Qortservation
and
Regulatio
in the UNITED STATES During the World War
An
outline for a course of LECTURES to be given in Higher Educational Institutions
prepared for the .
UNITED STATES FOOD ADMINISTRATION
Washington, D. C. By CHARLES R. VAN HISE
PART II
MADISON, WISCONSIN
1918
Walter Clinton Jackson Library
The University of North Carolina at Greensboro
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Gift of Greensboro Public Library
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([Conservation
and
Regulation
in the UNITED STATES
During the World War
An
outline for a course of LECTURES to be given in Higher Educational Institutions
prepared for the
UNITED STATES FOOD ADMINISTRATION
Washington, D. C. By CHARLES R. VAN RISE
PART II
MADISON, WISCONSIN 1918
1//=/
C,\NT\VI-;I,L PniNTINC; CO. MADISON, WIS.
TABLE OF CONTENTS.
Page
Introductory 65
Chapter V. The Food Administration 67
Organization 67
I. The Food Administration at Washington 67
II. The Federal Food Administration in the states 68
Conservation 68
Five cardinal principles 68
Practical execution of conservation 69
A. Cooperation of the established agencies 70
B. Direct appeal to the consumer : 77
Purposes of the educational campaign 78
Home card 79
Result of educational campaign 80
Control 82
Nlethods of administration of the law with regard to control 84
The general system of licensing 84
The President's proclamation analyzed 85
Application of license system 87
Digest of rules and regulations relating to hcense 89
General regulations 89
Special regulations ; 90
Summary of general and special requirements 93
Special measures aside from licensing 93
Wheat and flour.... 94
The problem of supply 94
The fixing of a basic price 97
Table of prices at interior primary market 99
The Grain Corporation 100
Standardization of bread 106
Live Stock 108
Supply 108
Suggested measures of relief 109
General considerations 109
Sugar 110
General situation HO
The situation with the Allies Ill
Resulting speculation 112
Measures for handling situation 112
Results 113
Other foods 114
Comparison of policies in America and England 114
Work of Federal Food Administration in Illinois 116
Methods of organization 116
Chicago : 118
Other cities and towns 120
VI CONTENTS.
Chapter V. The Food Administration — Continued. Page
Summary of general results 120
Licensing 120
Prices 121
Control of distribution 122
Chapter YI. Food Production 124
The things accomplished 124
Measures taken to produce results 129
The task of the coming year 137
Chapter VII. The Work of the Fuel Administration 139
The investigations of the Federal Trade Commission 139
The creation of the Fuel Administration 141
Organization 142
Organization at Washington 142
State organizations 143
Price control 144
Mine prices... 145
Anthracite coal 145
Bituminous coal 146
Coke 151
Principles followed in price fixing 151
Jobbers' margins 153
Retail margins 157
Apportionment 158
The railroads must be supplied 159
The steel and coke plants 159
The Upper Lakes ■ 159
The Central and Eastern States 160
Canada 161
Priority of coal over other goods 162
Production 162
Conservation 164
Industrial saving 164
Domestic economy 165
Elimination of the unnecessary use of coal 166
General statements 166
The fuel problem abroad 167
General discussion 167
The savings due to the Fuel Administration 167
The necessity for apportionment 168
The war of coal driven machines 168
Chapter VII I. Construction and Control of Shipping 170
The Shipping Act 170
The Emergency Shipping Fund 174
Principal provisions of these acts 177
The Shipping Act 177
The Emergency Shipping Fund...' 178
Presidential proclamations 178
Work done under these laws and proclamations 179
The United States Shipping Board 179
Orders of Board 179
The Emergency Fleet Corporation 182
Conclusion lo^
Contents. vii
Page
Chapter IX. The War Industries Board 186
The Council of National Defense 186
The National Defense Act 1^7
Creation and Powers of War Industries Board 188
Fixing the price of copper 189
Fixing the price of steel and iron 190
Discussion of prices fixed 192
Method of operation 192
War and pre-war prices 193
The legal basis 193
Priority in manufacture 195
Conclusion 196
Chapter X. Print Paper 197
Chapter XI. Exports and Imports 203
Espionage Act 203
Certain exports in time of war unlawful 203
The Exports Council 204
The Exports Administrative Board 205
The Trading with the Enemy Act 207
Proclamations and actions of the President 211
Actions of the Treasurer 212
Actions of the War Trade Board 213
Chapter XII. The Priority Administration 215
The carriers 216
Shippers' organizations 217
Interstate Commerce Commission 218
Coordination 218
General discussion 221
Chapter XIII. Summary and Conclusions 222
Conservation 222
Summary of regulatory measures 222
The Food Administration 223
The Fuel Administration 224
The Priority Administration 224
The War Industries Board 225
Shipping 225
Print paper 226
Creation of Correlating Board 226
The regulatory measures and antitrust laws 228
Incongruity of regulation and the antitrust laws 229
Regulatory actions beneficial.... 230
Reconciliation of anomalies 231
The continuation of regulation after the war 231
NOTE.
The Food Administration assumes no responsibility for any opu ions on the economic questions discussed in this pamphlet.
INTRODUCTORY.
The first part of these lectures upon Conservation and Regu- lation in the United States During the World War was issued in October. That part consists of four chapters, as follows: I. Conditions Antecedent to the War; 11. The Economic Effects of the World War; III. Food Production and Conservation; and IV. Federal Regulatory Legislation. These chapters cover the situation from their respective points of view so far as it had de- veloped to the middle of August.
The purpose of the second part of the lectures is primarily to describe the work in conservation and regulation which has been accomplished under "the several laws and boards. To a certain extent the two parts overlap, since it seems advisable to make the second part so nearly complete that it can be used independently of the first part.
In preparing the lectures, there has been very free use, with or without quotation marks, of material which has been issued by the various administrations and boards. The language of the public announcements is used exactly, is condensed, or adapted as best fits the situation. To have attempted to indicate by quotation every phrase taken from the announcements would have made unpleasant alterations from quoted to nonquoted material. It is felt that whether or not the material is quoted is unessential, since so far as the facts are concerned, there is no claim of originality. The contribution of the author is the selec- tion, arrangement, and discussion of the facts.
From the outset I have had the cordial cooperation of the sev- eral boards and officers of the government, who have freely fur- nished me material asked. Also I have had the cooperat'on of the government officials in revising and correcting the manu- script. Especially important has been the very careful revision of the entire chapter upon the work of the Food Administration by that office; indeed considerable new material was inserted. Similarly, the Fuel Administration revised the chapter upon fuel. Louis E. Van Norman, chief of the Division of Informa- tion of the War Trade Board, Lieutenant H. P. Bingham, secre- tary of the War Industries Board, and Ralph P. Feagin, secre- tary of the Priorities Board, each kindly read the proof relating to his respective board and made a number of valuable sugges- tions.
65
66 LECTURES ON CONSERVATION.
The Department of Agriculture prepared the chapter on Food Production. Mr. H. D. DuGroot prepared a statement upon the relations of the carriers, the Interstate Commerce Commission, and the other administrations, so far as they relate to transporta- tion, which statement is embodied in its entirety. Mr. Robert Stevenson, Jr., prepared a complete account of the work of the Federal Food Administration of Illinois, from which account the material relating to Illinois was adapted.
The manuscript has been brought up to December 1, 1917; and in one or two instances, where especially important actions have been taken since that date, they have been included. For the most part, for material later than December 1, it will be necessary for the lecturer to obtain additions and modifications from the original sources. All dates given in the lectures in which the year is not mentioned are for 1917.
CHAPTER V.
THE FOOD ADMINISTRATION.
The Food Administration Bill entitled "An Act To provide further for the national security and defense by encouraging the production, conserving the supply, and controlling the distribu- tion of food products and fuel," was passed August 10, 1917. On the same day President Wilson appointed Mr. Herbert Hoover Food Administrator in charge of the U. S. Food Administration. Then followed the rapid growth of the organization through a series of developments which undertook the immediate solution of the problem of the food supply of America and her Allies. For the sake of convenience we will treat the early history of the Food Administration as from the point of view of December 1. The work of the Food Administration will be treated under the following heads: Organization, Conservation, and Control.
Organization.
In his first statement of plans for food administration issued May 19, Mr. Hoover said:
"I conceive that the essence of all war administration falls into two phases:
"First. Centralized and single responsibility.
"Second. Delegation of this responsibility to decentralized ad- ministrative organs."
In accordance with the announced plan of centralized respon- sibilities for policies and decentralized administration the organ- ization of the Food Administration falls into two general divi- sions. These are:
I. The Central Food Administration at Washington.
II. The Federal Food Administration for the respective states.
I. THE FOOD ADMINISTRATION AT WASHINGTON.
The Food Administration began at Washington with a small personnel and a few functions. It soon expanded into an organ- ization of more than 1,000 persons and many functions. In the development of the treatment of food administration problems, divisions have been set up for popular education, the organiza- tion of the households, the support of the activities of the states, the control of commodities, the obtaining of the support of the
67
68 LECTURES ON CONSERVATION.
distribution systems of the country, the conduct of the grain trade, including exports, to meet the emergency in transporta- tion, to supply data in statistics, to cooperate with hotels and restaurants, etc. As the work has proceeded these divisions have been subject to change. With the passing of particular prob- lems some have been dropped entirely; others have been modified to other uses. In accordance with the previously announced plan of Mr. Hoover, the Food Administration accepted the voluntary service of a large number of representative men and women from various parts of the United States. The work of the Food Ad- ministration therefore began with the principle of volunteer co- operation under the law.
II. THE FEDERAL FOOD ADMINISTRATION IN THE STATES.
The local work of the Food Administration within each state is under the immediate charge of a Federal Food Administrator for the state, who serves without compensation. The duties of the Administrators in the respective states are to administer the provisions of the Food Control law so far as they apply to state matters, and to coordinate the state food activities, whether official or voluntary, with the work of the United States Admin- istration.
The organizations within the respective states vary according to local need and the state of development to which the work has been carried. So far as the state organizations have any uni- formity prescribed by the central administration, they include a Federal Food Administrator, a State Merchant Representative, and a Home Economics leader. In addition to these there is for New York State a separate administration for New York City.
CONSERVATION.
We come now to the consideration of conservation, the second main head of our outUne. Conservation represents one of the two main principles for which the work of the Food Adminis- tration has been undertaken. In a large sense conservation refers to all those measures taken for the more economical man- agement of our food supply in the hands of the producers, dis- tributors and consumers.
FIVE CARDINAL PRINCIPLES.
In accordance with the previously announced plan of Mr. Hoover, the Food Administration has been organized on five cardinal principles:
LECTURES ON CONSERVATION. 69
"First. That the food problem is one of wise administration and not expressed by the words 'dictator' or 'controller,' but 'food administrator.'
"Second. That this administration can be largely carried out through the coordination and regulation of the existing legitimate distributive agencies of the producers, distributors, and consum- ers.
"Third. The organization of the community for voluntary conservation of foodstuffs.
"Fourth. That all important positions, so far as may be, shall be fdled with volunteers.
"Fifth. The independent responsibility of the Food Admin- istration directly under the President, with the cooperation of the great and admirable organizations of the Department of Commerce, the Department of Agriculture, the Federal Trade Commission, and the railway executives."
PRACTICAL EXECUTION OF CONSERVATION.
As Conservation as a practical policy refers largely to the sav- ing that may be accomplished by the consumer it may be con- sidered according to one of two principles, either compulsory conservation or voluntary conservation. In either case the end is secured by bringing some kind of pressure, educational, moral, or regulatory, upon the consumers of food.
1. Compulsory conservation. — The system of compulsory con- servation is associated particularly with the Central Powers, though the Allied nations have begun to use it as well. In Ger- many the desired results have been secured by a card system, under which the individual is allowed only a limited amount of any given food a week. Under circumstances where it is neces- sary to limit the amount of food which may be assigned to each individual, it is certain that the supply is so scanty that little or none of the material would be wasted. Thus this system secures both reduced consumption and elimination of waste.
To some extent the card system and other methods of govern- mental control have been introduced into the Allied countries. In the United States, however, it was felt by the Food Adminis- tration that these methods could not be used for two reasons: first, that public sentiment would not support their use, and sec- ond, that the desired results could be secured in another way, more closely allied with our democratic principles.
2. Voluntary conservation in the United States. — ^The method decided upon is based upon widespread education and a faith in well-nigh universal patriotism. It was believed that if the facts
70 LECTURES ON CONSERVATION.
could be brought to the people so that they would understand the reason why waste should be eliminated and consumption of , certain articles reduced, they would do these things as a patriotic duty. In short, the premise upon which the Food Administra- tion began its conservation work was the faith that an enlight- ened democratic people would be willing to change their habits, and sacrifice for a great patriotic purpose.
Without waiting for the Food Administration law to be enacted, President Wilson, on June 12, 1917, asked Mr. Hoover to in- augurate "that portion of the plan for food administration which contemplates a national mobihzation of the great voluntary forces of the country which are ready to work towards saving food and eliminating waste."
In this spirit Mr. Hoover undertook on June 17, nearlj^ two months before the passing of the Food Control Law, his effort to handle the conservation of food by voluntary methods. Some of the agencies then inaugurated continue in existence; others have been added by measures based upon regulation and control. The entire campaign was directed by a special organ- ization in Washington with field agents in every community. Half a million workers were engaged in the drive. The methods by which the Food Administration has worked to secure volun- tary conservation of food products have been two:
a. Cooperation of established agencies.
b. Direct appeal to the consumer.
A. COOPERATION OF THE ESTABLISHED AGENCIES.
In its use of established agencies in the effort to secure food conservation by voluntary means, the Food Administration has made use of agencies of all types, political, social, educational, and commercial. These may be summarized under the follow- ing orders of cooperation:
1. State agencies.
2. Trade organizations and commercial concerns.
3. Educational institutions.
4. Women's organizations.
5. Libraries.
G. Religious and fraternal organizations.
7. Hotels and restaurants.
8. Transportation companies.
1. Cooperation of the states. — The Food Administration has been decentralized, employing the state as the territorial unit. In each state a Federal Food Administrator has been appointed. Each
LECTURES ON CONSERVATION. 71
Federal Food Administrator has a staff of assistants in his office and has carried his organization into the local communities as far as may be convenient or necessary. It is the duty of the Federal Food Administrator for the state not only to co- operate in the administration of the measures later to be dis- cussed but to be the medium through which the campaign for spreading information and the securing of food pledges is under- taken. The Federal Administrator of the state is also to have immediate contact with the state and county councils of defense and other local bodies. The Federal Food Administrators in the respective states work in direct contact with the States Admin- istration Division of the Food Administration in Washington. The functions of this central States Administration Division have been enumerated as follows: To maintain personal touch with the Administrators; to keep the Administrators informed as to the activities of the Food Administration; to furnish suggestions to Administrators as to present activities and new activities in their respective states, and to serve as a link between Washing- ton and the local state activities.
2. Trade organizations. — Commercial concerns, naturally the most important agencies, aside from the states, for the voluntary conservation of food, are those trade organizations which have immediately to do with the distribution of food products to the consumer. The cooperation of these agencies was early sought and secured. The trade agencies are useful both through the saving they may institute in their own methods and through their close contact with the consumers. The wholesale grocers early evidenced a willingness to help through reorganization of their machinery and through inaugurating a campaign of education on the part of their salesmen with the retailers of the country. They undertook to urge upon retailers, and through them upon consumers, measures to save food and fuel, to push the sale of wholesome substitutes for wheat and other commodities of which there is shortage, and to give information to and assist the retailers in the food conservation program in the matter of display of foods, saving in delivery, and shortening of credit.
The wholesale grocers were soon joined by the National Retail Grocers' Association, then independent retail grocers, and the chain stores of the country, representing in all some 360,000 in- dividuals. Representatives of these, meeting in conference with the United States Food Administration, adopted the following resolutions :
"(1) We will, whether licensed or not, cooperate with the United States Food Administration in every way possible to
72 LECTURES ON CONSERVATION.
insure the enforcement of its rules and regulations and the suc- cess of its conservation plans, and deliver to the consumers of the United States the necessities of life as cheaply as it lies within our power to do. We will earnestly and vigorously recommend all other retail grocers to pursue this course steadfastly.
"(2) We recommend that retail grocers discontinue the solicit- ing of orders during the period of war.
"(3) We recommend the limitation of all deliveries to one a day to any one family or on any one route.
"(4) We recommend that under conditions and in localities where it is feasible, the cooperative system of delivery be em- ployed.
"(5) We urge all retailers and their clerks to concentrate their efforts in selling wholesome and nutritious substitutes for white flour and meat.
"(6) We recommend that the retailers use their efforts to sell articles of food that are cheap yet of good quality in the place of high price staples, and that in doing so they be guided by the recommendations of the Conservation Department of the Food Administration.
"(7) We urge the most strict economy in the conduct of all retail grocery methods to the end that time, energy, fuel, equip- ment, and men may be conserved, and that the wholesome food may be placed in the hands of consumers at the lowest possible prices.
"(8) We recommend that retailers throughout the countr^^ and their associations, local, state, and national, cooperate to the fullest extent with the United States Food Administration and that they immediately express their purpose so to do by communicating direct with the Administration in Washington.
"(9) We express our appreciation of the support that has been given the Food Conservation work by the trade papers of the country and earnestly solicit their continued cooperation with the Food Administration.
"(10) We recommend that all retail grocers assist in the potato campaign of the Food Administration by urging the sale of that commodity this season.
"(11) We urge that all food products where possible be sold by weight in reasonably large quantities and for cash.
"(12) We recommend that all retailers urge the sale of such items as small prunes, cornmeal, oatmeal, rice, hominy, and similar articles in bulk.
"(13) We ask all retailers to urge the sale of such articles as soup stock and materials, peas, rice, barley, fresh vegetables, and fresh and canned cove oysters.
LECTURES ON CONSERVATION. 73
"(14) To the end that the country's industries and their work- ers may be maintained at the greatest efficiency, and that any unreasonable profits or speculation in food staples may be elimi- nated, we pledge ourselves to the United States Government not to sell any of the fundamental necessities (as announced by the President of the United States in his Licensing Proclamation of October 8, 1917) at a margin of profit over the delivered cost to the merchant that will yield to him more than a reasonable living profit, irrespective of the market conditions at time of re-sale; and we pledge ourselves to urge other grocers, whether under the licensing plan or not, to the end that margins of profit by retail grocers throughout the country over the cost to them shall not be greater than prevail under normal conditions. We urge that each retail grocer act individually, and that he sell the staple foods at no greater profit than is reasonable in accordance with their cost, and his individual cost of doing business, as sanctioned by the United States Food Administration.
"(15) We earnestly urge the members and officers of every association of retail grocers as well as individual grocers in their respective communities to advocate these principles persistently in their local associations and to other retail grocers of the coun- try in this grave national crisis when our country needs us most, that they may not fail vigorously to uphold the needs of the government and to do their utmost towards a speedy and tri- umphant conclusion of our war against Germany." I In addition to this cooperation of the wholesale and retail grocers' organizations the Food Administration secured the co- operation of a great number of other national organizations rep- resenting practically all the food industries of the country. Hundreds of conferences were held with representatives of estab- lished organizations and of the interests involved, producers, dairymen, canners, packers, manufacturers, wholesale and retail dealers, transportation interests, and commercial organizations.
3. Educational institutions. — The organization of the educa- tional forces of the country for the conservation program relates to two fields: (a) that of the elementary and secondary schools; and (b) that for the higher educational institutions.
(a) The work in the elementary and secondary schools has been prepared under the direction of Charles H. Judd and Leon C. Marshall. Three sets of reading lessons have been planned: the first, for the fourth, fifth, and sixth grades; the second for the seventh and eighth grades of the elementary schools and the first year of the high school, and the third for the three upper classes in the high school. Each month, from October, 1917, to May, 1918, three leaflets, each of thirty-two pages, are to be
74 LECTURES ON CONSERVATION.
issued by the Bureau of Education working in cooperation with Professor Judd. The individual leaflets will be the work of a number of men connected with the educational system of the country. The series as a whole is to bear the title "Lessons in Community and National Life." The lessons will be used for reading in English classes and as material for discussion and com- position. The subject matter is to be correlated with the work in geography and history so that it can be profitably used one hour per week in periods allotted to these subjects. It can also be used in civics and 'current topic work, or can be given a place in the program as a major course itself.
It is the plan to begin with the simple relations and processes of the home and to work upward from this center familiar to pupils into the wider, unfamiliar fields of conservation. The gen- eral treatment will be made vivid by concrete illustrations and stories.
Much of the material in the course will be found illustrated in the environment of the school, and if the lessons are successful they should lead the teachers and pupils to study the communi- ties in which they live. The lessons are to be printed in suffi- ciently large editions so that a school may secure copies at cost from the Bureau of Education. The state, county and city superintendents will be asked to aid in the distribution and utiliza- tion of the leaflets.
The lessons, while primarily directed to the conservation pro- gram, have a broader scope. They place the conservation pro- gram in its relation to the war conditions and in relation to the trend of American life. It is hoped that not only will these les- sons serve a present necessity, but when peace comes the perma- nent effects will be produced in the economic and efficient pro- duction, distribution and consumption of food.
(b) The conservation work in the higher educational institu- tions has been organized by Charles R. Van Hise. The higher educational institutions included in the plan comprise the col- leges, universities, the normal schools, and the technical schools of the country, except those in medicine, dentistry, pharmacy, and law. The courses to be offered are four in number: (1) Con- servation and Regulation in the United States During the World War, prepared by Charles R. Van Hise; (2) Ten Lessons on Food Conservation, prepared by the Department of Agriculture and the Food Administration; (3) Increased Food Production, pre- pared by the Department of Agriculture; and (4) Fuel Conserva- tion, prepared by Professor L. P. Breckenridge.
It is the purpose of the first of these courses to place the con- servation and regulation movements in relation to the general
LECTURES ON CONSERVATION. 75
conservation and regulation movements of the United States, and, this done, to make a forecast in regard to conservation and regulation in the future.
The detail knowledge which is necessary for teachers and speakers in food conservation, food production, and fuel con- servation will be covered by the specialized courses.
The presidents of the higher educational institutions have been asked to introduce these courses into their respective institutions and to allow the courses to be freely elected by all students. The general course upon conservation and regulation should appeal to all students interested in the economic development of the country; the course upon food conservation to all of the women in the higher educational institutions; the one upon food pro- duction to the men in the agricultural colleges; and that upon fuel conservation to all classes of engineering students.
4. Women's organizations. — The women's organization of the country is headed by the Woman's Committee of th Council of National Defense, of which Dr. Anna Shaw is chairman. All of the great women's organizations of the country have agreed with this committee to carry on the conservation campaign. Also in addition to the national women's organizations, state commit- tees, county committees, city committees, and municipal com- mittees have been organized in connection with the state and county councils of defense. To illustrate, special committees of women have been formed in many of the educational institu- tions. The work of these women's organizations has included institutes of from one to several days' length upon food conserva- tion, accompanied by demonstrations. Also the women have participated in the speaking campaigns throurjhout the country. Above all else the women have been the at-"^^% who have secured the pledges of the individual women of thcthoyjitry.
5. Libraries. — ^All of the pubhc libraries'^? the country have been enlisted to serve the cause of food conservation. Each Federal Food Administrator has on his staff an official whose duty is to supervise and encourage exhibitions and cooperate closely with the Food Administration. These exhibitions com- prise posters, pamphlets, charts of facts, and other material which can be advantageously exhibited in the libraries. A monthly bulletin, called the Food News for Public Libraries, is issued by the Food Administration for distribution to all libraries. Herein suggestions are made regarding books and pamphlets for in- terested readers. The bulletin board is to have on it late information about food conservation and lists of articles on food appearing in the current magazines. The librarians are in a most fortunate position to influence the rich and poor, the young and old alike.
76 LECTURES ON CONSERVATION.
6. Religious and fraternal organizations. — The religious and fraternal organizations are cooperating in the campaign of edu- cation for conservation. As a result of a conference held in July, it was decided to call together at meetings during July and August each of the large religious organizations. At these meet- ings the situation in regard to food and especially wheat, beef, pork, fats, and sugar was presented to the gatherings. In every case the representatives of the denominations agreed to support to the best of their ability the conservation program.
Similar conferences were held with fraternal organizations, and as a result of the movement some thirty national religious and fraternal organizations pledged their cordial assistance in conserving the food of the country. By September 30, sixteen of these bodies had appointed official representatives to join the staff of the Food Administration in order to secure a close con- nection with the churches and fraternal orders represented by them.
Since these religious organizations and those affiliated with them comprise perhaps more than 50,000,000 people, or half the population of the country, it is obvious that the work of the preachers in explaining the need for saving food and for food conservation and the active cooperation of the women in these organizations cannot but have a far reaching influence in spread- ing abroad the necessary information.
Especial mention should be made of the religious press weekly bulletin which is conducted in Washington through the coopera- tion of a large number of religious organizations.
7. Hotels and restaurants. — The hotels, restaurants, clubs, and dining cars, and nassenger steamships of the country have very generally joined tP PT'^ood Administration, and many thousands of them are putilPii £into operation the directions of the Food Administration in ?.te saving of waste and in the introduction of substitutes for the products of which we are short. Many of them have been leaders in introducing the meatless Tuesday and the wheatless Wednesday.
8. Transportation companies. — In order to prevent the waste of perishable commodities and to secure equitable distribution, the Food Administration found it necessary to have the coopera- tion of the transportation companies, both railroad and express. This with the approval of the Priority Board has been readily secured. Through this cooperation much has been accomplished. Cattle have been transported from Texas, where they were dying for lack of food and water, to other points, and more rapid transit has been secured for perishables.
LECTURES ON CONSERVATION. 77
B. DIRECT APPEAL TO THE CONSUMER.
Much of the work done through estabUshed agencies has had as an end the stimulation to saving and substitution on the part of the consumer. Below are considered the direct measures taken in the educational campaign.
The effort was to give the consumer information as to condi- tions on food problems, and to appeal to his cooperation in the saving and substitution of foods. To concentrate the attention of the country upon the campaign for food conservation the President of the United States was quoted as follows:
"We cannot accomplish our object in this great war without sacrifices and devotion, and in no direction can that sacrifice^ and devotion be shown more than by each home and public eating house in the country pledging its support to the Food Adminis- tration and complying with its requests." And the ambassadors from several European powers made statements showing the conditions in their home lands and what was being done there to improve these conditions.
The educational drive was carried on by means of
a. Visual instruction.
b. A speaking campaign.
c. A personal canvass.
d. Cooperation of the press.
a. Visual instruction. — The chief resource for visual instruc- tion lay in the thousands of pictured placards and posters and outdoor signs which were distributed through the country. Exhibits at food conservation conventions and food shows have been utilized fully. In addition, electric signs have been used to flash the message of food conservation. Furthermore it was announced in October that the owners of thousands of moving picture theatres had assured the United States Food Adminis- tration of their cooperation in the plan to enroll the women of the nation in the food conservation army. This they undertook through slides and reels explaining the necessity for food con- servation and the manner in which this may be accomplished, and also by pictorial illustrations which enforce these principles.
b. Speaking campaign.— The apeaking campaign has been undertaken by a variety of agencies, women's organizations, educational institutions, fraternal organizations, religious organ- izations, and representatives of the Administration.
c. Personal canvass. — But it was by means of a personal can- vass that the largest results were secured. This was undertaken by all the agencies within reach but particularly by women's
78 LECTURES ON CONSERVATION.
organizations of various kinds, national, state, county, and city organizations whose particular function it was to reach the home. Thus the ministers of 100,000 churches of the country w^ere asked to deliver addresses on food conservation, and a large number of them complied with the request. Also, many other speakers and organizations took part and fraternal and cooperative groups concentrated on the drive. The school teachers of the country were furnished with the data necessary for the educational cam- paign, and the millions of children in the schools were asked to carry the information to their mothers. The campaign was organized in many cases by the State Councils of Defense, and in rural states was largely in the hands of the schools.
d. Cooperation of the press. — The first dependence of the Food Administration in its efforts to make known the needs and prin- ciples of food conservation has been placed on the generous co- operation of the newspaper and magazine press of the country. This assistance has been granted unstintingly.
PURPOSES OF THE EDUCATIONAL CAMPAIGN.
The chief purpose to which this educational campaign was di- rected was the securing of a large number of signers to the Food Administration Pledge. Beginning October 28, a food pledge drive was carried on, the purpose of which was to put the home card in as large a proportion of the homes of the country as pos- sible, and to secure a pledge in each case that the signer would use all practicable means within her power to aid the Food Ad- ministration in its efforts to conserve the food supplies of the country. Also, it was planned to ask the managers of all hotels and restaurants, and all dealers in foodstuffs to assist the Food Administration.
Food pledge. — The following is a copy of the Food Adminis- tration pledge:
"Food Administration, Washington, D. C: I am glad to join you in the service of food conservation in our United States and I hereby accept membership in the United States Food Ad- ministration, pledging myself to carry out the directions and advice of the Food Administrator in the conduct of my house- hold in so far as my circumstances permit."
Upon signing this pledge the householder was given a home card to display in the window and containing on the back the following statement from the Food Administration:
LECTURES ON CONSERVATION. 79
HOME CARD. UNITED STATES FOOD ADMINISTRATION
What you can do to help win this war.
OUR PROBLEM is to feed our AlUes this winter by sending them as much food as we can of the most concentrated nutritive value in the least shipping space. These foods are wheat, beef, pork, dairy products and sugar.
OUR SOLUTION is to eat less of these and more of other foods of which we have an abundance, and to waste less of all foods.
BREAD AND CEREALS. — Have at least one wheatless meal a day. Use corn, oat, rye, barley or mixed cereal rolls, inufTms, and breads in place of white bread certainly for one meal and, if possible, for two. Eat less cake and pastry.
As to the white bread, if you buy from a baker, order it a day in advance; then he will not bake beyond his needs. Cut the loaf on the table and only as required. Use stale bread for toast and cooking.
MEAT. — Use more poultry, rabbits, and especially fish and sea food in place of beef, mutton, and pork. Do not use either beef, mutton, or pork more than once daily, and then serve smaller portions. Use all left-over meat cold or in made dishes. Use soups more freely. Use beans; they have nearly the same food value as meat.
MILK. — Use all of the milk, waste no part of it. The children must have whole milk; therefore, use less cream. There is a great waste of food by not using all skim and sour milk. Sour milk can be used in cooking and to make cottage cheese. Use buttermilk and cheese freely.
FATS (butter, lard, etc.).— Dairy butter has food values vital to children. Therefore, use it on the table as usual, especially for children. Use as little as possible in cooking.' Reduce the use of fried foods to reduce the consumption of lard and other fats. Use vegetable oils, as olive and cottonseed oil. Save daily one-third of an ounce of animal fat. Waste no soap; it contains fat and the glycerine necessary for explosives. You can make scrubbing soap at home, and, in some localities, you can sell your saved fats to the soap maker, who will thus secure our needed glycerine.
SUGAR. — Use less candy and sweet drinks. Use less sugar in tea and coffee. Use honey, maple syrup, and dark syrups for hot cakes and waffles without butter or sugar. Do not frost or ice cakes. Do not stint the use of sugar in putting up fruits and jams. They may be used in place of butter.
VEGETABLES AND FRUITS.— We have a superabundance of vegetables. Double the use of vegetables. They take the place of part of the wheat and meat, and, at the same time, are healthful. Use potatoes abundantly. Store potatoes and roots properly and they will keep. Use fruits generously.
FUEL. — -Coal comes from a distance, and our railway facilities are needed for war purposes. Burn fewer fires. If you can get wood, use it.
These directions of the Food Administration were later sup- plemented by others, directed to two ends:
a. The saving of food and avoidance of waste, and
b. Substitution of plentiful foods for those less plentiful.
a. Saving. — Under the first head special attention was paid to encouraging greater efTiciency in the handling of foods, at the stores, in the kitchens and on the table. These recommendations
80 LECTURES ON CONSERVATION.
refer to proper proportions, and proper helpings. They encour- age the "starvation" of the garbage pail. Particular attention was directed to the scarcity of wheat, meat, sugar, and fat. Rec- ommendations were made for one meatless day and one wheatless day a week.
b. Substitution. — The second class of recommendations, those referring to substitutions, sought to encourage the use of plentiful food products instead of those which were needed for overseas shipment when there was no difference in the food values. This is one of the most important features of the educational drive of the Administration and one of the least understood. In order to properly present the possibilities of substitution careful state- ments were distributed showing the food values of different com- modities and revealing that some of the less popular foods have an equal or higher food value for the cost than other more popu- lar foods. Especial efforts were directed to securing the follow- ing types of substitution:
1. Local instead of shipped produce during the summer months.
2. Fish and beans and poultry instead of meat.
3. Corn meal instead of wheat.
One of the chief arguments for substitution lies in this fact that certain commodities can be more readily shipped than others. Thus corn meal and poultry, which cannot be shipped to our Allies, have as high a food value as wheat and meat which can be shipped.
RESULT OF THE EDUCATIONAL CAMPAIGN.
Pledge card signed. — As a result of this drive on the twenty-two million homes in the United States there had been secured on November 30, 11,024,329 pledges. This figure exceeded the number set as a goal when the campaign was begun and promises that the hopes of twelve million and a half pledged families may yet be realized. A further result of this campaign was the creation of a volunteer Food Administration corps extending through the states, counties and cities into the homes of more than half the families of America. Steps are now being taken to make this organization permanent.
Hotels and restaurants. — Scarcely less important than the house to house canvass was the canvass of public eating houses, in- cluding hotels, restaurants, dining cars, clubs, passenger steam- ships, etc. This canvass was at first in the hands of a committee of hotel men cooperating with the Food Administration. A file list of 63,700 eating places was made to which communications were addressed. A national organization was created, and under
LECTURES ON CONSERVATION. 81
this eight sections, each under its district chairman. It has been the purpose of this national organization to cooperate with the Food Administration by explaining its measures to the members and encouraging saving and substitution of foods.
It is yet too early to state in quantitative terms the savings that have been accomplished by the conservation movement. This will only be known when the consumption of staple articles for the country as a whole can be compared for the year 1917-18 with the consumption for 1916-17.
Already, however, it may be said for some departments that the savings are large. Some illustrations are as follows:
The hotels and restaurants of New York City. — Actual figures received show that in the hotels and restaurants of New York City on Tuesday, November 13, the saving in meats amounted to 193,545 pounds, or 96.75 tons.
The saving of wheat flour on Wednesday, November 14, was 101,295 pounds, or 50.6 tons, or 517 barrels.
Through taking certain meats from their daily menus and re- fusing to serve meats at banquets, a further conservation was effected by hotels and restaurants, swelling the total quantity of meats saved by them in New York during the whole week of November 12, to 232,254 pounds, or 116.12 tons.
By the use of whole or partial substitutes for wheat flour, par- ticularly in bread and pastries, the saving in wheat flour for the week is increased to 121,554 pounds, or 60.8 tons, or about 620 barrels.
The hotels and restaurants of Massachusetts. — Frank C. Hall, chairman of the New England Committee for hotels and restau- rants, has reported to the Hotel Division of the United States Food Administration, that the hotels and restaurants of Massa- chusetts saved during the month of October by meatless and wheatless days and other methods of food conservation 1,281,840 pounds of meat or 640.92 tons and 914,040 pounds of flour or 4,663 barrels.
The cities of the country.— ThsX there have been savings in many cities is shown in another way, i. e., by the reduction in the amount of garbage. Garbage reports have been received from 59 cities in the United States for the month of July, the aggregate population of which is more than 21,000,000. Only 12 of the 59 cities report an increase in garbage, and most of these are cities of relatively small size. The remaining cities show a decrease in garbage. The weighted average of the total 59 cities shows a reduction of 11.3 per cent, or more than one-tenth.
Figures were available for 69 cities for August, with an aggre- gate population of 22,000,000, The average total reduction of
2
82 LECTURES ON CONSERVATION.
garbage was 6.6 per cent. However, the grease recovered in the nine cities having reduction plants, representing a population of 5,500,000, showed a decrease of 29.2 per cent over the period from June 1 to August 31. This is a more important criterion of the saving than the total amount of garbage, since the larger collections may in part be due to more canning and preserving being done or to an increase in the use of fresh vegetables.
Adequacy of the savings.— ~U the hotels and restaurants of the country continue their good work and improve upon it, as they doubtless will when they have had time to work out methods to put into full effect the recommendations of the Food Adminis- trators, the reduction in consumption of wheat, sugar, meats and fat will be very large. But it is certain that such savings must be supplemented in the millions of households by large savings, the aggregate of which will be enormous. Whether the savings altogether will be sufficient to meet the imperative need of the Allies cannot yet be predicted. The result hangs in the balance, and the full and sustained effort of every influence should be continued to insure adequate results.
Control.
We come now to the consideration of the third general head in the study of the Food Administration program. Legalized state control has been used to supplement and ratify the measures of voluntary conservation undertaken before the passage of the Food Administration Act.
The measures of regulation and control undertaken are based upon clear legal and social principles. The legal force of the measures of control is based upon the Food Control Law passed August 10, 1917, covering in its 27 sections all the contingencies that may be presumed to arise in connection with a nation's food supply in time of war.
Upon this Food Control Law the legal measures of food con- trol and regulation taken by the Food Administration have been based. These measures have also had the sanction of other principles which have not been lost sight of in the administra- tion of the provisions of the law. These principles have to do with those voluntary bonds of patriotism and enlightened self- interest which it is confidently believed unite a free people in the face of a common enemy.
The hopes of the Food Administrator. — In the first announce- ment made by Mr. Hoover after his appointment as Food Ad- ministrator he said that the hopes of the Food Administration were threefold:
LECTURES ON CONSERVATION. 83
"First, to so guide the trade in the fundamental food com- modities as to ehminate vicious speculation, extortion, and waste- ful practices and to stabilize prices in the essential staples; sec- ond, to guard our exports so that against the world's shortage we retain sufficient supplies for our own people, and to cooperate with the Allies to prevent inflation of prices; and, third, that we stimulate in every manner within our power the saving of food in order that we may increase exports to our Allies to a point which will enable them to properly provision their armies and to feed their peoples during the coming winter.
To stabilize and not disturb conditions. — "The Food Adminis- tration is called into being to stabilize and not to disturb condi- tions and to defend honest enterprise against illegitimate com- petition. It has been devised to correct the abnormalties and abuses that have crept into trade by reason of the world disturb- ance and to restore business as far as may be to a reasonable basis.
"The business men of this countr>% I am convinced, as a result of many hundreds of conferences with representatives of the great forces of food supply, realize their own patriotic obliga- tion and the solemnity of the situation, and will fairly and gener- ously cooperate in meeting the national emergency. I do not believe that drastic force need be applied to maintain economic distribution and sane use of supplies by the great majority of American people, and I have learned a deep and abiding faith in the intelligence of the average American business man whose aid we anticipate and depend on to remedy the evils developed by the war, which he admits and deplores as deeply as ourselves. But if there be those who expect to exploit this hour of sacrifice, if there are men or organizations scheming to increase the trials of this country, we shall not hesitate to apply the full drastic, coercive powers that Congress has conferred upon us in this in- strument.
Constructive regulation in. various commodities. — "In enforcing the measures of the act it is not our intention to proceed with a host of punitive measures, but rather by coordination with the various trades to effect such constructive regulations as will render gambling, extortion, and other wasteful practices im- possible, and will stabilize prices. Indulgence in profiteering in this hour of national danger is far from the wish or the will of the vast majority of our business people, and I am convinced that while we must have in reserve the corrective powers given us, we shall by these powers free the great majority from neces- sity to compete with operators whose sole effort is to inflate
84 LECTURES ON CONSERVATION.
prices and bring into disrepute the majority of honest traders. We propose to proceed as rapidly as possible with constructive regulation in various commodities and to announce each pro- gram as quickly as it is properly formulated."
METHODS OF ADMINISTRATION OF THE LAW WITH REGARD
TO CONTROL.
Upon the principles here set forth the Food Administration undertook further to conserve the food resources of the country by stabilizing the manufacture and distribution of the chief food products. It undertook this by general systems of centralized licensing operating over the great mass of food commodities, and by specialized treatment, through cooperation with those inter- ested, and by mandatory action, of certain large and important groups of fundamental commodities.
