink and candy trades, (e) To stimulate production. 
 
 As to the latter, the shortage of labor in the United States 
 gave little hope of increased home production, although by ap- 
 pointment of producers' committees and adjustment of prices for 
 , beets, the prodiiction was maintained. Under policies carried out 
 in connection with Cuba, its production, as shown above, was 
 very materially increased. 
 
 The problems of distribution and conservation were impos- 
 sible of solution in the fall of 1917, owing to the exhaustion of 
 the previous crop before the Food Administratiori came into 
 being, and some temporary shortage developed in the northeastern 
 states. During 1918, however, a partial rationing, which threw 
 the sacrifice upon the sweet drinks and candy trades, did protect 
 the householder and other essential users. 
 
 The purchase of the 1918 Cuban crop was effected through a 
 joint inter- Allied committee, but decreasing shipping and other 
 difficulties made it necessary to create. the Sugar Equalization 
 Board, with a capital of $5,000,000, held by the Government. 
 The Board made advance purchase of the Cuban crop of 1919 
 on behalf of ourselves and the Allies, and it undertook the distri- 
 bution, and control of price in co-operation with domestic pro- 
 ducers as from July, 1918. By providing stabilized prices on 
 basic materials and the fixing of margins between purchase and 
 resale for refiners, wholesalers and retailers, the public was pro- 
 tected by a steady even price of sugar during the entire period 
 of the administration. The retail price on seaboard basis was 
 reduced from 11 cents to 9>^ cents at the establishment of the 
 administration. It was later advanced one cent per pound, 
 m the fall of 1919, to cover the necessary increase to pro- 
 ducers. The public was protected from large profits accruing to 
 the trade through this one cent per pound advance in price 
 through the purchase and resale of all existing refiners' and 
 wholesalers' stocks at a profit to the Sugar Board of $5,165,024. 
 The Food Administration relations to sugar control ended July 
 
31 
 
 1, 1919, although the Board continued m liquidation of out- 
 standing contracts. 
 
 The benefits to the consumer by sugar operations are well 
 indicated in retrospect of the experience since control was re- 
 moved. Retail prices have advanced approximately eight cents 
 per pound even with more abundant supplies, and are now 
 at about the same level as uncontrolled sugar in neutral 
 markets during the war. It is interesting to note that, whereas 
 the margin between duty paid Cuban raws and retail refined 
 sugar seaboard basis, was approximately Syi cents during the 
 period of control, it is now about 6 cents a pound, indicating the 
 repression exerted on speculation and profiteering. Our con- 
 sumption of sugar during the two years of control was over 
 fifteen billion pounds. Every one cent per pound saved to the con- 
 sumer was' thus a total saving of $150,000,000. The aggregate sav- 
 ing through control can easily be computed at $750,000,000. 
 Under free distribution in 1919 the consumption of the United 
 States increased by about one billion pounds (500,000 tons) over 
 that of the year 1918, thus indicating the extent of conservation. 
 Some shortage developed in the fall of 1919 after the dissolu- 
 tion of the Food Administration, but had it not been for the 
 administration's control of the Cuban crop, the world drain after 
 the armistice would have greatly reduced the supplies of the 
 United States and much increased this shortage. The sales 
 through the Sugar Board aggregated about $600,000,000 and by 
 its adjustment of prices to protect different producers, the Board 
 earned a surplus of some $30,000,000 for the Government. 
 
 Pork and Beef Products. 
 
 One of the most difficult operations undertaken under the 
 Food Administration was the stimulation of production and 
 the control of distribution of pork products. As mentioned 
 elsewhere, the shortage of shipping had not only driven the 
 Allies onto our markets for the supplies, but the decrease in 
 the productivity of their dairy herds, the very large slaughter of 
 their hogs before our entry into the war, had decreased their fat 
 supplies to the point of great danger. The American hog was 
 the only possibility through which an increased supply of fats 
 
32 
 
 could be provided in time to be of service. It was possible to 
 secure increase in pork production in a year, whereas cattle would 
 require three years. Due to over export in the previous year 
 the number of stock hogs had decreased by over 5,000,000. 
 
