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
Special Collections & Rare Books
World War I Pamphlet Collection
Gift of Greensboro Public Library
Digitized by the Internet Archive
in 2010 With funding from
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http://www.archive.org/details/conservationreguOOvanh
([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."
LECTURES ON CONSERVATION. 89
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
92 LECTURES ON CONSERVATION.
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
LECTURES ON CONSERVATION. 123
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
LECTURES ON CONSERVATION. 125
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
126 LECTURES ON CONSERVATION.
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
LECTURES ON CONSERVATION. 127
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.
128 LECTURES ON CONSERVATION.
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.
LECTURES ON CONSERVATION. 129
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
130 LECTURES ON CONSERVATION.
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
LECTURES ON CONSERVATION. 131
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
132 LECTURES ON CONSERVATION.
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.
LECTURES ON CONSERVATION. 133
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
134 LECTURES ON CONSERVATION.
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
LECTURES ON CONSERVATION. 135
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-
136 LECTURES ON CONSERVATION.'
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.
LECTURES ON CONSERVATION. 137
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.
180 LECTURES ON CONSERVATION.
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.
LECTURES ON CONSERVATION,
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
203
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.
LECTURES ON CONSERVATION. 207
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,
215
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:
222
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
LECTURES ON CONSERVATION. 231
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?
232 LECTURES ON CONSERVATION.
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
LECTURES ON CONSERVATION. 233
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.
I
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