We will first consider:
I. THE GENERAL SYSTEM OF LICENSING.
The power to license the manufacture and handling of certain commodities goes back to Section 5 of the Food Administration Act which reads as follows :
"Section 5. That, from time to time, whenever the President shall find it essential to Ucense the importation, manufacture, storage, mining, or distribu- tion of any necessaries, in order to carry into effect any of the purposes of this Act, and shall publicly so announce, no person shall, after a date fixed in the announcement, engage in or carry on any such business specified in the announce- ment of importation, manufacture, storage, mining, or distribution of any neces- saries as set forth in such announcement, unless he shall secure and hold a licnese issued pursuant to this section. The President is authorized to issue such licenses and to prescribe regulations for the issuance of licenses and requirements for systems of accounts and auditing of accounts to be kept by licensees, submission of reports by them, with or without oath or affirmation, and the entry and inspec- tion by the President's duly authorized agents of the places of business of licen- sees. Whenever the President shall find that any storage, charge, commission, profit, or practice of any licensee is unjust or unreasonable, or discriminatory and unfair, or wasteful, and shall order such licensee, within a reasonable time fixed in the order, to discontinue the same, unless such order, which shall recite the facts found, is revoked or suspended, such licensee shall, within the time pre- scribed in the order, discontinue such unjust, unreasonable, discriminatory and unfair storage charge, commission, profit, or practice. The President may, in Ueu of any such unjust, unreasonable, discriminatory, and unfair storage charge, commission, profit, or practice, find what is a just, reasonable, nondiscriminatory and fair storage charge, commission, profit, or practice, and in any proceeding brought in any court such order of the President shall be prima facie evidence. Any person who, without a license issued pursuant to this section, or whose license shall have been revoked, knowingly engages in or carries on any business for which a license is required under this section or wilfully fails or refuses to
LECTURES ON CONSERVATION. 85
discontinue any unjust, unreasonable, discriminatory and unfair storage charge, commission, profit, or practice, in accordance with the requirement of an order issued under this section, or any regulation prescribed under this section, shall, upon conviction thereof, be punished by a fine not exceeding |5,000, or by imprisonment for not more than two years or both; Provided That this section shall not apply to any farmer, gardener, cooperative association of farmers or gardeners including live-stock farmers, or other persons with respect to the products of any farm, garden, or other land owned, leased, or cultivated by him, nor to any retailer with respect to the retail business actually conducted by him, nor to any common carrier, nor shall anything in this section be construed to authorize the fixing of a duty or tax upon any article imported into or exported from the United States or any State or Territory, or the District of Columbia. Provided further, that for the purposes of this Act a retailer shall be deemed to be a person, copartnership, firm, corporation, or association not engaging in the wholesale business whose gross sales do not exceed $100,000 per annum."
THE president's PROCLAMATION ANALYZED.
On the 8th of October the President issued a proclamation applying the principle of license to a certain group of trades and commodities, twenty in all, and promulgating the rules, general and particular, governing such licensees. All these were called upon to secure license by November 1, 1917. Later a supple- mentary proclamation was issued governing licensees manu- facturing bakery products, the regulations of which were to become effective December 10, 1917.
To whom directed. — ^"All persons, firms, corporations, and associations engaged in the business either of (1) operating cold storage warehouses (a cold storage warehouse, for the purpose of this proclamation, being defined as any place artificially or mechanically cooled to or below a temperature of 45 degrees above Fahrenheit, in which food products are placed and held for thirty days or more), (2) operating elevators, warehouses, or other places of storage of corn, oats, barley, beans, rice, cotton seed cake, cottonseed meal, or peanut meal, or (3) importing, manu- facturing (including milling, mixing, or packing), or distributing (including buying and sening)"were included in this classification. To these three classes bakers were later added.
Commodities included. — The requirements as to license cover some sixty-five commodities in the following general classes:
Wheat, wheat flour, rye, or rye flour.
Barley, or barley flour.
Oats, oatmeal, or rolled oats.
Corn, corn grits, cornmeal, hominy, corn flour, starch from corn, corn oil, corn syrup, or glucose.
Rice, rice flour.
Dried beans.
86 LECTURES ON CONSERVATION.
Pea seed or dried peas.
Cotton seed, cottonseed oil, cottonseed cake, or cottonseed meal, peanut oil or peanut meal.
Soyo bean oil, soyo bean meal, palm oil or copra oil.
Oleomargarine, lard, lard substitute, oleo oil or cooking fats.
Milk, butter, or cheese.
Condensed, evaporated or powdered milk.
Fresh, canned or cured beef, pork or mutton.
Poultry or eggs.
Fresh or frozen fish.
Fresh fruits or vegetables.
Canned peas, dried beans, tomatoes, corn, salmon or sardines.
Dried prunes, apples, peaches, or raisins.
Sugar, syrups, or molasses.
Bakery products.
Exceptions. — " (1 ) 0 perators of elevators or warehouses handling wheat or rye, and manufacturers of derivitive products of wheat or rye, who have already been licensed.
"(2) Operators, manufacturers, and refiners of sugar and manu- facturers of sugar syrups, and molasses who have already been licensed.
"(3) Retailers whose gross sales of food commodities do not exceed $100,000 per annum.
"(4) Common carriers.
"(5) Farmers, gardeners, cooperative associations of farmers or gardeners, including live stock farmers, and other persons with respect to the products of any farm, garden or other land owned, leased, or cultivated by them.
" (6) Fishermen whose business does not extend beyond primary consignment.
"(7) Those deahng in any of the above commodities on any exchange, board of trade, or similar institution, as defined by Section 13 of the Act of August 10, 1917, to the extent of their dealings on such exchange or board of trade.
"(8) Millers of corn, oats, barley, wheat, rye, or rice operating only plants of a daily capacity of not less than seventy-five barrels.
"(9) Canners of peas, dried beans, corn, tomatoes, salmon, or sardines whose gross production does not exceed 5,000 cases per annum.
"(10) Persons slaughtering, packing and distributing fresh, canned or cured beef, pork or mutton, whose gross sales of such commodities do not exceed $1,000,000 per annum.
"(11) Operators of poultry or egg packing plants, whose gross sales do not exceed $50,000 per annum.
LECTURES ON CONSERVATION. 87
"(12) Manufacturers of maple syrup, maple sugar, and maple compounds.
"(13) Ginners, buyers, agents, dealers, or other manufacturers of cottonseed who handle yearly between September 1 and August 31, less than 150 tons of cotton seeds."
APPLICATION OF LICENSE SYSTEM.
The first trades to be subjected to license were the elevators and mills, from which applications for licenses were called for in August. The first licenses to elevators and mills were issued August 14. Sugar licenses were put into effect in September, the first being issued September 24. When the President issued his Licensing Proclamation of October 8, these three, elevators, mills and sugar dealers were included in the general Hst to which license provisions were made applicable. To these twenty classes (enumerated under The President's Proclamation Analysed), all of which were to be under license by November 1, there were added November 16, manufacturers of bakery products. To the general order of licenses there has been recently added the class of Permits, prac- tically equivalent to licenses, issued to cover activities in branch offices, poisons (arsenic, etc.), alcohol and starch.
Number of licenses issued to December 8. — The licenses issued to December 8, fall into five general classes. Of Elevator Licenses there had been issued to October 10, when this class was by the President's Proclamation taken into the general list, 19,260 licenses. To mills there had been issued up to October 10, under the same conditions, 1,506 licenses. Of sugar licenses there had been issued 447. Of general licenses there have been issued to December 8, 37,551. Of bakers' licenses there have been issued to December 8, 8,561. This makes a total of 67,325 licenses issued to December 8. In addition to this about 250 permits have been issued. Summarized the figures stand as follows:
Number
19,260
1 ,506
447
37,551
8,561
Class |
Mark |
Elevators |
E |
Mills |
M |
Sugar |
F |
General Commodity |
G |
Bakers |
B |
Total licenses issued to December 8 67 ,325
General explanation of principles of license. — The regulations and constructive methods of control by which the general prin- ciples of license should be adininistered were worked out through
88 LECTURES ON CONSERVATION.
some 200 conferences held with representatives of various trades and consumers' organizations before the regulations were pro- mulgated.
On October 10 the following statement was issued in general explanation of the President's licensing proclamation of October 8: "It has been the desire of the Food Administration to enlist the cooperation of all patriotic men in the various trades so as to eliminate speculation, hoarding, unreasonable profits, wasteful practices, etc., in the great distribution system of the country."
Scope of licensing provision. — "The licensing provision in the food bill is limited in operation to the channels of trade which lie between the farmer on the one hand and the retailer on the other, except as it extends to those few retailers who do an annual business of more than $100,000.
"Selecting about 20 basic commodities and their products as constituting the prime necessaries of life, the licensing control of the Food Administration confines itself to these commodities and also, so far as possible, to the larger business units dealing in these staples, leaving undisturbed the smaller concerns.
"It is the purpose of the Food Administration to effect con- servation in the commercial use of these commodities and to keep them flowing toward the consumer in direct lines through the channels of trade in as economical a manner as possible. The administration does not wish to disturb the normal and necessary activities of business, and no business factor who is performing a useful function will be expected to surrender that function.
Purposes served by licenses. — "The administration is, however, charged with several duties :
"The producer must have a free outlet and a ready market.
"There must be no manipulation or speculation in foods.
"There must be no hoarding in foods.
"Unfair or unreasonable profits must be eliminated.
"Discriminatory and deceptive and wasteful practices which in any way restrict the supply or distribution must be stopped.
"These are the provisions of the food law. The licensing system which was authorized by the law provides a more effective ma- chinery for its enforcement. It must not be thought that these operations become illegal only upon the issue of licenses. They have been illegal since the 10th of August when the law was passed, and numerous cases coming to the attention of the Food Administration have been corrected. The licensing has the effect of giving definition to the provisions of the bill and the practices which the trades should respectively follow in connec- tion therewith."
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Method of application for license. — "Applications for license must be made to the United States Food Administration, Wash- ington, D. C, Law Department, License Division, on forms pre- pared by it for that purpose, which may be secured on request.
"Any person, firm, corporation, or association other than those hereinbefore excepted, who shall engage in or carry on any busi- ness hereinbefore specified after November 1, 1917, without first securing such license will be Hable to the penalty prescribed by said act of Congress."
DIGEST OF RULES AND REGULATIONS RELATING TO LICENSE.
Object of the regulations. — The objects of the regulations are:
"1. To limit the prices charged by every licensee to a reason- able amount over expenses, and forbid the acquisition of specu- lative profits from a rising market.
"2. To keep all food commodities moving to the consumer in as direct a line and with as little delay as practicable.
"3. To limit as far as practicable contracts for future deliv- ery, and dealings in future contracts."
GENERAL REGULATIONS.
Rules 1 to 4 require a licensee to render reports upon demand, to permit authorized inspection, to keep proper records, and provides regulations therefor.
Rule 5 forbids unjust, exorbitant, unreasonable, discrimi- natory, or unfair commissions, profits, and charges.
Rule 6 requires the licensee in selling food commodities to keep them moving in as direct a line as practicable and without un- necessary delay.
Rules 7 and 8 limit buying and selling of food commodities to those engaged in their distribution and use, thus restricting brokerage.
Rule 9 provides that certain commodities shall be shipped only upon certain prescribed minimum weight per car load.
Rule 10 forbids buying, holding or handling goods for the pur- pose of unreasonably increasing the price or restricting the supply.
Rule 12 requires licensee to report changes of address and char- acter of business.
Rule 13 forbids licensee to keep on hand food commodities in quantity in excess of reasonable requirements for use or sale by him during a period of sixty days, with stated exceptions.
Rules 14 and 15 extend the appUcation of Rule 13 to forbid selling to one known to have a supply beyond legal requirements, and to forbid making contracts to sell.
90 LECTURES ON CONSERVATION.
Rule 17 forbids sale to those who violate provisions of the Food Control Law.
Rules 18 to 22 make detailed regulations to govern trading of licensees, and interpreting words and terms.
SPECIAL REGULATIONS.
In addition to the general regulations, certain special regula- tions were promulgated to apply to different trades and busi- nesses, as follows:
a) Commission merchants, brokers, auctioneers. — The rules pro- vide among other things against charges in excess of the ordinary charge under normal conditions, against taking both commission and profit, and against split commissions.
b) Wholesalers, retailers, and other dealers in cleaned rice, rice flour, oleomargarine, lard, lard substitutes, oleo oil, cooking fats, condensed, evaporated or powdered milk, fresh canned and cured beef, pork or mutton, canned peas, canned dried beans, canned tomatoes, canned corn, canned salmon, canned sardines, dried prunes, dried apples, dried peaches, dried raisins, syrups, molasses and clarified, plantation-washed and open-kettle sugars.
"Rule 1. The licensee shall sell the above food commodities at not more than a reasonable advance over the actual purchase price of the particular goods sold, without regard to the market or replacement value at the time of such sale."
c) Licensees engaged in handling dried beans and dried peas. — The rules protect the supply of seed by setting dates before which the new crop may not be sold and provide other regulations.
d) Wholesalers, retailers, and other dealers in milk, butter, cheese, poultry, eggs, fresh fruit, fresh vegetables, fresh and frozen fish. — Rule 1 forbids sale of poultry, eggs, butter and fish which have been held for a period of thirty days or over in a cold storage warehouse without display of a placard marked, "Cold Storage Goods."
Rule 2 requires that the licensee shall not ship or sell for food purposes potatoes which are not practically free from injury and decay.
e) Grain elevators, dealers and millers. — Rule 1 requires storage space in warehouses and elevators to be placed at the command of the Food Administration.
Rules 2 and 3 limit the time which grains may be held in storage to thirty days.
Rule 4 limits quality and percentage of wheat to be used in manufacturing poultry feed.
LECTURES ON CONSERVATION. 91
Rules 5 to 8 limit grains to be kept on hand in different cases to the equivalent of the aggregate output or consumption for thirty days.
Rule 9 stipulates the use of prescribed forms of contracts in sales of twenty-five barrels or more of wheat and rye flour. It forbids sale of smaller amounts on terms less favorable than lots of twenty-five barrels.
Rule 13 limits profits of those engaged in milling flour and feed from wheat to twenty-five cents per barrel in the case of flour, and fifty cents per ton for feed.
/) Rice millers and dealers in rough rice. — Rule 1 limits amount of rough rice in hand to equivalent to the output for twenty days.
g) Licensees in business of canning food products.- — Rule 1 for- bids quoting for future packing or delivery canned peas, corn, tomatoes, salmon or sardines before February 1 of the year in which these are to be canned.
Rules 2 and 3 forbid selling for future delivery these products in excess of seventy-five per cent of capacity.
Rule 7 forbids the canning in tin plate containers of dried beans and dried peas without special permission.
h) Wholesale dealers in plantation-washed, clarified and open- kettle sugars. — Sale of plantation-washed, clarified and open- kettle sugar is forbidden except to retailer, manufacturer, or consumer.
i) Manufacturers of beet sugar. — Rule 1 requires that carload shipments be made in carload lots of 60,000 pounds each.
Rules 2 and 3 limit the sales of producers to Hcensees, whole- salers, retailers, manufacturers and consumers.
Rule 7 limits brokers' fees to five cents per hundred pounds on any sale.
j) Refiners of cane sugar.— Rule 1 requires carload shipments to be not less than 60,000 pounds each.
Rule 2 limits buying and selling to licensees.
Rule 3 forbids contracts for sale of sugar for shipment after thirty days.
Rule 4 forbids the sale of sugar except to wholesalers, retailers, manufacturers, and consumers.
Rule 6 limits brokers' charge to 34 of 1 per cent of the value of the raw sugar.
k) Licensees engaged in manufacture and dealing in cotton seed and vegetable oil products. — -The regulations for cotton seed and vegetable oil may be summarized as follows:
A crusher of cotton seed will not be permitted to have on hand or under contract any greater quantity of cotton seed than is
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equal to his normal crush for sixty days, nor to hold any cotton seed for a longer period than sixty days except during the period of actual operation of his mill.
Crushers will not be permitted to hold any oils for a longer period than sixty days or to have on hand at any time a quantity of oil exceeding their production for thirty days.
Crushers will not be permitted to buy or sell any cottonseed oil other than their own manufacture.
Dealers in cottonseed meal and cake will not be allowed to have any contract for shipment or delivery m,ore than sixty days from date of such contract.
A general provision is that no licensee shall have on hand or under contract any cotton seed or cottonseed products in excess of the reasonable requirements of his business for a reasonable time.
The profit on any sale of cotton seed, cottonseed oil, meal or cake is to be determined not by the market or replacement value at the time of the sale, but is to be no more than a reasonable advance over the cost and expense of doing business.
I) Cold storage warehouses. — Of these, special definitions and classifications are provided, a cold storage warehouse being held to be "any place artificially or mechanically cooled to or below a temperature of 45 degrees above zero Fahrenheit in which food products are placed and held for thirty days or more." Ware- houses are classified as Public, engaged in storing for "hire and compensation"; Private, operated as adjuncts to other business and serving it exclusively; and Combined Public and Private, combining both activities.
The Special Rules require that no public warehouseman shall have an interest in the food products stored in his warehouses; that combined Public and Private Warehouses shall clearly in- dicate the dual capacity in all warehouse receipts issued; that service charges shall be stated by all licensees; that no higher charge shall be made than that indicated in the official blank; that loans on commodities shall be limited to a maximum of seventy per cent of the market value; that the stamp "Cold Storage" be used on all fresh meat, fish, game, poultry, dairy products, etc.; and that no tainted or diseased products shall be held in storage.
m) Licensees manufacturing bakery products. — Rules 1 to 5 require the keeping of stipulated records and prescribe rules for these.
Rule 6 forbids manufacture, distribution or sale at unjust or exorbitant profit.
LECTURES ON CONSERVATION. 93
Rule 7 requires the licensee in selling bakery products to keep them moving to the consumer in a direct line.
Rules 8 and 9 forbid manipulation for increasing the price or restricting the supply and forbid destruction and waste of bakery products.
Rule 10 stipulates that the flour on hand shall not exceed reasonable requirements for thirty days.
Rule 11 restricts trade of the licensee to those observing^the provisions of the act of August 10.
Rule 13 forbids the licensee to accept returns of bread.
SUMMARY OF GENERAL AND SPECIAL REQUIREMENTS.
Summarizing the general and special regulations as these apply to licensees we find that the following stand out promi- nently: 1^ The licensee shall not knowingly commit waste.
Shipments are to be made in carload lots of stipulated mini- mum weights.
The stock in hand is to be not larger than the equivalent of requirements for a normal output or overturn twenty, thirty or sixty days in the several classes. ■
There are to be no contracts in futures.
Dealings are to be with licensees or with those who will sign a licensee's contract.
In some cases, notably those of millers of flour and brokers in sugar, maximum rates of profits are stipulated.
SPECIAL MEASURES ASIDE FROM LICENSING.
We have now reviewed the general measures undertaken with a view to standardizing trading and manufacture and to secure conservation in the creation, distribution, and consumption of our food commodities. As has been seen the measures have been made to apply to a limited number of food products, including such general classes, among others, as grains, meats, and fats, dairy products, poultry and eggs, vegetables. To date some of these have been subjected merely to the general regulations involved in the system of licensing and such special regulations as to license as may have been applied to the particular com- modity.
In the case of some large classes or divisions of commodities special supplementary measures have been undertaken. This is for the reason that these^as a rule provide their own distinct
94 LECTURES ON CONSERVATION.
problems. They have their own machinery of production and distribution. They have a speciaHzed personnel and procedure. These special measures apply particularly to the grains and flour, live stock and meat, and sugar.
WHEAT AND FLOUR.
The grains are of two general classes: those which are mainly used for human food and those which are mainly used for the feed of animals. Of the grains grown in the Americas and Europe for human food, wheat is by far the most important. We will consider the problem of wheat under three heads:
The Problem of Supply,
Measures of Voluntary Relief, and
Measures of Regulation and Control.
I. THE PROBLEM OF SUPPLY.
In considering the problem of supply of any world food com- modity, it needs to be kept in mind that supply is of two types: (a) absolute, and (b) relative to abnormal demand and dislo- cated shipping facilities. While a knowledge of the absolute supply is of interest, it is only the relative supply that is of im- portance in a consideration of the problem.
The absolute world supply of wheat as estimated upon the basis of the crops of 1917 is shown by the following tables:^
Probable North America Production Normal
1917 Consumption Surplus
United States 670,000,000 590,000,000 80,000,000
Canada 250,000,000 100,000,000 150,000,000
Total surplus 920,000,000 690,000,000 230,000,000
The surplus in other countries is shown by the following table:
Australia:
Present surplus 120,000,000
New-crop surplus 120,000,000
India:
Present surplus 50,000,000
New-crop surplus 70,000,000
Argentina:
Estimated surplus from January harvest 180,000,000
Total 540,000,000
'United States Food Administration, Bulletin No. 10, Thoughts Concerning a National Policy for Grain and Live Stock in Time of War, by Herbert Hoover, p- 4.
LECTURES ON CONSERVATION. 95
Wheat situation in France, Italy, the United Kingdom, and Belgium.
Bushels Bushels
Three-year pre-war average imports from United
States 79 ,426 ,000
Three-year pre-war average imports from Canada 112 ,900 ,000
Three-year pre-war average imports from else- where 188,478,000
Total 380,804,000
Average production 590 ,675 ,000
Estimated production for 1917 393,770,000
1917 deficiency 196 ,905,000
Total imports required to maintain
normal consumption 577,709,000
These tables show that if the wheat crop of the world outside of the Central Powers and Russia were available for the Allies, and if the demand were normal, there would be no wheat problem the present year, for the surplus of North America, South Amer- ica, India, and Australia is 770,000,000 bushels. Not only would this be sufTicient to meet all of the needs of the Allies but there would be left nearly 200,000,000 bushels. However, the wheat of Australia, India, and Argentina will be available only to a small extent because the voyage from these countries to France and England is three times as long as that from North America; and therefore to deliver a given quantity of wheat requires three times as much shipping tonnage. The shortage of shipping due to the submarine campaign is so acute that every ship will be required to perform the largest possible duty in carrying material to the Allies; and it should be remembered in this connection that not only must wheat be transported, but vast quantities of other human foods as well as animal foods, munitions, and supplies of many kinds.
Because of this situation, the Austrahan, Indian, and Argen- tine wheat will be available only to such small extent as sailing vessels can bring the product from Australia and Argentina to the United States, for no sailing vessel can go directly to the Allies' ports because of the submarine danger.
The great shortage. — ^It therefore follows that the only available resource of wheat in large quantity for the Allies is North Amer- ica; and if the United States and Canada consumed a normal amount of wheat, there would be only 230,000,000 bushels to send to the Allies, whereas the need of the Allies to maintain their normal consumption is 577,000,000, or nearly 350,000,000 more than the available surplus.
96 LECTURES ON CONSERVATION.
There is no possibility that this amount of wheat can be fur- nished the Allies. If, however, we share the deficiency alike, this would require us to decrease our consumption by 175,000,000 bushels which could go to the Allies; and still they would have to make good by substitutes the equivalent of. 175,000,000 bush- els. Even on this basis we would be treating ourselves better than we did the Allies, for in Great Britain, France, Italy and Belgium there are more than 100,000,000 people. In this coun- try, also, we have great quantities of excellent substitutes which we are accustomed to using to a large extent; whereas in Europe substitutes are lacking; indeed in large measure we must fur- nish them from our vast supplies.
Production in France. — How desperate is the situation may be illustrated by the rapidly declining production of food in France. The Minister for General Revictu ailing, Mr. Maurice Long, says that in 1913 France produced 87,830,000 hundred-weights of wheat; in 1914, 76,930,000 hundred-weights; in 1915, 60,630,000; in 1916, 58,410,000; and in 1917 but 39,900,000 hundred-weights, or less than one-half of the crop of 1913.
In foodstuffs, which comprise all cereals and include potatoes and beetroot, the 1913 production of 358,000,000 hundred- weights had declined in 1917 to only 222,000,000 hundred- weights.
Using the production of 1913 as a basis, the 1917 wheat crop of France is short 53.3 per cent or 176,000,000 bushels; the potato crop is short 33.1 per cent or 165,000,000 bushels; the sugar beet crop is short 67.9 per cent or 148,000,000 bushels; the number of cattle has declined 16.5 per cent or 2,435,000 head; the number of sheep has declined 36.6 per cent or 5,535,000 head; the number of hogs has been lessened 40.2 per cent or 2,825,000 head. Mr. Long estimated the requirements of France this year could be held down to 40,000,000 hundred-weights of .cereals.
It is clear that if the United States is to accomplish anything like what is necessary it can be done only by the drastic economies both of a voluntary and mandatory order. As we have seen, if we could reduce the consumption of flour in North America by one pound per capita per week, there would be available for export 150,000,000 additional bushels of wheat. It is clear that this large problem can not be handled entirely by methods of voluntary conservation already described, for there are also the problems of a reasonable price and the distribution of the short supply. To accomplish these ends a basic price for wheat was fixed and the Grain Corporation was established.
LECTURES ON CONSERVATION. 97
THE FIXING OF A BASIC PRICE.
Some review of the history of price fixing seems to be called for.
The power to fix prices is not specifically accorded to the President. Section 2 of the Food Control Act authorizes the President to purchase, store, and "sell for cash at reasonable prices" wheat, flour, and meal, beans and potatoes, thus infer- entially granting power to the Food Administration, the agent of the President, to fix prices for these. Price fixing is not a general function of the Food Administration.
The one case of price fixing in the Food Control Act is that covered in Section 14. This provides that "the guaranteed prices for the several standard grades of wheat for the crop of nineteen hundred and eighteen shall be based upon number one northern spring or its equivalent at not less than $2.00 per bushel at the principal interior primary markets."
The basic price of wheat for 1917. — Following the action of Congress in setting the price of wheat for 1918, it became neces- sary to stabilize the price of wheat for the current year 1917. This action was based upon the following premises quoted ver- batim from the statement of the Food Administrator for August 12.
"The disturbance to the world's commerce and short supplies has caused a greater disruption of the normal markets for wheat than any other cereal.
"1. As a result of the isolation of certain of the world's wheat- producing countries by either belligerent lines or short shipping the normal determination of the price of wheat by the ebb and flow of commerce is totally destroyed.
Allies have one buyer. — "2. In order to control speculation and to secure more equitable distribution of the available wheat and flour between their countries, the allied governments have placed the whole purchase of their supplies in the hands of one buyer. Also the European neutrals are now buying their wheat through single Government agents instead of in the normal course of commerce. Therefore the export price of wheat and flour, and thus the home price, if not controlled, will be subject to almost a single will of the foreign purchaser.
"3. In normal times American wheat moves largely to Europe in the fall months. This year the shortage of shipping necessitates its distribution over the entire year. Therefore there is danger of a glut in our warehouse system over a considerable period.
"4. There are large stocks of wheat which can not be drawn upon by the allies during the war, but in the event of peace or s
98 LECTURES ON CONSERVATION.
defeat of the submarines, these would be available and might seriously demoralize the demand for American wheat.
Two-dollar wheat applies to 1918 crop. — "5. It must be clearly understood that the guaranteed minimum price of %2 per bushel for wheat, set out in the food bill, does not apply to the 1917 harvest, but only to the 1918 harvest, and then under conditions which must be elaborated. There is therefore no determined price for the 1917 harvest.
"The result of this situation is that the normal price-making machinery is entirely broken down unless some efficient Govern- ment action is brought into play, either (a) the American pro- ducer may face a slump in wheat, possibly below his production cost, and (b) the export price of wheat which ultimately deter- mines the real price, is at the will of a single agency; (c) some one must buy the surplus wheat at any given moment, and if the surplus passes into speculative hands it will be held for higher prices later in the year; (d) with stabilized prices, extra hazards are introduced into all distribution links which must be paid for by the consumer. It must be evident that the United States Government can more justly deal with the situation than any of the agencies mentioned."
Consequent upon these premises the following course was determined upon: (a) The licensing of elevators and mills; (b) the substitution of government agencies for the broken down market- ing machinery; (c) the fixing of a fair price to be paid in govern- ment purchases.
Price fixing committee. — On August 15, the President announced the appointment of a committee to determine a fair basic price to be paid in government purchases of wheat, and at the same time announced the plan of the machinery by which governmental agencies would operate. The latter topic will be treated under the head of Grain Corporation. The fair price committee con- sisted of producers, dealers, and consumers of wheat. The con- stitution of the committee was as follows : I President H. A. Garfield, Williams College, Chairman. W Charles J. Barrett, President, Farmers Union, Union City, Ga. FfeWiHiam N. Doak, Vice President, Brotherhood of Railroad Trainmen, Roanoke, Va.
Eugene E. Funk, President, National Corn Association, Bloomington, 111.
Edward F. Ladd, President, North Dakota Agricultural College, Fargo, N. Dak.
R. Goodwyn Rhett, President, Chamber of Commerce of the United States, Charleston, S. C.
LECTURES ON CONSERVATION. 99
J. W. Shorthill, Secretary, National Council of Farmers Cooperative Association, York, Neb.
James W. Sullivan, American Federation of Labor, Brooklyn, N. Y.
L. J. Tabor, Master, Ohio State Grange, Barnesville, Ohio.
Frank W. Taussig, Chairman, Federal Tariff Commission, Washington, D. C.
Theo. N. Vail, President, American Telephone and Telegraph Company, New York City.
Henry J. Waters, President, Kansas State Agricultural College, Associated with Department of Agriculture, Manhattan, Kan.
On August 30 President Wilson announced that a price had been fixed for No. 1, northern spring wheat or its equivalent at Chicago of $2.20 per bushel. This was done upon the unanimous recommendation of the price fixing committee. In recommending this price the committee stated that it had taken into account both the necessity for encouraging the producer and the necessity for reducing the cost of living to the consumer. Obviously the price should not be made so low as to discourage the farmer in increasing the production of wheat. The farmers must be returned not only the cost of their production, but a fair and probably a liberal profit. On the other hand, in order to relieve the con- sumer from the excessive cost of flour which has obtained, the price of wheat must be reduced as low as possible. The problem was to strike the golden mean between these two necessities; and as we have seen the judgment of the committee was $2.20 for No. 1 northern spring or its equivalent at Chicago.
With the basic price fixed, the prices of the different varieties of wheat at the principal markets are shown by the following table :
TABLE OF PRICES AT INTERIOR PRIMARY MARKET.
No. 1 Hard Winter, No. 1 Red Winter, basic grades, equivalent of No. 1 Northern Spring.
Government Government
Price Price
No. 1 Dark Hard Winter $2.24 No. 1 Humpback $2.10
No. 1 Hard Winter, basic 2 .20 No. 1 Amber Durum 2 .24
No. 1 Red Winter, basic 2.20 No. 1 Durum, basic 2.20
No. 1 Yellow Hard Winter 2 .16 No. 1 Red Durum 2 .13
No. 1 Soft Red Winter 2.18 No. 1 Red Walla 2.13
No. 1 Dark Northern Spring.... 2.24 No. 1 Hard White, basic 2.20
No. 1 Northern Spring, basic... 2 .20 No. 1 Soft White 2 .18
No. 1 Red Spring 2.18 No. 1 White Club 2.16
No. 2 of grade, 3 cents less
No. 3 of grade, 6 cents less <
No. 4 of grade, 10 cents less
100 LECTURES ON CONSERVATION.
Relative Market Basis.
Kansas City, 5 cents less New Orleans, basis
Omaha, 5 cents less ' Galveston, basis
Duluth, 3 cents less Buffalo, 5 cents more
Minneapolis, 3 cents less Baltimore, 9 cents more
St. Louis, 2 cents less Philadelphia, 9 cents more
Chicago, basis New York, 10 cents more
THE GRAIN CORPORATION.
The establishment of the Grain Corporation was forecast in a statement issued by the Food Administrator on August 12 when it was announced that the Government would open agencies for the purchase of all wheat at the principal terminals, these agencies to be in substitution for the broken down marketing machinery of commerce. "In undertaking the purchase of wheat, it was determined to dislocate the normal machinery of the grain and other trades, to the least degree possible, consonant with the elimination of speculation, and, therefore the Food Administra- tion determined to make its purchases at the primary interior terminals through the already existing marketing machinery of the country, and to follow the customs of the trade as closely as possible in its operations. Finance for these operations was pro- vided by the United States Treasury, but the ordinary machinery of the Treasury for making purchases and receiving money for routine government expenditure, was found ill adapted to trad- ing operations." It was therefore determined to set up a corpora- tion after the fashion of the Emergency Fleet Corporation, the whole of the stock of which should be owned by the United States Government. The United States Food Administration Grain Corporation was organized by the authority of the Presi- dent, with a capital of $50,000,000, its direction being in the hands of the Grain Division of the Food Administration and its officers as follows:
Board of Directors Herbert Hoover, Chairman Watson S. Moore Julius H. Barnes Darwin P. Kingsley
Gates W. McGarrah Frank G. Crowell J. W. Shorthill
Officers President, Julius H. Barnes Vice President, Frank G. Crowell Secretary, Watson S. Moore Treasurer, Gates W. McGarrah Counsel, Curtis H. Lindley Transportation, Edward Chambers
LECTURES ON CONSERVATION. 101
Working in cooperation with the Grain Corporation was the United States Millers' Division of the Food Administration com- prised of the following gentlemen representing nine milling zones of the country:
Chairman, James F. Bell, Minneapolis, Minn.
Secretary, A. P. Husband, Chicago, 111.
Northwest: Albert C. Loring, Minneapolis, Minn.
Southwest: Andrew J. Hunt, Arkansas City, Kan.
Southeast: E. M. Kelly, Nashville, Tenn.
St. Louis and Illinois: Samuel Plant, St. Louis, Mo.
Ohio Valley: Mark N. Mennel, Toledo, 0.
Chicago and Milwaukee: Bernard Eckhardt, Chicago, 111.
North Pacific Coast: Theo. B. Wilcox, Portland, Ore.
South Pacific Coast: S. B. McNear, San Francisco, Cal.
Eastern: Fred J. Lingham, Lockport, N. Y.
Plan of operation of the grain corporation and milling division. — The following is selectively quoted from the handbook of the Policies and Plan of Operation, Food Administration Grain Cor- poration and Milling Division.
"The Executive Officers at New York, as well as the thirteen (13) Second Vice-Presidents, act without remuneration and in an entirely voluntary capacity and further have divested themselves of all financial interests in grain activities while this service con- tinues.
"Operative Organization. The United States is divided into fourteen (14) zones centering about geographically and commer- cially terminal markets.
"The Food Administration Grain Corporation is represented in each of the fourteen (14) zones resident at terminal markets by a Second Vice-President, who acts as Government buyer of wheat at that point. He is entrusted with the responsibility of administering the Grain Corporation in his particular zone and in cooperation with the Federal State Administrator as to en- forcement of the legal phase of the work."
Buying terms. — "The Grain Corporation will buy grain only as unloaded in elevators at terminal points where a Zone Repre- sentative of the Grain Corporation is located, either in form of elevator receipts or because unloaded in mills under agents' directions.
"Direct consignments to the Grain Corporation will be subject to one per cent (1%) administration charge. Shipments to the Government are not encouraged on account of the extraordinary service required for grading, etc., and multiplication of Govern- rhent machinery. It is expected that regular trade channels,
102 LECTURES ON CONSERVATION.
with their organizations built up through years of experience, can more efficiently, and with less expense, care for this business.
Licenses. — "(a) Under the law all elevators handling wheat or rye, and all mills of over 100 barrels, must have licenses, but elevators that do not handle wheat or rye may claim exemption if they desire under present regulations.
"(b) All applications for licenses should be made to License Division, Law Department, Food Administration, Washington, D. C. Grain Corporation Agents have license application blanks to forward on any request and facilitate issuing.
"(c) After the application is executed and forwarded to Wash- ington, the elevator or mill may continue to operate, until ad- vised application refused, for a reasonable time.
"(d) These licenses were required by September 1 and ele- vators or mills requiring such licenses now operating without same are subject to the penalties of the law.
"(e) License conditions require no storage of wheat or rye for anyone except the Food Administration for longer period than 30 days, but in special instances the New York Agency of the Food Administration will modify these regulations on a proper show- ing made by request on the prescribed form, which must be signed by the miller desiring such modifications, approved by the divi- sion milling committee, endorsed by the zone grain agent, and forwarded to the general office.
"(f) License regulations as to 30-day storage, of course, will be replaced, if under the general agreement of the Grain Corpo- ration with elevators, the Grain Corporation directs the retention of stocks of wheat in store.
"(g) The elevator operator must protect himself against diffi- culties through any conflict with the storage regulations. The Food Administration suggested a wording for a clause giving the elevator the right to sell stocks on expiration of 30 days; this clause to be added to warehouse receipts and storage tickets issued September 1. The Food Administration does not re- quire this clause, but will require the elevator operator to see that no storage is allowed longer than 30 days, except for the Food Administration, this 30-day limitation applying only to wheat and rye.
Relations with terminal elevators. — "(a) If the Food Adminis- tration requires space for wheat or other supplies needed for allied or domestic movement, it may exercise powers to requisi- tion storage space, regardless of such space being used for other grain or regardless of outstanding contracts for such space, but it will do this only as last resort.
LECTURES ON CONSERVATION. 103
"(b) An agreement has been definitely entered into with the terminal elevators that grain shall not be mixed except under the direction of the Food Administration. The terminal elevators will be protected in their business and the Food Administration protected in the character of the grain which it handles and dis- tributes by prohibiting intermediate points from mixing or treating grain for higher grade.
"(c) Elevators are expected to protect themselves by some form of warehouse receipt worded so as to comply with the license regulations prohibiting storage of wheat or rye beyond thirty days.
Relations with country elevators. — "(a) Country elevators or operators are free to buy without regulation, except that against unfair practices. We expect these country buyers will operate on terminal prices, less freight and a fair profit, using their judg- ment as to the conduct of their business and the shipments until we exercise the right under voluntary agreements with them to retain stocks in their country elevators, subject to our shipping directions. There is no reason for country elevators to retain their own account, as the stabilized price furnishes no carrying charge.
"(b) Country elevators and elevators at intermediate points are now generally entering into the general elevator agreement. This contract gives the Grain Corporation the right at any time to order the retention of stocks by paying one-fifteenth (1-15) per cent per day to cover storage, insurance, and interest. It gives the Grain Corporation the right to direct shipments at any time after such retention by adjusting the returns f.o.b. elevator to be equal to a direct shipment by the elevator to its natural commercial terminal at which the Grain Corporation operates. The Grain Corporation guarantees the elevator at all times, whether or not it has exercised its option for retaining storage, against a fall in the price level of the Grain Corporation at the terminal market to the extent of all unsold stock in store or in transit. The Grain Corporation proposes to use this reten- tion right to form milKng reserves when figures indicate certain sections are approaching depletion.
"(c) License regulations as to 30-day storage may be'modified by contract.
"(d) Country elevators should protect themselves by some form of warehouse receipt wording so as to comply with the license regulation prohibiting storage beyond thirty days.
"(e) Country elevators desiring to trade direct with the mills may of course do so, but mills may be governed by the milling agreement by which no mill, even after approved permission.
104 LECTURES ON CONSERVATION.
dealing direct with the country elevators shall pay closer than one cent less freight discount under terminal price f.o.b. point of origin. But, if a zone agent approaches the country elevator to supply a mill by diversion, then the basis in our elevator contract applies and the f.o.b. price may be just freight discount under the terminal price.
Relations with the mills. — -"(a) The Food Administration Grain Corporation comes into contact with the millers of the United States through a Millers' Division, with headquarters at No. 74 Broadway, New York. The United States is divided into nine (9) divisions with a representative of the mills resident in each division acting as Division Chairman.
"(b) Voluntary agreement with mills has been generally executed.
"(c) Grain Corporation rules governing mills under agreement prohibit disturbances of fair price level and require mills buying in terminal markets to do so through Grain Corporation Agency. Mills located outside of terminals and customarily buying wheat outside of terminals may buy outside of Grain Corporation Agency, but at point of purchase basis must not under the agree- ment exceed freight discount under terminal market price and should leave a margin for local grain operators.