 While it appeared possible to secure a sufficient export mar- 
 gin by conservation during our first year in the war, it was evi- 
 dent that the continued inroad into Allied herds would require 
 increases of exports the following year, and therefore could only 
 be obtained by a great stimulation in production. Such stimu- 
 lus must be obtained as a corn product from the great corn 
 states. Propaganda was initiated jointly with the Depart- 
 ment of Agriculture in stimulation of increased production. 
 Conferences were called with the principal producers' rep- 
 resentatives, and after receiving their reports the Adminis- 
 tration in November, 1917, gave an assurance to farnlers that - 
 (so far as it could be protected by the control of foreign buy- 
 ing) a minimum of $15.50 per, 100 lbs. would be maintained for 
 average hogs at Chicago, this assurance to hold until Septem- 
 ber, 1918. On the recommendation of various producers' associa- 
 tions, a further assurance was given that, so far as the buying 
 control of exports permitted, hogs, farrowed in the spring of 
 1918, and consequently marketed in the fall and winter of 
 1918-19, would be held to a minimum price equal to a ratio of 
 13 to 1 on the average price of corn fed. The exports amounted 
 to about 17% of the total production and were sufficient to 
 influence the price greatly although not to control it entirely. 
 
 The packers and the livestock exchanges and the Allied buyers 
 entered into a voluntary arrangement to cooperate and support 
 the minimum price over the heavy marketing season, when the 
 large fall in price was usual. Contracts were made between the 
 packers and the Allied buyers providing for a profit of one- 
 fourth of one cent per pound, and regulations were imposed 
 upon the packers that the same price should be made on pork 
 products to the civilian population as that made to the Allies. 
 
 The 45 firms engaged in the packing industry were placed 
 under regulation limiting their profits ; that of the larger packers ' 
 to a maximum of 9 pef cent, on their food products and the 
 others to 2^ per cent.~ on their turn over. Owing to the lack of 
 authority in the Food Law, it was impossible to control 
 profits on by-products and various other interests of the industry. 
 
33 
 
 As shown by the accounts of the five great establishments, 
 the actual earnings upon that portion of their operations which 
 were legally controllable under the Food Law during the period 
 when they were under regulation, amounted to 1.6 per cent, upon 
 their gross sales and equaled 5.6 per cent, upon the actual capital 
 employed. Their gross profits were reduced during the year of 
 regulation approximately $21,000,000 below those of the uncon- 
 trolled year previous to regulation. 
 
 Owing to the heavy stOrm delays in December and January, 
 1917-1918, hogs were held on the farms and came with a great 
 rush in February and March. It was necessary to secure the 
 assurance that the Allied Governments should make very large 
 forward purchases of products in order to maintain the mini- 
 mum during this heavy marketing season. Extra storage was 
 provided for some 45.0,000,000 pounds of pork products to 
 accommodate this situation and during a period of two months 
 over 600,000,000 pounds were purchased for the Allied account. 
 In order to secure the movement of products from the Missis- 
 sippi Valley to seaboard, packers' shipments were combined into 
 several special trains daily. The minimum price assured the 
 farmers was maintained with difficulty during the rush season, 
 but maintained itself thereafter with no trouble until the fall 
 of 1918. In anticipation of the Armstice and possible freeing 
 of the Argentine surplus for export, a slump of some 40 cents 
 per bushel occurred in corn. On the theory of 13 to 1 on the 
 price of corn that had been fed to the hogs, the farmers naturally 
 anticipated that a fall of aproximately $5.00 a hundred in hogs 
 would sooner or later follow from the fall in corn. The con- 
 sequence was a panic of marketing of hogs and the failure of 
 the minimum. 
 
 The Livestock Advisory Committee of the Agricultural Ad- 
 visory Board, together with representatives of the swine pro- 
 ducers' associations, were called into conference in October, and 
 it was determined by them that it was in the interest of the 
 farmer that the 13 to 1 ratio should be abandoned in the face of 
 the uncertainties and probable wild fluctuation of the corn market. 
 They recommended a minimum assurance of $17.50 per hundred 
 to the farmers. The agreements above mentioned were reinforced 
 by an arrangement through the Livestock Exchanges that their 
 agents would not pay less than this amount for hogs, and co- 
 
