FOOD AS A WAR FACTOR

Economic conditions generally had been shaped and dictated by the nation's entry into the war. The financial advantages which the country enjoyed in the two previous years through being neutral and not belligerent, disappeared with the war declaration; but the accumulated resources of the country's previous neutrality remained a continuing bulwark, and its distance from the theaters of war gave the country certain economic advantages of a neutral.

The situation greatly changed upon the United States throwing its entire resources into the common stock of the Entente Allies. The Government's enormous advances of credits to them took place when its own war requirements were even larger. Shipments to the Allies of maximum consignments of food and equipment proceeded in face of heavy home demands for the same products. The abnormal efforts with which the Shipping Board set about building new ships to repair the ravages of the submarines coincided with unexampled calls upon the mills for domestic needs. Such developments could not occur without profoundly affecting American finance and production; especially in view of the intensified economic strain on belligerent Europe by the continuance of the war through another year and the reliance of the Allies on American aid.

There came an immediate and violent rise in commodity prices, due largely to the Government's new demands, coming in the wake of the increased needs of the Allies. As a consequence maximum prices on many products were imposed either by imperative Government orders or by agreement between the Government and the producers. The wheat crop failed in volume, being barely eleven million bushels above the deficient yield of 1916, and except for that season was the smallest in half a dozen years. On the other hand, corn and oats yielded record-breaking crops, and there was such an excellent harvest of other cereals that the total out-turn of the five leading grains, including wheat, exceeded by 970,000,000 bushels that of 1916. Except for 1915 the general crops surpassed in yield that of any other year. The war, however, robbed the country of the fruit of its own fertility. The effect of full granaries was offset by a European wheat harvest worse even than that of 1916 and by the difficulty of sparing ships to bring Australia's wheat to Europe. The demand on American wheat for export became so urgent that the Government was compelled to place the wheat trade virtually in the hands of a paramount commission.

Governmental food control became a reality on November 1, 1917, when the manufacture, storage, importation, and distribution of practically all essential foodstuffs came under the jurisdiction of the Food Administration headed by Herbert C. Hoover, and could only be conducted under license from that body. Probably the Government had never before undertaken such a step in commercial regulation which came so close to the lives of the people. About twenty important and inclusive classes of food were brought under Federal control. Virtually the whole machinery of their manufacture and distribution became subject to Federal pressure. All food brokers, commission men, wholesalers, jobbers, warehousemen, importers, and grain elevator men not previously licensed were required to take out permits, in most cases without reference to the size of their business. Only meat packers, canners, millers, egg packers, ginners, etc., whose business was small, were exempted. All retailers whose gross sales of food exceeded $100,000 yearly were licensed. The control affected small retailers also, for it was expressly provided by Mr. Hoover that no licensee shall "knowingly sell any food commodity to any person who shall, after this regulation goes into effect, violate the provisions" of the Food Administration Act; and wholesalers and jobbers were to be furnished information concerning small retailers who hoarded or extorted. It also affected manufacturers and dealers whose merchandise was not included in the specified classes of food controlled.

The object, of course, was to keep food prices down to the minimum. The Food Administration Act forbade manipulation or speculation, excessive profits, discriminatory practices, and waste. The licensing system was simply a means of enforcing these prohibitions. Mr. Hoover looked for their successful operation not so much by formulating strict regulations as by awakening a spirit of public service among food traders.

The grocers undertook to concentrate their efforts upon selling substitutes for white flour and meat, in view of the Allies' calls on American produce and the consequent shortage for home purposes. Retailers promised to encourage the sale of "articles of food cheap but good in quality in place of high-priced staples." Wholesale grocers were urged to arrange with manufacturers for larger supplies of corn meal, rye, and oat products. Food distributing and selling organizations throughout the country began a campaign to induce retailers to stop soliciting orders, to reduce deliveries to one daily for a family or route, and to stimulate the sale of prunes, oats, corn meal, and rice in bulk and for cash. Mr. Hoover had laid down the principle that it was the delivered cost of food to jobber, wholesaler, and merchant that determined the price on resale, and not market conditions at the time of resale. No one was to profit by fluctuations upward while he held goods in stock.

The Food Administration's task was to awaken millions of families to recognize the necessity of food conservation, to educate millions of producers to maximum effort, and to banish greed from the business of thousands of distributors. The last presented the greatest difficulty. Yet the readiness of dealers to be content with living-profit margins and to increase efficiency, the eagerness of commission men to discourage all speculation and to help constructively in effecting adequate deliveries on full cars, and the assurances of most distributors that they would aid in bringing recalcitrants into subjection, promised that the problem was not impossible of solution. Profiteering had been one of the banes of the war in Europe, and the Government sought to check this rapacious method of using war conditions to acquire ill-gotten gains by traders who preyed upon public necessities.

Mr. Hoover thus presented the situation in the autumn of 1917:

"There is plenty of food in this country, and our problem is one of surplus and not a deficit. This does not mean that we can send to the Allies all they need, for there is not enough when considered from the war point of view. The wheat we export will be the direct amount that the people save out of their bread, for we have shipped our surplus and must keep the bread supply for the country. We will ship wheat or flour from month to month, but such shipments will not be allowed except our supply warrants them. Through conservation we are gaining a 20 per cent. surplus of wheat. This means literally that every one who saves a slice of bread is giving a slice of bread to our Allies. We are consuming 20 per cent. less wheat than last year."

According to Mr. Hoover, the Allies' wheat requirements from the United States amounted to 210,000,000 bushels. The country's production of wheat in 1916 was 670,000,000 bushels, of which 590,000,000 bushels was consumed at home, leaving only 80,000,000 bushels available for export. There were thus 130,000,000 bushels to be found to fulfill the Allies' needs, that is, by saving that much from the normal consumption of flour by the people. The Food Administration found a spokesman in President Wilson, who, in a proclamation, called on the people at large to observe more wheatless days, and on wheat traders to curtail their stocks and sales.

The application of the slogan, "Food will win the war," was extended to neutral countries contiguous to Germany. If food was to win the war, then victory would come by the weakening of Germany through being unable to obtain American food, since the United States had virtually become Europe's chief food source, and Germany could always obtain American supplies through the neutrals. The President stopped further trading in American food between the neutrals and Germany by a proclamation ordaining that after August 30, 1917, no exports from American ports could be shipped, except under a strict license of the Exports Council, to any country in the Eastern Hemisphere. The restraint, though made of universal application, was specifically aimed at the European neutrals which flourished upon trading with Germany.

A large number of Dutch and other neutral vessels lying in New York harbor were chartered by the American Government and added to the available merchant shipping.