"(d) Milling operation really started September 4 by volun- tary act of almost all mills, while agreement became actually effective September 10.
"(e) Mills entering agreement with Grain Corporation will be assisted in every way possible, in way of car supplies, cooperation in the formation of milling reserve stocks, assurance of export business, etc."
Seed policies. — "(a) Seed stocks are encouraged in their forma- tion and our policy is to encourage their formation under private enterprise. A special form of application for modification of license regulations allowing the storage of wheat and rye for seed has been prepared. This modification limits the profit on seed stock to 15 per cent. It requires that the application be sent to the Zone Agent, who will forward it, with his recommendation, to the general office where it will be registered and numbered if approved. All grain zone agents have this blank for distribution on request.
"(b) Seed stocks are desirable. The United States Department of Agriculture has a special Seed Committee to assist in the selection of seed stocks. (Address W. 0. Oswald, 326 Flour Exchange, Minneapolis, where information and aid can be readily obtained.)
LECTURES ON CONSERVATION, 105
"(c) As to seed wheat which farmers may wish to put in store in elevators for preservation until seeding time, such action requires special permission by the Food Administration and the case should be put before the General Office in New York with full details. Every effort will be made to encourage under wise restrictions the creation of seed stocks by farmers for their own use, but not for sale at substantial advances.
Canadian relations. — ^"(a) The control of grain prices in Canada rests with the Board of Grain Supervisors for Canada. They have established a price basis for the Canadian Grades at the Lake ports of Fort William and Port Arthur, by which their No. 1 northern wheat is fixed at $2.21, the same price as No. 1 dark northern wheat at Duluth on Lake Superior, and as compared with the Chicago prices of $2.24 for No. 1 dark northern wheat and No. 1 dark winter wheat.
"(b) No shipment can be made from Canada into the United States without the permission of the Canadian Board of Super- visors, and the Canadian Board of Supervisors will not consider any requests unless endorsed by the United States Food Admin- istration through the Grain Corporation." (Policies and Plan of Operation, Food Administration Grain Corporation, pp. 15, 16, 17.)
Rules and regulations governing flour millers. — The following is quoted from the Rules and Regulations governing the conduct of Flour Millers Operating under Agreement with the United States Food Administration:
"No miller shall hereafter take any profits upon the business of milling flour and feed, in excess of the following maximum, unless such maximum is terminated by action of the United States Food Administration after thirty days' notice; that is, a maxi- mum average profit of twenty-five (25) cents per barrel on flour and fifty (50) cents per ton on feed; and in calculating such profits the cost of flour bulk at the mill shall be determined at the cost of cleaned wheat used multiplied by the actual amount of wheat used (which in no event shall be in excess of 285 pounds of cleaned sixty pounds per bushel wheat, to the barrel), less the amount secured from the sale of feed (excluding the profit derived from the sale of feed not to exceed fifty (50) cents per ton as above), plus the actual cost of production (which shall not include inter- est on investment) and marketing.
"The aforesaid method of ascertaining cost shall apply to one hundred (100) per cent flour and the cost of the different per- centages in the patent division shall vary relatively to the re- turns derived from the sales of lower grades of flour and feeds.
106 LECTURES ON CONSERVATION.
"Any profits in excess of the above profits are hereby deter- mined by the United States Food Administrator under the power vested in him by Section 5 of the Act of August 10, 1917, known as 'The Food Control Act' and the executive order of the Presi- dent, dated August 10, 1917, creating the United States Food Administration, to be unjust and unreasonable."
Actual transactions. — While the Grain Corporation is in a posi- tion to handle all of the wheat of the country, if necessary to carry out the purposes of the regulations cited, as a matter of fact it has directly handled a relatively small proportion of the total. For the most part, the Grain Corporation brings together the buyer and the seller, or keeps informed concerning their rela- tions. Thus the committee buying for the Allies purchases di- rectly. The miller also buys directly from the seller. However, they carry on these transactions at the same prices paid by the Grain Corporation in similar cases.
Also in controlling the grain, it has been the pohcy to carry it directly from the sources to the places where it will be exported or milled. In consequence of this Chicago and St. Louis receive a much smaller amount of the 1917 crop than heretofore. The price at Chicago has controlled the price of this commodity. This fact consequently made that market a magnet to which the grain was brought in vast quantities and from which it was distributed. To a less extent this was true of other large markets.
Through the control of distribution, the grain which goes abroad is largely shipped from the Gulf ports and thus has a relatively short haul by rail. This also is a great advantage since the wheat directed to the South avoids the congested roads to the East.
The wheat in the Northwest to be used for flour goes directly to the Minneapolis and other northwestern mills. Since the wheat of the United States and Canada has been pooled, the mills at Buffalo and Eastern points are supplied by Canadian grain.
STANDARDIZATION OF BREAD.
In a further effort to effect economies in wheat products, as well as fats and sugar, there have been issued, effective December 10, Special Rules and Regulations Governing Licensees Manu- facturing Bread and Rolls.
"Rule 1. The Ucensee shall manufacture bread and offer it for sale only in the following specified weights, or multiple thereof, which shall be net weights, unwrapped, twelve hours after baking:
"16-ounce units (not to run over 17 ounces)
LECTURES ON CONSERVATION. 107
"24-ounce units (not to run over 253^ ounces)
"Where twin or multiple loaves are baked, each unit of the twin or multiple loaf shall conform to the weight requirements of this rule.
"Rule 2. The licensee shall manufacture rolls and offer them for sale only in units weighing from 1 to 3 ounces, but no rolls shall be manufactured or offered for sale which shall weigh, un- wrapped, twelve hours after baking, less than 1 ounce or more than 3 ounces.
"Rule 3. The standard weights herein prescribed shall be determined by averaging the weight of not less than twenty-five loaves of bread of any one unit, or five dozen rolls of any one unit, and such average shall not be less than the minimum nor more than the maximum prescribed by these rules and regula- tions for such units.
"Rule 4. The licensee in mixing dough for bread or rolls shall not use the following ingredients in amounts exceeding those speci- fied below, per unit of 196 pounds of any flour, or meal, or any mixture thereof:
"Sugar: Not to exceed 3 pounds of cane or beet sug&r or, in lieu thereof, 33^ pounds of corn sugar. Where sweetened con- densed milk is used, the licensee in determining the permitted amount of sugar, shall deduct the added sugar content of such condensed milk from the net amount of other sugar, of the kinds herein designated.
"Milk: Not to exceed 6 pounds of fresh milk from which the butter fats have been extracted, or the equivalent thereof.
"Shortening: No shortening shall be used except as follows: Not to exceed 2 pounds of "compounds" containing not more than 15 per cent of animal fats.
"Rule 5. The licensee in making bread or rolls shall not add any sugar or fats to the dough during the process of baking, or to the bread or rolls when baked."
Recommendations to bakers by the United States Food Adminis- trator.— "The United States Food Administrator earnestly urges all wholesale bakers to establish as the wholesale prices of their products the prices at which they will offer such products for sale in lots of twenty-five pounds or more, unwrapped, for cash, at the bakery door, the prices so established to be subject to such additional charges as may be fair for wrapping and delivering when such services are performed by the baker. The United States Food Administrator requests that, when such wholesale prices are established the licensee report this fact and state such prices to the Federal Food Administrator in the state where his bakery is located.
108 LECTURES ON CONSERVATION.
"Inasmuch as some wholesale bakers in certain communities are now retailing bread at their plants direct to the consumer, un- wrapped, undelivered, and for cash, at wholesale prices, the United States Food Administrator recommends that this practice be extended wherever bakers fmd it possible to do so, adding only sufficient extra charge to cover the extra expense.
"The United States Food Administrator, believing that fre- quent deliveries are uneconomical and tend to enhance prices, urges all bakers to reduce deliveries wherever possible to one a day over each route, and to consolidate deliveries or zone their territories in order to reduce the expense of deliveries as far as possible."
LIVE STOCK.
fThe general conditions under which the live stock situation has rested have been of great perplexity. It is therefore not desir- able at the present time to base conclusions entirely upon sta- tistical data.
The chief conditions governing live stock may be summarized as follows:
The increased consumption demand of great armies; the de- crease on account of the killing of cattle in Europe because of the high cost of fodder; the scarcity of cattle feed and the unusual drouth areas in the United States which have laid a burden on the live stock interest.
SUPPLY.
The herds of Europe, both for the Allied countries and the Central Powers, have been decreasing during the period of the war. This reduction has been due to several causes.
For the Central Powers, feed and fodder have not been im- portable on a large scale, although considerable amounts have been received from the neutral countries and especially Holland. For the Allies, it has not been possible to import a sufficient amount of feeds and fodder because of the insufficient shipping. From their point of view, on account of the larger than usual de- mand for foods for the vast armies, it has been much better policy to import meat and fat than to use cargo space for feeds and fodder. Feeds and fodder have been further reduced through an increased acreage of food grains. There has been a diversion of many millions of men and women to war and the manufacture of materials of war, so that there has been a shortage of agricul- tural labor. All these causes have led to a great decrease of the live stock for Europe.
LECTURES ON CONSERVATION. 109
SUGGESTED MEASURES OF RELIEF.
1. Voluntanj conservation by the consumer. — These have been sufTiciently explained under the head of saving.
2. Substitution. — ^The most important substitute for meat is fish. Steps have been taken to encourage the increase of the supply of fish to the consumer by established distributing cen- ters, opening up markets, increasing cold storage and preserving facilities, and obtaining better transportation facilities.
The number of wholesome species of fish is much larger than has heretofore been fully realized. Thus there are fifty varieties of salt water fish, whereas the principal trade has been confined to about a half a dozen of fresh water fish. There are fully three dozen species of edible fish. Plans for increasing the catch and consumption of fish have met with the enthusiastic cooperation of the fishing interests.
3. Municipal markets. — In accordance w^th the policy of the Food Administration local movements have been launched to solve local problems. One of these is the institution of municipal markets.
4. Measure of production. — The method of increasing the pro- duction of meat is discussed in the succeeding chapter on food production.
GENERAL CONSIDERATIONS.
There seems no reason why the herds of cattle, hogs, and sheep should not be greatly increased. Beginning with the harvest of 1917 there should be an abundance of feed and a surplus of fodder.
A forecast based upon a review of the meat situation gives every reason for increasing the herds of the United States. When the war ceases there is likely to be a surplusage of grain, and espe- cially of wheat. There is no possibility of a surplusage of live stock; for not only will the demand for export which now exists in Europe persist for France, England, and Italy, but the demands will come in even a more acute form from the Central Powers. Not only will there be a demand for meats and fats, but it will be necessary for Europe to import live stock again to build up their herds to the normal size. Thus, whatever the turn of events, whether the war continues a long or short time, there is a cer- tainty of high prices for live stock and their products.
Taking a still longer look, the increase in the herds will increase the value of the farms because of increased fertility of the land; and this in turn makes possible greater grain crops, and hence
110 LECTURES ON CONSERVATION.
there is advantageous action and reaction in the increase in the herds.
SUGAR.
GENERAL SITUATION.
With regard to sugar the situation until very recently was one of a practically uniform consumption on the part of the people of the United States along with a decreasing supply. Nearly one-half the sugar we consume comes from foreign countries, mainly from Cuba.
For the year ending June 30, 1916, the situation was as follows:^
United States: Pounds Pounds
Cane 277,240,320
Beet 1,748,440,000
Total 2,025,680,320
Non-contiguous countries:'
Porto Rico 849,763,491
Hawaii 1,137,159,828
Philippines .'. 217,190,825
Total 2,204,114,144
Imports, exclusive of non-contiguous
countries 5,415,763,835
Grand total 9,645,558,299
Exported from United States 1,685,195,537
Consumed by United States 7,960,362,762
During the war, exportation of sugar has enormously increased, as is shown by the following statements:
In 1912 our total sugar exportation amounted to 83,747,751 pounds; in 1913 to 47,987,761 pounds; and in 1914 to 72,323,615 pounds. This increased to 581,710,510 pounds in 1915, and reached high water mark in 1916, when the total was 1,665,- 895,639. In 1917 the total was 1,254,551,280 pounds.
The western Allies, which in 1914 received but 5,195,879 pounds, in 1916 received 1,328,242,883 pounds, and in 1917 a total of 776,097,128 pounds.
The northern neutrals, Sweden, Norway, Denmark and Hol- land, which prior to the war were purchasing no sugar from the United States, last year bought 140,944,415 pounds.
One curious feature shown is the great increase in the exports to Mexico, which rose from 7,175,395 pounds in 1913, to 35,807,-
I statistical abstract of the United States, 1916, pp. 528-529.
LECTURES ON CONSERVATION. Ill
609 in 1917. This is partly due to the failure of the Argentine beet crop for the past two years.
South America, which prior to the war purchased little more than 1,000,000 pounds of sugar in the United States, in 1917 took 142,853,818 pounds.
The decrease in our sugar exports of 1917 as compared with 1916 of 411,000,000 pounds is more than accounted for by the decrease in our shipments to England of 734,000,000 pounds.
The great increase in our exports to the western Allies is di- rectly due, of course, to the cutting off of the English imports from the Central Powers and Belgium, together with the de- crease in sugar crops in France and Italy.
We practically exported no sugar to the northern neutrals before the war. In 1917 our exports to these countries consti- tuted 11.2 per cent of our total exports.
In 1913 Norway imported 48,138 tons from Germany; Den- mark, 9,485 tons; Holland, 28,379 tons.
THE SITUATION WITH THE ALLiES.
The great demand for sugar abroad has resulted in drastic reductions in the sugar allowance of Great Britain and France.
The Food Comptroller of Great Britain has limited the supply of sugar to one-half pound per person per week. This means an allowance of 26 pounds per annum, as compared with the aver- age consumption per person in the United States of about 85 pounds.
This action, of course, resulted in the practical prohibition of jelly making in the homes. In order to protect the consumer in regard to prices of jams and jellies, one of the chief constituents of which is sugar, retail prices were fixed for these products, to go into effect September 1, varying for different kinds from 18c to 24c per pound, with the further provision that the dry ingredients of the jams and jellies should not be less than 65 per cent of the total.
Notwithstanding the liberation of a large quantity of sugar for France, in October, the French Food Comptroller was obliged to reduce the ration of sugar to 500 grams per month per person, or practically one pound per month, about one-half ounce daily. This is only about one-seventh of the amount per person which is being used in the United States.
112 LECTURES ON CONSERVATION.
RESULTING SPECULATION.
In consequence of our undiminished consumption of sugar com- bined with the cutting off of the available supply from the Central Powers, and a vast increase in exportation, the price of granu- lated sugar increased from $4.50 per hundred pounds in 1914 to a maximum of $9.15 in 1917.
As the largest single source of the sugar used in the United States is Cuba, the cost of Cuban refined cane at New York has controlled the price for the country. In June and July bills were introduced into Congress providing for the elimination of draw- backs on export sugar. Foreign buyers who before that time had been making their purchases through American refineries feared that the bills, being introduced as war measures, would be enacted promptly into law.
They therefore decided to buy Cuban sugar directly in the Cuban market, at not exceeding an advance of 13^ cent, which was the extent to which sugar would have been affected had the bill been passed. The situation resulted in foreign speculation. The price for raw sugar advanced from $5.77 to $7.77 the first week in August, and refined, following the raw quotations, rose as high as $9.15 per hundred pounds.
MEASURES FOR HANDLING SITUATION.
a) Voluntary conservation. — As in the case of other commodi- ties the measures taken for handling the food shortage were partly a direct appeal to the people to conserve the use of sugar in sweet drinks and candy, and to the refiners and distributors to reduce the sale of sugar to confectioners and manufacturers of gum, cordials, syrups and ice cream. But voluntary measures could by no means reach the situation, so in addition to the licensing regulations as applied to the sugar trades treated under our discussion under Licensing other measures were undertaken with the cooperation of the sugar interests. • b) Control by agreement. — Before any of the sugar trades had been subjected to license, the Food Administration had secured an agreement with the New York Coffee and Sugar Exchange whereby dealing in contracts for future delivery of sugar was suspended after August 16. As a result of conferences with the domestic beet sugar companies, it was agreed that the price for beet sugar should be upon the basis of $7.25 less 2 per cent per hundred pounds for cane sugar, f. o. b., at seaport refining points, such as New York, Philadelphia, New Orleans, Boston,
LECTURES ON CONSERVATION. 113
and San Francisco. It was estimated that the price of 734c for beet sugar will give the manufacturers a sufTicient profit, as it is believed that the cost will not exceed 5c a pound for the year 1917-18. The annual report of the American Beet Sugar Com- pany for the year ending March 31, 1917, gives 33^c as the average cost of production for that year.
Further to control prices arrangements were made with the wholesalers under which they agreed with the Food Adminis- tration to limit their charges so as to exclude speculative or exorbitant profits. A committee was later nsmed by the Food Administrator after conference with the refiners to have full charge of the importation of foreign sugar, at a net margin be- tween the cost of raw material and the refined product of ap- proximately 1.3 cents per pound. This margin was arrived at by taking the average margin for the five years previous to 1914 and adding the increased cost of operation and the necessary materials.
In order to arrange for the distribution of the available sugar of the world an international sugar committee was formed. Two members of the committee were appointed by the Allied gov- ernments, two members by the Food Administrator, the fifth member to be the head of the sugar division of the Food Admin- istration. It became the duty of this committee to arrange for the purchase and distribution of all sugar for the United States and the Allied countries.
Another special committee was appointed to handle the de- tails of the distribution of beet sugar, to be known as the Food Administration Sugar Distributing Committee.
Similarly a committee of Canadian refiners was formed to co- operate with the International Committee with the idea of as- sisting in the distribution of that part of the imported sugar which came from the United States refineries.
The next step in the control of sugar was to take up the ques- tion of the price of Cuban sugar when the new crop should come into the market about December. President Menocel of Cuba sent to Washington special envoys to consider this question with Mr. Hoover.
Because of the sugar shortage orders were issued in Novem- ber forbidding combination sales, except with corn meal.
RESULTS.
The above constitute some of the steps aside from the general and specific regulations associated with license which have been taken by the Food Administration with regard to sugar.
114 LECTURES ON CONSERVATION.
On October 16 announcements in regard to a fair retail maximum price for beet sugar, at a number of principal points, were as follows: San Francisco, 8c; Chicago, 83^c; St. Louis, 8c; New Orleans, 8c; Pittsburgh, 8 l-16c. If, as a result of the control movement, the saving is no more than the saving of 1 3^ cents a pound on the normal consumption of the United States, this would amount to more than 11,000,000,000 per annum.
In spite of all that has been done by conservation and control, the stress of demand from abroad, particularly France, so re- duced the supplies as to entail a noticeable shortage of sugar.
OTHER FOODS.
For a number of foods, the control work of the Food Adminis- tration has not as yet been sufTiciently developed so that it is practicable to give them separate treatment. Among the im- portant foods here included are corn meal, rice, beans, potatoes, milk, butter, cheese, and eggs. However, the general regulations summarized on previous pages apply to a number of them.
COMPARISON OF POLICIES IN AMERICA AND ENGLAND.
In order that the policies of the United States Food Adminis- tration may be compared with those practiced in Europe, in the country most like the United States, there is here inserted a brief summary of the policies of Great Britain.
As has been seen, the American idea in food saving is to secure the voluntary cooperation and conservation as far as possible from the producer and consumer of food, and to introduce regu- lations in the matter of prices and distribution. The German idea is strict rationing of the consumer, combined with the fixing of prices. The British plan lies between the two, as little com- pulsory rationing as possible is imposed upon the public; but there is far reaching and rigid supervision of food articles by regulations of the manufacturers and merchants, and by the establishment of maximum prices. Also, after December 30, rationing cards are to issued for sugar.
Control in Great Britain. — The English plan as presented by Lord Rhondda, food controller of Great Britain, is as follows:
"My aim is to safeguard the interests of the consumer, to do away with profiteering altogether, and to prevent excessive profits of any kind. The frame- work of our machinery is formed on the Civil Service. They are the administra- tors, but in all cases we secure the best available business men to advise them, as well as a number of expert committees dealing with almost every food com- modity. The policy is to limit profits at every step from the producer to the consumer, and at the same time to regulate supply.
LECTURES ON CONSERVATION. 115
"A Costings Department under the direction of chartered accountants has been set up, through which the profits made by any manufacturer or retailer of food can be ascertained. The country has been divided into separate areas, in each of which a leading firm of accountants has been appointed by this Depart- ment to do the necessary work. Reasonable profit based on pre-war rates is added to the present cost, and price limits agreed on that basis, after consultation with the representatives of the trades concerned.
"Decentralisation is obtained by dividing Great Britain into sixteen food divisions, consisting of so many counties. Each division is under the superin- tendence of a commissioner appointed by the Food Controller. In each of these divisions the borough, urban or rural district councils, or other local authorities, appoint local Food Committees, with limited powers and certain discretion, to carry out such regulations as regards price and distribution as may be issued from headquarters.
"Local tradesmen are registered with their local Committees, and if any trades- man does not carry out regulations and orders he may be struck off the register and prevented from further trading. The various orders fixing or amending the maximum prices of meat, milk, potatoes, bread, etc., are communicated to the local committees, and the trades and public are informed through the daily and trades press. A staff of inspectors is kept at headquarters, and a number of sentences have been imposed by magistrates throughout the country for con- travention of the regulations. The general penalty is a fine not exceeding one hundred pounds, or a term of six months' imprisonment with or without hard labor, or both. This punishment may be inflicted for every several offense. I purpose to make the penalties more severe.
"While the prices of practically all essential foods are now under control, no compulsory rationing is imposed on the general public, although all public eating places are rationed as to the amount of meat, flour, bread and sugar which may be used in every week on the basis of an average for each meal. After December thirtieth only a half-pound of sugar per capita will be permitted. This will be obtainable through a system of each consuming householder or con- sumer registering with a specified retailer, and securing from the local food com- mittee a card entitling his household or himself to the ration. The retailer will keep a record of his deliveries to ensure his not supplying any one customer in one week with more than the proper allowance. Arrangements for the issue of these cards are in progress, and they will form the groundwork should it become necessary later on to ration other foodstuffs.
"There are many restrictions in manufacturing. Flour made from wheat must be straight-run flour, milled to eighty-one per cent extraction, and it is compulsory to mix in twenty per cent of flour from other cereals and pulse, and permissible to mix in up to fifty per cent, while no bread may be sold unless twelve hours old. Following on restrictions of fifty per cent and forty per cent, manufacturers are now restricted to the use of only twenty-five per cent of the amount of sugar they used in 1915. Speaking generally, the use of foodstuffs for industrial purposes and for the feeding of animals has been either restricted or prohibited. Waste of bread is a criminal offense.
"Appeals for economy in consumption have been made, and a new campaign is being organized to this end. The maximum price of the quartern loaf has been reduced to ninepence for cash over the counter. It was found possible to do this by subsidising flour. I find it necessary to control practically all essential commodities. The danger that in reducing prices we may restrict supplies and increase consumption is obvious, but I think it can be largely overcome. It has been suggested that our recent fixing of meat prices will lead
116 LECTURES ON CONSERVATION.
to excessive slaughtering. If it does, we are in a position to control the transport of meat, and we are taking steps to license the slaughter-houses. A condition of the license will be that no more than a certain number of cattle are slaughtered per week. We also propose to control the sales through the auctions, and we can limit the quantity there. In the course of a month or two we hope to be able to determine approximately what quantity of meat ought to go to each industrial area, and to limit the quantity if necessary. Maxirhum wholesale meat prices. for the whole kingdom have been fixed independently of the cost of transport, but we hope to meet the danger that producing areas, because of this, might get more than their fair share of supphes, by fixing a flat railway rate. As regards nearly all imported commodities, adequate distribution is being secured, as the sole control is in the hands of the Government, and im- porters or wholesalers are required to supply in fair proportion the needs of their usual customers."
WORK OF FEDERAL FOOD ADMINISTRATION IN ILLINOIS.
METHODS OF ORGANIZATION.
It would unduly prolong this chapter to summarize the work done by the various federal state administrators. In New York a comprehensive state law has been passed for food administra- tion. In Wisconsin, the State Council of Defense has been given certain powers which affect food administration. However, it is in the state of Illinois that a comprehensive method of control of retail prices has first been worked out; and this method, so far as conditions are similar, is to be introduced into other states. There is therefore herewith included a statement in regard to the work of the Federal Food Administration in Chicago. The Fed- eral Food Administrator for that state is Harry A. Wheeler. The following statement of the work of that administration is adapted from the statement furnished by Robert Stevenson, Jr.
Early in July, it was decided that there should be secured a representative for the state organization in as many townships of the state as was practical. It was realized that in some cases several townships could best be handled by one rather than a number of men, because of particular physical situations and also because of particular personal situations. To secure the proper representatives was the first question; and it seemed to the Food Administration of Illinois that a selection of representa- tives from the various country banks in the state would bring close relations to the people. The local banker of a country community is a chief center of information, advice and authority. The Food Administration therefore proceeded on that basis and sent out some 900 letters inviting various bankers to act as local food administrators. Fromfthis preliminary letter, there were secured in the neighborhood^of 300 acceptances. A consider-
LECTURES ON CONSERVATION. 117
able further number replied, who regretted inabiUty to serve, in most cases on account of advanced years or ill health. From those who could not serve, there was requested the nomination of a strong man in the community as a substitute. From these nominations, a considerable number of additional local adminis- trators were selected.
At this stage the Food Administration had probably over 400 local administrators, located in all but two or three counties of the state. Assignments of territory were made by townships, depending, as above stated, on the situation to be covered and the geographical location of the particular representative. In this way there were covered, roughly, between 650 and 700 townships out of the 1,200 or more in the state.
At about 20 larger points in the state, associations of com- merce were selected, each of which was asked to appoint a com- mittee of five. The chairman of this committee is the local food administrator for a district of the size and character he is able to cover. It was the idea in selecting Chamber of Commerce committees to cover not only the country farming situation, but the problems presented in cities of considerable size.
After the appointment of these local administrators, the state was divided into fifteen districts, each having from four to eight counties. In Chicago, volunteers, from business men of consid- erable experience, were appointed to act as sponsors for these various districts. The first duty of each of these men was to make a personal trip through his district and so far as possible call on every appointee. While in the district, he rearranged the allotments of territory by selecting additional local adminis- trators in order that each county might have a coherent organ- ization which could do efficient work without any one man dupli- cating the work of another. A chairman was appointed for each county, who from time to time brings the county group together for general conferences or to receive instructions, or to make a report to the central organization here in Chicago. When these county committees meet, it is planned to have the district man meet with them.
Very valuable assistance has been received from a large number of these local administrators. To them is sent, once a week if possible, a bulletin of interest either in the line of production or con- servation, which is given as much publicity as possible through the local press and any other means at hand.
118 LECTURES ON CONSERVATION.
CHICAGO.
With regard to the interpretation of retail prices, the State Food Administration has acted from the time the wholesale prices of sugar and flour were established by the Government. After these prices were established, there were called together a group of some twenty to twenty-five retailers of -Chicago, who were representative of practically every type of grocer^^ operating in the city and in its immediate large suburbs. To them was explained the Illinois plan of gaining the cooperation of the retail grocery trade in an endeavor to establish a fair margin of profit on those commodities which go to make up what might be called the industrial dinner table. These particular commodities at the time had not been determined by the Government, so work was begun with a list of ten or twelve. Since that time the President's proclamation requiring licenses has listed about twenty items of food, with food derivatives manufactured from them; and it is planned to cover all of these items as soon as practical knowledge of their trading position is clear.
At the first conference the aims and desires of the State Food Administration were expressed; and the Chicago retailers, practically as a whole, expressed not only their willingness but seemed to show a genuine desire to assist in bringing the plans into successful operation. There were certain abuses in the trade, which this meeting gave the retailers an opportunity to discuss and formulate recommendations for their remedy.
From the large group there were selected a smaller group or committee, to come together a few days later to discuss the actual prices or margins of profit and the actual recommendations which were to be made to a gathering of some seventy-five or one hundred retailers, to be called at a later time — that is, to develop a program.
The first large meeting was devoted altogether to the flour and sugar questions; and it was agreed that it would be fair to estab- lish a maximum and a minimum price on all items, to be quoted each day, in accordance with general market quotations — the minimum profit to be asked by those giving the minimum of service, viz.: the "cash and carry" service, leading up to the maximum profit to be asked by those having the "charge and delivery" system, and other more expensive overhead organiza- tions to maintain. The agreements on flour and sugar were very easily reached.
From this start there were brought into the discussion those interested in poultry and dairy products. The Chicago Butter,
LECTURES ON CONSERVATION. 119
Egg and Poultry Board met with the Food Administration -and in conference with them an agreement was reached as to fair minimum and maximum margins of profit on the items connected with that branch of the trade. In arriving at a proper margin for potatoes the Food Administration had the cooperation of some of the largest dealers in potatoes. Fair maximum and mini- mum profits have been established for canned milk. In a similar manner by cooperation with those concerned with the commodity, others of the articles under license will be taken up.
The Federal Food Administration of Illinois is thoroughly satisfied that by taking into consultation a committee of grocers for each of the various commodities, it is giving the grocers and also the consumers a fair opportunity to know the whole situation.
The prices thus determined apply only to the Chicago market, as there are matters connected with freight differentials and local conditions which could not fairly apply to places at a distance from Chicago. The consumer at Chicago knows each day what are the fair limits to pay for certain necessary goods; and if the grocer to whom he applies will not sell at those figures, there are others within easy reach who will. The one who asks unreasonable profits will find that he cannot hold out against such a situation, and sooner or later must abide by the published prices or lose the trade which he has been accustomed to have. Beyond this, the control which the licensing gives over the wholesaler will enable the control to a very large extent of any exorbitant prices asked by retailers.
These prices are made effective by cooperation of the news- papers. There is published each day the prices which the retailer pays and the price which the consumer should pay, there being variations depending upon the quality and as to whether the goods are to be at cash and carry stores or for delivery and credit. In general the lowest prices are for cash and carry and the higher prices for delivery and charge. The list for which the prices are controlled include the most important food commodities with the exception of fresh meats. In early December the list in Chicago of articles the prices of which were thus controlled comprised flour, rye flour, rice, corn meal, hominy, sugar, potatoes, beans, hams, bacon, poultry, canned salmon, butter, oleomargarine, lard, cooking oils, cheese, eggs, and prunes. Under a number of these general headings several items or grades were included.
120 LECTURES ON CONSERVATION.
OTHER CITIES AND TOWNS.
This plan as put into effect in Chicago has been extended to many cities and towns of Illinois, including nearly all of the important towns. The method of procedure by which prices were agreed upon was not identical with, but similar to that, which was pursued at Chicago. The main difference was due to the fact that the district and local administrators were taking the lead. At the Chicago office a man was assigned to direct the activities of price interpretation throughout the state. He super- vises the work of all of the district administrators in regard to price maintenance and a uniform policy of price interpretation and handles all correspondence. The Federal Food Administrator announced that in agreeing upon these prices, it should be primarily by cooperation, but that the Food Administrator has the power and intends to use it to carry the plan to a successful conclusion, if fair prices are not secured by cooperation.
The prices charged in the different towns and cities take into account freight differentials and other conditions, which should result in different prices from the Chicago price. However, the prices fixed at Chicago very largely control the differentials since that city is the great central market of the northwest for foods. As in Chicago the local administrators are to publish each day the prices which the retailers pay and the fair price which they should charge.
SUMMARY OF GENERAL RESULTS.
In the short period in which regulative measures have been in operation it is not possible to bring many data of a statistical nature to bear on the evaluating of results. Results can better be expressed in the movements and processes set into regular and systematic operation. These will in their time reveal results of such detailed nature as to supply material for generalization and for further constructive programs.
LICENSING.
Through processes now systematically in operation the effort has been made through the licensee system:
To eliminate hoarding and the dealing in futures.
To stabilize and standardize processes in food trades.
To evolve principles for the discovery of the "fair and just" line in profits.
To equalize distribution of commodities to assist local firms.
LECTURES ON CONSERVATION. 121
To simplify trade movements.
To suggest, in the case of certain commodities, the mark of reasonable prices.
In the case of the dealer who cannot be directly reached by the regulations of license, formal efforts have been made:
To bring moral suasion through appeals by national and state organizations.
To bring the suasion of publicity by giving prominence to unfair prices.
To control through their source of supplies in the hands of a licensee, either manufacturer or wholesaler.
The more important effects of these various measures, where they have fully worked out their results, will be to maintain reasonable prices and to control distribution equitably.
PRICES.
The maintenance of reasonable prices is a task of great delicacy and difficulty.
Notwithstanding the difficulties it appears that, as a result of the work of the Food Administration, the tendency for prices to rise with cumulative velocity has been not only halted, but that prices for several of the most important commodities have ceased to advance. Further, for some commodities prices have been decreased to an appreciable extent.
After prices all along the line have gone much higher than normal, not only for this country but abroad, it is impossible to reduce the price of one line of articles to the normal because of the increased costs which result from increased costs of other products and of labor. Consequently, it cannot be expected that at best the Food Administration will be able to reduce prices to the pre-war level.
Also international prices are a factor. Since great quantities of the most essential food commodities are necessarily exported and to the AUies especially, prices in the United States cannot be considered from the point of view of the home trade alone. They are to a large extent a function of world trade. However it may be said that definite results in the reduction and stabilizing of prices are illustrated by the fundamental staples, flour, bread, and sugar.
Flour. — By fixing the price of wheat and limiting the charges of the miller and jobber the price of flour for the 1917 wheat at Minneapolis is about $10.25 per barrel, a reduction of at least $3 as compared with prices which obtained before the wheat and flour trade was regulated. At the same time the farmer is receiv-
122 LECTURES ON CONSERVATION.
ing about $2.50 more for the 43^ bushels of wheat (necessary to make a barrel of flour) than upon the average for the 1916 crop or more than a half dollar more per bushel.
Bread. — The reduction in the price of flour and the control of the bakery business has resulted in furnishing the pound loaf of bread where the local committees have exerted their authority at 7 to 9 cents dependent upon whether the basis is "cash and carry" or "delivery and credit." This is a large reduction as compared with the prices which obtained for bread before control was instituted.
Sugar. — As we have already seen it has been determined that a fair price for retail sugar at the principal sugar centers in the latter part of 1917 is* from 8 cents to 83^ cents per pound; and there is no warrant anywhere for a price higher than 9 cents per pound. This is a reduction of about a cent from prices which prevailed before control was undertaken. But more important than this, the rapidly enhancing price before control was insti- tuted was checked. "Had the situation not been promptly acted upon, it is little short of certain that sugar prices would have soared to quite unreasonable amounts.
CONTROL OF DISTRIBUTION.
However, the beneficial effects of the Food Administration have not been limited to halting rising prices. Another line in which the Food Administration has been advantageous is in the control of distribution. By ascertaining the conditions in the country as a whole, when a situation arises such as is likely to lead to a shortage for a particular commodity in some district, the products of the manufacturers and wholesalers are diverted in that direc- tion. This is well illustrated by the diversion of sugar to the eastern part of the United States in the autumn of 1917, in conse- quence of the necessity of shipping to France large supplies to meet its immediate needs.
But more important than the control of distribution at home is its control of export. At a time when there is a shortage of the essential commodities, wheat, sugar, meat and fat, had not this control been exercised and everyone been free to export, it is certain that such large amounts of these foods would have been sent abroad as to result in acute scarcity at home. As a con- comitant of this scarcity, there would have been run-away prices. What the situation would have been in the United States for the essential commodities named, had we depended upon the law of supply and demand and competition to control, we can only
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conjecture; but I doubt if anyone who knows the situation can question that it would have brought a catastrophe upon the country.
It is certain if the free plan of trade had continued that the Allies could not have secured at reasonable prices these com- modities as necessary for them as men or guns and munitions. It is as imperative to feed the Allies as it is to feed ourselves. Only by so doing can this World War be carried to a successful conclusion. If we fail in this duty, it will be without avail that we send our men to France and Italy. Unless the millions of men of the Allies along the fronts and the many more millions support- ing them behind the lines have adequate nourishment, they can- not be expected after the terrible losses and burdens thay have already borne to keep up the spirit necessary to carry on the ter- rific struggle for years to come. If we fail in this duty, the war is lost despite all else we can do, and German Imperialism will be imposed upon the world.
CHAPTER VI. FOOD PRODUCTION.
The increase of food production is of equal importance to that of food conservation and regulation. The charge of the problem of increased production was placed with the Secretary of Agri- culture. Immediately upon the outbreak of the war he began the organization of this fundamental work.
The following account of the work done and the plans for the future are exactly as furnished by the Department of Agriculture under date of November 5, 1917.
THE THINGS ACCOMPLISHED.
The existence of a state of war between the United States and Germany was declared on April 6. Three days later the Secretary of Agriculture sat in conference at St. Louis with agricultural leaders from New England to the Rocky Mountains. It was Agriculture's war council. The Nation was represented by the Secretary of Agriculture and specialists of his staff and the States by their Commissioners of Agriculture, officers of their agricul- tural colleges, and men in charge of the county farm demonstra- tion service — that force of workers whose activities now make a direct contact between the Federal Government at Washington, the state agricultural colleges, and the very firesides of most of our six million farmers. Farm editors, also, able to carry the message of the conference in detail to eleven million readers, were there. On April 15 the Western States, in a similar confer- ence at Berkeley, Cahfornia, called at the request of the Secretary of Agriculture, endorsed the conclusions reached at the St. Louis meeting.
One week after war was declared, therefore, the most peaceful industry of a peaceful country had shouldered its war task, and its leaders in two days had drawn up a program of production, conservation, and investigation the wisdom of which has not been successfully questioned, and the substantial part of which was enacted into law or put into effective operation in time to increase food production in 1917 and to prepare for still greater production in 1918.
It is not so remarkable, therefore, that this gigantic farming con- cern, comprising as it does the Federal Department of Agriculture,
124
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the state colleges of agriculture, the commissioners of agriculture, farmers' organizations, farmers, and others, was able to report at harvest time this progress of gains on the agricultural front:
1. The production of spring wheat was increased by 84,308,000 bushels over the crop of 1916, according to a preliminary estimate (spring wheat offered the only opportunity to add to the wheat supply this year, the season for winter wheat sowing having passed when the existence of a state of war was declared), and a campaign for the production of a billion bushels of wheat next year has been inaugurated and is being vigorously pushed.
2. The country's largest corn crop, 3,210,795,000 bushels — 456,631,000 bushels over the five year average — ^was produced, as well as a record crop of oats, 1,580,714,000 bushels; a record rye crop, 56,044,000 bushels; a record white potato crop, 452,923,000 bushels; a record sweet potato crop, 87,244,000 bushels; and slight increases over the five year averages in barley, buckwheat, and rice.
3. A nation-wide campaign for food conservation and utili- zation through canning, drying, and the like, and for the elimin- ation of waste, was conducted. The number of home gardens was greatly increased in village, city and country — in some places 200 to 300 per cent — and an unusual quantity of perishable products was preserved for future use as a result of the work of an army of eniergency demonstrators supported by an intensive publicity campaign.
4. More than 1,600 additional emergency demonstration agents — men and women — ^were appointed up to November 1, bringing the total number up to approximately 5,000. When the plans of the Department have been fully matured at least one agent — possibly two, a man and a woman — ^will be stationed in most of the 2,850 agricultural counties. For the first time a large number of women were assigned to assist city residents in the production, conservation, and utilization of food products. In addition, the force of plant pathologists, entomologists, dairy specialists, animal and poultry husbandmen, veterinarians, chemists and the like has been largely increased.
5. The facilities of the Department for assisting in the solution of marketing problems have been greatly expanded. The Market News Service /or fruits and vegetables and for meats and meat products has been further developed and has been extended to include grain, hay, and seeds, and dairy and poultry products. Assistance has been rendered to many cities dealing with local truck marketing problems and producers and consumers have been helped to form direct business relations through the parcel
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post system. Reports on holdings in cold storages of meats, cheese, butter, eggs, poultry, fish and apples are prepared and furnished to the trade and to the press at regular intervals. A quarterly report on stocks of wool in the hands of dealers and manufacturers also is issued.