34 
 
 operation with the railways was established, so that shipments 
 to market would be limited to the number of hogs equal to the 
 capacity of the packing houses. Gluts of hogs at the central 
 markets would obviously defeat the price. This reorganization 
 proved successful until a new disturbing factor entered at the 
 end of December, 1918, in the refusal of the Allies, as a result 
 of the Armistice, to continue the purchases on the $17.50 price 
 level, in view of their ability to secure fat products in other parts 
 of the world for a much lower price. As the surplus fat produc- 
 tion had been provided solely in the interest of the Allies, it was 
 considered that they had a positive obligation to assist in main- 
 taining the awards that had been given the farmers in co- 
 operation with their agents. One of the Allied governments who 
 had hitherto purchased' 120,000,000 pounds per month,, with- 
 drew entirely from the market, and later on the other gov- 
 ernments reduced their purchases despite all protests. Demand 
 was made that the blockade restrictions on the import of fats 
 by neutral countries and Germany should be removed. This 
 was refused upon political grounds. In consequence, the Agri- 
 cultural Advisory Board was again called in Washington to 
 assist in holding the situation and our Food Administration in 
 Europe took measures to purchase large quantities of advance 
 supplies through the various agencies of the American Govern- 
 ment in anticipation of the ultimate relaxation of the blockade. 
 The situation was tided over and ultimately the products were 
 marketed in Germany in return for gold payment. 
 ' The actual average for the twelve months after enlarged 
 assurance came into force was $19.00 per hundred, or 143 per 
 cent, over average pre-war prices. The actual price during the 
 heavy marketing season worked out at about 13 to 1 for the farm 
 value of corn in the principal hog producing spates contiguous 
 to the great Mississippi Valley markets. That the consumer was 
 also protected by these arrangements for a stable price and con- 
 trolled margins, is indicated by comparing the period of July, 1918, 
 to February, 1919, with a similar period of 1919-1920 after con- 
 trol was removed. In the former period the average price of hogs 
 at Chicago was $18.14 and the retail price of products to the 
 consumer from 100 pounds of live hog was about $37.32. The 
 same period 1919-1920 shows $16.69 to the farmer and $37.67 
 the retail price to the consumer. In other words, during the 
 
35 
 
 period of stabilization and control of trade margins, the farmer 
 received 8.7 per cent, more for his products without tax on the 
 consumer, or, put in the other way, the consumer now pays 8.7 
 per cent, more for his products without benefiting the farmer. It 
 is the opinion of our statistician that this increase in margins lies 
 largely in the wholesale and retail trades. During the work of 
 the Food Administration a considerable experience was gained in 
 the structure of the packing industry. A report was made to the 
 President upon these matters recommending certain reforms, but 
 pointing out that they must properly be undertaken after the war, 
 for the administration must concentrate itself upon mobilization 
 of our resources for immediate war purposes. 
 
 The Department of Agriculture shows that our stock hogs 
 decreased from 65,645,000 at September 1, 1916, to 60,218,000 
 at September 1, 1917. This was due to over-slaughter and 
 export during the year before we came into the war. Such a 
 decrease would indicate an over-export of at least 600,000,000 
 pounds and the loss of stock hogs seriously handicapped the ex- 
 ports the following year pending recovery of the herd during our 
 first year of the war. The tables below of dressed weight of 
 hogs coming to the inspected markets (probably 50 per cent, of 
 the production) indicate (a) the effect of this over slaughter on 
 production in the first year after our entry into the war; (b) the 
 even increased exports of that year obtained very largely by 
 the womens' work in conservation ; (c) the enlarged production 
 by our farmers and the increase in exports for the second year; 
 (d) the result in increased consumption during the last ten months 
 by removal of all restrictions on consumption. 
 
 Year. 
 
 Dressed Weight 
 
 of Inspected . 
 
 Slaughter, 
 
 Pounds. 
 
 Exports, 
 Pounds. 
 
 American Con- 
 sumption from 
 Inspected 
 Slaughter, 
 Pounds. 
 
 Annual average three 
 
 pre-war years 
 
 Fiscal year 1916-17.... 
 
 Fiscal year 1917-18 
 
 Fiscal year 1918-19.... 
 
 6,072,000,000 
 5,360,000,000 
 7,366,000,000 
 
 996,000,000 
 1,499,000,000 
 1,737,000,000 
 2,944,000,000 
 
 4,573,000,000 
 3,623,000,000 
 4,422,000,000 
 
 We normally export but little beef and even with conserva- 
 tion directed to secure the surplus needed for our own and the 
 
36 
 
 other armies in Europe, the volume of export was too small a 
 percentage of the whole production to have serious weight in 
 prices. The exports over the control period amounted only to 
 about 5 per cent, of the total production. Therefore the admin- 
 istration could not, in any event, undertake stimulation by price. 
 Moreover, the time required for increase of herds made any 
 policy of this kind of no avail for the probable period of the 
 war. 
 
