THE LIBRARY

OF

THE UNIVERSITY

OF CALIFORNIA

LOS ANGELES

BOOKS BY FREDERIC C. HOWE

Published by CHAKLES SCRIBNER'S SONS

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THE HIGH COST OF LIVING

THE
HIGH COST OF LIVING

BY
FREDERIC C. HOWE, Ph.D., LL.D.

COMMISSIONER OP IMMIOBATION AT THE POBT OP NEW TOBK

AUTHOR OF "why WAR," "SOCIALIZED GERMANY," " EOHOPEAN CITIES AT WORK,'

" PRIVILEGE AND DEMOCRACY IN AMERICA," " THE MODERN

CITY AND ITS PROBLEMS," ETC.

NEW YORK

CHARLES SCRIBNER'S SONS

1917

COPTRIGHT, 1917, BY

CHARLES SCRIBNER'S SONS

PubUshed October, 1917

o

Co

69^3

PREFACE

The high cost of Hving is not a war product. The
war hastened tendencies. It aggravated conditions.
It gave opportunities for speculation and extortion.
But the cost of Hving was rising rapidly before the
war. And it will continue to rise when the war is
over unless radical steps are taken to prevent it.

The last few years have witnessed a change in
the economic foundations of American life. Com-
petition is passing. Monopoly has entered into al-
most every process of industry. The laws of de-
mand and supply no longer protect us. A host of
intermediaries have wedged themselves in between
the producer and the consumer, each one of which
is interested in taking as large a profit for himself
as possible. This is not only true of food, it is true
of almost every necessity of life. Even more im-
portant, the control of the land and resources of the
earth has diminished production. It has excluded
men from the land. It has limited the opportu-
nities of labor. It has checked initiative. It has
reduced the amount of wealth produced.

Monopoly is responsible for the conditions which
confront us. It operates in the following ways:

It controls the natural resources, the agencies of

• ^7374-3

vi PREFACE

transportation, distribution, and marketing. It
has increased prices. It has discouraged agricul-
ture. Tribute is exacted from the consumer at one
end of the Hne and the producer at the other.

It reduces the output of wealth of all kinds.

It limits the opportunities for labor and keeps
down wages and salaries.

What we are most in need of is freedom; freedom
of access to the hundreds of millions of acres of land
that are held out of use; freedom of access to ade-
quate transportation; freedom in distribution, in
marketing, in competition all along the line. Mo-
nopoly stifles. It strangles the labor and industry
of the nation. It short-circuits the efforts of the
manufacturer and the farmer. Colossal as is the
output of wealth in this countiy, the possibilities of
production have scarcely been touched. The talent
of the country is not free to apply itself as it would
if the land and resources were opened up to use.
Freedom is the great need of America, freedom from
monopoly in all of its forms, but most of all in its
control of the land, of transportation, of credit, and
of distribution.

It is not the tribute that monopoly exacts, it is
the embargo on production that is most costly.

These evils can only be corrected by law, by legis-
lation. Exhortation will not bring relief. Nor will
criminal proceedings, trust-busting, or regulation of
prices. We have tried this kind of regulation for a

PREFACE vii

generation and monopoly has grown rich and pow-
erful under it. Monopoly now prefers regulation.
It is a guarantee against competition and govern-
ment ownership. The farmer cannot secure relief
by his unaided efforts. Nor can the consumer. Re-
lief will only come when the conditions surrounding
agriculture and the means of distribution are radi-
cally altered. This can only be done by law. And
legislation will only represent the producing classes
and the consumers when the monopoly interests
which now control our life are driven from power
and the state becomes an agency of service, of co-
operation, of a new freedom. When people rather
than privilege rules, then the food problem, the agri-
cultural problem, the social problem will be open
to solution.

I have received valued assistance in the prep-
aration of this volume from Miss Gertrude Bor-
chard, assistance which I desire to acknowledge.

Frederic C. Howe.

New York, September, 1917.