6. Considerable additions to the meat supply have been made possible by the efforts of the Department, which have been greatly extended since the entrance of the United States into the war, to suppress animal diseases. Hog cholera, for example, decreased by approximately thirty per cent during the last fiscal year and 70,000 square miles of territory were released from the cattle tick quarantine.
7. Specialists of the Department have developed and urged more economical methods of feeding live stock. These methods will accomplish a vast saving of both feed and food as they be- come more generally applied.
8. Poultry and egg production has been stimulated and a campaign has been inaugurated through the field workers of the Department and the state agricultural colleges to further increase the supply next year; sheep specialists have been placed in several of the eastern states to promote sheep raising for mutton and wool purposes; and dairy specialists have succeeded in bringing about a more complete utilization of dairy products and the elimination of a great deal of waste.
9. The field agents of the Department, up to October 1, aided in the transfer of 75,000 cattle from the drought stricken sections of the southwest to the southeastern states where there has been a large increase in feed crops. This work has resulted in the saving of a large number of animals which otherwise would have perished.
10. Plans have been formulated to conduct a vigorous campaign for the increased production of pork and pork products. A large number of swine specialists have been placed in the field and are now actively at work on the problem.
11. Constant vigil on the part of entomologists, who were in close touch with every- agricultural section and obtained frequent reports on conditions, prevented serious outbreaks of many pests and made possible the prompt control of others. An emer- gency force of entomologists has been organized and will assist the extension forces in demonstrating proper methods of control- ing destructive insects. The production of honey also will be stimulated in various sections of the country.
12. Warfare against stock killing animals by the Federal hunting force of three to four hundred men resulted in the trap- ping or shooting from April 1 to November 1 of approximately
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13,829 coyotes, wolves, mountain lions, bobcats, and bears, while approximately 75,000 more, it is conservatively estimated, were killed by poisoning during the fiscal year 1917. A large saving of cattle, sheep, goats, horses, swine and poultry thus was effected and the danger to human life from rabies was greatly reduced. Measures against prairie dogs, jackrabbits, and other rodents also were successful, while a nation-wide effort to reduce rat and mouse damage is now under way.
13. Comprehensive campaigns against the diseases of the major feed crops and vegetables are well under way. Particular efforts have been directed against the smuts of wheat, barley, oats, and rye, which alone cause losses of fifty to sixty million dollars a year, as well as against the rusts and a new serious bacterial disease of wheat discovered during the year in practically all the important wheat growing states. The campaign against citrus canker has been vigorously pressed and specialists of the Depart- ment hope that it may be possible to complete next year the eradication of this destructive disease throughout South Carolina, Georgia, Alabama and Florida.
14. In 1,042 community clubs in the Southern States increased during the season from 250, 1,635,000 rural women and girl members are doing emergency work in various forms.
15. The membership of the boys' and girls' clubs in the northern and western states alone was increased from 406,000 to more than 800,000. This juvenile army, together with the members of the southern boys' and girls' clubs, numbering approximately 850,000, rendered valuable service to the nation in canning, sowing, gardening and poultry raising.
16. A nation-wide food survey was undertaken to ascertain, as accurately as possible, the condition of the country's food stores and the normal consumption of food products. This survey will furnish valuable information which is needed in connection with the effective prosecution of many of the activities of the Government in this emergency.
17. Twenty-one million bulletins, circulars, posters, and the like, carrying the message of food and feed economics to every agricultural corner, have been issued since April 1. A similar number of publications dealing with the regular lines of work of the Department were issued in the same period.
18. The information service which furnishes timely articles to the press regarding the activities of the Department and the re- sults of its investigations and experiments, has been greatly ex- tended and developed. Plans have been formulated for furnishing information to the weekly newspapers, women's magazines.
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agricultural press, and others in more available form. The work of the Department in this field was recently discussed in a con- ference with a group of prominent agricultural editors.
19. Farm help specialists were stationed in nearly every state and, in cooperation with the Department of Labor and state authorities, have assisted in bringing about the better organization of labor remaining on farms and in making available for farm service other labor which heretofore has not been regularly or fully utilized in farming operations.
20. The production of food supplies in Alaska, Porto Rico, Hawaii, Guam, and the Virgin Islands was increased, and Porto Rico, which formerly required more than $800,000 worth of beans from the mainland, now has beans available for export.
21. Meat inspectors of the Department, at the request of the War and Navy Departments, have been detailed to all camps, cantonments, forts and twenty-seven naval stations to see that the troops have good, wholesome food. All meat and meat food products are thus reinspected and the laboratories of the Depart- ment carefully analyze samples to detect poisons or other ex- traneous substances. Butter and milk sources also have been investigated by the Department's experts.
22. The Tenth Engineers of 1,200 men, the Forestry Regiment, was organized by the Forest Service in cooperation with the War Department for service in France. These troops will supply lumber, construction timber, railroad ties, and fuel for the British and American troops in France. Another regiment of the same kind, the Twentieth Engineers, consisting of ten battalions of 750 men each is now being organized.
23. The war work in the field of forest products has assumed large proportions. A great deal of technical information regarding wood properties, strength, seasoning, and new species of wood suitable for rifles, airplanes, vehicles and ships, was placed at the disposal of the Army, the Navy, the Shipping Board, the Council of National Defense, and manufacturers of war orders.
24. The Weather Bureau is furnishing the troops in France with forecasts of weather conditions and with observations of the upper air, particularly for the needs of aviation and the firing of pro- jectiles. Five new aerological stations are now in the process of establishment in the United States to aid in the collection of information of value to aeronautics and to supplement the work of the 200 regular field stations already maintained. The Weather Bureau service is being extended to the cantonments and en- campments in cooperation with the War Department.
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25. Noteworthy progress has been made in the development of certain processes useful in the manufacture of American dyes and substances from which they are produced; a new method for making chlorine compounds has been worked out; and progress in the manufacture of certain rare and important drugs is being made.
26. Important results have been secured in nitrogen fixation and in potash production. A plant for testing out on a commercial scale the methods of extracting potash from kelp has been erected on the Pacific Coast and is now in operation. A survey of the cement industry, which indicated that the cement mills of the country, by modifications in operation, might produce 100,000 tons of potash annually as a by-product — nearly one-half the nor- mal consumption of potash salts in the United States — was com- pleted.
27. Rapid progress was made in putting into operation the Federal Aid Road Act. Engineering experts of the Department were detailed to assist the War Department in road building at the sixteen cantonments and much valuable map data has been placed at the disposal of the military authorities. Irrigation and drainage engineers have given expert advice in the development and erection of drainage projects involving thousands of food producing acres.
These are some of the achievements of the Department of Agriculture's force of 20,000 trained workers, in its Bureaus of Plant Industry, Animal Industry, Entomology, Soils, Chemistry, Markets, Biology, Weather, Forest Service, Public Roads, and States Relations Service, in cooperation with the large forces of the state agricultural colleges and the state departments of agri- culture, since the entrance of the United States into the war.
MEASURES TAKEN TO PRODUCE RESULTS.
It would not be fair to give the impression that the St. Louis conference was the "presto change" which made these things possible. More than a mobilization order was needed to start the great war program on its way. Organization and coordination of agencies was necessary.. Thanks to a progressive agriculture, however, these agencies were ready and waiting — they did not have to be created.
That such an organization was available when the emergency arose last April is due to the foresight of the American people in supporting agricultural progressiveness, which thus also proved
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to be agricultural preparedness. The results which this organized agriculture was able to report to the country in the short space of a few months, and which it will continue to accomplish with increasing efficiency as the war continues, may be regarded by Americans as dividends on their investment in a better and more progressive farming industry. Anyone who has followed the rapid course of progress in the industries of the farms does not need to be reminded that much of our hope for success in this war is grounded in a sturdy agriculture which has been greatly strength- ened by the Federal and state governments in such movements for national betterment as were provided for in the Cooperative Agricultural Extension Act, the Farm Loan Act, the Cotton Futures Act, the Grain Standards Act, the Warehouse Act, the Federal Aid Road Act, and other progressive measures. "This Nation," said the Secretary of Agriculture recently, "is exception- ally fortunate in having laid, generations ago, foundations for scientific and practical agriculture, not only for the whole nation in the Federal Department of Agriculture, but also for each State in the land-grant college, in the State Department of agriculture, and in the great farmers' organizations. Repre- sentatives of these agencies in two days at St. Louis not only evolved a program involving legislation, but a program involving also organization and coordination of agencies for more effective assistance in this crisis. Such organization was quickly developed and I imagine that in this direction, as in others, the Nation has given demonstrations of efficiency that no other Nation has equaled."
In this connection the following statement, which the Secretary made a few months before war was declared, is of interest:
"We hear much about the efficiency of foreign Governments and of the farmers of other nations. There is no other Government in the world which has agricultural establishments at all comparable with those now provided by the people of the United States through their Federal and State governments. More helpful and constructive agencies are now in operation for the betterment of rural life than ever before in the history of the Nation. Even now no farmer in the world can compare with the American farmer in agricultural efficiency. His adaptability to new and changing conditions, to the use of improved ma- chinery and processes, coupled with the great natural resources with which the Nation is endowed, make him far superior to any of his competitors.
"It is true that he does not produce more per acre than the farmers of some of the other nations. Production per acre, however, is not the American standard. The standard is the amount of production for each person engaged in agricul- ture, and by this test the American farmer appears to be from two to six times as efficient as most of his competitors. With the provisions heretofore and recently made to assist him both in the field of production and distribution, he
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need not fear the competition of the world. He will inevitably control the home market, except for things which cannot be produced here, and will be called upon increasingly to supply the needs of the world."
In addition to the agencies already in existence when the United States entered the war, the St. Louis conference suggested the creation in each state, either separately, or preferably in connection with the state council of safety, of a small central division on food production and conservation, composed of representatives of the State boards of agriculture and the land- grant colleges, of such farmers' organizations as the Grange, the Farmers' Union, the American Society of Equity, the Gleaners, the Farmers' National Congress, and others as may exist in a particular state, and of bankers' and business agencies. This suggestion was communicated to the Governors of the several states by the Secretary of Agriculture and such an organization promptly was created in nearly every state in the Union. They have rendered very effective service in connection with the organ- ization of agriculture and in the coordination of agricultural activities in the various states. The conference also suggested the creation of county, township, or urban bodies of similar con- stitution, working in close cooperation with the State central agencies, to study and deal with problems of food production and conservation.
The Secretary of Agriculture, shortly after the St. Louis conference, called to his assistance at Washington a few men of special training and broad experience to assist him in further pro- jecting the activities of the Department, in keeping in touch with the problems and machinery over the Nation, and in pro- moting large national activities. He also thought it of special importance that he secure the views of the executive heads of the great national farmers' organizations, and therefore invited them to come to Washington on April 23 to advise and confer with him. They responded promptly and, in general, they en- dorsed the suggestions made in the Secretary's letter to the Senate on April 18, in which he discussed the recommendations of the St. Louis conference and made specific suggestions for legislative action.
Conferences immediately were held with members of the agricultural committees of the House and Senate and, at their suggestion, the Secretary undertook the preparation of tentative measures embodying the necessary legislation as outlined in his letter to the Senate. There were two leading thoughts in mind. One thought was to speed up the activities of existing agencies
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along normal lines and to have them attack aggressively certain larger problems of production, home economics, and farm market- ing. The other was to vest powers in the President, to be exercised through an emergency agency rather than through an existing department, to deal with certain special and urgent problems growing out of the war and having both a national and an inter- national aspect. Hearings were held by the Senate and House Committees and certain changes were made from time to time in the tentative drafts. The Secretary's suggestions found fmal expression in the enactment, and approval by the President on August 10, 1917, of two measures:
1. The Food Control Act, the provisions of which, so far as they relate to foods and feeds, are administered by the Food Administrator and are well known, and
2. The Food Production Act, which is administered by the Department of Agriculture and carries an appropriation of $11,346,400, for the following purposes:
1. For the prevention, control and eradication of the diseases and pests of live stock; enlargement of live stock production; and the conservation and utilization of meat, poultry, dairy, and other animal products, $885,000.
2. For procuring, storing and furnishing seeds for cash at cost to farmers in restricted areas where emergency conditions pre- vail, $2,500,000.
3. For the prevention, control, and eradication of insects and plant diseases injurious to agriculture, and the conservation and utilization of plant products, $441,000.
4. For the further development of the extensive service which is conducted in cooperation with the agricultural colleges in the various states, $4,348,400.
5. For making a survey of the food supply of the United States; for gathering and disseminating information concerning farm products; for extending and enlarging the market news service preventing waste of food in storage, in transit, or held for sale, giving advice concerning the market movement or distribution of perishable products and investigating and certifying to shippers the condition as to soundness of fruits, vegetables, and other products received at important central markets, $2,522,000.
6. For the development and extension of the informational work of the Department; for extending the facilities of the Depart- ment for dealing with the farm labor problem; for extending and developing the work of the Bureau of Crop Estimates, the Bureau of Chemistry, and the publication and informational work of the Department, $650,000.
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At first glance it might appear that these two measures, the Food Control Act and the Food Production Act, overlap un- necessarily and that a needless duplication of effort between the Food Administration and the Department of Agriculture will result. This impression, however, is corrected by a proper understanding of the functions of the two agencies.
In a large sense the Food Administration has as its prime func- tion the control and regulation of commercial distribution, con- servation by consumers, and the control of the handling of available foods and feeds, through means legally provided by the Food Control Act and by the President. It initiates and adminis- ters all volunteer organizations looking to this end, and also administers the powers affecting food regulation authorized by the Food Control Act.
The Department of Agriculture continues to administer the laws already in its charge and to direct its activities in reference to production. It also continues its investigations authorized by Congress and furnishes assistance to farmers and live stock men in the marketing of their products, stimulates organization among producers for the distribution of their products to the markets, promotes conservation of farm and animal products, including the conservation through canning, drying, preserving, pickling, and the like, of farm products to make them available for food, and continues its activities and investigations in home economics, as provided by law, in cooperation with the agricul- tural colleges, through the extension service and otherwise, and is extending its activities in all these directions as provided by the Food Production Act. In the promotion of these activities, as in the past, it enlists the aid of volunteer service.
Prompt action was necessary to carry out the recommendations included in the St. Louis program. Farmers already were in the field or had made their plans for the season. It was recognized that spring wheat offered the only opportunity to make good, in part at least, the prospective shortage of winter wheat indicated by heavy winter killing. The Department of Agriculture, there- fore, conducted a vigorous campaign to secure a larger acreage of spring wheat in the wheat growing sections as well as substan- tial increases in other food crops. Simultaneously an extensive campaign was launched through the demonstration forces and the press, and by means of circulars, posters, and the like, to reduce waste and to bring about better utilization and conservation of food products.
Pending legislation by Congress, the Department and the states speeded up their work along the most promising lines with
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the forces and the funds at their command. Projects not having an immediate bearing on the emergency were set aside in order that the energies of the workers might be concentrated on the main problems. County agent leaders in the northern and western states, in cooperation with the Department, immediately put into effect plans for increasing the production in spring wheat, oats, barley, corn, potatoes, buckwheat, soy beans, and grain sorghums, with the result that the total acreage planted in these crops was much larger than it otherwise would have been. For example, the seeding of spring wheat, which promised to be only one-half to two-thirds of the normal, was increased to normal; seed corn was more carefully selected and tested and oats were more extensively treated for smut, with consequent increases in yields. Many farmers who previously had not grown potatoes at all, grew enough for their own use, and many who had never grown potatoes as a market crop planted large areas.
The Department Committee on Seed Stocks aided in locating available supplies of seed and in putting farmers in touch with them. This committee is still actively at work and is dealing with the many problems arising in connection with the seed supply. Under the provisions of the Food Production Act seed will be purchased and sold to farmers for cash at cost in restricted areas where emergencies requiring such action exist.
The vigorous canning and preserving "drive", which opened as the gardens came into harvest early in the summer, was carried on by the entire home economics field force, aided by several hundred emergency agents and supported by an intensive publicity campaign under the direction of a special assistant in the office of the Secretary, cooperating with experts in the commercial field who volunteered their services. It is impossible here to give the story of this great food saving effort the telling it deserves. How all the home economics workers turned aside from their regular work and aided in this campaign for food conservation; how the campaign was pushed by the daily, weekly, and agricul- tural press; how the community kitchens and community drying plants, increased in number and efficiency, enabled food saving on a large scale; how short and intensive training courses were held in ten state agricultural colleges to prepare emergency food agents and local volunteer workers; how, to meet a serious short- age in cans, the Department, through the cooperation of the Council of National Defense, railroads* and manufacturers, assisted in securing the shipment of more than ten million tin cans in carload lots from certain factories direct to counties in the South, resulting in a saving to the buyers of a quarter of a
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million dollars; and, finally, the success of the great movement in saving millions of cans of food — the food survey now in progress should give some indication of the amount — all this makes a story which might well bid for a prominent place when the chapter on "The 1917 Retrenchment" is written for that volume of agricultural history "The Overthrow of American Wastefulness "
The value of the county agent in the emergency has been appreciated from the first. One of the major projects under the food production act, therefore, was to enlarge this arm of the agricultural service as rapidly as possible. The plan to place at least one agent — and possibly two, a man and a woman — in every agricultural county has been developed since the passage of the Food Production Act as fast as men and women with the re- quisite qualifications could be found. These agents carry to the farmer's door the latest information regarding production, con- servation, and marketing, with special regard to its local applica- tion. The number of women county agents is being greatly in- creased and other women agents are being assigned to projects in gardening, poultry raising, and food economy in a number of the larger cities and towns.
The task of increasing the meat supply, necessarily a slow one in its production phase, was particularly difficult. As hogs and poultry yield the quickest returns, special campaigns were begun to increase the production of these products. Boys' and girls' pig and poultry clubs are being used as valuable agencies in this work. Some of the things advocated are the greater production of pigs in fall litters, the more extensive feeding of pigs on garbage, the raising of chickens on small premises and feeding them partly on table waste, and the more general production of infertile eggs after the hatching season so that spoilage may be avoided.
The transfer of cattle from regions where feed shortages exist to regions where feed is relatively plentiful is receiving special attention. Agents in both regions are endeavoring to bring sellers and buyers together. A large increase of feed crops in the South- eastern States as a result of the Department's campaign in that region will make possible the maintenance of a much larger number of animals. Indications at harvest time were that Florida, Geor- gia, Alabama, and Mississippi probably would need between 400,000 and 500,000 steers in addition to those which they already had to consume the velvet bean crop alone. A joint conference with representatives of the live stock industry was held by the Department and the Food Administration in Washington, D. C, on September 5 and 6. The problems confronting the industry, including the redistribution of animals, were thoroughly dis-
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cussed and definite plans were formulated for further work in this field. The conference was very satisfactory and helpful.
Work connected with the suppression of animal diseases has been and is being vigorously pressed. Anti-hog cholera campaigns in cooperation with the State authorities have been extended to twenty-six states in addition to the fourteen in which the work was already under way. Fifty-one per cent of the original tick- infested area of the South now has been released from quarantine, much of it as a result of more general systematic dipping last sea- son. Mississippi hopes to be tick-free by the end of 1917, and the Department expects to release other large areas at the same time. South Carolina should follow closely. Suppression of the tick makes possible the introduction of more and better beef and dairy cattle. Department agents already have been instrumental in bringing into the freed areas thousands of fine breeding cattle.
Definite projects aimed to encourage sheep raising, to provide a more adequate supply of dairy products by the elimination of waste and a more complete utilization of by-products, and to en- courage the breeding of better horses for military purposes also are under way.
Measures designed to assure an adequate production of food and feed crops necessarily involve the dissemination of reliable information regarding the selection of suitable crops and varieties, the best methods of culture, protection of crops against disease, and in case of the more perishable crops, how to protect the har- vests by proper methods of handling and storing.
A special study looking to the control of the new bacterial disease of wheat, which reduces the yield by weakening or killing the leaves and stems and shrivels the kernels themselves, is being made by Department specialists. It is probable that this disorder is spread through the planting of diseased kernels. Careful screen- ing before planting to eliminate such kernels and methods of seed treatment may prove effective in its control. A more compre- hensive campaign has been undertaken in the Northwestern States for the eradication of stinking smut of wheat, which is re- sponsible for heavy losses to the crop. Measures which will enable farmers to reduce losses from this source are being carried to farmers by agents in that territory. Somewhat similar cam- paigns looking toward the ultimate control of the destructive epi- demics of stem rust, which devastate certain sections in the spring wheat area from time to time, have been undertaken.
Working in cooperation with the Department of Labor and State agencies, officials of the Department of Agriculture were able to handle the farm labor problem in a satisfactory manner.
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Through this cooperation of the two agencies in listing and di- recting laborers, aided by local organizations, the farmers were almost entirely supplied. There were very few cases where any material shortage of labor was not met during the year. Under the provisions of the Food Production Act the Department's facilities for dealing with the farm labor problem have been greatly expanded. The conservation of farm labor by the more eflficient use of farm implements has been given considerable attention by farm management specialists of the Department, and advice as to how economies in labor may be effected is available.
The national food survey, now in progress, was undertaken to ascertain as accurately as possible, the amount of the country's food stores and the normal consumption of food. This informa- tion is needed in order that the action necessary to secure the production of sufficient supplies may be taken intelligently. It will also be very useful to the Food Administration and other branches of the Government. Farm stocks and supplies in retail stores and in the hands of consumers are being estimated, as are stocks held by wholesale jobbing, storing, manufacturing, and other commercial establishments. Monthly reports on several of the more important commodities will follow the preliminary sur- vey and, if the emergency requires it, another survey will be made after an interval of perhaps six months.
Improved methods of packing and handling food products, as determined by the investigations of the Bureau of Markets, are being made increasingly available to producers. This bureau also is extending its market news services to include grain, hay, and seeds, dairy and poultry products, and to cover more fully vege- tables and fruits and meats and meat products. It also will assist in solving local truck marketing problems. The market reporting services make public facts as to supply, demand, and movement of food products and are intended to aid in the elimination of lost motion and economic waste in the marketing machinery of the country.
THE TASK OF THE COMING YEAR.
As the season for fall seeding of winter wheat and rye ap- proached, plans for obtaining a maximum acreage in these crops without disrupting proper farming systems were considered in conferences held in Washington and other sections of the country with state officials, bankers, farmers, and others. The result was the development of a program for the production of approximately one billion bushels of wheat next year. Definite suggestions were made as to the acreages to be planted in each of the wheat growing
138 LECTURES ON CONSERVATION.
states and steps were immediately taken through the field workers to bring about the planting of the acreages recommended.
The area suggested as a minimum for winter wheat, 47,337,000 acres, an increase of 18 per cent over that for 1916, would return 672,000,000 bushels if the average yield of the last ten years is equaled, or under conditions as favorable as 1914, 880,000,000 bushels. In either case, if a spring wheat crop equal to that of 1915 is obtained, a billion bushels of wheat next year would be assured. It is believed that 83,000,000 bushels of rye can be expected from the sowing of 5,131,000 acres which was recommended.
The bread need of the world during the next year, whether it is at war or at peace, requires the complete success of the billion bushels campaign, declared Secretary Houston in placing the program before the country:
"It is highly essential that we omit no step to secure a production of wheat during the next year which will be greatly in excess of the normal needs of this Nation. My own conviction is that, whether we have peace or war, this Nation is going to be called upon for some time to come to feed a considerable part of the population of Europe and to furnish it with agricultural supplies and equip- ment. A continent going through what Europe has gone through for the last three years, and is continuing to go through, does not quickly get on its feet. The waste of men, the loss of human life, the impairment of many of those who survive, the destruction of work animals, the waste of farm equipment, the impairment of labor, the disorganization of labor, the disruption of the normal processes of agriculture — all these things entail heavy burdens and handicaps; and it is going to take Europe a considerable period to get where she was before this war came on. . . .
"I think this Nation is giving a demonstration, and will continue to give a superb demonstration in the field of organization, in the direction of great resources and is going to teach the peoples of the world that democracy is really what we claim it to be — the best form of government."
It* is impossible, within the limits of this statement, to detail all that has been done by the Department of Agriculture and its great allies, the land-grant colleges, and the commissioners of agriculture, as well as by the farmers of the Nation since the entrance of the United States into the war. Enough has been said, however, to give an indication of the results that have been accomplished to date in dealing with some of the larger problems confronting us in this emergency. The farmers of the country responded generously during the past season to the appeals for increased production and their patriotism will stimulate them to even greater efforts next year. The Department of Agriculture will continue to assist them in every possible way.
CHAPTER VII.
THE WORK OF THE FUEL ADMINISTRATION.
Before the law was enacted which lead to the organization of the Fuel Administration, the Federal Trade Commission had taken up the coal question and had made various reports upon the subject.
THE INVESTIGATIONS OF THE FEDERAL TRADE COMMISSION.
The fac% under this heading are mainly taken from the reports of the Federal Trade Commission.
In consequence of the war and the revival of industry there came an increased demand for coal. This did not appear immedi- ately; indeed in 1915 the needs did not require the maximum production of 1913, and it was not until nearly the end of 1916 that the increased demand for coal led to any fear of shortage.
As we have already seen in the first part of these lectures, the demand during the winter of 1916-17 locally exceeded the available supply, and there resulted hardship and industrial difTiculties, especially during the latter part of the winter. With this shortage went rapidly enhancing prices. The situation became so acute by June, 1917, that Congress passed a resolution asking the Federal Trade Commission to make an investigation regarding anthracite coal. The Commission saw that the anthracite coal problem could not be considered apart from that of bituminous coal, for the reason that under conditions of in- creased demand, one may take the place of the other to a con- siderable extent in industry. Thus, while in April and May of 1917 the production of anthracite increased by nearly 25 per cent, the amount which went into household sizes did not greatly increase, because the demand for coal was such that the larger sizes of anthracite were diverted to the production of steam on an extensive scale in plants which had heretofore used bituminous coal.
The difTiculties in the coal situation were found by the Federal Trade Commission to be due more to a lack of cars for trans- portation and to a shortage of labor than to the incapacity of the mines to produce the necessary amount of coal. The shortage of cars was made even worse by the withdrawal of boats in the Atlantic coast trade from coal transportation which necessitated
139
140 LECTURES ON CONSERVATION.
the shipping of coal to the northeastern part of the United States to a greater extent than usual by rail.
The estimates made of the amount of coal which was needed during the year ending June 30, 1917, as compared with the previous year, indicate an increase of only about 10 per cent. Notwithstanding this the prices of coal, when it came time to make contracts in the early summer of 1917, had increased for large consumers by 100 to 150 per cent and for small consumers by 200 to 400 per cent; indeed, in the early summer of 1917, contracts for many thousands of tons of industrial coal were made for the country contiguous to the interior basins at a rate three to four times that which had been paid the year before.
The fact that coal is basal to all the industry of th^ country, with the possible exception of agriculture, and its g^atly en- hancing price, together with the difficulties of transportation, led three members of the Federal Trade Commission, Messrs. Davies, Colver, and Fort, in a report presented June 19, to make the following recommendations:
"First, That the production and distribution of coal and coke be conducted through a pool in the hands of a government agency; that the producers of various grades of fuel be paid their full cost of production plus a uniform profit per ton (with due allow- ance for quality of product and efficiency of service).
"Second, That the transportation agencies of the United States, both rail and water, be similarly pooled and operated on Government account, under the direction of the President, and that all such means of transportation be operated as a unit, the owning corporations being paid a just and fair compensation which would cover normal net profit, upkeep, and betterments."^
While Commissioner Harris in general agreed with the state- ment of facts, he did not concur in these recommendations, but in a minority statement he recommended "that during the war the President be authorized to order rail and water transporta- tion agencies to give preference to shipments of coal, coke, and other commodities in the order of their importance to the public welfare."^
After the recommendations of the Federal Trade Commission were made, the coal situation became more and more acute; and during the discussion in Congress of the Food Administration bill, it became so clear that drastic action was necessary that when the bill was in the Senate a section was inserted giving the President the sweeping powers concerning coal, summarized
'Report of the Federal Trade Commission on Anthracite and Bituminous Coal, June 20, 1917. Washington, D. C, pp. 20 and 21.
LECTURES ON CONSERVATION. 141
in Part 1, under which he might do either of the things which the members of the Federal Trade Commission mentioned, or he could make any prices and regulations which he regarded as necessary, even to becoming the exclusive dealer in coal in the United States.
As we have seen, this bill became a law on August 10. On August 20, Robert S. Lovett was made Federal agent under the Priority Shipment Act and given full authority to require the roads of the country concerned in the transportation of coal to give coal priority in transportation. By executive orders on August 21 and 23 the President, upon the basis of information furnished him by the Federal Trade Commission, temporarily fixed a scale of prices for bituminous and anthracite coal in ac- cordance with statements later made.
THE CREATION OF THE FUEL ADMINISTRATION.
The President did not take advantage of an authority in the law to place the control of coal under the Federal Trade Commission but decided to appoint a Fuel Administrator. Harry A. Garfield, President of Williams College, was appointed to this office on August 23. The President said he had been appointed to carry out the broad provisions of the act with the instruction "that he shall do and perform such acts and things as may be required of him from time to time by direction of the President and under such rules and regulations as may be prescribed." The Fuel Administrator was given authority to employ assistants and subordinates, and other departments and agencies of the Govern- ment were directed to cooperate with the Fuel Administrator in the performance of his duties.
With this appointment began the work of the Fuel Administra- tion. The Fuel Administrator in his first announcement stated his task to be "to secure the largest possible production of fuel at prices just to the producer and reasonable to the consumer." In accomplishing this purpose it is the plan of the Fuel Adminis- tration to encourage production, to utilize existing agencies, to seek cooperation of experts, operators, miners, industrial and domestic consumers, and indeed all who perform a useful service in the production and distribution of coal. The work of the Fuel Administration will be considered under the headings of Organization, Prices, Apportionment, Production, and Con- servation.
142 LECTURES ON CONSERVATION.
ORGANIZATION.
The organization of the Fuel Administration comprises the organization of the forces at Washington and the organizations in the several states.
ORGANIZATION AT WASHINGTON.
The organization of the Fuel Administration at Washington is as follows:
1. Fuel Administrator, H. A. Garfield. The Fuel Administra- tor derives his powers from the Executive order issued by Presi- dent Wilson on August 23, 1917, in accordance with the provisions of the Act of Congress, approved August 10, 1917, entitled "An Act to provide further for the national security and defense by encouraging the production, conserving the supply, and con- trolUng the distribution of food products and fuel". An Execu- tive order, printed as Publication No. 1 of the U. S. Fuel Ad- ministration, appoints Harry A. Garfield as Fuel Administrator to hold office during the pleasure of the President.
The Fuel Administrator's duties and authority embrace all matters relating to fuel. The prices of bituminous coal were fixed by the President in an Executive order of August 21, 1917, and the prices of anthracite coal were fixed by the President in an Executive order, dated August 23, 1917. The control of the prices, distribution and apportionment of bituminous and anthra- cite coal were then assumed by the Fuel Administrator.
2. Administrative Division: George W. Nasmyth, Head. The Administrative Division has supervision of (a) the coordination of all departments, (b) expenditures, (c) all technical questions connected with the organization of the Fuel Administration, including personnel.
3. Production— Operators' Prices — Legal: Harry D. Nims, Head. The Production Department has supervision over all prob- lems connected with stimulating the production of coal and all ap- pHcations for changes in prices and questions involving rulings of the Fuel Administrator.
4. Fuel Supplies: Leonard A. Snell, Head. The Division of Fuel Supplies has supervision over all questions of the distribu- tion and apportionment of fuel, including the provision of supplies for emergency needs of the Government, Army and Nav^^ railroads and shipping, public utilities, industries and domestic consumers.
5. Labor Representative: John B. White. The Labor Repre- sentative is Special Advisor to the Fuel Administrator in all labor questions.
LECTURES ON CONSERVATION. 143
6. Operators' Representative: Rembrandt Peale. The Oper- ators' Representative is Special Advisor to the Fuel Administrator in all questions affecting the interests of Operators.
7. Engineering and Technical Advisor: Samuel A. Taylor. The Engineering and Technical Advisor is Consulting Engineer to the Fuel Administrator in all technical and scientific problems connected with coal mining.
8. State Organizations: Walter E. Hope and A. F. Hebard in charge. The Division of State Organizations is in charge of all relations with the Federal Fuel Administrators in the forty- eight states and the District of Columbia.
9. Conservation: P. B. Noyes, Head. The Division of Con- servation is in charge of all questions relating to the conservation of fuel, including increase of car supply.
10. Transportation: G. N. Snider, Head. The Division of Transportation is attempting to speed up the delivery of cars by investigating cases where reports have been received that cars are held an unnecessary length of time at any one place.
11. Coke: W. S. Blauvelt, Head. The Division of Coke is in charge of all questions relating to coke.
12. Legal, Appointment, Supplies and Accounting Divisions. The Fuel Administration uses the Appointment, the Supplies and the Accounting Divisions in common with the Food Ad- ministration. It has its own Legal Department.
STATE ORGANIZATIONS.
Following the plan of the Food Administration, there has been appointed in each of the states a Federal Fuel Administrator. For many of the states these were appointed on September 28, and for remaining states from time to time.
It is the duty of the Federal Fuel Administrator in each State to appoint a State Advisory Committee and also certain Local Committees. Usually a local committee has been appointed for each county, but frequently it has been found advisable to appoint committees for cities or towns. It has been the rule not to ap- point to membership on Committees persons interested in the coal industry. The State Administrator, through his local Committees, has complete supervision of local distribution and in this connection is charged with the important duty of seeing that the rulings of the President and of the Fuel Administration with relation to prices are observed. The Local Committees have authority, with the approval of the State Administrator, to in- vestigate and remedy cases of hardship or unequity, subject to
144 LECTURES ON CONSERVATION.
reversal or appeal to the United States Fuel Administrator. They are also to keep the State Administrator informed as to local conditions and needs and to lend assistance in providing relief.
The most important duty of the State Fuel Administrators is to see that the supply of fuel in their States is equitably distribu- ted at fair prices. It is the intention of the United States Fuel Administrator to see that the State Administrators are provided with the necessary authority to accomplish these results. In regard to powers to be exercised by the local Fuel Administrators, distinction is to be made between those which may require legal action for their enforcement and those which may be effective through the acquiescence of parties affected. For the latter class of cases, the State Administrators are empowered to make all reasonable regulations and arrangements not inconsistent with the orders and rulings of the United States Fuel Administrator. Thus the State Administrators have authority to promulgate reasonable regulations concerning local distribution. They may require dealers to deliver only a limited supply to any one custo- mer; they may require customers to give information concern- ing their supply on hand and their requirements; they may take measures to prevent hoarding.
Powers which may require legal enforcement may be exercised only by express authority of the United States Fuel Administra- tor on recommendation of the State Fuel Administrator. In gen- eral, it is desirable that the reasonable control be exercised by conference and agreement and enforced by public opinion, and that legal action be resorted to only in exceptional cases.
Under the plan of organization at Washington there will be centralization of the authority to determine policies and issue rulings. However, there will be decentralization in carrying out these rulings. The State and local Fuel Administrators will be the agents through which these rulings will be executed.
PRICE CONTROL.
It was the greatly enhanced prices of coal and the rapid con- tinuance in the advancing prices which caused general alarm among the people early in 1917, and led Congress to add the Fuel Control section to the Food Administration Bill.
The prices of coal to the consumer depend upon the amount (1) charged by the producer at the mine, (2) charged by the jobber or wholesaler for his service, and (3) allowed to the retailer.
LECTURES ON CONSERVATION. 145
MINE PRICES.
The consideration of mine prices requires separate treatment for anthracite coal, bituminous coal, and coke.
ANTHRACITE COAL.
The first limitation of prices was made by the President upon information furnished by the Federal Trade Commission. On August 23 an order fixing prices for anthracite coal was issued, reading as follows:
1. Effective September 1, 1917, the maximum prices per ton of 2,240 pounds free on board cars at the mines for the grades and sizes of anthracite coal hereinafter specified shall not exceed the prices indicated in paragraph 5 when such coal is produced and sold by the Philadelphia and Reading Coal & Iron Co., Lehigh Coal & Navigation Co., Lehigh & Wilkes-Barre Coal Co., Hudson Coal Co., Delaware & Hudson Co., Scranton Coal Co., Lehigh Valley Coal Co., Coxe Bros. & Co., Pennsylvania Coal Co., Hillside Coal & Iron Co., Delaware, Lackawanna & Western Railroad Co., Delaware, Lackawanna & Western Coal Co., Susquehanna Coal Co., Susquehanna Collieries Co., Lytle Coal Co., or the M. A. Hanna Coal Co.
2. The grades and sizes for which the maximum prices a^^e specified are as follows : White ash anthracite coal of the grade that between January 1, 1915, and January 1, 1917, was uniformly sold and recognized in the coal trade as coal of White ash grade; red ash anthracite coal of the grade that between January 1, 1915, and January 1, 1917, was uniformly sold and recognized in the trade as coal of Red ash grade; and Lykens Valley anthracite coal that is mined exclusively from the Lykens Valley seams and of the grade that between January 1, 1915, and January 1, 1917, was uniformly sold and recognized in the coal trade as coal of Lykens Valley grade.
White-ash grade:
Broken - $4.55
Egg 4.45
Stove 4.70
Chestnut 4. 80
Pea 4.00
Red-ash grade:
Broken 4.75
Egg 4.65
• stove 4.90
Chestnut 4.90
Pea 4.10
Lykens Valley grade:
Broken 5.00
Egg 4.90
stove 5.30
Chestnut 5.30
Pea 4.35
6
146 LECTURES ON CONSERVATION.
3. Producers of anthracite coal who are not specified in para- graph 4 shall not sell the various grades and sizes of anthracite coal at prices that exceed by more than 75 cents per ton of 2,240 pounds free on board cars at the mines the prices enumerated in paragraph 2: PROVIDED, That any producer of anthracite coal who incurs the expense of rescreening it at Atlantic or lake ports for transshipment by water may increase the price thereof by not more than 5 cents per ton of 2,240.
4. Producers of anthracite coal specified in paragraph 1 of these regulations shall not sell anthracite coal to producers of anthracite coal not specified in paragraph 1.
5. Dealers and selling agents shall not sell coal produced by the producers included in paragraph 1 on the basis of the prices fixed at the mine for coal produced by producers not specified in said paragraph.
These prices continued until September 30. After the matter
was considered by the Federal Fuel Administrator, an order was
issued reducing these prices for pea coal as follows:
White-ash $3.40 per ton
Red-ash 3.50 " "
Lykens Valley 3.75 " "
It was further ordered also that all other producers of pea coal should sell at maximum prices not to exceed 75 cents per ton on the prices above named.
On December 1, upon recommendation of the Fuel Adminis- tration, the President issued an order increasing the price on each class of anthracite coal by 35 cents a ton. This order does not apply, however, to any coal sold at the mines under an ex- isting contract, containing a provision for an increase for the price of coal thereunder in case of an increase of wages paid to miners. The order applies to coal actually shipped from the mines after 7 a. m., December 1. The increase was recom- mended by the Fuel Administrator because of the increased cost of labor. The Fuel Administrator also stated that it was his expectation to order the reduction in anthracite prices which had been regularly given beginning April 1, 1918.
BITUMINOUS COAL.
On August 21, provisional prices for bituminous coal, f. o. b. were fixed by the President. Later, after the Fuel Administration was organized, many of these prices were changed with the ap- proval of the President. After being modified from time to time, there was issued in November, a table giving the President's prices, and so far as these had been deviated from, the new prices.
LECTURES ON CONSERVATION.
147
Table Giving Comparison of President's Prices and New Prices for Bituminous Coal.