 The representatives of the cattle associations co-operated with 
 the Food Administration to secure changes in the various army 
 specifications, as to weights, from time to time, so as to give 
 more even demands and stability in prices for the seasonal 
 changes in different types of beef. A small minority of cattle 
 raisers complained of conservation measures restricting their 
 markets, but these measures were maintained only during the 
 seasons of short marketing, when vitally necessary to secure the 
 army exports. By such means the exports of beef were increased 
 from 700,000,000 lbs. in the fiscal year 1917-18 to 1,100,000,000 
 in the fiscal year 1918-19, although the total slaughter decreased. 
 Very little or no American beef went into civilian consumption 
 in Europe as such supplies were secured by the Allies from the 
 much cheaper beef of the Argentine. 
 
 Conservation was tried in order to secure some mutton ex- 
 ports but the results were insufficient to warrant continuation. 
 
 Other Activities. 
 
 Further paragraphs could be written in description of the^ 
 activities in connection with the regulation of wholesale distribu- 
 tion, the produce exchanges, Boards of Trade, the canning 
 trades, milk supplied to cities, of cold storage, of perishables, 
 beans, peas, cotton-seed, rice, and so forth, but the above should 
 pfove sufficient to convey the nature of the results sought and the 
 efifect. In all of these activities the great objective was to co- 
 operate with the producer, and to protect the consumer by limit- 
 ing the margin between the producer and the consumer, to the 
 least possible figure compatible with the normal and propey 
 functioning of business. 
 
37 
 
 United States Food Situation After the Armistice. 
 
 With the completion of the war, it was. determined to demobi- 
 lize the Food Administration as rapidly as the Government could 
 liquidate guarantees to producers and protect consumers from 
 speculative advantage being taken of demobilization. .The return 
 of business to normal was imperative and the reduction of na- 
 tional expenditure essential. Of even more importance was the 
 fact that all these measures, while necessary to enable the prosecu- 
 tion of the war, become in peace a strangulation of initiative, and 
 would burden the country with bureaucracy. During war a 
 hjgh degree of altruism maintains initiative, but in peace there 
 can be but one basis of economic control, that is freedom for nor- 
 mal processes of business with prevention of domination by the 
 few. Those activities based upon a continuation of the war were 
 demobilized within sixty days, and by the end of March there 
 was outstanding only the control of wheat, sugar, pork and 
 cottonseed products. The wheat control was transferred to the 
 new Wheat Director, and the sugar control to the Equalization 
 Board, both on July 1st. The cottonseed control expired in May, 
 1919. The pork products control was terminated at the end of 
 March (instead of the end of June) by the War Trade Board 
 over the Food Administration protest that world conditions were 
 still uncertain and consequently consumers would suffer greatly 
 without benefiting the farmers. This protest has since been 
 justified. 
 
 The greatest duty of the Food Administration at the Armis- 
 tice, however, was to see that the great surplus of food supply — 
 amounting to over 18,000,000 tons — provided by the denial and 
 'exertion of our people, was disposed of, without creation of 
 financial difficulties to our farmers and the public at home. 
 
 With the Armistice declared, the world food situation materi- 
 ally changed. The markets of Australia, the Far 'East, and the 
 Argentine, were glutted with stocks of food due to the shortage 
 of shipping, and as the prices were below American levels' the 
 Allied Governments naturally desired to take advantage thereof 
 with the shipping freed by the Armistice. On the other hand, 
 our agricultural industry with a surplus of some 18,000,000 
 tons — three times our normal — was by their action in acute 
 danger of collapse. On the other hand, the surrender of Ger- 
 
38 
 
 many had been brought about largely by economic exhaustion and 
 the impending starvation of 200,000,000 people under German 
 domination. Our surplus would be needed by the newly opened 
 areas even if the Allies deserted our markets/ and our problem 
 was to carry over this period of change in markets. Given a 
 stoppage in the flow overseas of this great surplus for sixty days, 
 our merchants would have ceased buying from our farmers and 
 a collapse in prices would have resulted that would not only have 
 done great injustice to the producer but would have betrayed the 
 assurances we had given them, and through depression in the 
 values of stocks in the hands of manufacturers and distributors^ 
 would have jeopardized our country banks which mainly financed 
 the movement of these commodities. 
 