CONTENTS

PAOB

Preface v

CHAPTER

I. The Feeding op the Nation 3

II. OtJR Agricultural Possibilities and Problems 13

III, The Cost of Living and the Food Supply . . 19

rv. Gambling in Wheat 27

V. The Packers and the Cattlemen 46

VI. Cold Storage and Food Speculation 53

VII. The Middlemen and Distributers 65

VIII. The Transportation Embargo 77

IX. Why There Is Not More Food 86

X. Denmark: An Experiment Station in Agricul-
ture 103

XI. How Australia Controls the Food Problem . 117

XII. Opening up the Land to Settlement .... 128

XIII. Food Control in Germany 139

XIV. From Producer to Consumer 157

XV. Other Items in the Family Budget 177

XVI. Freeing the Highways op the Nation .... 184

XVII, The Embargo on Farming 192

XVIII, Land for the Landless 201

XIX. Exploiting the Would-be Farmer 213

ix

X CONTENTS

CHAPTER PAGE

XX, The Tenant Farmer 220

XXI. Openino up the Land to Agriculture .... 227

XXII. The Farmer and the Banker 240

XXIII. A New Agricultural Programme 250

XXIV. The New Era in Politics 259

Index 273

THE HIGH COST OF LIVING

CHAPTER I
THE FEEDING OF THE NATION

The feeding of the nation has been left almost
wholly to chance and to unorganized, uncontrolled
agencies. Production and distribution have been
permitted to evolve from the conditions of a half-
century ago into the highly complex relationships
of a whole nation, if not the entire world, with but
little official concern for either the producer at one
end of the line or the consumer at the other.

Before the coming of great cities each community
sufficed for itself. The marketmen or local grocer
bartered for food with the neighboring farmer, and
the laws of demand and supply regulated produc-
tion and kept prices at a reasonable figure. This
was the condition up to a few years ago.

Cities grew. The nation became a market. The
Northwest entered into competition with New Eng-
land, and California and Florida with the local
truck-garden. The steamship widened the market
into the world. Canada and the American North-
west, Russia, Australia, and South America pro-
duced for the industrial workers of the world, and
the prices of cereal and meat products were fixed in
London and Liverpool. Refrigerator-cars brought

3

4 THE HIGH COST OF LIVING

the fruits and vegetables of Florida and California
closer to New York than the near-by farm of earlier
generations, while the cold-storage plants and ter-
minal warehouses made it possible for perishable
commodities to be held for months or years for
their ultimate market.

Prices were fixed not only by a world market but
by an all-the-year-around market. The price of
butter and eggs in April was fixed in the previous
November, just as the price of meat and growing
crops was fixed during the harvesting season.

With all these revolutionary changes, with the re-
frigeration devices and the means for placing the
products of the world upon the breakfast-table, the
control of a multitude of agencies as well as the pro-
duction and distribution of food was left to the
anarchistic, chaotic direction of thousands of indi-
viduals, each of whom was thinking only of maxi-
mum profit to himself rather than of the service he
was performing for the nation.

Only in a few countries — notably, Australia, Den-
mark, and Germany — has the control of food been
viewed as a matter of government concern or sub-
jected to a unity of direction in the interest of the
producer and the consumer. And these countries
have worked out means for social control of food in
the interest of the nation. In most of the other
countries, and in America in particular, the subject
has been left to the unregulated license, not of the

THE FEEDING OF THE NATION 5

producer, not of the consumer, but of the distribut-
ing agencies which have it in their power to control
not only prices but production as well. Unregulated
private banking and usury have contributed still
further to the disorganization which prevails, while
no official concern has been shown for the economic
foundations of agriculture, the relation of the people
to the land.

The extent to which this whole subject of the feed-
ing of a people has been neglected is indicated by a
comparison with finance or industry. To-day the
credit of America is organized in every detail. The
control of our monetary resources has been so mobil-
ized that it is under the direction of comparatively
few men, subject to regulation by the Federal Re-
serve act. The weekly deposits of the wage-earner
in a distant mining-camp are effective for credit pur-
poses in distant China or South America as soon as
they are deposited. The total resources of a bank
in a farming community are readily mobilized for a
two-billion-dollar loan through the district reserve
cities, and from them to New York. The credit
resources of the country are known, as are the lia-
bilities. Just as the tiny stream emerging from the
mountain slopes of Colorado ultimately finds its way
to the Gulf of Mexico, so every dollar in every bank
in America is potentially organized for the doing of
the work of America every moment of time. Yet
credit is merely an agent, an agent for production.

6 THE HIGH COST OF LIVING

And one of its primary purposes is the feeding of
the people and provision for their wants.