President's |
Prices |
New Prices |
||||
States |
R. M. |
P. S. |
SCR. |
R. M. |
P. S. |
SCR. |
Pennsylvania -_-- __ |
.$2.00 2.00 2.00 2.15 2.00 |
$2.25 2.25 2.25 2.40 2.25 |
$1.75 1.75 1.75 1.90 1.75 |
|||
West Virginia _ _ _ _ |
||||||
West Virginia {New River) |
||||||
Mines operated near St. Charles, Lee County, Va., by the Darby Coal Min- ing Co., Black Mountain Mining Co., Virginia Lee Co., Old Virginia Coal Co., United Collieries Co., Inc., Bene- dict Coal Corporation, and the Im- perial Mine of the Virginia Iron, Coal & Coke Co., Roanoke, Va. |
,$2.40 |
$2.65 |
$2.15 |
|||
Ohio (thick vein) _ . |
2.00 2.35 |
2.25 2.60 |
1.75 2.10 |
|||
Deerfield or Palmyra Field, Massillon Field and Jackson Field |
3.75 |
4.00 |
3.50 |
|||
Kentucky _ . _ _ _ |
1.95 |
2.20 |
1.70 |
|||
Counties of McCreary, Pulaski, Rock- castle, Lee, Jackson, Wolfe, Morgan, Lawrence, Johnson, Martin, Laurel, Owsley, Breathitt, Perry, Leslie, Har- lan, Magoffin, Boyd, Carter, Pike, and all of Floyd, Knott and Letches counties excepting coal produced from the thick vein Elkhorn district in |
2.40 4.00 |
2.65 4.25 |
2.15 |
|||
Counties of Whitley, Knox, Clay and Bell, Blue Gem District. |
2.75 |
|||||
Kentucky (Jellico) - _ _ |
2.40 |
2.65 |
2.15 |
|||
Big Seam District _ . _ . _ _ |
1.90 2.15 2.40 |
2.15 2.40 2.65 |
1.65 1.90 2.15 |
2.15 |
2.45 |
1 .85 |
Pratt, Jaeger & Coronea Districts Cahaba & Black Creek Districts |
||||||
New Classification Cahaba, Black Creek, Brookwood, and |
2.85 2.35 2.40 2.40 |
3.10 2.65 2.75 4.00 |
2.45 |
|||
Pratt, Jaeger, Jefterson, Nickle Plate |
2.05 |
|||||
Corona District |
2.05 |
|||||
Montevallo District |
2.15 |
|||||
2.30 |
2.55 |
2.05 |
||||
Counties of Scott, Claiborne, Anderson and Morgan |
2.40 4.00 |
2.65 4.25 |
2.15 |
|||
County of Campbell, Blue Gem District |
2.75 |
|||||
Tennessee (Jellico) __ |
2.40 1.95 1.95 |
2.65 2.20 2.20 |
2.15 1.70 1.70 |
|||
Indiana |
brazil block |
2.95 |
1.70 |
|||
McLean County Coal Co., when sold at retail only - |
4.00 |
1.70 |
||||
Illinois (third vein) |
2.40 2.65 |
2.65 2.90 |
2.15 2.40 |
|||
Arkansas _ _ _ _ |
||||||
Hartford, Greenwood, Midland, Hackett |
3.05 |
3.40 4.50 |
2.40 |
|||
Paris Field |
2.00 |
|||||
Iowa .__ _____ |
2.70 |
2.95 |
2.45 |
|||
Appanoose, Wayne, Boona, Webster Company |
3.15 |
3.40 |
2.90 |
|||
Kansas |
2.55 |
2.80 |
2.30 |
|||
Osage County _ _ _ |
2.55 |
4.00 |
2.30 |
|||
Missouri^ . _ _. _ _ _ |
2.70 |
2.95 |
2.45 |
|||
Lafayette, Ray, Clay, Platte, Linn and Putnam Counties, and the Longwall Thin Seam Vein in Randolph County Oklahoma _ |
3.15 |
3.40 |
2.90 |
|||
3.05 |
3.30 |
2.80 |
||||
Leflore and Haskell Counties _ _ |
3.50 3.10 3.30 3.50 |
4.30 3.90 4.10 4.30 |
2.25 |
|||
2.00 |
||||||
Coal County |
2.00 |
|||||
Pittsburgh and Latimer Counties |
2.25 |
|||||
Texas . |
2.65 |
2.90 |
2.40 |
148
LECTURES ON CONSERVATION.
Table Giving Comparison of President's Prices and New Prices for Bituminous Coal — (Concluded.)
President's Prices |
New Prices |
|||||
State |
R. M. |
P. S. |
SCR. |
R. M. |
P. S. |
SCR. |
$2.45 |
$2.70 |
$2.20 |
||||
Bit. domestic coal Walsenberg Cannon City, Rout, Garfield, Gunnison, Durango, Mesa, Pitkin, Montezuma, Delta, Montrose, and Rio Blanca |
$3.00 2.75 2.45 2.70 2.75 2.50 |
$4.00 3.25 3.50 3.60 3.25 3.50 |
$1.50 |
|||
2.00 |
||||||
Lignite coal. Northern Field and El Paso |
1.00 |
|||||
2.70 2.40 2.50 2.60 3.25 |
2.95 2.65 2.75 2.85 3.50 |
2.45 2.15 2.25 2.35 3.00 |
1.50 |
|||
2.00 |
||||||
1.25 |
||||||
Utah |
||||||
3.25 3.15 |
4.50 3.60 |
3.00 |
||||
none |
2.20 |
|||||
On October 26 orders were given fixing the maximum price of several grades of bituminous coal at terminal lake ports after transportation by rail and by water to the upper lake docks. From these docks it is distributed to the consuming centers. To such coal the following regulations apply:
(1) For coal received as aforesaid and, during the period begin- ning October 30, 1917, and ending April 30, 1918, reshipped by rail from the docks to consumers buying in carload lots or to local retailers, prices for the following grades of coal, per net ton f. o. b. cars at the dock, shall be as follows:
Coal from —
Youghiogheny, Fairmont, Greensburg, and West- moreland County fields
No. 8 seam, eastern Ohio fields
Hocking and Pomeroy, Ohio fields
West Virginia splint and block fields
Kentucky gas and steam and splint and block fields Smokeless coal fields
Run of |
|
Lump. |
pile. |
$6.60 |
$6.40 |
6.40 |
6.20 |
6.60 |
6.40 |
6.85 |
6.65 |
7.20 |
7.00 |
7.701 |
6.55 |
Screening.
$6.20 6.10 6.20 6.55 6.55 6.55
'Lump and egg.
(2) For coal so received by lake shipment at any of the docks aforesaid, and sold for delivery by truck, wagon, or other usual facility for retail delivery to consumers without any rail reship- ment, prices must be fixed and determined in the manner and ac- cording to the provisions and limitations prescribed in the order of the United States Fuel Administrator dated October 1, 1917, rela- tive to maximum gross margins of retail coal dealers, unless and until the State Fuel Administrator may have adopted, with the
LECTURES ON CONSERVATION. 149
approval of the United States Fuel Administrator; some other or different retail prices or method for fixing or establishing retail prices for the locality in which the dock affected thereby is situated.
(3) For coal received by any method of transportation, by any such corporation, association, partnership, or persons in their capacity of jobbers, or in other capacity not covered in the foregoing provisions of this order, all orders and rulings of the United States Fuel Administrator relative to other jobbers shall remain in effect.
Subsequent to the promulgation of the above table of prices, additional minor changes have been made, but they are not here included, since the purpose of these lectures is rather to present the facts sufficiently to illustrate the principles than to be com- pletely encyclopaedic.
Further advance of scale of prices. — The prices of coal cannot be considered separately from the matter of miners' wages. The latter part of September and the first part of October, there were numerous demands by the miners for higher wages; these demands were enforced by numerous strikes in Indiana, Ohio, Illinois, and other Southwest districts. As a result of conferences, on October 6, it was finally agreed to give increases in wages as follows:
10 cents per ton to miners,
75c to 11.40 per day to laborers,
15 per cent for yardage and dead work.
These increases will result in advances to the miners of 50 per cent and to the best paid laborers of 78 per cent over the wages of 1914, but the increases are not in advance of the increase in cost of living.
In consequence of these increases in labor cost the Fuel Ad- ministrator recommended to the President that the prices of bituminous coal at the mines be increased by the sum of 45 cents per ton.
In consequence of this recommendation, the President on October 27 gave an order amending the prices which had been fixed through previous orders by adding the sum of 45 cents to each of the prices so prescribed or so adjusted and modified, subject however, to the following express exceptions:
(1) This increase in prices shall not apply to any coal sold at the mine under an existing contract containing a provision for an increase in the price of coal thereunder in case of an increase in wages paid to miners.
(2) This increase in prices shall not apply in any district in which the operators and miners fail to agree upon a penalty pro- vision, satisfactory to the Fuel Administrator, for the automatic
150 LECTURES ON CONSERVATION.
collection of fines in the spirit of the agreement entered into be- tween the operators and miners at Washington, October 6, 1917.
This order shall become effective at 7:00 a. m. on October 29, 1917.
Penalty clause as condition of advance of wages. — The Fuel Ad- ministrator fixed a penalty of $1 a day upon miners who declined to work, or who ceased work while the contract was in force. The accumulated amount, in case of a man subject to the pen- alty, should be deducted from his wages. This provision was generally accepted by the miners promptly, because of the war emergency situation, although with protest upon the part of some of them. However, on November 3, the miners in Kansas, Missouri, Oklahoma, and Arkansas had not agreed to the pen- alty clause. The Fuel Administrator insisted that this clause should remain in every contract as a just war measure. As a result of negotiations, it was announced on November 19 that the miners had accepted the penalty clause.
Mining of coal must not be interrupted. — It is the spirit of the understanding both of operators and mine workers on one hand and the Fuel, Administration on the other, that mining of coal shall continue without interruption during the period of the war. In order that this may be accomplished, the Fuel Administrator directed that no independent action be taken either by operators or mine workers in case of dispute, but that the controversy be submitted at once to the United States Fuel Administrator. A regularly prescribed procedure will be followed in adjusting any dispute, but work at the mine must continue without interrup- tion, pending the final settlement of the controversy. As illus- trating this matter, may be mentioned the dispute between the coal operators and coal miners of Illinois bituminous fields. After the terms of agreement had been under consideration for some time and final details arranged, they were approved by Fuel Administrator Garfield on November 26.
Prices fixed reasonably satisfactory. — In concluding this section it may be said that in consequence of the increase of wages granted to the miners under the new schedules and the increased price granted to the operators, there followed reasonable con- tent with the situation in the majority of districts both for the miners and operators. However, the mine operators in some districts were so dissatisfied with the price that they indicated they would refuse to supply coal at the prices fixed by the Gov- ernment. This was true of some of the miners in Michigan, whereupon, on November 24, the Federal Fuel Administrator of Michigan was informed by the United States Fuel Adminis-
LECTURES ON CONSERVATION. 151
trator that if the Michigan operators refused to ship coal in ac- cordance with the prices fixed, he would take possession of the mines.
COKE.
On November 9, the maximum base price of Beehive oven coke, per ton of 2,000 lbs., f. o. b., at the places where manufac- tured, east of the Mississippi River, were fixed as follows:
Blast furnace coke $6.00
Foundry coke, 72 hours, selected 7. 00
Crushed coke, over 1 inch in size 7.30
On November 20, the basic prices for byproducts of coke were fixed as follows:
Run of mine coke $6.00
Selected foundry coke 7.00
Crushed coke, over 3^ inch in size 6.50
The price of gas coke for industrial and metallurgical uses shall be the same as corresponding grades produced in byproducts ovens.
If deliveries or other services are performed in connection with the coke, reasonable additional compensation may be charged. Also the producers of coke at other points than at or adjacent to the mine will be allowed a fair differential to compensate for the freight charges. It has been the aim in fixing the price of coke to make it suflficiently high to give liberal return to the pro- ducer and therefore to insure maximum production.
PRINCIPLES FOLLOWED IN PRICE FIXING.
The Fuel Administration has the problem of fixing the price of coal sufficiently high so that there will be a large production, with- out going to a price that will make it possible for the very poor small mine, remote from facilities, to operate. If the price were fixed high enough so that all of these could work, this would result in taking from the public many millions of dollars which should not be paid. The problem is to strike the nice balance which will result in the greatest benefit to the people of the United States; a price high enough so that there shall be in- creased production over that of previous years, but not so high as to place too heavy a burden of cost upon the people.
Variations in prices fixed. — In fixing the prices for bituminous coal it is to be noted that a different principle has been followed from that used in connection with wheat by the Food Adminis- tration. For wheat a basis is fixed for a certain quahty of wheat
152 LECTURES ON CONSERVATION.
at the central interior markets, and prices for other grades and for other localities depend upon well recognized differentials due to quality and transportation. The only deviation from this principle for wheat is that of California. The price there was fixed at a higher rate than required under these principles.
However, in the case of coal, the plan of the Fuel Adminis- tration has been to fix the price so that each operator shall re- ceive a hmited profit. Hence the price is relatively low for coal from the thick seams, easily and cheaply mined, and high for the thin and poor seams from which it is more expensive to mine.
The difficulty of the problem may be illustrated by the very small mine which under ordinary circumstances would not be able to operate. Many of these properties do not even have railroad facilities; these are known as "wagon mines." In con- sequence of their lack of facilities they cannot produce coal as cheaply as the larger mines with better facilities; hence if they are operated at all, it is necessary for them to receive a high price for their product, which is no better, indeed is likely to be on the average poorer than that from the large mines.
While differences in prices exist for like products in the same districts, it has been the aim of the Fuel Administration not to make the differentials greater than necessary in order to secure a great production. The larger part of the variations in the prices announced for bituminous coals are due to difference in quality of the coal and to freight differentials.
The fact that a ton of coal from different mines having the same thermal capacity may be sold at variable prices has occa- sioned no especial difficulty, because there is a greater demand for coal than can be met, and consumers readily pay a price necessary to secure the coal.
The practice followed is in complete contravention to economic theories accepted before the war. If a mine were rich and con- veniently located it gained a much larger profit per ton than did the poor mine badly located. The owner of the better property gained all the advantages of cheapness of operation and conven- ience in transportation. Even with the prices fixed this is still the situation to a considerable extent, but the effect of the price fixing is to reduce the differences between the gains of the rich and the poor mine.
Other possible methods of handling the problem.- — Under the fuel law another method of attack would have been possible. The law authorized the Government to be the exclusive buyer and seller of the coal of the country. Had this authority been used, the coal mined would have been sold to the Fuel Administrator at a fair
LECTURES ON CONSERVATION. 153
profit for each operator. The coal, then the property of the Fuel Administration, could have been pooled and sold at prices depend- ent upon its value, taking into account its thermal power, its other qualities, and its position in the country in regard to freight and demand, the prices being fixed so as to return to the Fuel Administration its cost with a sufficient amount to cover adminis- tration. Indeed, this was the plan of the Federal Trade Commis- sion, except that the plans of the Corhmission went even further and required the operation of the mines.
Had this suggested procedure been followed, the inequality of cost of the same quality of coal at the same place would have been avoided. However, the Fuel Administration would have had the extremely difficult problem of determining the cost of the pro- duction of coal at each mine, dependent as this is upon so many complex factors, including the cost of labor, reduction of the value of the mines due to extractions of material, the depreciation of permanent property, the interest on the investments, etc.
The method would also have placed upon the Fuel Adminis- tration the entire burden of apportioning and marketing the coal, a gigantic undertaking. While, therefore, the method of buying coal by the Government and pooling the same might be theoreti- cally advantageous, its difficulties were such that the alternative of price fixing was chosen. However, the possibilities of the sec- ond alternative are brought forward since there is public discus- sion and, in some instances, advocacy of pooling of the coal of the country through government purchase and distribution.
Perfect freedom in handling the problem of coal has further been interfered with by the fact that so much of the coal was under legal contract before the Fuel Administration began its work. After these contracts have expired there will be greater freedom of action. When this time arrives, it may be practicable to put into force an intermediate plan, that of permitting all the coal operators of a given territory to pool their coal, at least for the purpose of distribution. Thus, on November 23 at a con- ference in Cleveland, it was proposed that a pool be formed of the central territory, possibly with local pooling districts centered at Cleveland, Cincinnati, Columbus, Toledo, Canton, Akron, Pittsburgh, Detroit, etc. One of the chief purposes of such pool- ing would be to expedite distribution and thus to avoid congestion at terminals.
JOBBERS' MARGINS.
From time to time rulings were made in regard to contracts made before the fixing of maximum prices, jobbers' margins, and
154 . LECTURES ON CONSERVATION.
other matters relating to distribution. These were all supple- mented by a general order covering the entire subject, issued October 7. This order is as follows:
1. The prices for coal fixed by the President as modified by the orders of the Fuel Administrator, shall apply to export and bunker coal.
2. Contracts relating to bituminous coal made before the President's proclamation of August 21, 1917, and contracts relating to anthracite coal made before the President's proclama- tion of August 23, 1917, shall not be affected by these proclama- tions provided the contracts are bona fide in character and enforceable at law, in the absence of further express regulation.
3. If the claim is made that any specific coal has been acquired in accordance with a bona fide contract enforceable at law, existing prior to the time of the order of the President applicable thereto, the burden of proof is upon the parties to the contract to establish these facts.
4. Coal may be bought and sold at prices lower than those prescribed by the orders of the President.
5. The effect of the President's orders on coal rolling when the order affecting such coal was issued, is to be decided by first ascertaining whether or not the title had passed from the operator to the consignee at the time the President's order became effective. If the title had passed to the consignee the price fixed by the President does not apply.
6. Operators who maintain their own sales department, whether in their own name or under a separate name, and dispose of coal directly to the dealer or consumer, shall not charge any jobber's commission. A jobber must be entirely independent of the operator, in fact as well as in name, in order to be entitled to charge a jobber's commission.
7. Free coal shipped from the mines subsequent to the promul- gation of the President's order fixing the price for such coal shall reach the dealer at not more than the price fixed by the Presi- dent's order, plus only the prescribed jobber's commission (if the coal has been purchased through a jobber) and transportation charged.
8. A jobber who had already contracted to buy coal at the time of the President's order fixing the price of such coal, and who was at that time already under contract to sell the same, may fill his contract to sell at the price named therein.
9. A jobber who, at the time of the President's order fixing the price of the coal in question at the mine, had contracted to buy coal at or below the President's price, and at that time had no
LECTURES ON CONSERVATION. 155
contract to sell such coal, shall not sell the same at a price higher than the purchase price, plus the proper jobber's commission as determined by the President's regulation of August 23, 1917.
10. A jobber who, at the time of the President's order fixing the price of the coal in question, was under contract to deliver such coal at a price higher than that represented by the price fixed by the President or the Fuel Administrator for such coal, plus a proper jobber's commission, as determined by the Presi- dent's regulation of August 23, 1917, shall not fill such contract at a price in excess of the President's price, plus the proper job- ber's commission, with coal purchased after the President's order became effective and not contracted for prior thereto.
11. A jobber who, at the date of the President's order fixing the price of the coal in question, held a contract for the purchase of coal, without having already sold such coal, shall not sell such coal at more than the price fixed by the President or the Fuel Administrator for the sale of such coal after the date of such order, plus the jobber's commission as fixed by the President's regulation of August 23, 1917.
12. Every jobber of coal or coke in the United States shall file with the Federal Trade Commission, Washington, D. C, on or be- fore October 25, 1917, a statement showing (1) his name; (2) post office address; (3) date of the establishment of his business; (4) names of stockholders, members and partners of the jobbing concern; (5) financial interests of stockholders, members and partners of the jobbing concern in any mine producing coal. Any jobbing con- cern which may be established after the issuance of this regula- tion shall immediately upon its organization file a similar state- ment with the Federal Trade Commission.
13. Whenever called upon to do so by the Fuel Administrator, all persons, firms, and corporations dealing in and selling coal to consumers at retail, shall return to the Fuel Administrator at Washington, D. C, or otherwise as directed, a sworn statement of facts showing his, her, or its retail margin, between the dates of January 1, 1915, and December 31, 1915, both inclusive; and to furnish such other information as may be required; such returns to be made on a blank form to be furnished by the Fuel Administrator, when so requested.
14. Where coal has been confiscated by a railroad for its own use, it may be sold to the railroad by the owner thereof at the price at which it was consigned when confiscated, but at no higher price; provided, however, that if the price at which it was consigned is above the price fixed by orders of the President and of the Fuel Administrator it shall be billed at the price so fixed,
156 LECTURES ON CONSERVATION.
unless it is consigned in compliance with a bona fide contract enforceable at law, which was in existence when the price of such coal was fixed,
15. Coal delivered direct to the consumer from the mine, by wagon or truck (whether from wagon mines or other mines) shall be sold at not more than the prices fixed by the President and the Fuel Administrator, plus the actual cost of hauling. ■
16. Coal bought by a railroad for its own use as fuel from a wagon mine hauling to such railroad, shall be sold at not more than the prices fixed by the President and the Fuel Adminis- trator, plus the actual cost of hauling.
17. No charge for hauling may be made by an operator of a wagon mine, or paid by the purchaser of the coal, on coal shipped by rail except where such shipment is made in box cars, in which case an additional charge of not to exceed 75 cents per ton may be made. In all other cases the price of wagon mine coal on board cars shall not exceed the price fixed by the President and the Fuel Administrator for coal at the mine.
18. Until further action of the Fuel Administrator, smithing coal, when used for smithing purposes only, may be sold at the market prices prevailing at the time of the sale.
19. Until further action of the Fuel Administrator, cannel coal may be sold at the market prices prevailing at the time of the sale.
20. An assignment of a contract for the sale of coal, where such assignment is made after the President's order applicable to the price of the coal covered by the contract, shall be treated as a sale of coal and be subjected to all the orders and regulations of the President of the United States and the Fuel Administrator relating thereto.
21. These orders, rulings and regulations supersede all orders and regulations of general application previously issued, ex- cepting— •
(1) The order of the President dated August 21, 1917, fixing prices of bituminous coal modified by sundry orders of the Fuel Administrator and all such orders affecting such modifications.
(2) The order of the President dated August 23, 1917, defin- ing jobbers and fixing the prices of Pennsylvania anthracite coal, the same being modified so far as it relates to the price of anthra- cite pea coal by the order of the Fuel Administrator dated Octo- ber 1, 1917.
(3) Order of the Fuel Administrator, dated October 1, 1917, relative to the shipment, distribution and apportionment of coal reshipped by water at Lake Erie ports; and
LECTURES ON CONSERVATION. 157
(4) Order of the Fuel Administrator, dated October 1, 1917, relating to the maximum gross margins of retail coal dealers.^
On November 8, it was announced, in regard to contract coal, that the jobbers would be allowed to sell this coal at a sufficient advance so that their profits would be the same as if the jobber were obtaining coal at the price fixed. In order to take advan- tage of this order, the jobbers must show that the coal was con- tracted for in bona fide agreement prior to the President's proc- lamation. Also the coal must be sold to the purchasers desig- nated by the State Fuel Administrators.
RETAIL MARGINS.
On October 1, it was ordered that the gross margins for the retailer of any size or grade of coal or coke for each class of busi- ness shall not exceed the average gross margin added by such dealer for the same size or grade for each class of business during the calendar year 1915, plus 30 per cent of said retail gross mar- gin for the calendar year 1915; provided, however, that the retail gross margin added by any retail dealer shall in no case exceed the average added by such dealer for the same size, grade, and class of business during July, 1917.
This margin is the maximum and the retailer may accept smaller margins. The retailers shall calculate their margins and fix their prices the 1st and 16th of each month. The retailers are required to report monthly to the Federal Administrator and to the Federal Trade Commission in regard to the cost of coal and coke received by them, their own sale prices and their gross mar- gins. Retail dealers who have not been in business before Janu- ary 1, 1916, and therefore have had no gross margins for 1915, may continue to sell at the gross margin which they have re- ceived during the period in which they have been in business, provided that this margin does not exceed that which was re- ceived during the month of July, 1917. An increase of 30 per cent in their margins is not allowed.
Bona fide contracts enforceable by law, made before October 1, are not affected by this order. However, only minimum amounts may be delivered under such contracts unless the reasonable requirements of other consumers have been met.
The general ruHng above given in regard to retail margins was based upon- the idea that these margins had been fair and reason- able before the price fixing regulations. However, in certain com- munities, retail dealers had long been charging excessive prices for coal, and their retail margins therefore had been unreasonably
»Document No. 35, U. S. Fuel Administration, Public Information Division.
158 LECTURES ON CONSERVATION.
large. The general order issued would continue these unreason- able profits. Where it is reported that unreasonable profits have heretofore been exacted, the local committee is to make an inves- tigation of the costs of doing business by each dealer; and, if more than a reasonable profit is enjoyed by the dealers under the general ruling made, the committee is to arrive at a fair and reasonable profit to be received by the retailer and send the recommendation as to such reasonable prices to the State Admin- istrator who will pass upon the recommendations of the local committee and determine whether the findings are equitable and just to consumer and retailer. If so found, the State Administra- tor will confirm such price in that town or city, subject to appeal to the United States Fuel Administrator.
On November 22 the Fuel Administrator asked all of the State Administrators to report immediately to the legal department at Washington any sales of coal or coke by operators, jobbers, or retailers in violation of the price fixed by the President.
As a result of these various orders it was stated on October 28 that there had been a downward tendency in retail prices. At Harrisburg and Philadelphia such prices have been reduced. In New York City the prices have been reduced by large dealers from 10 to 40 cents a ton. In Wilmington prices are somewhat lower. In Alabama, at Birmingham, Huntsville, Selma, Talladego, and Sheffield, prices have been reduced from 25 cents to $1.25 a ton.
APPORTIONMENT.
Because of the decrease in the available supply of coal at various points during the summer of 1917 as compared with previous years and because of the fear that there might be absolute shortage on account of insufficient transportational facilities, the problem of apportionment was one of the most difficult and important with which the Fuel Administration had to deal. This situation was accentuated by the buying of many manufacturers far in advance of their ordinary needs at high prices before the Fuel Administration was established. As illustrating a case of this kind, announcement was made October 2 that the Fuel Adminis- tration had discovered at one factory a reserve of 204,000 tons of coal — a year's supply. This is an exceptional instance, but there is no question that a large number of manufacturers had bought ahead of their immediate needs, and in many cases a year's supply. The delivery of such unnecessary amounts of reserve coal reduced the amounts available for general distribution.
LECTURES ON CONSERVATION. 159'
THE RAILROADS MUST BE SUPPLIED.
In order that there shall be available the greatest supplies of coal for the country as a whole and the greatest production in industry, it is obvious that the railroads must be furnished with a sufficient amount of coal to operate to their full capacity. In consequence of this fact on October 11 when it appeared that there was a shortage for the Pennsylvania Railway, an order was given that a sufTicient amount of coal should be furnished so that the road might continue full operation.
Similar orders were later made to cover the Baltimore & Ohio, Chesapeake & Ohio, Lehigh Valley, the New York, New Haven & Hartford, and the Central New England Railway Companies. Under these orders the railways have priority over contracts.
One great difficulty in economically furnishing the railroads coal has been that the roads serving coal producing districts have purchased from a limited number of mines, and have therefore transported coal long distances for their own service, when coal could have been bought at other points which would have lessened the amount of energy used for coal transportation, be- sides requiring an unnecessary number of cars. In consequence of this situation, it has been determined that producers of steam coal which are situated along railroads shall contribute pro rata for the fuel needed for operation in such a manner as to reduce to a minimum the consumption of coal and the use of cars in providing coal for railroad purposes.
THE STEEL AND COKE PLANTS.
In the apportionment of coal, probably next to the need of the railroads are the needs of the steel plants and coke plants, in order that these products may be available for munition and other war materials. Therefore it has been arranged with the steel mills and coke plants that their necessary needs shall be supplied.
THE UPPER LAKES.
Next to the needs of the railroads and for steel and coke is the necessity for accumulating coal at the upper lake points, Chicago, Milwaukee, Superior, Duluth, etc. Unless, before the close of navigation, sufficient coal is accumulated at these points to supply the territory tributary to the lakes during the winter, it will be necessary to make all-rail shipments from the mines to the consuming points; and this would make an excessive demand upon cars — the place at which the shortage is most acute. Hence
160 LECTURES ON CONSERVATION.
it was necessary that there be accumulated at lake points before the end of November the customary supplies, and accordingly it was ordered on October 5 that the accumulation of coal at the upper lake ports should have priority over the accumulation elsewhere. In order to deliver the largest amount of coal, iron ore boats which brought ore down the lakes were compelled to carry coal up the lakes on their return trips.
By giving Great Lake ports priority, the Fuel Administration succeeded by November 2 in accumulating at the lake ports as much coal as usual at that season of the year and the priority order for the Northwest was suspended on lines east of Pittsburgh. Later, further modifications of the priority orders were made, diminishing the amount of coal which went to the Northwest, and on November 30 the priority for the Great Lakes ports ceased altogether. Thus, to the close of official navigation, coal con- tinued to accumulate rapidly at the Upper Lakes ports. The priority order has assured the Northwestern states of their share of the coal supply for the winter.
THE CENTRAL AND EASTERN STATES.
Because of the three demands considered, it resulted that the coal supplies became reduced to very low minimums in a number of states, so that alarm was created as to whether the industries would not be shut down. The situation was especially acute in New England, Ohio and Michigan, and at the cities of Washing- ton, New York, and Chicago. The situation was made more acute than it otherwise would have been because of the dis- turbance of the plans of the Fuel Administration by strikes, already mentioned. However, whenever a case arose in which it appeared that there was necessity for immediate action in order to relieve the coal shortage to keep industry in operation, there was diverted a sufficient amount of fuel to prevent actual cessation of industry.
As illustrative of the sort of action necessary to meet local needs, it may be said that all the coal mined on October 29 in Western Pennsylvania, Ohio, Michigan, Eastern Kentucky, and West Virginia, was diverted to Ohio and Michigan for distribution to householders. This suspended for one day the priority order under which coal was to go to the lake ports for shipment in the Northwestern states. Other necessary steps have been taken from time to time to relieve local coal shortage in different parts of the country.
To increase the efficiency of the cars of the railroads and to increase the proportion of transportation by water, it was
LECTURES ON CONSERVATION. 161
announced on November 7 that the formation of the Tide- water Coal Exchange had been approved. This exchange requires all shippers of coal to New England, Baltimore, and Hampton Roads to work through this exchange. This pooling of coal and classifying of grades should result in very greatly increasing the efTiciency both for cars and for vessels, since there may be prompt unloading of the cars to any vessel which may be available.
On November 12, in order to relieve the situation in New England and to accumulate coal in advance, it was ordered that all mines having contracts for New England coal should ship maximum amounts for consumption to the states of Maine, Massachusetts, Vermont, Rhode Island, and Connecticut, where such coal is to be transshipped from rail to water at Hampton Roads and Baltimore. By giving preference to shipment by water, decreased demand is made upon the railroads.
Thus, as the priority orders for Upper Lake ports were modified, it became possible in November to begin the accumulation of coal in the central and eastern states, and this accumulation will go on rapidly after December 1, when the priority of the Upper Lake ports ceases altogether.
CANADA.
Another aspect intimately associated with the coal for the United States is that for Canada. In consequence of the threatened shortage in the United States, and especially because of the fact that there had not been accumulated coal at the Upper Lakes ports, on September 14, the Fuel Administrator requested the Exports Administrative Board to allow no coal to be exported out of the United States without specific license. This request was complied with. On October 1, exportation of fuel to Canada was prohibited to dock companies and all producers and jobbers. Coal on the way to Canada was diverted to the Lake Erie ports for transmission to the upper lakes. It was necessary, in order to make the necessary Great Lakes accumulations already mentioned, to ship 150,000 tons a day to the Upper Lakes ports. Before the above order was issued, while about 180,000 tons of coal were shipped from Erie ports, only about 53,000 tons reached the northwest, the remainder going to Canada.
However, it was not the intention to prevent Canada from having an adequate supply of coal; on the contrary, it is the pur- pose to furnish coal to that country on the same basis that coal is furnished to the States. Since the output of the mines will probably be about 10 per cent more than last year, the plan is to
162 LECTURES ON CONSERVATION.
supply Canada during the rest of the year at a rate not to exceed 10 per cent more coal than was received last year.
On October 24 it was announced that statistics had been com- piled showing the total consumption of Canada during the past year and the future requirements for coal. On this basis a definite allotment has been made for the next two months of 2,000,000 tons of bituminous and 700,000 tons of anthracite. Last year Canada got approximately 19,000,000 tons of coal, anthracite and bituminous.
PRIORITY OF COAL OVER OTHER GOODS.
In order to meet the needs and get coal promptly to localities where there was a threatened shortage it has been necessary from time to time to give priority in shipment to coal over certain other classes of freight. Thus on November 2 the priority board issued an order to the railroads serving the Utah and Wyoming coal fields, compelling them to give coal cars priority over all other shipments except live stock and perishable freight.
On November 28 the Fuel Administrator requested the priority director to issue an order giving preference to all railway move- ments of coal and coke and empty coal and coke cars, in order that the general distribution of the available coal stocks be handled to the best possible advantage.
On November 30 the Fuel Administrator was informed by Chairman Thompson, of the Railroad War Board, that he had advised all the interested lines that preference must be given to coal and coke and empty and open cars returning to the mines to the fullest possible extent consistent with the relief of terminals and junction points. Certain modifications were later made so as to put food upon the same basis as coal.
PRODUCTION.
The production of coal for the year 1917-18 will not be limited by the capacity of the mines but by facilities and continuity of work of the miners. The most serious difficulty in the matter of facilities is coal cars. A report to the Federal Trade Commission before the Fuel Administration was established, indicated that the coal operators could not mine more than 78 per cent of their capacity for lack of cars. Through the efficient action of the Ad- visory Committee of the Railroads and the cooperation of the Priority Board, under which coal shipments have been given priority over many commodities, the efficiency of the cars has
LECTURES ON CONSERVATION. 163
been increased, but still many collieries have not succeeded in getting as many cars as they could use.
Another of the steps which has been taken to increase the efficiency of the cars is to allow wagon mines box cars only, so that the regular coal cars shall not be delayed by the necessarily slow loading from the wagon mines.
Another difficulty has been lack of pier facilities to accommodate the vessels on arrival. This has been particularly true of the Norfolk & Western and Chesapeake & Ohio railroads. This difficulty has been met by arranging to supply bunker coal in midstream, and thus retain all the pier space for vessels the cargoes of which are coal.
The difficulties in regard to facilities have been greatly enhanced by the numerous strikes which have been mentioned. When there are cars at the mines ready to be loading and a strike -occurs, time is lost for the cars, even if, in case the strike lasts for some time, the cars are diverted to other mines. When the situation was most acute in regard to strikes, early in October, there was temporarily an actual decline in the amount of coal mined; but upon the whole in early November the situation became fairly good, even if not altogether satisfactory.
On October 10 the United States Geological Survey submitted an estimate to Mr. Garfield that the tonnage of bituminous coal for the year 1917 will be 552,000,000 tons, or 50,000,000 more than last year. As compared with 1916 this is an increase of 10 per cent and as compared with 1915 an increase of about 25 per cent. For anthracite the increased production is also estimated at 10 per cent as compared with last year.
However, a survey of the situation made in November indicates that the amount of coal which will be required during the year as compared with the previous year will be about 100,000,000 tons, thus leaving a gap of 50,000,000 tons.
The great increase in the coal consumption is mainly due to war necessities. Munition plants running twenty-four hours a day require from one-third to one-half more coal than a year ago. The demands for coal by the Government, including the Army and Navy, have increased by 300 per cent or from 2,000,000 to 8,000,000 tons. The public utilities and industries of the country are asking for an increase of coal by one-third.
The problem of closing this gap of 50,000,000 tons, between production at the present rate and absolutely necessary con- sumption, must be met by taking steps to increase the production, by facilitating transportation, and by enforcing the most econom- ical use of available coal. The war industries, public utilities.
164 LECTURES ON CONSERVATION.
and 'domestic consumers must be supplied. To accomplish^this will require the cooperation of all coal users of the country. The Fuel Administrator will use his full authority to prevent waste and unnecessary use of fuel. Activities which are unnecessary for the maintenance of military and economic efficiency will have to curtail their supplies as demanded by the necessities of war.
CONSERVATION.
As has been seen, for the current year the war has created a demand in the United States for 100,000,000 tons of coal more than has been normally produced, and that, because of congestion on the railroads, it probably will not be possible to increase the production by more than 50,000,000 tons. This gap of 50,000,000 tons can only be met by reduction in the use of coal, through its conservation or restriction in its use. The first is to be accom- plished by voluntary action, the second by regulation.
It is the purpose of the Conservation Division of the Fuel Administration to assist the consumers in conserving coal. This will be done by furnishing them printed instructions in regard to economical and efficient firing, by lectures, and by actual visita- tion of plants where large amounts of coal are consumed. The visitation will be done by technical engineers who volunteer for this work from different engineering associations.
It is not properly within the scope of these lectures to consider the technical details of the methods by which the consumption of coal may be reduced. This field will be covered by the special set of lectures upon fuel conservation by Professor Brechenridge. However, there will be here very briefly indicated the directions in which it is expected that savings will be made.
INDUSTRIAL SAVING.
Firing. — Something more than 60 per cent of the coal is used by the power plants and railroads. The handling of this coal is done by more than 250,000 firemen. It is therefore apparent that the most important direction in which the consumption of coal can be immediately reduced is in economical and efficient firing of industrial plants and locomotives, so that the largest amount of heat will be secured from a ton of coal. To this end, detailed instructions have been issued by the Bureau of Mines in regard to firing of boilers, and may be obtained upon application.
Every fireman in industry should be given instruction in scientific firing. If such instructions are carried out, there should
LECTURES ON CONSERVATION. 165
be easily a saving of not less than 10 per cent; and this saving on locomotive and industrial coal would mean not less than 30,000- 000 tons.
Inefficient plants. — Many industrial plants have poor and in- efficient equipments. The Bureau of Mines states that some of these plants waste as much as 50 per cent of their coal through unscientific firing and inadequate equipment. This shows how great are the possibilities of saving in the use of coal for indus- trial purposes in the future when inefficient plants are recon- structed and careful firing is everywhere in vogue.
Ice manufacture. — In the manufacture of ice in factories and refrigerating plants 15,000,000 tons of coal are used annually. There are some 5,000 artificial ice making plants in the country. If these were organized to operate as a unit, it would be possible to make large savings. Thus it is estimated that the reorgan- ization and consolidation of the manufacturing icemen in New Orleans alone would save 100 tons a day, or 36,000 tons each year. Also it is the purpose of the Fuel Administration to take up with the ice companies the question of cutting and storing greater amounts of natural ice this winter than ever before. In addition householders, storekeepers, and farmers, who can obtain ice from nearby rivers, lakes, and ponds, will be urged to store for their summer needs. Every ton of natural ice which is harvested will save 500 pounds of coal.
DOMESTIC ECONOMY.
Domestic economy in the use of coal takes two directions, a more careful use of coal in heating and in the kitchen, and also the keeping of the house at a proper temperature. The per- centage of loss of heat by imperfect firing and care of furnaces is greater in the household than in industrial plants, because this work is necessarily done in the main by people who are not pro- fessional firemen. Also there is great waste of the fuel used in the kitchen. Instructions have been issued by the conservation division for the use of the householder. In the majority of in- stances, if these instructions are considered and obeyed, it will be possible to reduce the consumption of coal by 10 per cent or more.
Another factor in domestic economy is the overheating of houses. Many American homes are heated to 75 degrees or more. Physicians and sanitarians are in agreement in the opinion that 68 degrees is the proper temperature for the house when people are inactive, and when active a temperature of 65 degrees is
166 LECTURES ON CONSERVATION.
adequate. It has been calculated that if every householder could by proper procedure save a shovel full of coal each day during the six months of winter, this would amount to from 15,000,000 to 25,000,000 tons.
Another direction in which the consumption of coal can be reduced is by the increased use of wood. In many parts of the country there are extensive woods and woodlots, which, even if only the trees which are deteriorating and the waste wood were utilized would furnish a vast amount of heating material as a substitute for coal. For most purposes it is more convenient to use coal than wood; and, for this reason, that commodity has been used in districts where the forests without their deterioration would meet the domestic needs for heat.