 With the President's approval, the headquarters of the Food 
 Administration was transferred to Europe in order to deal with 
 these problems. A demand was made that the blotkade on neu- 
 tral and enemy countries should be removed, not only in the 
 interest of the economic stability of the world, but in the inter- 
 est of humanity. Demand was also made that. the Allies should 
 continue their supplies from the United States until other outlet 
 could be secured. It is not the time to discuss the- attitude of 
 some of the Allies in refusing to co-operate in these matters and 
 the consequent jeopardy into which our whole commercial struc- 
 ture was placed by the failure of some of them to maintain 
 an obvious obligation. It is sufficient to say that largely through 
 the mobilization of effort, we temporarily absorbed the, surplus 
 and prevented a glut during the three months to March, 1919, 
 required to break down the blockade and to organize the eco- 
 nomic and relief measures in Central and Eastern Europe. 
 Such a glut would have resulted in a vast waste of perishable 
 food, demoralization of the agricultural industry, with losses to 
 the consumer from the inevitable speculation. 
 
 Situation in Central Europe at the Armistice. 
 
 From the German collapse and the breaking up of the four 
 empires, some sixteen new or old states were erected or secured 
 their freedom. The collapse of Germany had been largely 
 brought about by her economic exhaustion and the whole area 
 
39 
 
 Was starving. It was imperative that no charge of inhumanity 
 should be laid at our door by continuing this starvation after the 
 surrender. Furthermore, the only hope of saving Europe from 
 anarchy lay in prompt measures on a large scale. Most of the new 
 states were withovit organization to provide credit, transportation, 
 or distribution. It was therefore necessary to undertake the prac- 
 tical economic control of a large part of Europe and co-ordinate it 
 with the existing economic controls of food, finance and shipping 
 of the United States and the Allies. This was accomplished 
 through the appointment of the American Food Administrator as 
 the executive head of supplies with mandatory powers over rail- 
 ways and coal mines and telegraphs in large parts of the old em- 
 pires by the Supreme War Council. The whole of the operations, 
 both in liberated, and enemy, as well as neutral and Allied 
 countries, was co-ordinated so far as necessary by the organiza- 
 tion of the Supreme Economic Council. Among other arrange- 
 ments carried out was an agreement transferring the entire 
 German and Austrian mercantile marine of some 1,500,000 tons 
 for relief and reparation purposes. 
 
 Extensive measures were taken under the Food Administra- 
 tion in the rehabilitation of transportation in Central and East- 
 ern Europe in order to make effective the supplies furnished. 
 Through a large directing staff drawn from the American Army 
 and Navy, and the sale on credit of a large quantity of army 
 materials, the railways, disintegrated by war use and by political 
 changes at the armistice, were sufficiently co-ordinated and re- 
 habilitated to maintain the movement of the basic necessities of 
 life throughout this area. 
 
 The rivers Elbe, Danube and Vistula were opened for traffic 
 by agreements effected by the Food Administrator under 
 authority given by the Supreme Economic Council. 
 
 In order to, cope successfully with the movement of supplies 
 and control of railways, and to rehabilitate economic life gen- 
 erally, it was necessary to organize telegraphic communication 
 through Central and Eastern Europe. Some 10,000 miles of 
 ^telegraph lines were ceded by the various Governments to our 
 organization and placed under our operation as a telegraphic 
 unit. 
 
 An organization was set up to secure the better production 
 and distribution of coal in Central and. Eastern Europe. Through 
 
40 
 
 agreements perfected between the various Governments con- 
 cerned, coal supplies were maintained to those areas where trans- 
 portation facilities had broken down. The distribution of many 
 million tons of coal was thus regulated. 
 
 All these agreements came to an effective termination at the 
 signing of the German Peace Treaty, owing to the new political 
 arrangements then set up. 
 
 Supplies to Europe During the Armistice. 
 