That which is true of credit is true of many in-
dustries as well. The great steel corporations are
self-contained industries reaching out to different sec-
tions of the country, or even to distant lands, for the
more efficient performance of their functions. These
corporations own great iron-ore deposits in Minnesota
and northern Michigan, in Cuba, and in other for-
eign parts. They own their own coal-fields and
coking plants. They own natural-gas fields and
limestone quarries. They own great fleets of vessels
which ply upon the Great Lakes, while thousands
of miles of railroad have become integral parts of
their industrial processes. The Standard Oil Com-
pany is a world-wide agency. It owns oil-fields not
only in America and Mexico, but in Russia, Rou-
mania, and, in fact, all over the world. It owns
fleets of sailing vessels, pipe-lines, and oil-tank cars;
it manufactures almost everything that it uses in
connection with its activities. It is far more than
a self-contained industiy. It owns or indirectly
controls banks, trust companies, and hundreds of
related industries. The American Tobacco Com-
pany reaches from the tobacco plantations of the
United States and Turkey to its distributing agency
in almost every city in the land. The United States
Rubber Company owns rubber-plantations, while
the sugar-refineries own sugar-plantations in Cuba,

THE FEEDING OF THE NATION 7

Hawaii, and elsewhere. Every great industry, in
fact, is organized and integrated. It has ehminated
one profit-taking intermediary after another between
the soil and the consumer. It acts with a single
mind. It knows from day to day the raw materials
available, and through its nation-wide or world-wide
statistical bureau it knows the fluctuations in de-
mand. Financial knowledge and industrial know-
ledge have been mobilized in a hundred great private
corporations, and their control has been so concen-
trated that all of the more important industrial
activities of America are susceptible of control
from half a dozen great offices, for the most part
situated in New York.

Yet, while this perfection has been achieved in
banking, transportation, and industry, the greatest
concern of all, the feeding of the people, is wholly
unorganized, wholly disintegrated, and up to the
present time has not even been studied from the
point of view of the producer and the consumer.
It is hardly too much to say that the feeding of the
people is primarily under the control of the dis-
tributing and credit agencies of the nation, which,
guided only by the desire for private profit, deter-
mine, indirectly at least, how much shall be pro-
duced, how much shall be paid for the labor of those
who feed America, as well as the price that the
ultimate consumer shall pay. And springing from
the private control of this, the most important need

8 THE HIGH COST OF LIVING

of the nation, many consequences have followed,
consequences which are directly traceable to the
neglect by the nation of fundamental economic con-
ditions which must coexist if sufficient food is pro-
duced on the one hand and sufficient food is con-
sumed on the other.

It is true, the Federal Government has elevated
agriculture to a place in the cabinet. Congress
appropriates annually over $20,000,000 for the
maintenance of the Department of Agriculture. It
gathers information; it encourages production; it ad-
vises the farmer about soil, planting, and the care of
his farm; it studies soils and the breeding of cattle;
it distributes market reports to aid him in the sale
of his produce. Nearly all of our States, too, main-
tain agricultural colleges for the training of boys and
girls in scientific agriculture. They teach dairying,
farm management, and the production of pedigreed
seeds. Farming is being elevated to a science and
the potential output of the land is being increased
by all these processes. And year by year science is
demonstrating that there is no known limit to the
yield which can be secured from the land. It has
been estimated that 20,000 men properly organized
can feed 2,000,000. And the studies of agricultural
experts have shown that, with sufficient labor ap-
phed, enough food can be produced on a tiny bit of
land to feed a family. Agricultural science has al-
ready demonstrated that the limits to the possibilities

THE FEEDING OF THE NATION 9

of nature have not been reached in any country and
that many times the present population of the world
can be adequately and comfortably fed by the use
of the knowledge already existing.