ELIMINATION OF THE UNNECESSARY USE OF GOAL.
For certain purposes the use of coal is not necessary and it is the purpose of the Fuel Administration to reduce or eliminate such use. One of the largest unnecessary uses is for the manufac- ture of light for advertising signs in the cities. Therefore it was ordered by the Fuel Administration that on and after November 15, there should be no use of coal for the manufacture of electricity to maintain electrical displays except between the hours of 7:45 p. m., and 11 p. m. This order, however, does not apply to the governmental agencies, state or national; to the lighting of streets, nor to the giving of essential information concerning locations of houses, hotels, shops, and places of amusement.
GENERAL STATEMENTS.
If the various steps taken for conservation were fully carried out it would be possible to save 50,000,000 tons of coal and thus close the gap between the production and consumption. But the time is too short to carry through the necessary educational campaign and such large results cannot be expected the current year. However, once the habit of careful consumption of coal is introduced, it will be likely to continue. As has been indicated, by remodeling the industrial plants so as to introduce appliances which will use coal most efficiently the savings can be vastly in- creased. This cannot be accomplished in one year, but should be accomplished during the next two or three or five years.
The Director of the Bureau of Mines states that if there were a combination of the most modern appliances and the best human skill in handling coal, the consumption could perhaps be reduced by one-half.
LECTURES ON CONSERVATION. 167
THE FUEL PROBLEM ABROAD.
The United States is not the only country which has been con- fronted with a fuel problem during the war; indeed the same problem has confronted every country engaged in the war and far more seriously than the United States.
Of these countries, England has the largest supply of coal. In Great Britain the government took control of all the coal mines in the United Kingdom, the owners operating the mines. The cost of production is supervised by the. government. Thus, for the most important element in the cost, that of wages, all arrange- ments between the miners and the operators must be approved by the government. The maximum profits on coal are limited. The government requirements are given priority in the distri- bution of coal and the allotment of coal cars. There is a 50 per cent excess profit tax on the profits of the mines over those of the two best years of 1911, 1912, and 1913.
In France the state has been made the sole depositary of the coal. The general and municipal councils act as dispensing agents. Paris, her suburbs, and other cities have been on coal rations. Coal cards have been issued, so that a central heating plant, a business, or an industrial plant may each receive its fair allotment of the diminished supply of coal. For domestic con- sumption the quantity of coal per month is based upon the num- ber in the family.
The Italian government produces no coal. It imports all the coal of the country and acts as a clearing house for its distribution.
In Germany the control of coal has been centralized under the government administration.
GENERAL DISCUSSION.
THE SAVINGS DUE TO THE FUEL ADMINISTRATION.
It was in the autumn of 1916 that the growing scarcity of coal led to great competition among the consumers to supply their needs for the ensuing year. In consequence of this competition and hoarding, prices went skyward. Bituminous coal, which in preceding years had sold at the mines at from 75c to $1.25 per ton, leaped to $3.50 to $4, to $5, and even to $6. It was this condition which led the Secretary of the Interior to call into conference the larger producers of coal and get them to agree to a price of $3 a ton for bituminous coal. However, it was felt by the Government that this price was too high, and this led to the fuel law under which the President issued a proclamation fixing
168 LECTURES ON CONSERVATION.
the prices as given in the previous pages, $2 being the basic price for good bituminous coal in those districts where most cheaply produced. This base was later increased 45 cents a ton.
The lower prices could not fully go into effect at once, because of contracts which had been made, enforcible by law, at much higher figures. However, it is extremely probable that had not this law been passed and the Fuel Administration estabhshed, the price of coal for the country would have been at least $2 a ton higher than it is under the Fuel Administration, for prices under the competitive plan would undoubtedly continue to advance. Even at the conservative estimate of $2 a ton, the saving on 550,000,000 tons of bituminous coal would be $1,100,000,000.
THE NECESSITy"'fOr'^APPORTIONMENT.
While the saving to the public by reduction of prices due to the Fuel Administration is large, probably the greatest benefit to the country was the control of distribution. Had not such control been exercised, those who were in the more favorable positions would have had coal reserves to carry them through the winter ; while those in the parts of the country remote from coal fields would have been without fuel. It was absolutely essential that reserves of coal be accumulated at the Upper Lakes ports, and in New England. Otherwise it was certain that there would have been great suffering by the people and paralysis of industry. Indeed with the demand far beyond the supply, only by wise apportionment of coal could catastrophe have been avoided.
THE WAR OF COAL DRIVEN MACHINES.
In all wars, food has been a factor of first importance. This war does not differ from other wars in this respect, save that the colossal proportions of the conflict have made the problem of food supply one of vastly greMer magnitude than in any previous war. However, this war does differ from previous wars in that to a vastly greater extent than ever before its prosecution depends upon machines, that is, upon mechanical power instead of man power. This is the first great war which has been fought since the modern concentration of industry. This is indeed a war of machines driven by engines; of gigantic guns, of shells, and other explosive devices; of ships and railroads; and behind these the necessary multiform supporting manufactures of which iron is the most important. Any and all of these are only possible through the use of coal.
LECTURES ON CONSERVATION. 169
Coal, therefore, lies back of the war efTiciency of all the nations. The nations that possess abundant supplies of coal are in an enormously advantageous position. Germany's original strength in coal, and her almost immediately acquired control of the coal fields of Luxembourg, Belgium, and northern France, has given her a superiority in coal power as compared with France and Italy which has placed her in a most advantageous posi- tion. Great Britain is the only one of the nations of Europe that has coal power commensurate with that of Germany; and she has been compelled not only to furnish coal for herself, but also to furnish a large amount of coal to the rest of the Allies.
However, of all of the nations engaged in the war, the coal power of the United States is by far the greatest. Indeed our production of coal before the war was more than equal to that of Germany, England, and France combined. But even in the United States the enormously increased demand for coal, for railroads, for munition plants, for ship building, for government use, etc., has made greater requirements than can be met. The limitation, however, is not that of the mines. The limitation to some extent is that of labor at the mines, but to a far greater extent that of the railroads.
The railroads are unable to furnish cars to transport the neces- sary coal. The magnitude of this task is frequently not appreci- ated. The tonnage of coal handled by the railroads is greater than that of any other commodity; indeed greater than that of food. About 25 per cent of the motive power of the roads is used in handling coal.
As the war continues it is certain that the demand for coal will further increase. Since the production of adequate coal is fundamental in order to dominate, as our coal resources make it possible, in the mighty mechanical contest of winning the war, it is absolutely essential that the railroads shall have suf- ficient equipment in coal cars and motive power to furnish the necessary amount of coal; and whatever steps are necessary to put the railroads in this situation must be taken. If adequate steps be taken to bring to bear all the potential possibilities of our vast coal and iron resources, in the war of mighty machines driven by the energy of coal, we shall overwhelm the enemy.
CHAPTER VIII.
CONSTRUCTION AND CONTROL OF SHIPPING.
The work of the United States Shipping Board is authorized by two acts. The first is the so-called Shipping Act, the second, the Emergency Shipping Fund Act.
THE SHIPPING ACT.
The purpose of the Shipping Act is described as follows: An Act to establish a United States Shipping Board for the purpose of encouraging, developing, and creating a naval auxiliary and naval reserve and a merchant marine to meet the requirements of the commerce of the United States with its territories and pos- sessions and with foreign countries; to regulate carriers by water engaged in the foreign and interstate commerce of the United States; and for other purposes. (Public No. 260, 64th Congress. Approved September 7, 1916.)
A summary of this act follows:
Section 1 defines a common carrier by water in foreign com- merce to include all steamship lines engaged in water transporta- tion on regular routes between the United States and foreign countries, with the exception of ferryboats. The term common carrier in interstate commerce includes transportation by water of passengers and property on the high seas and the Great Lakes on regular routes, from port to port within the states and ter- ritories of the United States, upon the ocean, and upon the Great Lakes. Boats known as "tramps" are not included in the above definitions. The act applies to all "citizens" of the United States only.
Section 2 provides that no corporation, partnership, nor as- sociation engaged in water transportation shall be deemed a citizen of the United States unless the controlling interest is owned by citizens of the United States; and in the case of a cor- poration, unless its president and managing directors are citizens of the United States, and the corporation is organized under the laws of the United States or some one of its political divisions.
Section 3 provides for the creation of the United States Shipping Board to be composed of five commissioners to be appointed by the President with the consent of the Senate. The terms of the
170
LECTURES ON CONSERVATION. 171
appointees are to be for two, three, four, five, and six years, and as the terms expire, for periods of six years. The board is to be selected with due regard to fitness and to fair representation of the geographical divisions of the country. Not more than three of the commissioners shall be from the same political party. No commissioners shall have an^'' official relation or own stocks and bonds in any common carrier by water, nor be actively engaged in any other business. The board may adopt rules and regulations regarding its own procedure.
Section 4 appropriates for the compensation of the commission- ers $7500 per annum. A secretary and all necessary additional assistants may be employed, both expert and non-expert. Non- experts are to be employed under civil service laws. Upon request of the board the President of the United States is authorized to detail officers of the United States from the army, navy, and other branches of the service to duties which the board regard as necessary.
Section 5 authorizes the board to construct vessels, preference being given to American shipyards; and with certain safeguards to purchase, lease, or charter vessels for commercial uses or the use of the navy or army, and to make necessary repairs or alterations on such vessels.
Section 6 authorizes the President to transfer to the board ves- sels belonging to the War or Navy Departments suitable for commercial purposes, if not required for military or naval uses, and also vessels owned by the Panama Railway Company not required in its business.
Section 7 authorizes the board, upon the terms prescribed by it, and approved by the President, to charter, lease, or sell to any citizen of the United States any vessel, purchased, constructed, or transferred.
Section 8 gives the board authority, when any vessel in the possession of the board becomes unfit for the purposes of this act, to have the same appraised and sold under proper safeguards.
Section 9 entitles any vessel under the control of the board to registry or enrollment and license or both as a vessel of the United States, and furthermore allows such vessels, whether built in America or foreign-built, the privileges of engaging in the coast- wise trade.
When the United States is at war or during an international emergency, no vessel registered or enrolled and licensed under the laws of the United States may be sold, leased or chartered to any person not a citizen of the United States, or transferred to foreign registry or flag, without the approval of the board; nor in normal
172 LECTURES ON CONSERVATION.
times may any vessel be so sold, except one which the board is prohibited from purchasing, without first tendering the same to the board at a price offered by others. Penalties are imposed for violations of this section.
Section 10 gives the President authority to take possession either temporarily or absolutely of any vessel purchased, leased, or chartered from the board, for naval or military purposes; fair compensation to be paid.
Section 11 authorizes the organization of one or more corpo- rations under the laws of the District of Columbia, with a total capital stock of not to exceed $50,000,000, the majority of which must be owned by the United States, to carry out the purposes of the act; provided that the corporation is not to operate any of the vessels over which it has authority unless it has been unable to contract with some person or citizen of the United States for the purchase, lease, or charter of such vessels under such terms and conditions as may be prescribed by the board. After the ex- piration of five years from the conclusion of the present war, the operation of vessels on the part of the corporation of which the United States is a stockholder shall cease, and the corporation shall dissolve. The vessels and other property of the corporation shall at that time revert to the board. The board will sell, lease or charter the vessels and dispose of the property other than vessels on the best available terms, and after the payment of all debts and obligations deposit the proceeds in the United States treasury-. All stock owned by others than the United States in the corpora- tions herein authorized at the time of the dissolution shall be taken over by the board at a fair and reasonable value.
Section 12 authorizes the board to investigate the cost of building merchant vessels in the United States and foreign countries and the advantages and disadvantages of operating under United States and foreign registry. It shall make an in- vestigation of the subject of marine insurance and the navigation laws of the United States, and other matters concerning the de- velopment of a merchant marine and shall make recommendations to Congress for the revision of its laws so as to develop same. Full annual reports are to be made to Congress.
Section 13 makes an appropriation of $50,000,000 to the board for the purposes of the act, allows the issue of Panama Canal bonds to that amount, and appropriates all income of the board as a rotating fund to be used for its purposes.
Section 14 contains a number of provisions forbidding unfair practices by common carriers by water, such as giving deferred
LECTURES ON CONSERVATION. 173
rebates, the use of fighting ships, retaliation against shippers, and discrimination.
Section 15 requires that all agreements between common car- riers by water in regard to rates, accommodations, pooling, limiting sailings, and other methods of cooperation, shall be filed with the board.' The board may approve or disapprove any agree- ment, modify any agreement, or cancel any agreement which has been approved at any time. All agreements which have been thus approved are exempted from the provisions of the Sherman anti-trust law and amendments of the same.
Section 16 forbids the common carriers by water, subject to the act, to give undue preference or advantage to any person, to use unfair means and devices to give lower than the regular rates, or to influence marine insurance companies to grant discrimination.
Section 17 forbids common carriers by water in foreign commerce from unjust discrimination in rates between different shippers or ports and orders that such carriers shall observe just and reasonable regulations relating to receiving, handling, and storing of property. Whenever the board finds rates and regulations unfair or unjust, fair and just rates and regulations may be fixed and imposed.
Section 18 provides that the common carrier by water in inter- state commerce shall establish reasonable rates, fares, charges, classifications, and tariffs. These shall all be filed with the board and be open to public inspection. No greater compen- sation shall be charged than these published rates, except with the approval of the board. The board is authorized, when it finds any rate unfair or practice unjust or unreasonable, to pre- scribe and order reasonable charges and fair practices.
Section 19 provides that if a common carrier by water reduces its rates at some competitive point below a fair and remunerative basis, with the intent of driving out or injuring a competitive carrier, it shall not increase such rates unless after hearing the board finds that such increase rests upon other conditions than the eliminations of such competition.
Section 20 provides that information detrimental to shippers or consignees shall not be disclosed or solicited by any person subject to this act; this provision, however, not to apply to a court or an official of the United States Government.
Section 21 provides for the file of reports and records by com- mon carriers by water as required by the board and penalties for non-compliance.
Sections 22, 23, 24 relate to methods of procedure in case of complaints and violations of the act.
174 LECTURES ON CONSERVATION.
4
Section 25 gives the board authority to reverse, suspend, or modify all orders upon proper notice and hearing.
Section 26 makes it the duty of the board to investigate in re- gard to the discriminations by foreign governments against Amer- ican vessels and to report the result of such investigations to the President, and authorizes the President to enter into negotia- tions to secure equal privileges through diplomatic negotiations or if this fails to advise Congress of the facts.
Sections 27, 28, 29, 30, 31, 32 relate to witnesses, procedure, and penalties in enforcing the provisions of the act.
Section 33 provides that the act shall not be construed to affect the power and jurisdiction of the Interstate Commerce Com- mission, nor to confer upon the board concurrent powers or juris- diction over any matter within the power or jurisdiction of such commission; nor shall the act be construed to apply to intrastate commerce.
Section 34 provides that if any part of the law is found uncon- stitutional it shall not affect the remainder of the act.
Section 35 appropriates $100,000 for the expenses of the es- tablishment and maintenance of the board for the fiscal year ending June 30, 1917.
Section 36 authorizes the secretary of. the treasury to refuse clearance to a vessel when the master or other ofTicer declines to accept or receive freight in good condition tendered for the port of destination or some intermediate port of call, together with the proper freight or transportation charges therefor, by any citi- zen of the United States, unless the vessel is fully laden and there are no accommodations for freight or cargo so tendered, or unless the freight or cargo consists of merchandise for which such vessel is not suited.
THE EMERGENCY SHIPPING FUND.
In the urgent deficiencies appropriation act approved June 30, 1917 (Public No. 23, 65th Congress), there is included an emergency shipping fund. This part of the act reads as follows:
1. The President is hereby authorized and empowered, within the limits of the amounts herein authorized, —
(a) To place an order with any person for such ships or ma- terial as the necessities of the Government, to be determined by the President, may require during the period of the war and which are of the nature, kind, and quantity usually produced or capable of being produced by such person.
LECTURES ON CONSERVATION. 175
(b) To modify, suspend, cancel, or requisition any existing or future contract for the building, production, or purchase of ships or material.
(c) To require the owner or occupier of any plant in which ships or materials are built or produced to place at the disposal of the United States the whole or any part of the output of such plant, to deliver such output or part thereof in such quantities and at such times as may be specified in the order.
(d) To requisition and take over for use or operation by the United States any plant, or any part thereof without taking possession of the entire plant, whether the United States has or has not any contract or agreement with the owner or occupier of such plant.
(e) To purchase, requisition, or take over the title to or the possession of, for use or operation by the United States, any ship now constructed or in the process of construction or hereafter constructed, or any part thereof, or charter of such ship.
2. Compliance with all orders issued hereunder shall be ob- ligatory on any person to whom such order is given, and such order shall take precedence over all other orders and contracts placed with such person. If any person owning any ship, charter, or material, or owning, leasing, or operating any plant equipped for the building or production of ships or material shall refuse or fail to comply therewith or to give to the United States such pref- erence in the execution of such order, or shall refuse to build, supply, furnish, or manufacture the kind, quantities, or qualities of the ships or material so ordered, at such reasonable price as shall be determined by the President, the President may take immediate possession of any ship, charter, material, or plant of such person, or any part thereof without taking possession of the entire plant, and may use the same at such times and in such manner as he may consider necessary or expedient.
3. Whenever the United States shall cancel, modify, suspend, or requisition any contract, make use of, assume, occupy, requi- sition, acquire, or take over any plant or part thereof, or any ship, charter, or material, in accordance with the provisions hereof, it shall make just compensation therefor, to be deter- mined by the President; and if the amount thereof, so deter- mined by the President, is unsatisfactory to the person entitled to receive the same, such person shall be paid seventy-five per centum of the amount so determined by the President and shall be entitled to sue the United States to recover such further sum, as, added to said seventy-five per centum, will make up such amount
176 LECTURES ON CONSERVATION.
as will be just compensation therefor, in the manner provided for by section twenty-four, paragraph twenty, and section one hundred and forty-five of the Judicial Code.
4. The President may exercise the power and authority here- by vested in him, and expend the money herein and hereafter appropriated through such agency or agencies as he shall deter- mine from time to time: Provided, that all money turned over to the United States Shipping Board Emergency Fleet Corpo- ration may be expended as the other moneys of said corporation are now expended. All ships constructed, purchased, or requisi- tioned under authority herein, or heretofore or hereafter acquired by the United States, shall be managed, operated, and disposed of as the President may direct.
5. The word "person" as used herein, shall include any in- dividual, trustee, firm, association, company, corporation, or contractor.
6. The word "ship" shall include any boat, vessel, or sub- marine and the parts thereof.
7. The word "material" shall include stores, supplies, and equipment for ships, and everything required for or in connection with the production thereof.
8. The word "plant" shall include any factory, workshop, warehouse, engine works; buildings used for manufacture, as- sembling, construction, or any process; any shipyard or dock- yard and discharging terminal or other facilities connected therewith.
9. The words "United States" shall include all lands and waters subject to the jurisdiction of the United States of America.
10. All authority granted to the President herein, or by him delegated, shall cease six months after a final treaty of peace is proclaimed between this Government and the German Empire.
11. The cost of purchasing, requisitioning, or otherwise ac- quiring plants, material, charters, or ships now constructed or in the course of construction and the expediting of construction of ships thus under construction shall not exceed the sum of $250,000,000, exclusive of the cost of ships turned over to the Army and Navy, the expenditure of which is hereby authorized, and in executing the authority granted by this act for such purpose the President shall not expend or obligate the United States to expend more than the said sum; and there is hereby appropriated for said purpose, $150,000,000: Provided, That this appropria- tion shall be reimbursed from available funds under the War and Navy Department for vessels turned over for the exclusive use of those departments or either of them.
LECTURES ON CONSERVATION. 177
12. The cost of construction of ships authorized herein shall not exceed the sum of $500,000,000, the expenditure of which is hereby authorized, and in executing the authority granted herein for such purpose the President shall not expend or obligate the United States to expend more than said sum; and there is hereby appropriated for said purpose, $250,000,000.
13. For the operation of the ships herein authorized or in any way acquired by the United States, except those acquired for the Army or Navy, and for every expenditure incident thereto, $5,000,000.
PRINCIPAL PROVISIONS OF THESE ACTS.
THE SHIPPING ACT.
The act, approved September 7, 1916, provides for the creation of the United States Shipping Board, composed of five com- missioners. It further provides for the creation of the Shipping Corporation, with a capital of $50,000,000, the majority of the stock of which is to be owned by the United States, to carry on the business of shipping. The Shipping Board may buy or lease vessels now on the seas and may have ships constructed, prefer- ence being given, however, in the constructional work to the American yards.
However, the shipping board is not to operate any of the vessels under its control unless it is unable to make satisfactory arrangements for the lease or charter of such vessels. By the terms of the act, the plan is to give the Shipping Board control of vessels through leasing or constructing them and then re-leasing them to other corporations. By the terms of the leases, the board is able to control the operation of the vessels, including the routes and the commodities which they shall carry.
Where plants or ships are taken over just compensation must be paid, as determined by the President. If this is unsatisfactory to the person from whom the property is taken, 75 per cent of the amount determined by the President shall be paid, and any additional amount which may be justly due may be recovered in court.
The other more important provisions of the act apply the prin- ciples of regulation worked out in regard to the railroads to rates, service, etc., to all ships under American registry, or engaged in commerce between the United States and foreign countries. The rates and practices must be reasonable. However, the Ship- ping Board is allowed to approve any agreements between com- mon carriers by water in regard to rates, accommodations, pooling,
178 LECTURES ON CONSERVATION.
limited sailings, and other arrangements; and all agreements thus approved by the board are exempt from the provisions of the Sherman anti-trust law and its amendments.
The Shipping Corporation must close business within five years after the end of the war. The Shipping Act presents the anomaly or at least new practice that the board which controls the operation of vessels also performs the function of a public utility commission for water carriers similar to that which the Interstate Commerce Commission exercises concerning railroads.
THE EMERGENCY SHIPPING FUND.
The terms of the Emergency Shipping Fund Appropriation are completely comprehensive. Under it the Government may require the existing plants to continue their work, may cancel the contracts that they have already made, may require the plants to do work designed by the Government; or the Government may take over the plants and engage in the construction of ships as it desires. In short, the Government has most sweeping authority to carry on the ship-building business under such conditions as will give the largest results.
For the acquiring of plants and ships under construction $250,000,000 is appropriated, of which $150,000,000 is immedi- ately available; for the construction of new ships $500,000,000 is appropriated, of which $250,000,000 is immediately available; and for the operation of ships acquired by the United States, except those required for the army and navy and for other ex- penditures $5,000,000 is appropriated.
The ships constructed under this act or purchased or requi- sitioned are to be managed, operated or disposed of as the Presi- dent may direct.
PRESIDENTIAL PROCLAMATIONS.
These laws were supplemented by executive proclamations. On February 6, 1917, the President proclaimed that a national emergency existed under which no vessel registered under the laws of the United States shall, without the approval of the Ship- ping Board be sold, leased, or chartered to any person not a citizen of the United States or transferred from foreign registry or flag.
By executive order the President on July 11, 1917, outlined the functions of the Fleet Corporation and the Shipping Board as follows :
"I hereby direct that the United States Shipping Board Emergency Fleet Corporation shall have and exercise all power
LECTURES ON CONSERVATION. 179
and authority vested in me in said section of said Act, in so far as applicable to and in furtherance of the construction of vessels, the purchase or requisitioning of vessels in process of construction, whether on the ways or already launched, or of contracts for the construction of such vessels, and the completion thereof, and all power and authority applicable to and in furtherance of the production, purchase, and requisitioning of materials for ship con- struction.
"And I do further direct that the United States Shipping Board shall have and exercise all power and authority vested in me in said section of said Act, in so far as applicable to and in furtherance of the taking over of title or possession by purchase or requisition of constructed vessels, or parts thereof, or charters therein; and the operation, management and disposition of such vessels, and of all other vessels heretofore or hereafter acquired by the United States. The powers herein delegated to the United States Shipping Board may, in the discretion of said Board, be exercised directly by the said Board or by it through the United States Shipping Board Emergency Fleet Corporation, or through any other corporation organized by it for such purpose."
WORK DONE UNDER THESE LAWS AND PROCLAMATIONS.
THE UNITED STATES SHIPPING BOARD.
Organization. — ^The United States Shipping Board was organ- ized by executive order. As first created, the officers of the board consisted of William Denman, chairman; Theodore Brent, vice chairman; Bernard M. Baker, John E. Donald, and J. B. White. Later the board was changed so as to consist of the fol- lowing men: Edward N. Hurley, chairman; Raymond B. Stev- ens, vice chairman; John A. Donald, Bainbridge Colby, and Charles R. Page.
ORDERS OF BOARD.
The first order of this board was issued on May 12, 1917. This order permitted the lease or charter to a person not a citizen of the United States of a vessel of the United States for a voyage from a foreign port to a port in the United States before July 1, provided that on such homeward voyage the vessel may stop at one or more foreign ports for coal, as long as such homeward voyage shall not take such vessel more than 300 miles from the direct route. This order is not to be construed as permitting other than homeward voyages of the vessels of the United States now at or approaching foreign ports.
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On June 4 the Shipping Board issued an order that common carriers by water in interstate commerce shall file with the board the maximum rates, fares, and charges between points on their routes; and if a through route has been established, the maximum rates, fares, and charges between points on their own routes and points on the routes of other carriers. These shall not be larger in the case of the carrier making the through route without stop.
It was further ordered that the rates shall be posted con- spicuously at the stations, offices, and docks where the ship company does business.
On October 12, 1917, the United States Shipping Board gave notice to be effective October 15 to the owners of all ships reg- istered and enrolled under the laws of the United States, that the steamers contained in the order, 149 in number, would be requisitioned by the Shipping Board.
The regulations under which this requisition is to take place are as follows:
1. The ships affected by said requisition and included thereon are (a) all cargo ships and tankers able to carry not less than twenty-five hundred tons total deadweight, including bunkers, water and stores; (b) all passenger steamers of not less than twenty-five hundred tons gross register.
2. (a) As to all steamers in or bound to American ports on October 15, 1917, requisition becomes effective after discharge of inward cargo and ship is put in ordinary good condition.
(b) As to steamers which have started to load their outward cargo, requisition becomes effective at noon on October 15, 1917, and accounts as to hire and expenses will be adjusted from time steamer began to load.
3. Steamers, trading to and from American ports that have sailed on their voyage prior to October 15, 1917, at noon, are to complete that voyage as promptly as possible and report for requisitioning.
4. Steamers that are occupied in trade between foreign ports shall be requisitioned as of October 15, 1917, at noon, and ac- counts adjusted accordingly.
5. (a) Owners, whose steamers are operating in their regular trades, are to continue the operation of their steamers for account of the Government as they have been doing for themselves until they receive further instructions.
(b) Owners, whose steamers are chartered to others, will apply to the Shipping Board for instructions regarding the future em- ployment of said steamers.
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181
Rates of payment of requisitioned vessels. — The rates which the United States Shipping Board will allow per month for the boats requisitioned are as follows:
Over 10,000 tons d 8,001 to 10,000 " 6,001 to 8,000 " 4,001 to 6,000 " 3,001 to 4,000 " 2,500 to 3,000 "
w. capacity, Government Form Time Charter, $5.75 per d. w. ton
6.00 " 6.25 " 6.50 " 6.75 " 7.00 "
Vessels of speed in excess of 11 knots to be allowed 50 cents per ton deadweight per month for each knot or part of a knot over 11 knots.
For passenger steamers, the board adopted a two-fold basis of classification, Class A consisting of steamers with a capacity of over 150 passengers, and Class B consisting of steamers with a capacity of from 75 to 150 passengers. In both classes the char- ter rates are determined by the speed as shown by the following table:
CLASS A.
10 to 11 knots. Government Form Time Charter,
12
13
14
15 Over 15
59.00 per ton gross register
9.50 •'
10.00 " 10.50 " 11.00 " 11.50 "
CLASS B.
10 to 11 knots. Government Form Time Charter,
12
13
14
15 Over 15
$8.00 per ton gross register
8.50 " "
9.00 " "
9.50 " " 10.00 " " 10.50 " "
Accompanying the announcement of the requisition rates was the following statement:
The foregoing rates will become operative on October 15, 1917. The vessels embraced in the requisition, except in so far as ac- tually required for government service, will be left in the hands of the present owners to be operated for government account, but subject at all times to such disposition as the board may direct.
A certain number of the requisitioned vessels, which are re- quired for the continuing and exclusive service of the Army and Navy, will be taken over on a bare ship basis. The rate of hire on this basis has been fixed by the board at $4.15 per deadweight ton for cargo boats, and |5.75 per ton gross for passenger steam.ers of eleven knots speed, with an additional allowance of fifty cents per ton for each knot in excess of eleven, and up to sixteen knots.
182 LECTURES ON CONSERVATION.
All the foregoing rates are tentative. The board will care- fully examine the results of operation under the requisition rates and from the results, as certified by expert examiners, will de- termine upon such revision as fair and equitable treatment of the owners of the requisitioned vessels may require. Revisions will be made, if reasons therefor are found to exist, at intervals of not more than ninety days.
As to insurance, the Government will assume the war risk, and in some instances, the marine risk as well. In cases in which for any reason it is more convenient for the Government to assume the marine risk, the usual rate for such insurance will be deducted from the charter hire.
The Shipping Board on October 6, 1917, announced the fol- lowing regulation in regard to the coastwise trade:
No vessel under foreign registry or foreign-built vessel under American registry may lawfully engage in the coastwise trade of the United States, except under a permit issued by the Ship- ping Board, countersigned by the Collector of Customs who de- livers the permit.
THE EMERGENCY FLEET CORPORATION.
Acting under authority of the Shipping Act, the Shipping Board on April 6, 1917, organized a corporation known as the United States Shipping Board Emergency Fleet Corporation with a capitalization of $50,000,000. This capital is exclusively owned by the Government, no advantage being taken of the privilege of securing a portion of the funds by private participation.
Directors and officers. — When first organized the trustees or directors of this corporation were William Denman, John A. Donald, Geo. W. Goethals, T. C. Abbott, E. P. Bertholf, Richard H. Bailey, Jr., William L. Soleau. Commissioner Denman was chairman of the board and Commissioner Geo. W. Goethals was General Manager of the corporation. From time to time changes were made in the constitution of the board and early in Novem- ber, 1917, it was so changed that the trustees were as follows: Edward N. Hurley, John A. Donald, Bainbridge Colby, Ray- mond B. Stevens, W. L. Capps, Chas. R. Page, and Charles Piez.
The general officers of the Fleet Corporation as reorganized in November were as follows: Edward N. Hurley, president, John A. Donald and Charles Piez, vice presidents, Raymond B. Stevens, treasurer, and Lester Sisler, secretary. The work was organized in six divisions as follows : 4. Construction, shipyards plants, contracts, purchasing, legal, and auditing.
LECTURES ON CONSERVATION. 183
The actual construction work of the corporation was divided between a number of districts as follows: Boston, New York, Baltimore, Jacksonville, New Orleans, Houston, San Francisco, Seattle, Great Lakes, Philadelphia. Each of these has district ofTicers who deal with the general officers of the Fleet Corpora- tion. Under the district ofTicers the actual constructional work is done in accordance with the plans of the general ofTicers.
Plans for constructional work. — On July 16, 1917, it was an- nounced that the construction of merchant ships in the United States must be hastened so that the production of each yard should reach the maximum. Also it was announced that after the berths are cleared of ships then under construction they will be used to produce the particular type of ship to which they are best adapted. In order to reach these results it was deter- mined that the entire ship-building industry of the United States should be Federalized. In carrying out this plan all the ships under construction were requisitioned and have been or will be completed in accordance with the direction of the General Man- ager of the Fleet Corporation. So far as decided upon by the General Manager the plans of the vessels under construction may be changed, the purpose of such changes being to simplify con- struction and omit unessentials.
For the use of the shipyards and requisitioned vessels fair com- pensation will be paid, the particular arrangements varying in particular instances. To keep the yards in continuous operation will involve night labor and overtime work, the additional cost of which will be paid. In case the Government desires, it will erect additions to the plants and laborers' houses and accommo- dations. All such new structures will be the property of the Government. Federalization of the yards will cease within six months after peace, subject to the completion of the ships under construction. Fair and equitable arrangements will be made for returning the yards to their owners.
Progress of construction. — The progress which had been made in the construction of requisitioned and new vessels by the Fleet Corporation was announced November 24 as follows:
184
LECTURES ON CONSERVATION.
Type of vessels |
Number of vessels |
Total deadweight capacity* |
Wood |
375 58 451 |
1 330 900 |
Composite |
207 000 |
|
Steel .• |
3 186 400 |
|
Total contracted for |
884 99 |
4,724,300 |
Contracts pending |
610 000 |
|
Total |
983 426 |
5,334,300 |
Total requisitioned (all types) |
3 029 508 |
|
GRAND TOTAL |
1,409 |
8 363 808 |
* By deadweight capacity is meant the actual weight of cargo which the vessel will carry to a certain draft, assumed to be the safe limit of loading.
The number and capacity of the vessels under contract are as follows :
Type of vessels
Number of vessels
Deadweight tonnage
Cargo:
3,500
4,000
4,700
5,000
6,000
7,500 and under
8,800
9,000
10,000 and under
Total
Cargo and transport:
8,000
GRAND TOTAL
411 16 12
160
7 76 54 44 34
814 70
884
1.438,500
64,000
56,400
800,000
42,000
569,200
475,200
396,000
323,000
4,164,300 560,000
4,724,300
It is to be noted that of the tonnage under contract, less than one-fourth of the total of the carrying capacity is wood. From this it follows that the plans of the Fleet Corporation continue steel as the dominant vessel material. Also it is to be noticed that while the vessels of 5,000 or less tonnage number 599, those between 6,000 and 10,000 number 215. The carrying capacity of the 599 vessels is 2,358,900 tons which does not greatly exceed the carrying capacity of the 215 or. 1,805,200 tons.
Of these more than 8,000,000 tons of shipping under construc- tion, it is the plan of the Fleet Corporation to have finished by the end of the year 1918 not less than 6,000,000 tons.
To the time of the announcement 33 vessels had already been completed and released having an aggregate capacity of 257,575 tons.
LECTURES ON CONSERVATION. 185
CONCLUSION.
It appears that as the laws and executive orders have been carried out the authority has been so exercised that the Fleet Corporation has had full charge of the construction work of all vessels, both in relation to facilities and actual building. Also the Fleet Corporation has been the organization which has operated the vessels so far as operation has been done directly by the Government. Thus the vessels of the German mercantile fleet seized under the proclamation of the President have been operated by the Fleet Corporation.
While the Fleet Corporation is the organism which performs these functions, the interlocking personnel of the Shipping Board and the directors of the Fleet Corporation is such that it may be said that the policy of the Fleet Corporation is in harmony with the Shipping Board.
One of the chief functions of the Shipping Board is the taking over of the merchant fleet of the United States and again leasing these ships for operation under conditions prescribed by the leases. These conditions involve the operation of vessels on the routes and for the purposes designated by the Shipping Board.
Another of the chief powers of the Shipping Board is that of regulation of rates and service. Since, as we have seen, the Government has taken over all vessels greater than 2,500 tons burden in regular routes, and they are being operated under the direction of the Shipping Board, the regulatory functions of the Shipping Board parallel with those of the Interstate Commerce Commission have been subordinate. However, in the future, when the Shipping Corporation has been dissolved and the opera- tion of the fleets is again in private hands the Shipping Act will continue in force so far as the regulatory functions of the Shipping Board are concerned.
Special attention is called to the very important provision of the Shipping Act that cooperation of shipping companies in fixing rates, in pooling business and returns, and in any other agreement are allowed provided they are approved by the Ship- ping Board. Such, agreements are exempt from the Sherman and other anti-trust laws. The effect of this provision of the law is to repeal these acts from shipping utilities so far as ap- proval of the Shipping Board is obtained. The Interstate Com- merce Commission has no such power in regard to the railroads.
CHAPTER IX.
THE WAR INDUSTRIES BOARD.
Before describing the work of the War Industries Board, it is necessary to go back somewhat and consider its origin, since unlike the Shipping Board, and the Food and Fuel Administra- tions, this board is not created directly by act of law, but has come into being indirectly through other laws. In short, the source of this authority goes back to the law creating the Council of National Defense and to section 120 of the National Defense Act.
THE COUNCIL OF NATIONAL DEFENSE.
The Council of National Defense is created under Chapter 418 of the 64th Congress — An Act making appropriations for the support of the army for the fiscal year ending June 30, 1917, and for other purposes, approved August 29, 1916.
The first three paragraphs of the law relating to the Council of National Defense read as follows:
"That a Council of National Defense is hereby established, for the coordi- nation of industries and resources for the national security and welfare, to con- sist of the Secretary of War, the Secretary of the Navy, the Secretary of the Interior, the Secretary of Agriculture, the Secretary of Commerce, and the Secretary of Labor.
"That the Council of National Defense shall nominate to the President, and the President shall appoint, an advisory commission, consisting of not more than seven persons, each of whom shall have special knowledge of some industry, public utility, or the development of some natural resource, or be otherwise specially qualified, in the opinion of the council, for the performance of the duties hereinafter provided. The members of the advisory commission shall serve without compensation, but shall be allowed actual expenses of travel and subsistence when attending meetings of the commission or engaged in investi- gations pertaining to its activities. The advisory commission shall hold such meetings as shall be called by the council or be provided by the rules and regu- lations adopted by the council for the conduct of its work.
"That it shall be the duty of the Council of National Defense to supervise and direct investigations and make recommendations to the President and the heads of executive departments as to the location of railroads with reference to the frontier of the United States so as to render possible expeditious concen- tration of troops and supplies to points of defense; the coordination of military, industrial, and commercial purposes in the location of extensive highways and branch lines of railroad; the utilization of waterways; the mobilization of mili- tary and naval resources for defense; the increase of domestic production of
186
LECTURES ON CONSERVATION. 187
articles and materials essential to the support of armies and of the people during the interruption of foreign commerce; the development of seagoing transpor- tation; data as to amounts, location, method and means of production, and availability of military supplies; the giving of information to producers and manufacturers as to the class of supplies needed by the military and other serv- ices of the Government, the requirements relating thereto, and the creation of relations which will render possible in time of need the immediate concen- tration and utilization of the resources of the Nation."
The terms of the act indicate the composition of the Council of National Defense. The advisory commission authorized by law, as nominated by the Council and approved by the President, consists of Daniel Willard, chairman, Howard E. Coffin, Hollis Godfrey, Julius Rosenwald, Bernard M. Baruch, Samuel Gomp- ers, and Franklin H. Martin.
The Council of National Defense has also created a number of committees, each having some special function. While the work of each one of these committees in some measure relates to gov- ernmental regulation, to consider the work of all would too greatly extend these lectures. However, the work of one committee is mainly regulatory; and this one will be considered. This is the War Industries Board.
THE NATIONAL DEFENSE ACT.
Chapter 134 of the 64th Congress is entitled. An Act for making further and more effectual provision for the national defense and for other purposes. (Approved June 3, 1916.) The first para- graph of section 120 of this act reads as follows:
"The President, in. time of war or when war is imminent, is empowered, through the head of any department of the government, in addition to the present authorized methods of purchase or procurement, to place an order with any individual, firm, association, company, corporation, or organized manufacturing industry for such product or material as may be required, and which is of the nature and kind usually produced or capable of being pro- duced by such individual, firm, company, association, corporation, or organ- ized manufacturing industry."
Orders issued by the President under this section are made obligatory upon industry and are to take precedence over all other orders.
The compensation to be paid to any individual, firm, company, association, corporation, or organized manufacturing industry for its products or material, or as rental for use of any manufactur- ing plant while used by the United States, shall be fair and just.
188 LECTURES ON CONSERVATION.
CREATION AND POWERS OF WAR INDUSTRIES BOARD.