 A total of 4,752,829 tons of foodstuffs and clothing of an esti- 
 mated value of $1,147,497,051) from the various Allied and Asso- 
 ciated Governments were distributed between December 1st, 1918, 
 and August 31st, 1919. Of the above, approximately $765,000,000 
 of foodstufiEs were furnished on credits, $347,000,000 were paid 
 for in gold foreign exchange and commodities, $36,000,000 were 
 given in charity, to a large degree from private sources. The 
 following table indicates the destination, character and valuti of 
 these deliveries : 
 
41 
 
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 in to CN © ■* 1-1 ^ oVOO_'*,co_«i<H." "* ^- 
 iri'i-TcM-io ort> in ONCo''3-'''i''gN CO '*■ 
 
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42 
 
 Of the above 76.8% was supplied from the United States, 
 10.3% from the British Empire, 2.4% from France, 4.2% from 
 joint finance of all three countries and Italy, and the balance from 
 sundry sources. 
 
 In addition, a large amount of exchanges in potatoes, grain, 
 meat, etc., were arranged between interior countries in Central 
 and Eastern Europe by the Food Administration, amounting to 
 somewhat over 500,000 tons of foodstufifs. 
 
 The support of certain critical countries was made possible 
 by the special appropriation of $100,000,000 by Congress. The 
 following tables show approximately the supplies furnished from 
 this fund and their destinations : First, those for which obliga-. 
 tions of repayment were taken, and, second, those contributed 
 in charity for the relief of undernourished children. Of theJiotal 
 of about $96,000,000 actually expended from the fund about 
 $86,000,000 should be recoverable with the rehabilitation of 
 Europe. 
 
43 
 
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45 
 
 Although the total food shipments to the Allies between July 
 1, 1917, and July 1, 1919, are given below, it is interesting to note 
 that during the armistice the total food shipments to France, Italy 
 and the United Kingdom from the producing area under the 
 control of the United States Food Administration amount to 
 approximately 12,500,000 tons, of a value of approximately 
 $2,000,000,000, the largest part of which was supplied upon credits 
 from the United States. During the same period the shipments 
 to European neutrals aggregated approximately 2,000,000 tons 
 of a value of about $300,000,000. The aggregate American ship- 
 ments of food to Europe during the period of the last phase of 
 war and its attendant famine amount to approximately 17,500,- 
 000 tons. 
 
 Special Feeding of Children During the Armistice. 
 
 The special care of starving children of the poor was set up as 
 an independent charitable organization operating under a com- 
 mittee system, and providing for approximately three and one-half 
 million hungry children in some ten countries in Central and 
 Eastern Europe. This eflfort was supported by the American 
 Government to the extent of approximately $10,000,000, which 
 was about one-half of its cost, the remainder being provided by 
 public charity, and governmental subsidies from various quarters. 
 This administration was based upon the creation of a great 
 system of volunteer committees in twelve different countries 
 and the service of the better to do for the poor in those countries 
 contributed very greatly to soften class conflict, in addition to 
 its primary function of preservation of child life. The saving 
 of the child life of the poor of Europe should be a matter of 
 especial pride to every American. 
 
 Conclusions of Armistice Relations. 
 
 The result of these operations was to carry Europe (except 
 Russia) through the greatest famine since the Thirty Years' War 
 without appreciable loss of life, although necessarily with some 
 
46 
 
 privation. With the arrival of the European harvest and, there- 
 fore, of suppUes for some period in advance, and with the sign- 
 ing of peace and therefore some measure of rehabilitation of 
 communications and of commercial life, the necessity for relief 
 measures on so wide a scale expires, and we considered that 
 initiative of the various countries must be summoned to their 
 own support. 
 
 Belgian Relief Commission. 
 
 It seems proper to refer to this enterprise at this point, 
 because it was, during the years 1917-18-19, under the direction 
 of the officers of the Food Administration, although main- 
 tained as a separate organization. The Commission for Relief 
 in Belgium was created under my Chairmanship immediately 
 after the outbreak of war in Europe in September, 1914, and 
 continued without interruption until April, 1919. During the 
 entire war it was conducted as a neutral organization, having 
 many of the attributes of a neutral state. It enjoyed direct 
 diplomatic relations with Allied, enemy and neutral governments, 
 through its own representatives, had immunity from submarine 
 attack and naval interference (although occasionally violated by 
 the- enemy), and flew its own flag. It was financed initially by 
 charity and later partly by commercial operations and partly by 
 governmental subsidies arranged directly with the Allied govern- 
 ments, under authority from the fugitive Belgian government. 
 Finally the sums expended were exacted for repayment from the 
 Germans by the treaty. The Commission not only undertook the 
 care of the destitute, which at one time rose to over 4,000,000 out 
 of the total population of 9,500,000 in occupied Belgium and 
 France, but also undertook to provide the remainder of the popu- 
 lation with its necessary food imports; in the consummation of 
 these operations it became the Food Administration of Belgium, 
 controlling production and distribution of local foodstuffs as well 
 as imports. During the five and one-half years of operations the 
 Commission delivered the following imports : . 
 