On July 28, 1917, the Council of National Defense made an announcement in regard to the War Industries Board as follows:
The Council of National Defense today decided, with the approval of the President, to create a small body to be known as the War Industries Board. The War Industries Board, in ad- dition to other duties, will assume those formerly discharged by the General Munitions Board. The new board will be composed of seven members, working under the direction and control of the Council of National Defense through it to the President. Its members will be direct representatives of the Government and of the public interests. It will be composed of:
Mr. F. a. Scott, Chairman
Lieutenant Colonel Palmer E, Pierce, repre- senting the Army
Rear Admiral Frank F. Fletcher, representing the Navy
Mr. Hugh Frayne
Mr. B. M. Baruch
Mr. Robert S. Brookings
Mr. Robert S. Lovett
The board will act as a clearing house for the war industry needs of the Government, determine the most effective ways of meeting them and the best means and methods of increasing productions, including the creation or extension of industries demanded by the emergency, the sequence and relative urgency of the needs of the different Government services, and consider price factors; and, in the first instance, the industrial and labor aspects of problems involved, and the general questions affecting the purchase of commodities.
Of this board, Mr. Baruch will give his attention particularly to raw materials, Mr. Brookings to finished products, and Mr. Lovett to matters of priority. These three members, in associa- tion with Mr. Hoover so far as foodstuffs are involved, will constitute a commission to arrange purchases in accordance with the general policies formulated and approved.
The Council of National Defense and the Advisory Com- mission will continue unchanged and will discharge the duties imposed upon them by law. The committees heretofore created immediately subordinate to the Council of National Defense, namely, Labor, Transportation and Communication, Shipping, Medicine and Surgery, Women's Defense Work, Cooperation with State Councils, Research and Inventions, Engineering and
LECTURES ON CONSERVATION. 189
Education, Commercial Economy, Administrations and Statis- tics, and Inland Transportation — will continue their activities under the direction and control of the council. Those whose work is related to the duties of the War Industries Board will cooperate with it. The sub-committees advising on particular industries and materials, both raw and finished, heretofore created will also continue in existence, and be available to furnish as- sistance to the War Industries Board.
The purpose of this action is to expedite the work of the Govern- ment, to furnish needed assistance to the Departments engaged in making war purchases, to develop clearly and definitely the important tasks indicated upon direct representatives of the Government not interested in commercial and industrial activi- ties with which they will be called upon to deal, and to make clear that there is total disassociation of the industrial committees from the actual arrangement of purchases on behalf of the Govern- ment. It will lodge responsibility for effective action as defi- nitely' as is possible under existing law. It does not minimize or dispense with the splendid service which representatives of industries and labor have so unselfishly placed at the disposal of the Government.
In November Frank A. Scott on account of ill health resigned the chairmanship of the War Industries Board, and in his stead the President appointed Daniel Willard, who is also chairman of the Advisory Commission.
FIXING THE PRICE OF COPPER.
The first important regulatory action of the War Industries Board was fixing the price of copper. The statement issued September 20, 1917, in regard to this action is as follows:
After investigation'^by the Federal Trade Commission as to the cost of producing copper, the President has approved an agree- ment made by the War Industries Board with the copper pro- ducers fixing a price of twenty-three and one-half cents per pound f. o. b. New York, subject to revision after four months. Three important considerations were imposed by the board: First, that the producers would not reduce the wages now being paid, notwithstanding the reduction in the price of copper, which would involve a reduction in wages under the "sliding scale" so long in effect in the copper mines; secondly, the operators shall sell to the Allies and the public copper at the same price paid by the Government, and will take the necessary measures, under the direction of the War Industries Board, for the' distribution of the copper and to prevent it from falling into the hands of
190
LECTURES ON CONSERVATION.
speculators, who would increase the price to the public; and third, the operators pledge themselves to exert every effort neces- sary to keep up the production of copper to the maximum of the past, so long as the war lasts.
The War Industries Board felt that the maintenance of the largest production should be assured, and that a reduction in wages should be avoided. The stipulation that the present wages shall not be reduced compels the maintenance of the highest wages ever paid in the industry, which without such stipulation would be reduced under the sliding scale with the reduction made in the price of copper. Within this year copper has sold as high as 36 cents per pound, and the present market price would be higher than it is had it not been well known for some weeks that the Government would fix the price.
The principal copper producers throughout the country have evinced a most patriotic spirit and for weeks have promptly sup- plied every request of the Government for copper, without await- ing decision as to price, and agreeing to accept the price which the board should ultimately fix. The proper departments of the Government will be asked to take over the mines and plants of any producers who fail to conform to the arrangement and price, if any such there should be.
FIXING THE PRICE OF STEEL AND IRON.
After prolonged conferences with the manufacturers of iron and steel, the War Industries Board and the steel men on September 24, agreed on maximum prices for a number of commodities, which agreement was approved by the President. The list of prices is as follows:
Basis |
Price agreed upon |
Recent price |
Reduction |
||
Commodity |
Amount |
Per cent |
|||
Iron ore |
Lower lake ports.... |
$5.05 GT 6.00 NT 33.00 GT 2.90 Cwt. 3.00 Cwt. 3.25 Cwt. |
$5.05 GT 16.00 58.00 GT 5.50 Cwt. 6.00 Cwt. 11.00 Cwt. |
||
Coke |
$10.00 25.00 2.60 3.00 7.75 |
62.5 |
|||
43.1 |
|||||
Pittsburgh! |
47.3 |
||||
Chicago / Pittsburgh; |
50.0 |
||||
Plates |
Chicago J Pittsburgh ^ |
70.5 |
|||
Chicago J ■"••• |
LECTURES ON CONSERVATION.
191
On October 11 further prices were agreed upon, approved by the President, as follows:
Commodity
Price agreed upon
Base
Blooms and billets 4"x4" and larger
Billets under 4"x4"
Slabs
Sheet bars
Wire rods
I 3" to 5"
<;hppt hnr<» ^^^^ 5" to 8"
bheet tsars ^^^^ g„ ^^ jq„
{ over IC"
f grooved
Skelp j universal
I sheared
147.50 GT 51 .00 GT 50.00 GT 51.00 GT 57.00 GT $3.25 per 100 lbs.
3.50
3.75
4.00
2.90
3.15
3.25
Pittsburgh and Youngstown
On November 6 it was further announced that the President had approved an agreement made by the War Industries Board with the principal steel industries of the United States, fixing maximum prices, subject to revision January 1, 1918, on certain steel articles as follows:
SHEETS
No. 28 Black Sheets $5.00 per 100 pounds f. o. b. Pittsburgh
No. 10 Blue Annealed Sheets 4.24 per 100 pounds f. o. b. Pittsburgh
No. 28 Galvanized Sheets 6.25 per 100 pounds f. o. b. Pittsburgh
The above prices to apply to both Bessemer and Open Hearth Grades.
PIPE
On % inch to 3 inch Black Steel Pipe Discount 52 and 5 and 2K% f. o. b.
Pittsburgh
COLD ROLLED STEEL
17% discount from March 15th, 1915, list, f. o. b. Pittsburgh.
SCRAP
F. 0. B.
No. 1 Heavy Melting Consuming point
$30.00 per gross ton
Cast iron borings and machine shop trimmings 20.00 per gross ton
No. 1 Railroad Wrought 35.00 per gross ton
WIRE
Plain wire $3.25 per 100 pounds f. o. b. Pittsburgh
TIN PLATE
Coke Base, Bessemer & Open Hearth $7.75 per 100 pounds box f. o. b.
Pittsburgh.
In connection with the above, the iron and steel manufac- turers have agreed to adjust the maximuni prices of all iron and steel products other than those on which prices have been agreed upon, to the same general standard as those which have been
192 LECTURES ON CONSERVATION.
announced. It is expected that this will be done promptly and consistently in line with the basic, intermediate, and finished products, for which definite maximum prices have been estab- lished.
In fixing maximum prices, it was stipulated, as in the case of copper, first, that there should be no reduction in the present rate of wages; second, that the prices above named should be made to the public and to the Allies, as well as to the Govern- ment; and third, that the steel men pledge themselves to exert every effort necessary to keep up the production to the maxi- mum of the past, as long as the war lasts.
Measures will be taken by the War Industries Board for plac- ing orders and supervising the output of the steel mills in such manner as to facilitate and expedite the requirements for war purposes of the Government and those nations associated with us, and to supply the needs of the public according to their public importance and in the best interest of all, as far as practicable.
The prices enumerated have been fixed by the President on / the assurance of those representing the steel industry that these prices equitably adjust the relations of the steel interests to each other, and will assist them in fulfilling their obligations to give the country 100 per cent of production at not to exceed the prices heretofore announced.
With this spirit of cooperation manifested, no doubt is enter- tained by the War Industries Board that every effort will be made to bring the production as nearly as possible up to the extraordinary demands resulting from the war.
DISCUSSION OF PRICES FIXED.
METHOD OF OPERATION.
By the secretary of the War Industries Board, Lieutenant Bingham, I am informed that the agreements entered into with regard to copper and iron are handled in the following manner:
"The Raw Materials Division of the War Industries Board has appointed a Director of Copper Supply and a Director of Steel Supply. The copper and steel interests have appointed Trade Committees who, under the supervision of the directors each in his department, allocate Government orders in the various trades and use their influence to prevent purchases being made by either department or by an individual outside of the Govern- ment at prices above 'those agreed to by their industry.
"Should any individual or corporation sell any of the articles upon which a price has been fixed at prices above those fixed,
LECTURES ON CONSERVATION. 193
the Trade Committee can use its influence to secure the reduction of that price to the fixed price, or if necessary can call upon the War Industries Board which, through its Priority Division, can be able to bring sufficient pressure to bear on the seller to cause him to come into line. There has been very little trouble of this kind and likewise very little material sold at the prices fixed as yet, due to the fact that all producers of copper and steel were sold ahead at old prices for a considerable period."
WAR AND PRE-WAR PRICES.
It is to be noted that under the agreement of September 24, the prices for coke, iron, and steel varied from 43 to 70 per cent below current prices, and the prices agreed upon for the finished product under the agreements of October 11 and November 6 are similarly greatly below current prices. However, it is inter- esting to compare these prices with those which obtained before the war.
Connellsville coke in 1914 varied from about $1.90 to $2.50 per ton. For all the earlier part of 1915 the price was $2 a ton. Thus this price before the war was only one-third that allowed by the Government.
The price of Bessemer pig iron at Pittsburgh during 1914 and the first half of 1915, averaged a little less than $15 a ton. There- fore the price allowed, $33 a ton, is more than twice that of the pre-war prices.
The price of steel billets at Pittsburgh during 1914 and the first half of 1915 varied from $19 to $21 a ton, with an average of about $20 a ton. The prices allowed, $47.50 and $51, are about two and a half fold those before the war.
Similar ratios obtain between pre-war prices and the prices allowed for other products.
THE LEGAL BASIS.
The transactions of the War Industries Board are based upon an entirely different legal foundation from those of the Food Administration, the Fuel Administration and the Shipping Board. Each of these organizations operates under laws enacted by Congress under the war powers of that body. The War In- dustries Board derives its power from the Council of National Defense, and that Council has no authority whatever to compel agreement in fixing prices. The Council of National Defense Act cannot even by implication be construed to repeal the Sherman Act in regard to agreements in fixing prices. Since, however, the
194 LECTURES ON CONSERVATION.
agreements entered into by the War Industries Board have the approval of the President, it may be held that the President in thus approving prices is acting under authority granted to him in section 120 of the National Defense law. However, the powers of the President granted by this section extend only to the control of prices for governmental purposes; whereas the agreements in regard to prices of the War Industries Board not only apply to governmental orders but apply to others. Therefore it is clear that there is no law which even by implication can be regarded as repealing or modifying the anti-truSt acts in regard to agree- ments by the copper, iron, and steel men to sell at uniform prices to the public.
In agreeing to fix lower prices than had prevailed, these men were doubtless moved by patriotic motives. However, the facts recited show that the prices to which they have agreed are such as to give them great profits beyond those which have obtained antecedent to the war, even when allowance is made for large deductions from these profits because of the excess war tax.
It should be remembered that the War Industries Board, in acting for the public in fixing prices, was obliged to take into ac- count the shortage of steel and the necessity of the largest pos- sible production. They were obliged to agree to a price which allows a profit sufficient for practically all of the furnaces and mills of the country to operate. Also in those industries in which there has been no governmental regulation or agreements regarding prices, profits have been much larger than before the war; and it was necessary to take this fact into account. A re- duction in prices was accomplished which in itself was a gain.
While the arrangements regarding prices were amicably made, it should be remembered that the public pressure for fair prices for iron and steel was supported by the threat of legislation at least so far as iron was concerned. A bill had been introduced into Congress by Senator Pomerene, S2756, to regulate the pro- duction, sale, and distribution of iron ore, iron, steel, and their products, in the manner parallel to that under which food and fuel are controlled.
With the absolute necessity for the Government and the public to obtain iron and steel, copper, and other essential products at reasonable prices, it is highly probable that if the agreements had not been entered into, legislation would have followed at the coming session of Congress.
LECTURES ON CONSERVATION. 195
PRIORITY IN MANUFACTURE.
Another duty of the War Industries Board is that of control of priority of manufacture. This is done through the priority com- mittee of the War Industries Board, of which Judge Robert S. Lovett is chairman. On September 21, the day that announce- ment was made of prices for iron and steel, the priority committee issued its first general priority order in regard to manufacture. The order was approved by the Secretary of War and the Secre- tary of the Navy.
The order gives instructions as to priority in orders and work for all individuals, firms, associations, and corporations engaged in the production of iron and steel and in the manufacture of products thereof.
Under these regulations all orders and work are divided into three classes:
Class A comprises war work — that is to say, orders and work urgently necessary in carrying on the war, such as arms, am- munition, ships, etc., and the materials required in their manufac- ture.
Class B comprises orders and work which, while not primarily designed for the prosecution of the war, yet are of public interest and essential to the national welfare, or otherwise of exceptional importance.
Class C comprises all orders and work not embraced in Class A or Class B.
All orders henceforth will be classed as Class C, unless covered by certificates of the Priorities Committee. No certificates will be issued for Class C orders.
Orders and work in Class A will take precedence over those in Class B, and both these classes will be given priority over Class C, irrespective of the date the orders were received. Class A and Class B will, in turn, be separated into subdivisions to be designated as Class Al, A2, A3, A4, etc., and Class Bl, B2, B3, B4, etc., each composed of orders within the class which are regarded respectively as of greater moment and to be given precedence in accordance with the serial number.
All materials required in the manufacture of an article or in the prosecution of any work will be entitled to take the class of such article or work unless otherwise specified.'
For the administration of the regulations, certificates will be issued by the Priorities Committee upon application, specifying the classification of the order of work. Certificates of a sub- sidiary nature will be issued upon request for the furnishing of
196 LECTURES ON CONSERVATION.
material and articles required in manufacturing the article or prosecuting the work ordered.
War orders of the Allies as well as of the United States will be placed in Class A, in the case of those already contracted for. All orders placed prior to September 21 by the War and Navy Departments or the Emergency Fleet Corporation of the United States will be classed as subdivision Al of Class A, unless other- wise ordered. Orders already placed by the Allies for war ma- terials will be classed as subdivision A2 of Class A, unless other- wise ordered.
CONCLUSION.
Under the arrangements for control which the War Indus- tries Board has made through agreement, we find not only that prices of steel and copper are controlled, but that their manu- facture is controlled under the priority orders; and thus the steel and copper businesses are regulated to a large extent in the same manner as food and fuel are controlled by congressional enact- ment.
CHAPTER X. PRINT PAPER.
In Part I of these lectures, a summary is found of the facts in regard to the greatly increased cost of print paper during the war and the very large excess profits of the paper concerns. According to the Federal Trade Commission, the profits for print paper in 1916 were from 65 per cent to 84 per cent higher. than in 1915, and the excess profits of the producers in 1916 as com- pared with 1915 were 130,000,000.
The situation was regarded as so serious that the Federal Trade Commission recommended to Congress as a war emergency measure that all print paper mills and distributing agencies be taken over by the Government and operated on the government account during the continuance of the war, in order that the governmental agency in charge of the mills should equitably distribute the paper at a fair price. The Federal Trade Com- mission also called attention of Congress to the fact that the paper trade associations, although ostensibly organized for legiti- mate purposes, are engaged in practices which destroy competition and defeat the objects of the Sherman Act. In this connection attention was called especially to the association called the Bureau of Statistics Book Paper Manufacturers, which included forty important book making concerns. The Trade Commission held that the activity of this Association has been one of the factors which has led to abnormal increase in prices and presents facts in support of this view.^
In consequence of the report of the Federal Trade Commission suit was brought by the Attorney General against the News Print Manufacturers Association, the so-called paper trust. Eight men and twenty-four companies were indicted for com- bination and contracts in restraint of trade.
The committee on printing of the Senate on October 6, 1917, submitted a report upon print paper of the Federal Trade Com- mission to Congress and at the same time introduced a resolution authorizing and directing the Federal Trade Commission to supervise, control, and regulate the production and distribution of print paper and chemical pulp in the United States, and
1 Book-Paper Industry, Senate Document No. 79, 65th Congress, 1st Session, Washing- ton Government Printing Office, 1917.
197
198 LECTURES ON CONSERVATION.
directing that all mills producing such commodities shall be operated upon government account. The products, according to the terms of the resolution, are to be pooled in the hands of the Federal Trade Commission during the term of the war and equitably distributed at prices based upon the production and cost of distribution, but with a fair profit as determined by the Federal Trade Commission, There are the usual provisions for compensation. This resolution has not as yet been acted upon.
On August 30 the President under his authority to control the price of commodities purchased by the Government (Section 120 of the National Defense Act) fixed the price of print paper for the Official Bulletin at 2}4 cents a pound. In the meantime the case for the dissolution of the paper combination was pressed in the United States Court, but before it was tried an agreement was reached between the Court and the paper manufacturers. The News Print Manufacturers Association agreed not to defend their case and five members of the executive committee of the Association were fined.
The decree of the court which was accepted by the defendants included among others the following important features:
The eight persons and the twenty-four companies by being members of the News Print Manufacturers Association have entered into unlawful combination in restraint of trade.
The News Print Manufacturers Association is held to be an unlawful combination in restraint of trade and the eight persons and twenty-four companies by becoming members of this Associa- tion are held to have acted unlawfully.
Each of the corporate members of the Association was per- petually enjoined in most sweeping terms from cooperating in any way in regard to price of distribution of paper in violation of the antitrust laws.
While the defendants agree to abide by these broad injunctions it is specifically stated that in so doing, they shall not be pre- vented from entering into an agreement with the Attorney General of the United States as trustee for the operation of the print paper industry during the war.
The agreement made the 26th of November between the Attorney General and the Print Paper Manufacturers, after reciting the reasons for entering into the same, includes the following important provisions:
First: The United States may file a petition in equity to enjoin any operations of the News Print Paper Manufacturers Associa- tion and of the manufacturers who are members of that asso- ciation, in so far as such operations are claimed to constitute a
LECTURES ON CONSERVATION. 199
restraint of trade. In such proceeding the parties of the second part will consent to a decree as prayed for, reserving the right, at the time such consent to a decree is presented to the court, to make such statements, oral or written, not impairing the binding force of the decree as they are advised may be necessary to pro- tect their interests. The petition may also pray for the dissolu- tion of the News Print Manufacturers Association, and if a request be made to that end, the parties of the second part will consent thereto.
Second: The price of news print paper on the basis of 24 by 36 inches in size weighing approximately thirty-two pounds per 500 sheets, on all new contracts from now to January 1, 1918, and on all contracts in existence on January 1, 1918, or made thereafter, and on all sales and deliveries, in the United States, shall not exceed the following amounts:
(a) From January 1, 1918, until April 1, 1918, for such news print paper in rolls, |3 per 100 pounds, free on board at the mill in carload lots, and $3.25 per 100 pounds, free on board at the mill in less than carload lots, and for news print paper in sheets, $3.50 per 100 pounds, free on board at the mill in car- load lots, and $3.75 per 100 pounds, free on board at the mill in less than carload lots. The foregoing subdivision (2-a) shall not apply to the Minnesota and Ontario Power Company nor the Fort Frances Pulp and Paper Company, Ltd.; but as to said companies, the Federal Trade Commission, after due hearing and investigation and subject to review as provided in subdi- vision 2-b, shall fix the just and reasonable maximum prices and terms of contract for said two companies from January 1, 1918, until April 1, 1918, effective January 1, 1918.
(b) After April 1, 1918, the just and reasonable maximum prices and terms of contracts for the sale of all or any news print paper shall be determined and fixed by the Federal Trade Com- mission, after due hearing and investigation, subject to review by the Circuit Judges of the Second Circuit, who, if of opinion that the prices or terms of contract fixed by the Commission are unjust or unreasonable, shall determine what are just and reason- able. The maximum prices and terms of contract so determined shall continue during the war and for three months thereafter, with the right to any of the parties of the second part or to the Department of Justice to ask the Federal Trade Commission for an investigation and determination of new prices or terms of contract whenever during such periods conditions arise which in the opinion of either make it desirable to ask for any change in price or terms of contract, subject to the same right of review.
200 LECTURES ON CONSERVATION.
In determining the prices to be effective April 1, 1918, the Federal Trade Commission shall consider all pertinent conditions, includ- ing those prevailing during the months of January, Februar^^ and March, 1918, to the end that the prices when announced shall cover the facts as near the time of the effective date of the new prices as is possible.
Third: The parties of the second part, during the life of this agreement, shall offer their news print paper for sale in accordance with paragraph second hereof. In case of sale by written con- tract said paragraph shall be embodied therein, either wholly or by sufficient reference thereto; but if any customer or any of the parties of the second part, who is offered paper in accordance with the provision of this agreement, prefers to make or retain a contract for a fixed price for a definite period, and any one of the parties of the second part, after duly notifying the Attorney General of his or its intention in the matter, shall make or retain such contract solely in deference to the wishes of the consumer, such agreement so made shall not be construed as a violation of this agreement, even though the price which the consumer pays in furtherance of his own interest is in excess of the prices fixed in this agreement.
Fourth: The parties of the second part agree that to the extent of their power they will cause such of their news print paper as is ordinarily purchased by the so-called small publishers through the intervention of jobbers, dealers, or other middlemen to be delivered to such small publishers at not to exceed reasonable and just prices and terms of sale to be established by the Federal Trade Commission, subject to review by the circuit judges in the manner aforesaid.
Fifth : The party of the first part, or his successor in office, as trustee of an express trust, m^y bring any appropriate action, suit or proceeding in law or in equity to enforce this agreement on behalf of any person, firm, or corporation injured or damaged by a violation of the terms thereof, and may proceed by pre- liminary injunction or otherwise to restrain violations of the terms hereof.
This agreement is fully summarized since it involves an entirely new principle in regulation. Heretofore, in case of prosecutions under the Sherman Act, if the defendants are found guilty of certain acts, the Court has enjoined them from doing those things; and in some instances in which the injunctions required complicated procedure with relation to a complex organization, the assistance of the Federal Trade Commission has been secured in reaching an agreement with the convicted companies in
LECTURES ON CONSERVATION. 201
regard to the steps that it will be necessary for them to take in order to meet the orders of the court. Also in various instances, without actually carrying the cases to the court, similar arrange- ments have been made with the accused corporation by the Attorney General.
However, the agreement above cited goes much further than this. The Attorney General actually fixes the maximum prices for an important commodity, and all of the corporations con- cerned agree that they shall not charge more than that price. Since the demand is so large this maximum price is in fact that paid. In other words the court in conjunction with the defend- ants does the most important of the things with which the de- fendants are charged, that is, fixes prices.
Thus the corporations do the things with consent of the Court which are in violation of the antitrust laws and for which they are fined. The agreements to fix prices antecedent to the action of the Court and with the concurrence of the Court are both clearly in violation of law, for it cannot be held that the Court has the right to change the law.
However, as far as the pubhc is concerned there is the great difference that in the first instance the agreements were made exclusively in the interests of the paper manufacturers; whereas, in the second instance, the agreements were entered into with a representative of the public, and the prices fixed were presumably fair both to the producers and to the consumers.
The price fixed by the Attorney General holds until April 1, 1918. After that date until the end of the war, the Federal Trade Commission is to exercise the authority to fix maximum prices for the Print Paper Manufacturers. The Federal Trade Com- mission has no such authority as this under the law which creates it, except the provision which says that it may assist the Court in the dissolution of corporations and make recommendations in regard to procedure concerning them. Thus it appears that the authority which the court has exercised is by it delegated to the Federal Trade Commission without any express enactment. That Congressional action was necessary in order to give this authority to the Federal Trade Commission was clearly the view of the Senate Committee; otherwise there would be no point to the committee resolution to grant authority to the Commission to regulate the print paper industry.
The defense for both of these actions as given by the Court is that it is desirable in the present condition of affairs in the United States that some adjustment of the news print paper be
202 LECTURES ON CONSERVATION.
made. The condition of affairs referred to is of course that we are engaged in war.
Therefore the justification of the action is that it is a benefit to the pubHc. Cooperation in violation of the antitrust laws is not only permitted, but is expressly approved when it is not a detriment to the public welfare. The Court without congressional action or authority of law has acted in a manner analogous to that with which Congress has acted for food and fuel. Congress bases its action upon the war powers of Congress. The Court justifies similar action on its part by its belief that the agree- ments made will help in the same direction. This, however, does not render less extraordinary, from the regulatory point of view, the action of the Court.
CHAPTER XI.
EXPORTS AND IMPORTS.
The control of foreign trade was for a very short time exer- cised by the Exports Council and later for several months by the Exports Administrative Board. With the passage of the Trad- ing with the Enemy Act a War Trade Board was created, which board took over the powers which had before been exercised by the Exports Administrative Board and also additional powers under the Trading with the Enemy Act. The law under which the Exports Council and the Exports Administrative Board were created reads as follows:
ESPIONAGE ACT.
The Espionage Act is ofTicially an act to punish acts of inter- ference with the foreign relations, the neutrality, and the foreign commerce of the United States, to punish espionage, and better to enforce the criminal laws of the United States, and for other purposes. Public No. 24, 65th Congress, H. R. 291.
CERTAIN EXPORTS IN TIME OF WAR UNLAWFUL.
The control of exports is covered under "Title VII" and the material herein contained is summarized as follows:
Section 1 states that whenever during the present war the President shall fmd that the public safety shall so require, and shall make proclamation thereof, it shall be unlawful to export from or ship from or take out of the United States to any country named in such proclamation any article or articles mentioned in such proclamation, except at such time or times, and under such regulations and orders, and subject to such limitations and ex- ceptions as the President shall prescribe, until otherwise ordered by the President or by Congress; Provided, however. That no preference shall be given to the ports of one state over those of another.
Section 2 provides penalties by fine and imprisonment for the violation of this section.
Section 3 authorizes the collector of customs of any district to refuse clearance to a vessel if there is reasonable cause to believe that the vessel is to carry out of the United States articles
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204 LECTURES ON CONSERVATION.
in violation of section 1. Any one who attempts to take out a vessel notwithstanding the prohibition of the collector of customs will be subject to fine and imprisonment and the vessel and forbidden cargo are forfeited to the United States.
THE EXPORTS COUNCIL.
Under the Espionage Act, by executive order, on June 22, 1917, the Exports Council was created, composed of the Secretary of State, the Secretary of Agriculture, the Secretary of Commerce, and the Food Administrator. This council was directed to formu- late for consideration and approval of the President policies and recommendations to be pursued concerning exports. Such policies were formulated and on July 9 the President issued a proclamation prohibiting the export of the more important commodities except under license. This list was amended and extended by order of July 23 and again August 6.
The commodities under the final list may be classified under the following headings: Coal, coke, mineral oils of all kinds, kerosene and gasoline; grains of all kinds and meals from the same; fodders and feeds of all kinds; meats and fats of all kinds, whether animal or vegetable; steel and iron, including pig, steel billets, plates, and structural shapes, scrap, and ferromanganese; fertil- izers of all kinds, organic and inorganic; arms, ammunitions, and explosives, including all original materials and chemicals necessary for the manufacture of the same.
It was stated that in issuing this order it was not the intention to prohibit the export of commodities but to control export. First a sufficient amount of all the essential indispensable com- modities to meet the needs of our own people and for the necessary military and naval program must be retained. The United States will liberate only surplus products. In liberating such surplus the necessities of the nations engaged in the war against the Central Empire first will be recognized. Neutral nations will however be considered and the United States will cooperate by fair and equitable means to supply their pressing necessities.
On July 9, the Secretary of Commerce organized the division of exports licenses as a division of the Bureau of Foreign and Domes- tic Commerce. Upon this division was placed the responsibility of issuing licenses in accordance with the instructions issued from time to time by the President.
On August 2, the President gave further orders to the division of export licenses superseding previous regulations. Shipments to all nations associated with the United States in the war are to be freely licensed without reservation and without restriction, except
LECTURES ON CONSERVATION. 205
for iron and steel products, for which licenses shall be granted only in case the articles are desired for actual war purposes or directly contribute thereto ; and even exportation of iron and steel as above defined will only be permitted where application has been received by the Division of Export License before August 10, and only for articles which are completely made up and manufactured before that date.
To facilitate exports to Canada and Newfoundland at first, a special license only was required, but on August 2 this plan was modified so as to require individual licenses for shipments on or after August 16, for certain classes of iron and steel, and this was extended to all classes on August 29.
On August 15 it was announced that all licenses must be made in regular form prescribed by the Division of Exports Licenses.
THE EXPORTS ADMINISTRATIVE BOARD.
On August 21, by executive order, there was created the Ex- ports Administrative Board, to be composed of the Secretary of State, the Secretary of Agriculture, the Secretary of Comrrierce, the Food Administrator, and the United States Shipping Board; and upon this board was placed the executive administration of all articles under Title VII of the Espionage Act. At the same time, the composition of the Exports Council was modified, so as to be composed of the Secretary of State, the Secretary of Agriculture, the Secretary of Commerce, the Food Administrator, and the chairman of the Shipping Board. This council is to act in an advisory capacity in matters referred to it by the President and the Administrative Board.
On the recommendation of the Exports Council August 27, the President issued a proclamation which brought under control many of the more important articles of commerce. This list ap- plied to the Central Powers and their allies and to the neutral countries of Europe. To other countries the list of commodities for which export license is required was greatly extended so as to include nearly all commodities except small unessential manu- factured products and luxuries. The administration of these orders is placed upon the Exports Administrative Board.
The order of August 27 did not include coin, bullion, currency, or evidence of indebtedness. However, on September 7, the President issued a proclamation forbidding the exportation of the above-mentioned commodities except with the consent of the Federal Reserve Board, and subject to the approval of the Secre- tary of the Treasury.
206 LECTURES ON CONSERVATION.
On September 13 the Exports Administrative Board announced that after September 20 small shipments, the value of any one commodity of which does not exceed $100, may be exported by the authority of the Collector of Customs to countries except those of the Central Powers and their allies and the neutral countries of Europe.
To Canada, Newfoundland, and Mexico, the customs officials permitted the export without a license of shipments of not more than 125 bushels of wheat, 25 barrels of flour, 125 pounds of butter, or 25 barrels of sugar.
On September 17, the Exports Administrative Board announced a list of commodities whose conservation is necessary on account of the limited supplies and the needs of the United States in its successful prosecution of the war. Accordingly the exportation of these articles was practically prohibited. The list was further added to on September 28. The extended list comprises all the articles the supplies of which are are not more than sufficient to meet our own minimum needs. The list included all foods, grains, and fodders; iron and steel; metals, including machine tools of certain classes; and many chemicals. Licenses are re- quired for the shipment of any article of commerce to the Central Powers and their allies and the neutral countries of Europe.
On October 5 the Exports Administrative Board announced that it would not grant bunker coal to a vessel which is bound for a border neutral and carries a cargo which may benefit the enemy, wherever such cargo originate. Also a vessel en route to non- European neutrals, which touches at a United States port, shall not be granted bunker coal for the voyage unless she will agree to return to the United States with a cargo which will be approved by the Board, or which is destined for a country other than a border neutral.
On October 9 it was determined that raw cotton could be ex- ported by special license to Great Britain, France, Italy, and Japan, and their possessions, and to Russia, This regulation was continued on October 9.
On September 25, it was announced that after October 10 collectors of customs will not approve even small shipments of commodities on the conservation list. This, however, does not modify the special arrangements which have been made regarding food, grain, fodder, butter, and sugar for Canada, Newfoundland, and Mexico.
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THE TRADING WITH THE ENEMY ACT.
The Trading with the Enemy Act is entitled "An Act to define, regulate, and punish trading with the enemy and for other purposes." A summary of the more important provisions of this act is as follows:
Section 1 states that the act shall be known as the Trading with the Enemy Act.
Section 2 defines the word enemy for the purpose of trading in most comprehensive terms. It includes all persons and cor- porations residing in territory in control of the enemy, all cor- porations incorporated in any nation with which the United States is at war, and all persons and corporations in any country other than the United States doing business with such enemy territory. It includes all citizens or subjects of the nations with which the United States is at war whether resident in the United States or elsewhere. Also it includes the governments and all officials of countries with which the United States is at war.
The words "ally of enemy" are defined in terms parallel to those in which the term "enemy" is defined for all countries which are allies of countries with which the United States is at war.
The section also defines other terms used in the act, including "person," "United States,", "the beginning of the war," "the end of the war," "banks," and "to trade."
Section 3 makes it unlawful
(a) For any person in the United States except with the license of the President to trade or attempt to trade with enemy or ally of the enemy.
(b) For any person except with the license of the President to transport or attempt to transport any subject or citizen of the enemy or ally of the enemy to or from the United States.
(c) To communicate in any way with a person in the enemy's territory, by mail, by paper, by picture, by telegram, by cable- gram, or by wireless message, except with the license of the Presi- dent or such officer as the President may designate.
The President is authorized to censor under such rules and regulations as he may prescribe all communications by any means between the United States and any enemy country.
Section 4 provides that insurance companies of the enemy country or ally of the enemy can only do business by special license, and prescribes the conditions under which such license shall be given. The President may renew or revoke such license in such manner and at such times as he shall determine.
208 LECTURES ON CONSERVATION.
During the present war no enemy or ally of the enemy and no partnership of which an enemy or ally of the enemy is a member may assume any name other than that by which it was ordinarily known at the beginning of the war, except by license from the President.
Finally, the President, during the war, whenever the public safety or the public interest require it, may prohibit any and all foreign companies from doing business in the United States; or the President may license such company or companies to do busi- ness upon such terms as he may deem proper.
Section 5 authorizes the President, if he finds it compatible with the safety of the United States and the successful prosecution of the war, by proclamation to suspend the provisions of the act so far as they apply to an ally of the enemy, and may grant licenses under such conditions as he may prescribe for such trade; and any such license granted may be renewed or may be revoked, if in the opinion of the President this is required for the safety of the United States and the successful prosecution of the war.
The President may investigate, regulate, or prohibit under such rules and regulations as he may prescribe by license, or otherwise, all transactions in foreign exchange, export or ear markings of gold or silver coin or bullion, or currency, or any other form of credit, or transfers of evidence of indebtedness, or ownership of property between the United States and any foreign country, whether enemy, ally of enemy, or otherwise, or between the residents of one or more foreign countries by any person within the United States. In the exercise of this act the President may require full and detailed information in regard to all these matters.
Section 6 authorizes the President to appoint, prescribe and fix the duties of an officer to be known as the alien property custodian. Such officer shall be empowered to receive all money and property in the United States due or belonging to an enemy or ally of the enemy, which may be paid, transferred or assigned to said officer. The custodian shall hold and account for such property as provided in this act.
Section 7 prescribes that every corporation and other in- corporated association, bank, or trustee, issuing shares or certifi- cates representing beneficial interests shall, under such rules and regulations as the President may prescribe, transmit to the alien property custodian a full list of all enemy or ally of the enemy property within their charge.
Also the President may require that a similar list shall be transmitted of all stocks and shares owned on February 3, 1917,
LECTURES ON CONSERVATION. 209
by any person now an enemy or ally of the enemy to the alien property custodian.
The President may require that such lists of property of. all kinds shall be transmitted to the ahen property custodian, although in the names of others, provided there is reasonable cause for belief that such property belongs to an enemy or ally of the enemy.
The President may require any money or property belonging to or owned by, or held for or on account of an enemy or ally of the enemy, not holding a license granted by the President, to be conveyed to the alien property custodian. If this requirement is not made by the President the custodian of enemy or ally of the enemy property may transfer same at his own initiative to the alien property custodian, under such rules and regulations as the President prescribes.
Sections 8 and 9 contain full provisions as to the manner in which transactions in regard to property belonging to an enemy or ally of the enemy shall be handled.
Section 10 covers the matter of letters patent, registration of trade-marks, prints, labels, and copyrights. It allows the con- tinuance of such privileges and rights, under definite regulations, if licensed by the President, and the President may prescribe rules and regulations under which such privileges are granted, including the fixing of prices.
Whenever the publication of an invention by the granting of a patent may in the opinion of the President be detrimental to the public safety or defense, he may order that the invention be kept secret and withhold the granting of the patent until the end of the war.
Section 11 authorizes the President, during the war, in case he finds the public safety requires it, by proclamation to forbid the importation from any countiy of any article or articles into the United States for such times and under such regulations as he may prescribe; with the provision, however, that no preference shall be given to the ports of one state over those of another.
Section 12 prescribes that all money received by the alien property custodian shall be deposited in the treasury of the United States and may be invested and reinvested by the secre- tary of the treasury in United States bonds or United States certificates of indebtedness, under such rules and regulations as the President may prescribe. All property, other than money, transmitted to the alien property custodian is to be safely held and administered by him as trustee under conditions which are carefully prescribed. Whether the property is managed directly
10
210 LECTURES ON CONSERVATION.
by the alien property custodian or by agents or depositaries with which the property is placed, any income from same is to be de- posited in the treasury of the United States and used as hereto- fore prescribed. The alien property custodian has all the com- mon-law rights of a trustee, in case he sells any property, shares, or certificates. The money received from any sale shall be de- posited with the United States Treasurer, to be used as hereto- fore prescribed. At the end of the war, the claim of an enemy or ally of the enemy for money or property received by the alien property custodian or deposited with the United States Treasurer shall be settled as Congress shall direct; provided, however, that upon the order of the President or the court the alien property custodian or the treasurer of the United States, under prescribed regulations, may forthwith pay to the person to whom the Presi- dent or court shall order the money held by such custodian or treasurer.
Section 13 requires the master of a vessel to deliver to the col- lector of customs in the district from which the vessel sails a man- ifest of the goods carried and to whom consigned. He is to state by oath that the cargo will not be delivered in violation of this act.
Section 14 authorizes the collector of customs to refuse clearance to any vessel in which he has reasonable cause to believe the statements of the manifest are false. Also the collector is to report to the President the amount of gold or silver coin or bul- lion contained in any cargo intended for export, and the con- signor and consignee.
Section 15 makes an appropriation of $450,000 to carry out the provisions of the act, for the fiscal year ending June 30, 1918.
Section 16 provides penalties by fine and imprisonment for violation of the act.
Section 17 gives the district courts of the United States juris- diction in regard to the provisions of the act.
Section 18 gives the several courts of the Philippine Islands and the Canal Zone jurisdiction in regard to their respective districts.
Section 19 prescribes that ten days after the approval of this act and until the end of the war, it shall be unlawful for any per- son, firm, or corporation, or association, to print, publish, or circulate, or cause to be printed, published, or circulated in any foreign language, any news item, editorial, or other printed mat- ter, respecting the government of the United States, or of any nation engaged in the present war, its policies, international re- lations, the state or conduct of the war, or any matter relating
LECTURES ON CONSERVATION. 211
thereto: Provided, that this section shall not apply to any print, newspaper, or publication where the publisher or distributor thereof, on or before offering the same for mailing, or in any man- ner distributing it to the public, has filed with the postmaster at the place of publication, in the form of an affidavit, a true and complete translation of the entire article containing such matter proposed to be published in such print, newspaper, or publication.
Any newspaper which does not conform to this act is declared to be non-mailable; but the President is given authority to allow the printing of newspapers in foreign language without com- pliance with this section, provided he is satisfied that this may be done without detriment to the United States; but he can re- voke such permit at his discretion.
The section further provides penalties for violation of the act.
PROCLAMATIONS AND ACTIONS OF THE PRESIDENT.
On October 13, acting under the Trading with the Enemy Act, the President created the War Trade Board, to take over the powers and duties of the Exports Administrative Board. This board is composed of the Secretary of State, the Secretary of the Treasury, the Secretary of Agriculture, the Secretary of Com- merce, the Food Administrator, and the United States Shipping Board. Since the Exports Administrative Board had the same composition, the action amounts merely to a change of name.
In addition to the power of controlling exports, there was placed upon the War Trade Board the control of imports.
The duties of administering the provision of the law so far as ordinary commodities are concerned in trading with the enemy or ally of the enemy passes to the War Trade Board.
The Secretary of the Treasury is vested with the executive administration of (1) the control of transactions in foreign ex- change, coin, bullion, and all forms of credit; (2) the control of communication between the United States and the enemy or ally of the enemy; and (3) the control of insurance.
A censorship is created, composed of the Secretary of War, the Secretary of the Navy, the Postmaster General, the War Trade Board, and the chairman of the Committee on Public Informa- tion; and upon this board is placed the executive administration of all rules and regulations in regard to censorship of communi- cation by mail, cable, or any other manner between the United States and any foreign country.
The Federal Trade Commission is vested with authority con- ferred by law over patents, trademarks, prints, labels, and copy- rights.
212 LECTURES ON CONSERVATION.
The Postmaster General is vested with executive adminis- tration of all provisions of the Trading with the Enemy Act re- lating to printing, publication, or circulation of material in any foreign language.
The Secretary of State is vested with the executive adminis- tration of transportation of subjects or citizens of the enemy or ally of the enemy upon any vessel of American registry.
The Secretary of Commerce is vested with power of clearance of vessels.
Upon the alien property custodian is placed the executive administration of the provisions of the act relating to enemy or ally of the enemy property.
On November 28 the President supplemented his previous proclamation of August 27 in regard to export of commodities. A considerable number of commodities are added whose con- servation is regarded as essential to the vigorous prosecution of the war; and, for the exportation of any of these commodities, a license is required.
On the same day a far more important proclamation w^as issued by the President, which requires a hcense from the War Trade Board for importation to the United States of practically all commodities imported in any quantity from almost every country from which they come. By this action the War Trade Board will be in a position to completely control the importation of commodities from any country or firm which is taking an atti- tude favorable to the enemy or ally of the enemy.
The President appointed Mr. A. Mitchell Palmer ahen property custodian. It was ordered that all money or property held by German citizens living abroad must be reported to the alien enemy custodian by December 5. After that time the prop- erty and money will be taken over by the government. It is estimated that such property in the United^States may amount to $600,000,000.
ACTIONS OF THE TREASURER.
On November 25 the Secretary of the Treasury indicated with the approval of the President, that the authority granted him by the President would be exercised as follows: The Fed- eral Reserve Board is to be the agency of the Treasury in trans- actions relating to exchange, coins, bullion, and credit. The War Trade Board is to act for the Treasurer in all communications be- tween the United States and the enemy or ally of the enemy which go through the mail and the Customs Division of the Treas-
LECTURES ON CONSERVATION. 213
ury Department for communications other than those that go through the mail. The control of insurance will rest with the War Risk Insurance Bureau of the Treasury Department.
ACTIONS OF THE WAR TRADE BOARD.
On October 15 the War Trade Board issued an announce- ment that all who wished to engage in exportation directly or indirectly will be required to sign an agreement to trade in accord- ance with the law and agree not to trade with the enemy or ally of the enemy as defined in the law. In order to obtain a license, this agreement must not only apply to the commodities for which the license is made, but must apply in general to any trading by the firm with the enemy or ally of the enemy. Both of these obligations are to be continuing ones. Furthermore the sales or deliveries of articles in the shipments must not be made with- out the written approval of the United States consul at the place where the sale or delivery is to be made.
On October 24 and November 12, the War Trade Board issued regulations in regard to the exportation of tin plate. The exportation of this commodity will not be allowed except in such a manner as will contribute to the military needs of the nations at war with Germany and her allies. In giving licenses for the exportation of tin plate as food containers, preference will be given to those cases in which evidence is presented that the food is to be for the use of the nations at war with Germany and her allies. These regulations also apply to the exportation of arti- cles other than tin plate which contain tin. No license for the exportation of tin plate will be granted except to manufacturers of the tin plate or to those who have purchased the plate abroad.
On November 2 the War Trade Board announced that the exportation of corn would be prohibited except in cases where satisfactory evidence of the necessity of such exportation is submitted. This is due to the late arrival of new corn, and its effect is therefore temporary.
On November 8 the War Trade Board issued an additional regulation in regard to the exportation of condensed milk, as follows :
No licenses shall be granted for the export of condensed, can- ned, powdered, or other forms of preserved milk, unless there shall have been filed with the Bureau of Exports a certificate of the manufacturer stating that such milk has been sold directly to the exporter and for export purposes; or unless compliance shall be had with such other regulations as may be determined by the Food Administration.
214 LECTURES ON CONSERVATION.
The purpose of this order is to stop the practice which had arisen of purchasing milk from retail stores for exportation.
Following the proclamations of the President of November 28, the War Trade Board ruled that commodities added to the con- servation list shall not be exported after December 1. Excep- tions are made for actual war purposes and those which will di- rectly contribute to the prosecution of the war.
On November 30, it was announced that certain articles on the conservation list which had been shipped to Canada and Newfoundland under special license could only be exported by individual license, this ruling to take effect December 2.
In putting into effect the order of the President in regard to imports, the War Trade Board announced that by their control it is believed there will be forthcoming larger quantities of various commodities essential for the successful participation in the war. By placing under control the imports of food products and raw materials it will be possible to get proper distribution of these commodities to essential industries and where necessary at equitable prices.
In conclusion it is stated, "The War Trade Board, conscious of the responsibiUty they assume in assisting to accelerate and facilitate the Nation's business, are approaching this tremendous task in a spirit of the broadest cooperation and accommodation, the desire being to obviate obstructions and vexatious delays to the fullest possible extent."
A list of 1,600 firms in Latin America has been published by the War Trade Board, with which trading is prohibited. This list is believed to comprise enemies and allies of the enemy and persons, firms, and corporations, who, there is reasonable cause to believe, have acted directly or indirectly for the benefit of the enemy or ally of the enemy.
Other minor actions have been taken by the War Trade Board which are not summarized, but the foregoing statement is suffi- cient to show that the export and import trade is absolutely controlled by the War Trade Board, both in regard to commodi- ties and the destination of such commodities.
CHAPTER XII. THE PRIORITY ADMINISTRATION.
The so-called Priority Act is called "An act to amend the act to regulate commerce, as amended, and for other purposes," Pub- lic No. 39, 65th Congress. Approved Aug. 10, 1917.
The first paragraph of this act makes it a misdemeanor lo knowingly and wilfully obstruct the railway traffic of the United States and prescribes penalties. Also the President is author- ized, when the public interests require, to employ the armed forces of the United States to prevent any obstruction or re- tardation of the mails or the curtailment of interstate or foreign commerce on any railroad of the United States engaged in inter- state or foreign commerce. The closing paragraphs of the act cover the subject of priority in shipment. These paragraphs read as follows:
That during the continuance of the war in which the United States is now engaged the President is authorized, if he finds it necessary for the national defense and security, to direct that such traffic or such shipments of commodities as, in his judg- ment, may be essential to the national defense and security shall have preference or priority in transportation by any common carrier by railroad, water, or otherwise. He may give these di- rections at and for such times as he may determine, and may modify, change, suspend, or annul them, and for any such pur- pose he is hereby authorized to issue orders direct, or through such person or persons as he may designate for the purpose or through the Interstate Commerce Commission.
Officials of the United States, when so designated, shall re- ceive no compensation for their services rendered hereunder. Persons not in the employ of the United States so designated shall receive such compensation as the President may fix. Suit- able offices may be rented and all necessary expenses, including compensation of persons so designated, shall be paid as directed by the President out of funds which may have been or may be provided to meet expenditures for the national security and de- fense.
The common carriers subject to the Act to regulate commerce or as many of them as desire so to do are hereby authorized without responsibility or liability on the part of the United States,
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216 LECTURES ON CONSERVATION.
financial or otherwise, to establish and maintain in the city of Washington during the period of the war an agency empowered by such carriers as join in the arrangement to receive on behalf of them all notice and service of such orders and directions as may be issued in accordance with this Act, and service upon such agency shall be good service as to all the carriers joining in the establishment thereof. And it shall be the duty of any and all the officers, agents, or employees of such carriers by railroad or water or otherwise to obey strictly and conform promptly to such orders, and failures knowingly and wilfully to comply there- with, or to do or perform whatever is necessary to the prompt execution of such order, shall render such officers, agents, or em- ployees guilty of a misdemeanor, and any such officer, agent, or employee shall upon conviction, be fined not more than $5,000, or imprisoned not more than one year, or both, in the discretion of the court.
For the transportation of persons or property in carrying out the orders and directions of the President, just and reasonable rates shall be fixed by the Interstate Commerce Commission; and if the transportation be for the Government of the United States, it shall be paid for currently or monthly by the Secretary of the Treasury out of any funds not otherwise appropriated.
Any carrier complying with any such order or direction for preference or priority herein authorized shall be exempt from any and all provisions in existing law imposing civil or criminal pains, penalties, obligations, or liabilities upon carriers by reason of giving preference or priority in compliance with such order or direction.
Under this law the President appointed Judge Robert S. Lovett to administer transportation priority. Judge Lovett has had the cooperation of the carriers, the shippers, and the Interstate Commerce Commission. I- am indebted to H. D. Du Groot, of the Interstate Commerce Commission, for the following state- ment of the relations of the carriers to the Interstate Commerce Commission and the priority work of Judge Lovett.
THE CARRIERS.
At a meeting held in Washington on April 11, 1917, the presi- dents of the carriers adopted a resolution reading as follows:
RESOLVED : That the railroads of the United States, acting through their chief executive officers here and now assembled, and stirred by a high sense of their opportunity to be of the greatest service to their country in the present national crisis, do hereby pledge themselves, with the Government of the United States, with the Governments of the several states, and with one another, that
LECTURES ON CONSERVATION. 217
during the present war they will coordinate their operations in a continental railway system, merging during such period all their merely individual and competitive activities in the effort to produce a maximum of national trans- portation efficiency. To this end they hereby agree to create an organization which shall have general authority to formulate in detail and from time to time a policy of operation of all or any of the railways, which policy, when and as announced by such temporary organization, shall be accepted and earnestly made effective by the several managements of the individual railroad com- panies here represented.
A committee of twenty-five was then created, to be known as the Special Committee on National Defense of the American Railway Association, and an executive committee was elected, composed of the following: Fairfax Harrison, President of the Southern Railway System, Chairman, Howard Elliott, New York, New Haven & Hartford Railroad, Julius Kruttschnitt, Chairman Executive Committee, Southern Pacific Company, Hale Holden, President, Chicago, Burlington & Quincy Railroad, and Samuel Rea, President, Pennsylvania Railroad. In addition to the above, a representative of the Interstate Commerce Commission and Daniel Willard, President of the Baltimore & Ohio Railroad, as the representative of the Advisory Commission of the Council of National Defense, were asked to become members ex officio of this Executive Committee. Commissioner Edgar E. Clark was named by the Interstate Commerce Commission to repre- sent it.
Commission on car service. — Operating as an adjunct of the Executive Committee of the Special Committee on National Defense of the American Railway Association (or, as it is now commonly known, the Railroad War Board) is the Commission on Car Service, consisting of eight transportation officers of railroads which cover quite generally the entire United States. This commission is charged with the distribution of freight equip- ment and the handling of car service matters generally for the railroads as a whole. It sits continuously in Washington and has an extensive organization, both office and field. Sub or local committees of the Commission on Car Service are located at some thirty different points of strategic importance throughout the country to handle local matters and administer locally the policy laid down by the Railroad War Board and its Commission on Car Service.
SHIPPERS' ORGANIZATIONS.
At the request of the Carriers' War Board a meeting was held in Washington May 25, 1917, at which the National Industrial Traffic League adopted a resolution "heartily endorsing the
218 LECTURES ON CONSERVATION.
suggestion that the League take appropriate action to cooperate with the Council of National Defense, the Committee of the railroads represented by Mr. Howard Elliott and all other properly constituted bodies to bring about transportation efficiency in the United States." As a result of this there was authorized and appointed (1) "A central committee comprised of seven members of the League to have general supervision and control of this movement," and (2) "Regional committees at the twenty-three (now thirty) points at which the railroads have appointed special committees and at such other points as may be necessary." The duties of the regional committees were set forth in the follow- ing terms:
(a) To cooperate with the local American Railway Associa- tion committee in adjusting strictly local transportation affairs; (b) to report to the Central Committee any local adjustment brought about by provision (a) ; (c) to report their recommenda- tions on all other matters to the Central Committee for consid- eration and action.
The regional committees and local committees of the carriers are now actively cooperating as intended.
INTERSTATE COMMERCE COMMISSION.
Bureau of car service. — -The Bureau of Car Service of the Interstate Commerce Commission was created under the author- ity conferred by the Car Service Act, approved May 29, 1917. Through this Bureau the Commission regulates car service throughout the United States, and where occasion requires orders or directions of the Interstate 'Commerce Commission will issue under the Car Service Act direct to the carrier or carriers concerned. Subject to this fundamental principle the commission announced that "the Bureau of Car Service will as far as practi- cable avail itself of cooperative effort on the part of the carriers' Commission of the Car Service." The policy outlined has been and is now being successfully carried out.
CO-ORDINATION.
It will be recognized that with so many commissions, councils, committees, boards, and administrators, there is excellent op- portunity for misunderstandings and perhaps for work at cross purposes. As a practical means for avoiding this confusion so far as transportation is concerned, the Bureau of Car Service, repre- sentatives of the Fuel Administration, the Food Administration, Transportation Priority Director, and the Commission on Car Service have worked closely together ever since the President's ap-
LECTURES ON CONSERVATION. 219
pointments under the laws referred to. As a result of the sincere desire on the part of all to be generally helpful in this time of trial and to reach conclusions as a result of what might be termed the "composite view point" rather than one more narrow, very ex- cellent results have been and are being secured in arranging for the transportation requirements of both food and fuel. The Transportation Priority Administrator and the Interstate Com- merce Commission both follow the plan of working through or utilizing the Commission on Car Service and its organization rather than the policy of issuing direct a large number of detail orders which would be otherwise necessary.
By Judge Lovett the first priority order was issued on August 20. This directed the railroad companies serving the Lake Erie ports in the transportation of bituminous coal to give preference and priority in the distribution of cars to coal mines, so that bituminous coal for transshipment to the upper lake ports should have priority in transportation. Further it was directed that the boats of the Great Lakes engaged in the shipment of bitu- minous coal, until further notice, should accept and receive for shipment all cargoes of coal tendered to them, and so load, trans- fer, and deliver the coal, that it should have preference and priority in transportation.
As explained in the chapter upon coal, acting under this priority order a sufTicient amount of coal had accumulated at the Upper Lakes ports by November 2 so that it was revoked for the railroad lines east of Pittsburgh. When it appeared that before the close of navigation with less service a sufficient amount of coal would be accumulated at the Upper Lakes ports, further partial cancellations of the order were made, and the formal can- cellation of the entire priority order was finally made to be effec- tive November 30.
The second priority order was designed to give priority to the shipment of coal, coke, ore, limestone, sugar beets, sugar cane, sorghum cane and raw materials for use in the metal, sugar and fertilizer industries and other commodities necessary to the na- tional defense. On and after November 1, 1917, all railroads were directed to deny open top freight cars other than flat cars for use in shipping the following articles: (1) ipaterials and sup- plies, other than coal, for the construction, maintenance, or re- pair of public or private highways, roadways, streets or side- walks; (2) materials and supplies, other than coal, for the con- struction, maintenance, or repair of theaters or other buildings or structures to be used for amusement purposes; (3) materials and supplies, other than coal, for the manufacture of pleasure
220 LECTURES ON CONSERVATION.
vehicles, furniture or musical instruments; (4) passenger vehicles, furniture and musical instruments.
Because of the severe and prolonged drought in the states of Texas and New Mexico, mentioned in the chapter on the work of the Food Administration, priority orders for certain railroads were given November 23 and November 29, under which all shipments of cotton-seed cake, cotton-seed meal, and certain other feeds, for points in New Mexico should have preference over all other traffic, except (1) live stock and perishables, (2) human foodstuffs, (3) railroad supplies and material, (4) coal, and (5). shipments for the United States Government.
These special priority orders were preparatory to a general policy. A general policy of priority for the entire country was announced to become effective December 12. Since this order is one of such great importance, it is included in its entirety.
All common carriers by railroad in the United States shall give preference and priority in car supply and in movement to the following commodities, and in the order numbered :
1. Steam railroad fuel for current use;
2. Live stock, perishable freight, food, and feed;
3. (a) Shipments of military supplies when consigned direct to the United States Government or the authorized officers of the United States Army, Navy, or Shipping Board, or to the Allies or the proper representative thereof, destined to any cantonment, post or encampment, to any point of export for movement thence to Europe, to any arsenal or navy yard, or material to any ship-building plant under contract to the United States Shipping Board for the sole purpose of constructing vessels for that board;
(b) Other shipments for the United States Government, as the same may be authorized from time to time by the undersigned as necessary in particular cases, but only upon request of the United States Army, United States Navy, or United States Shipping Board, through a designated officer or representative of the respective departments located in Washington :
4. Coal to and for by-product coking plants, and not subject to reconsign- ment; and
5. Preference and priority in movement only to coal for current use but not for storage, consigned direct (and not subject to reconsignment) to hospitals, schools, and other public institutions, retailers of coal for use in supplying do- mestic consumers only; and to coal, coke, and raw materials for current use but not for storage, consigned direct (and not subject to reconsignment) to blast furnaces, foundries, iron and steel mills, smelters, manufacturers engaged in work for the United States Goverment or its allies, public utilities (including street and interurbah railways, electric power and lighting plants, water and sewer works), flour mills, sugar factories, fertilizer factories, and shipbuilders; also shipments of paper, petroleum, and petroleum products.
This order shall not affect priority order No. 2, dated October 27, 1917, re- lating to open-top cars; priority order No. 3, dated November 2, 1917, relating to movement of|coal from mines in Utah and Wyoming; and priority order No. 4, dated November 22, 1917, and supplement A thereto, dated November 29, 1917, relating to shipments of cattle feed to points in Texas and New Mexico, issued by the undersigned.
LECTURES ON CONSERVATION. 221
GENERAL DISCUSSION.
While only a few priority orders have been issued it is seen that this last order is very comprehensive in its scope. Through conferences of representatives of the Food Administration, the Fuel Administration, the Interstate Commerce Commission, the Shipping Board, and the Railroad War Board, cooperation of all interests has been secured; and the railroads have been ex- erting themselves to the utmost to meet the needs of the Gov- erment in giving preference to goods directly for the army and navy or for war purposes.
It is aside from the scope of these lectures to undertake to present the great problem of transportation which has con- fronted the railroads, and the various patriotic steps which they have taken to do their utmost effectively to handle the vastly increased tonnage which war conditions demand that they shall handle.
In conclusion, attention should be called to the fact that the railroads are free from the penalties of the Sherman Act and other anti-trust laws in their cooperation to give preference to goods as indicated by the Government. This is a most signifi- cant feature of the law, since it is a recognition that when the highest efficiency is demanded from the railroads by the trans- portation of the largest possible tonnage of freight, they must cooperate and not^compete.
CHAPTER XIII. SUMMARY AND CONCLUSIONS.
CONSERVATION.
The facts presented in the previous sections make it clear that the existing conservation movement is a third episode in the development of general conservation in this country, the first phase being that which resulted in the policy of forest conser- vation, and the second that which grew out of the White House conference called by Roosevelt.
Under the mighty stress of war, the development of the conser- vation and regulatory movements has been at a speed never before approached. Before the war the realization of the ne- cessity for a conservation movement had reached but a small proportion of the people, although in this proportion were a large number of the leaders and thinkers. However, the wide campaign and the resultant action for food conservation carried on by the Food Administration, the United States Department of Agricul- ture, colleges of agriculture, state and local councils of defense, and other organizations have carried conviction to a very large pro- portion of the people of the United States. Moreover, conviction has been so strong that action has resulted, and already there are vast reductions in the consumption of the essential foods.
SUMMARY OF REGULATORY MEASURES.
It has been shown in Part 1 of these lectures that before the outbreak of the war the principles of regulation had developed sufTiciently so that it was a recognized policy of the nation that all public utilities are under public control. This control includes both rates and character of service; further, we have seen that pure food laws have been passed which control quality in the matter of food and drugs. Foods must be pure and labels must tell the truth.
These very moderate advances in regulation were accomplished as the result of a struggle extending over at least a quarter of a century; in contrast with this slow movement has been the amazing change since the war began. A remarkable group of regulatory laws have been enacted which go far beyond any- thing which had been considered possible in the direction of regulations. In summary these measures are as follows:
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LECTURES ON CONSERVATION. 223
THE FOOD ADMINISTRATION.
The Food Administration law has worked out in such a manner as to give very large if not complete control of the stable food commodities of the country from the time they leave the original producer to the time they reach the retailer. For the majority of commodities the control has been exercised by limiting the margins which are to be taken by the manufacturers, jobbers, wholesalers and other distributors; by eliminating hoarding and speculation; and by directing the distribution.
These forms of control are well illustrated by the commodity sugar. For that article the Food Administration has made agreements with the producers in regard to the price which they are to receive; with the refiners concerning the prices they are to charge for their services, has limited the margins of the jobbers and wholesalers; and thus has controlled the price at which the commodity should be sold to retailers and in addition indicated what would be a fair margin for the retailer. Thus the public knows precisely what it should pay for sugar in any locality. Further, the Food Administration has very sharply controlled the distribution of sugar, deciding absolutely the amount of sugar which should go abroad, and has limited the supply of sugar to certain industries, notably confectionery.
For wheat the control has gone even further. For this com- modity, there exists the grain corporation, which organization has actually bought and sold wheat to the extent necessary to completely control its distribution. While only a small part of the wheat crop has been bought and sold, the other larger part has been controlled as completely as if it were bought and sold; that is, the grain seller and the miller have been brought into direct relations, and the wheat delivered to the millers in accord- ance with the directions of the Food Administration. Wheat purchased by the Allies has been directed and controlled in a similar fashion. Operations, with few exceptions, have been carried on at the prices fixed by the Food Administration, and thus the dealing in wheat is practically a government controlled monopoly.
In distributing the wheat, its main routes of travel have been very largely changed. Under pre-war conditions, when ordinary commercial conditions obtained, the wheat very largely went to the great central markets and especially Chicago and St. Louis. The price of the wheat of the country was controlled by Chicago quotations and this market, and to a lesser extent St. Louis, served as magnets which drew the wheat to these centers and from
224 LECTURES ON CONSERVATION.
these centers redistributed it. Under the Food Administration the importance of these centers has diminshed; cross and return freights have been avoided. The wheat for export has very largely gone directly south to the Gulf ports and there found an outlet instead of through the Atlantic ports. The wheat not exported has gone directly to the milling centers, in proportion to their capacity, there to be converted into flour.
THE FUEL ADMINISTRATION.
The Fuel Administration might have followed several different paths. It decided to follow the path of definitely fixing the prices of coal at the mines, the prices varying in accordance with the character of the commodity and its position in the country. Margins were fixed for jobbers and dealers, wholesale and retail. Thus the price of coal has been completely under the direction of the Fuel Administration, with the exception of those trans- actions which have been completed under contracts made before the Fuel Administration law was enacted, and the prices controlled as completely as if the handling of the coal were done as a gov- ernment monopoly.
The distribution of fuel has also been completely controlled so that the coal from any mine has gone to a particular locality or for a particular purpose. By this control, cross freights have been avoided and the coal much more economically distributed; also the necessary accumulation of coal had been made at the Upper Great Lakes ports in anticipation of the closing of navi- gation.
THE PRIORITY ADMINISTRATION.
Under the Priority Law, transportation has been controlled. The Priority Administrator has given only a limited number of orders, but the effect of the Priority Law combined with the necessity of making the railroads far more efficient have produced very large effects through the cooperation of the railroads and especially their car service bureau, and through the cooperation of the Interstate Commerce Commission and the Food and Fuel Administrators. The roads have so cooperated in transportation as to greatly increase the efficiency of the cars and thus make unnecessary a large number of orders by the Priority Administra- tor. Since there is a shortage of transportation facilities in the country, this control has been absolutely necessary to meet the most pressing needs of the nation. The various needs are given priority in transportation in proportion to their importance in expediting preparations for the prosecution of the war.
LECTURES ON CONSERVATION. 225
The cooperation of the railroads, one with the other, to distrib- ute the freight most advantageously and to give priority to one commodity over another is exempted from the antitrust laws.
THE WAR INDUSTRIES BOARD.
The War Industries Board created under the National Council for Defense has made agreements with the producers of steel and iron in regard to the maximum prices which shall be paid for the principal forms of those commodities at the larger centers. The maximum price of copper has also been fixed by agreement. Through the Priority Committee of this board, the distribution of these metals has been controlled. Iron, steel, and copper must go first for war need&, second for needs which are accessories to the prosecution of the war, and third only to industries not necessary for the prosecution of the war.
These agreements for the fixing of maximum prices for copper, iron, and steel, have been reached without any express law of Congress authorizing control of these products, as in the case of food and fuel. Nor has there been any law passed which exempts these agreements from the antitrust acts, as is true in the case of priority in railroad transportation and in shipping. The only authority in law for the agreement is section 120 of the National Defense Act which gives the president power to control prices for the government purchase of supphes and for war purposes.
SHIPPING.
The shipping industry of the country has been taken completely under governmental control. All ships under American registry have been requisitioned by the Government and are operated under licenses which control their prices, routes, and business. The construction of ships in the country, including both the yards and the vessels, is carried on by the Emergency Fleet Cor- poration which also operates many of the completed vessels and those seized from Germany. Therefore the operation of the shipping of the country is completely controlled in the perform- ance and character of its business by the Government without governmental operation. Another part of the shipping of the country is owned and operated by the Government. The co- operation of the shipping companies along all possible lines is exempted from the antitrust laws, if the agreements under such cooperation has been approved by the Shipping Board.
11
226 LECTURES ON CONSERVATION.
PRINT PAPER.
The print paper combination has been dissolved by sweeping orders of the Federal Court, and several members of the executive committee have been subjected to fines. At the same time the court, as a war measure, fixed the price of the various forms of book paper for several months. After the lapse of that time the control of the price of book paper is placed in the charge of the Federal Trade Commission, during the period of the war and three months thereafter.
This agreement in the price fixing of this essential commodity was thus made without any change in the law whatever through action of the court. The only justification for action is the state of war. The court has followed by judicial decision the prin- ciples which Congress has applied through law to other essential commodities. Also under the action of the Court the Federal Trade Commission is designated as the body to fix the price of the paper from time to time; and thus the Court has delegated to the Commission powers which it exercised but for which there is no act of Congress. Upon this authority the Commission is to control the price of print paper for the duration of the war just as the Fuel Administrator is to control the price of coal in conse- cjuence of direct congressional action.
CREATION OF CORRELATING BOARD.
The powers and duties of the several boards and agencies have grown up within a few months. Each measure has been consid- ered from the point of view of the particular object to be attained. Under these circumstances it was natural, indeed inevitable, that there should be more or less overlapping of authority of the boards and agencies in certain cases and insufficient authority in other cases. Also there is conflict of interest. Thus, the inter- ests of the Food and Fuel Administrations conflict in the matter of priority of shipment. The powers and duties of the Shipping Board apparently overlap those of the Interstate Commerce Com- mission; at least there is an uncertain zone between them. The War Industries Board arranges for the fixing of prices and for purchasing; but the War or Navy, or other departments, need not purchase through the War Industries Board nor accept the arrangements for the purchase of food by the Food Administra- tion. They may, if they desire, make their own arrangements.
Through good will and cooperation, the defects in correlating the various measures have not been so great as might have been
LECTURES ON CONSERVATION. 227
anticipated. The Food and Fuel Administrations, in conference with the Priority Administration, have reached agreements which are as satisfactory as possible with the shortage in transporta- tional facilities. The Army and Navy have generally accepted the prices fixed by the War Industries Board and have extensively purchased in accordance with the arrangements made by that board.
There was sufficient dissatisfaction with the existing situation, however, so that it was felt that there should be an organization in a position to correlate the work of the various agencies and to consider cases of overlapping powers. As a consequence of this feeling the Council of National Defense upon November 27th announced the creation of a coordination body. The announce- ment is as follows:
"At a special meeting of the Council of National Defense this morning, action was taken to bring about a closer coordination of the war-making activities of the government. It was determined to hold a joint weekly conference of the Council of National Defense, Secretary of the Treasury McAdoo, Chairman Hurley of the Shipping Board, Food Administrator Hoover, Fuel Adminis- trator Garfield, and Chairman Willard, of the War Industries Board of the council. Director Gifford of the council will be present at these meetings as heretofore with the council.
"Since the Council of National Defense, composed of Secretary of War Baker, Secretary of the Navy Daniels, Secretary of the Interior Lane, Secretary of Agriculture Houston, Secretary of Commerce Redfield, and Secretary of Labor Wilson, represents the military aims of the government, as well as those federal executive departments dealing most directly with the vital resources of the nation, this larger coordinating body will work toward unification of the machinery necessary in the prosecution of the war."
It is seen that the organization includes, in addition to the members of the Council, the Secretary of the Treasury, the Chair- man of the Shipping Board, the Food Administrator, the Fuel Administrator, and the Chairman of the War Industries Board. This makes a board of eleven members. It is planned to have the Board meet once a week to conside its problems. The weak- ness of the organization is that it is a voluntary board made by the Council of Defense, and it has no authority to impose upon its members its decisions qr recommendations.
Still it is clear that the creation of this board is an advance step in the great task of governmental regulation during the war. Its operation may develop the sound principles of cooperation of the different agencies, and this may lead to the creation by law of a Superior War Council.
228 LECTURES ON CONSERVATION.
REGULATORY MEASURES AND ANTITRUST LAWS.
The recital of the above facts shows that for food, fuel, copper, iron and steel, paper, transportation by land and by water, the fundamental ideas of the Sherman and other antitrust laws are directly contravened.
The fundamental ideas of the Sherman Act are that trade is controlled by the law of supply and demand and competition and that in manufacture and transportation all competitors are to be on an equal footing. Manufacture and distribution are to freely flow as required by demand and supply and competition, without regard to the character of the commodity. In case of a shortage of supply, the highest bidder will have his necessary needs met. There must be no cooperation in distribution. The common carriers must show no discrimination in goods. If in order to meet the demands of the highest bidder, there is cross freight, this is immaterial. The carrier must ship the goods as asked by the shipper.
Everyone of these principles is directly violated for all of the commodities mentioned under the control authorized by the war measures. Prices instead of being variable are the same for the same commodity at the same locality. For wheat the price is to be neither higher nor lower than that fixed by the Food Ad- ministration. For fuel also the prices are definitely fixed. For copper, iron, and steel, only maximum prices are fixed, but since the demand exceeds the supply, the maximum price is in fact that everywhere paid. The difference in prices for different localities is only that necessary to compensate for freight difTer- entials and other conditions.
Commodities do not go to the highest bidders but to the persons and places indicated by the control. The wheat and sugar remain at home and are sent abroad in proportions decided by the Food Administration. Fuel is furnished to the Government and to corporations and individuals as decided by the Fuel Adminis- tration. Copper, iron, and steel are first to go directly to war purposes, then to purposes which are indirectly to benefit the war, and only what is left to unessential industries.
If the prosecution of the war is best furthered by so doing, commodities are sent abroad. If to do this, it is necessary to curtail the commodity for a given industry, this is done. The control of exports and imports through licenses is completely in charge of the War Trade Board. The common carriers instead of handling the goods without discrimination must handle goods in such a manner as to avoi(;J cross freights and to make the rail-
LECTURES ON CONSERVATION. 229
roads more efficient, and also in the order of preference which the Priority Board indicates.
In short, there is governmental control of almost every phase of business and industry, with the exception that production for essential commodities is not limited, but encouraged since the demand for every essential commodity exceeds the supply. The only limitation placed upon production is for unessential com- modities illustrated by candy, which requires for its manufac- ture an essential commodity, sugar.
By express act, any form of cooperation in shipping which meets the approval of the Shipping Board, even to the extent of pooling, is exempted from the Sherman antitrust act. Also the agreements of the railroads in regard to the distribution of freight and priority shipments are exempted from the antitrust acts. No such express exemption is made for the agreements in regard to food and fuel. It may be presumed that for these commodities the enactments of the food and fuel laws by Congress may be construed as repeahng the antitrust acts so far as the particular authority of these laws goes. Thus the fixing of the price of wheat and the control of wheat as a government monopoly are author- ized by law enacted later than the Sherman and other antitrust laws, and they therefore in effect repeal these laws as far as this commodity is concerned.
However, for the transactions of the War Industries Board there is no express law authorizing the Board to require the copper, iron, and steel men to agree upon prices and to recognize priority. This Board makes requests rather than issues orders. The price fixing is by agreement. These agreements may have the sanction of law by implication so far as the purchases are by the Government under section 120 of the National Defense Act. But it is clear that in agreeing upon prices for copper, iron, and steel for the public, the copper, iron, and steel men are violating all the antitrust laws, and so doing by government request of the War Industries Board, an instrument of the National Council of Defense, and with the approval of the President.
INCONGRUITY OF REGULATION AND THE ANTITRUST LAWS.
At the very same time these agreements are being made and put into force, the United States Steel Corporation is before the United States Supreme Court, charged with violating the anti- trust laws through cooperation and controlling prices in other ways. Even if the charges are fully sustained they do not go so far as the cooperation of the copper, iron, and steel men by the
230 LECTURES ON CONSERVATION.
request of the War Industries Board. Is this not indeed an extra- ordinary anomaly?
If the Steel Corporation is dissolved by the Supreme Court in consequence of the prosecution of the Attorney General, this dissolution will be caused by actions far less in violation of the law than those which the Steel Corporation has subsequently done at the request of the War Industries Board.
But the most curious anomaly of all is the situation in regard to book paper in which the manufacturers of book paper are indicted for violation of the antitrust laws for price fixing and are fined for this action. The organization which controlled the price fixing dissolved, the court itself fixed for a time the maximum price at somewhat lower rates from those fixed by the combin- ation itself, and granted authority to the Federal Trade Commis- sion to continue the price fixing throughout the war.
REGULATORY ACTIONS BENEFICIAL.
Few I suppose will question that the operation of the regulatory laws considered and the regulatory actions taken without law have been not only a benefit to the people but essential for the successful prosecution of the war. They have resulted in checking the enhancement of prices for essentials which before these regula- tory measures were enforced were sailing skyward ; not only have the prices been checked, but for many of the commodities they have been reduced — in the cases of food, fuel, and paper, mod- erate amounts; for copper, iron, and steel, very largely. Also great economies have resulted from dividing the work among the difTerent plants in such a manner that each plant does the work for which it is best fitted and nearest the location at which the commodity will be used. Vast additional economies have come from handling the freight in such a manner as to reduce con- gestion and cross freights to a minimum.
The diversion of the wheat for export to the South instead of through the congested centers of the North and the East at a time when transportational facihties of the country were taxed to the utmost was a vast economic gain. Also if the diversion of the coal to the Upper Lakes ports in advance of the closing of navigation had not been made, a catastrophe would have resulted.
Thus the majority of people will agree that the authorized exemptions from the Sherman Act, the exemptions from the Sherman Act by implication through the enactment of definite law, the ignoring of the Sherman Act by the War Industries
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Board, and the action of the court in enforcing the Sherman Act upon the manufacturers and itself violating the Sherman Act, have all been not only beneficial but necessary.
RECONCILIATION OF ANOMALIES.
But the question arises whether all of these anomalies can be reconciled. The answer is yes. Amend the lirst section of the Sherman antitrust act which forbids restraint of trade through combination and contract or by monopoly by adding the clause, "The restraint of trade meant by this act is that restraint of trade which is detrimental to the public welfare, and the presumption is that any restraint of trade is detrimental and to become legal must be approved by an appropriate governmental agency." If this amendment were made without special exceptions, it would legalize the cooperation of the shippers, the cooperation of the railroads, the actions of the Fuel and Food Administrations, the actions of the War Trade Board, and the action of the court in regard to paper.
The existing facts show that cooperation by combination or contract or monopoly may be beneficial or detrimental. Too frequently, when the control of the market and monopoly has been in private hands without regulation, it has been detrimental; indeed so detrimental that this led to the enactment of the anti- trust laws. When the control of the market or monopoly is, however, subject to governmental control, it may be highly beneficial; not only beneficial, but in case of the state of war, absolutely essential. The sanction, as far as public opinion is concerned, of all of the acts in regard to ships, railroads, food, fuel, copper, iron, steel, and paper, is that the regulatory steps taken have been a benefit to the people and have been essential for the successful prosecution of the war. There would have been no question about the legality and propriety of these acts had the Sherman Act been amended in accordance with the suggestion made.
THE CONTINUATION OF REGULATION AFTER THE WAR.
All the regulatory measures which have been discussed are for the duration of the war or for a certain limited period following the war. When the war closes, if no action of Congress is taken, all of the various measures considered for the control and distri- bution of essential commodities will expire. Should they be allowed to expire or should they continue?
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The general answer must be made that so far as they have proved beneficial to the public they should be continued, and so far as they have not been beneficial they should not be continued. The difficulty will be in indicating those measures which under normal conditions will be beneficial and detrimental.
In this matter, however, there are certain general considerations which should have weight. It is certain that, following the war, combination abroad will be general. Already Germany is con- sidering buying and selling nationally; and whether or not she decides to do this as a direct governmental activity, there is no question that the buying and selling by Germany of any com- modity will be done if not through a single organization at least through such a limited number of organizations that they will cooperate perfectly in their production, buying, and selling.
Furthermore, it is highly probable that this cooperation will extend even beyond Germany and will include her allies. Under these circumstances it is certain that any attempt to meet Ger- many in world trade under the individualistic method of law of supply and demand and competition cannot but fail. If we do not meet Germany's competition by national organization as efficient as her own, we may as well at once concede that Germany will gain world dominance for those trades and in- dustries for which she has adequate resources.
Also not only during the war but for a considerable period after the war, the demand for food and other essentials may be greater than the possible supply. As we have seen, the food production of Germany, France, and Italy has declined alarmingly during the war because of lack of fertilizers and insufficient labor. Their herds have been greatly diminished. These tendencies will continue throughout the war so that their agricultural production and herds will become even smaller. It is probable that for a long time, possibly for several years, we may have an insufficient surplus to meet the legitimate needs of the Allies; indeed it is httle short of certain that this will be true for a number of commodities.
Shall we revert to the law of supply and demand and compe- tition, and allow goods to be exported abroad in unlimited quantities so that our own prices sail to still higher levels, and no preference be given abroad?
I do not know the answer others will make; but, for myself, it seems clear that the essential necessities of the Allies must not only be met during the war, but for a sufficient time after the war so that their agriculture and industries may be rehabilitated; especially as such rehabilitation in northern France is largely
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necessary because of odious and unnecessary destruction of property on a vast scale by Germany and heavy drafts upon the financial resources of those countries unwarranted by interna- tional war.
This war probably will cost hundreds of thousands, and it may cost millions of our men. It will require many billions of our treasure which will put a heavy burden upon succeeding genera- tions. The dreadful costs of the war we must bear. Should we not therefore gain everything possible from the experiences of the war? The vast savings due to more scientific production and distribution, if continued after the war, will in large measure, indeed, they may completely, carry not only the interest load imposed upon us, but even a certain amount each year toward the liquidation of the principal. Without being able to demonstrate it, I believe it probable that if, following the war, wise govern- mental regulation is continued not merely for the public utilities but for every essential commodity, the savings to the people will be sufficient to meet the money cost of the war. Nothing can compensate for the losses in men.
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