47 
 
 TABLE "D" 
 
 Summary of Yearly Overseas Deliveries to Belgimn and Occupied France 
 &JI the Commission for the Relief of Belgium from 1914 to 1919. 
 
 Year Ending November 1st, in Tons 
 
 ^ "^ > Post 
 
 1915 1916 1917 1918 Armistice Total 
 
 Breadstuff 648,190 883,007 497,163 670,987 578,262 3,277,609 
 
 Other Cereals ... 114,399 143,478 47,902 58,048 65,207 429034 
 
 Rice 63,443 106,290 41,620 41,972 50,892 304,217 
 
 Peas and Beans.. 32,498 20,533 31,009 63,515 24,246 171801 
 
 Meats and Fats.. 29,386 72,010 72,635 101,614 101,497 377142 
 
 Milk 3,064 13,982 13,008 21,483 28,927 80464 
 
 Sugar and Cocoa 13,798 12,347 19,597 17,844 63,586 
 
 Clothmg 2,186 2,183 1,170 3,403 12,983 21,925 
 
 Miscellaneous — 
 
 Food 40,059 17,281 43,523 55,308 19,364 175,535 
 
 Non-Food 1,176 8,469 8,572 8,256 18,189 44,662 
 
 Total 934,401 1,281,031 768,949 1,044,183 917,411 4,945,975 
 
 Of the above, 1,077,506 tons were delivered to Northern 
 France. 
 
 In addition, five successive local harvests were requisitioned 
 and distributed. These operations by which local food and im- 
 ports were free from military interference and requisition were 
 carried out under agreements with all the belligerent govern- 
 ments. Its support arose from the following sources : 
 
 For Belgium For France Totals 
 
 Total Government subsidies $479,982,268 $238,338,327 $718,320,595 
 
 Commercial Exchange 6,330,220 6,330,220 
 
 World charity 43,938,929 5,111,900 49,050,829 
 
 Profits made on resales of imported , 
 food to self-supporting popula- 
 tion 107,243,418 18,295,243 125,538,661 
 
 Total C. R. B. Accountability. . $637,499,835 $261,745,470 $899,240,365 
 
 These accounts do not include handling internal production, 
 which was controlled through a decentralized system of local 
 committees under direction of the Commission. Their accounts 
 involve some $300,000,000 and were simply audited by the Com- 
 mission. 
 
48 
 
 The destitute were cared for from charity, from profits made 
 upon sales of imports to the self-supporting population, and from 
 the profits made from distribution of local production to the 
 self-supporting, as also from internal charity and municipal sub- 
 sidies. 
 
 Continuation of European Relief Over the Winter 1920. 
 
 It was evident at the termination of relief measures in Au- 
 gust, 1919, that certain limited localities and classes in Europe 
 would require exterior assistance over the winter of 1920 to 
 prevent actuat .starvatibn. This need was a mere echo of that 
 of the previous winter. It embraced the poorer sections of 
 the larger cities in Finland, the Baltic States, Poland, Austria, 
 Serbia, Czecho-Slovakia and the whole of Armenia. In order, 
 therefore, that American generosity and concern for the wel- 
 fare of the less fortunate should not be found lacking, the prin- 
 cipal officers of the American Relief Administration volunteered 
 to continue the organization as a private charity co-ordinating 
 with various other American activities. 
 
 Under these arrangements the European Children's Fund 
 has been set up to carry on the work of feeding two and one- 
 half million children throughout the above areas. This work is 
 supported by numerous sub-committees in the United States of 
 Polish, Serbian, Hungarian and other racial groups, and the Jew- 
 ish Joint Distribution Committee. Under arrangements with 
 various European Governments, the Fund has received residues of 
 supplies and balances remaining from the operations of the Su- 
 preme Economic Council of the previous winter. The supervision 
 of relief measures in Russian Armenia has been continued under 
 the American Relief Administration. The relief supplies were 
 furnished by the Near East Relief and from sales of flour on 
 credit by the Grain Corporation. Transportation of these sup- 
 plies was supported by the Red Cross, the Commonwealth -Fund, 
 and the British Government. Co-ordination has been arranged 
 in support of the feeding of children of the German poor through 
 the American Friends' Service Committee and various other 
 activities. A method has been devised for the remittance of 
 orders for food on warehouses established in Europe, to take 
 
49 
 
 the place of 'monetary remittances to relatives abroad and by 
 co-operation with the American Bankers Association is effecting 
 a large measure of substantial relief. Flour on credit is now 
 being supplied by the Grain Corporation, and its transportation 
 has been furnished partially by the British and neutral govern- 
 ments under transport arrangements co-operated in by American 
 Relief Administration ofificials in Europe. 
 
 A large active campaign in combat of typhus has been or- 
 
 , ganized in Poland under the Relief Administration, comprised 
 
 of volunteers from the American Army Medical Corps, and with 
 
 supplies furnished through the American Relief Administration 
 
 by various Allied armies. » 
 
 Altogether, with the sales of flour on credit by the Grain 
 Corporation and the continuation of these various charitable 
 activities, which are themselves furnishing over $7,000,000 per 
 month in relief, the countries under duress should weather 
 through until next harvest, when the last echo of famine should 
 have died away. 
 
 Total Food Supplied During the Wak. 
 
 Allied credits were practically exhausted when we entered the 
 war. Even at our normal rate of export, they would have starved. 
 It can be said, therefore, that in addition to the overpowering 
 weight that our army and navy threw into the military scale, 
 the organization and expenditure of our food resources con- 
 tributed no less to winning the war. 
 
 The following table shows the total food supplies furnished 
 from the United States to allied and neutral countries and the 
 enemy during our participation in the war, from July, 1917, to 
 July, 1919, compared to the annual exports for an average of 
 three pre-war years. 
 
50 
 
 Exports of the Principal Food Commodities in 1917-19, Compared with 
 Pre-War Three Years' Average in Short Tons. 
 
 Annual Average Total 
 Commodity. of 3 Pre-War Two Years 
 Years. 1917-19. 
 
 Wheat and Rye 3,720,398 14,973,022 
 
 Other Cereals 1,607,296 7,806,257 
 
 Pork 498,115 2,340,705 
 
 Beef 93,187 902,116 
 
 Vegetable Oils 165,116 224,642 
 
 Dairy Products 13,019 746,234 
 
 Sugar* 511,884 3,173,265 
 
 Fruits and Vegetables 350,040 828,051 
 
 Totals 6,959,055 30,994,292 
 
 * Including exports to Europe from Cuba. Cuba is include4 because 
 the drain of sugar therefrom was a direct reduction of American supplies. 
 
 The value of the cbmmodities furnished tjie Allies and Liber- 
 ated Countries amounted to about $3,670,000,000, practically the 
 whole of which was financed by the United States Treasury. 
 
 Conclusion. 
 
 I should like to pay tribute to the two hundred immediate 
 colleagues in heads of divisions, as state administrators and in 
 other important positions, for their high abilities and unfailing 
 devotion to our country in this most trying period. Their council 
 and co-operation made one of the most difficult administrative 
 tasks possible of successful consummation. They were all volun- 
 teers to their country at great personal sacrifice. Some thousands 
 unable to wholly volunteer also served with equal devotion to 
 their country. Beyond this immediate association were the mil- 
 lions of our farmers and our women, without whose patriotic 
 devotion and self-sacrifice the winning of the war would have 
 been impossible. It has indeed been a great honor to have held 
 the office of co-ordination and direction of this branch of great 
 national effort. A proper appreciation of the service of all these 
 individuals could not be adequately expressed even in a full report 
 of the Adminisration. 
 
 I wish to express my personal gratitude for the support 
 received from the officials of the twenty governments with whom 
 the Food Adminstration organization has had to deal. 
 Without this unity of support and co-ordination of economic 
 effort, the maintenance of the Allies during the war and the sub- 
 sequent stability in Europe pending the peace negotiations 
 would have been impossible, and the suffering and loss of human 
 life would have been of incalculable measure.