Yet, despite all this expenditure of money and
effort, despite the discoveries of science and the
introduction of improved machinery, despite the
substitution of steam and gasolene for horse-power
and the increase in the effectiveness of human labor,
the question of feeding America becomes more acute
each year, while the high cost of living is a problem
which worries not only the worker but the middle
classes as well. The war has made this problem
acute, so acute, in fact, that the war has passed from
one of man-power and munition-power into one of
food-power. Not only is this true of Austria-Hun-
gary and Germany, it is true of England, Russia,
and France as well. And now America is confronted
with the same problem, which is becoming so acute
that the public-school classes have been dismissed
in order that boys and girls may be organized for the
planting and harvesting of crops. The whole nation
has been urged to cultivate its back yards and to
utilize heretofore neglected fields and parcels of land.
The people have been urged to economize, to hus-
band their food supply. Dietary statisticians sug-
gest the substitution of cheap cereals, and the worker
is solicitously informed that he can live upon a rice
diet if he but makes up his mind to do so. Even the

10 THE HIGH COST OF LIVING

saving of potato-skins has been urged upon the
workers by advertisements appearing in the met-
ropolitan press. The farmer is being indignantly
prodded to increase the acreage under cultivation,
to labor a little harder, while the consumers are ap-
pealed to to limit their consumption, already re-
duced far below the American standard of living by
famine prices.

Yet with all these appeals, with the chambers of
commerce and countless other organizations bending
their efforts in these directions, little organized, in-
telligent thought is being given to the real problem.
Why do boys and girls leave the farms for the cities ?
Why do the farmers desert their holdings to become
motor-men or workers in the city? Why is our
agricultural population relatively decreasing and the
acreage under cultivation increasing but slightly in
amount? Why, with all the aids of science and
countless agricultural experiment stations, is agri-
culture less attractive than it was to oiu* fathers,
and why does the per-capita wealth produced fail
to respond to all of the improvements in agricultural
production? Why have so many of the advances
in civiKzation passed by the farmer? Why is agri-
culture a neglected if not a despised profession, and
why among other industrial classes does the farmer
feel that he- is of least concern to the state ? Why
do agricultural organizations like the Greenback
movement, the Grange, the Equity, and more re-

THE FEEDING OF THE NATION 11

cently the Non-Partisan Farmers' Alliance of the
Northwest periodically appear in politics, make a
gallant fight, and then their members settle down
to a kind of political despair? What is the matter
with our food supply? What is the trouble with
agricultui'e as a profession? To what is the high
cost of living really attributable and with it the
health of our children and the lowered standard of
living of our people as well ?

It cannot be that this problem is insoluble. It
cannot be that a civilization that can perfect wire-
less telegraphy, the flying-machine, and the modern
battle-ship ; that can organize science to systematize
warfare — it cannot be that a people who are able
to perfect medicine and whose discoveries have
speeded up science in every realm of hfe is impotent
before this, the greatest social problem of aU, the
feeding of the people. There must be knowable
economic reasons which underlie the discourage-
ment of the farmer and the decadence of his indus-
try. It must be possible to trace the economic
forces at work to their source, and after ascertaining
the proximate causes for these conditions to correct
them by constructive political action. We have done
this in industiy. We have produced the dollar
watch, the $350 automobile, marvels of mechanical
and engineering skill. Electricity has been made
the servant of man, aiding him in a million ways.
The power of Niagara has been harnessed and is

12 THE HIGH COST OF LIVING

distributed for thousands of miles to cities, towns,
and individual factories. The desert lands of the
Far West have been reclaimed by the storage of
water, and heretofore barren wastes have been
made to yield three or four crops a year. The
bottoms of the sea have been compelled to yield up
their secrets, as have the inscriptions of prehistoric
times. Yet to-day the first industry of man, that of
keeping himself alive, remains the least organized
and certainly the least sociaHzed of any modern
service.

CHAPTER II

OUR AGRICULTURAL POSSIBILITIES AND
PROBLEMS

The explanation of these problems is not to be
found in the niggardliness of nature or the character
of oui" people. There is land enough and water
enough and labor enough to produce all the food we
need. As a matter of fact, the United States should
be the cheapest country in the world in which to
live. Ours should be a land of overflowing abun-
dance; not for the few but for everybody; not
of a few articles but of every kind of food. Wages
are high, it is true, but labor is more productive here
than elsewhere. We have perfected machinery as
have no other people, and it is more universally used.
We have resources more fertile than those of all
Europe. We have every variety of climate and every
kind of food. The soO is so fertile that it needs but
Httle enrichment, while our race is recruited from
the most versatile in Europe. No people have been
so inventive; none have harnessed steam and elec-
tricity to increase the power of man, and nowhere,
unless it be in Austraha, is there so large a product
per man as in the United States. There should be
no difficulty about food, fuel, houses to live in, or

13

14 THE HIGH COST OF LIVING

any of the ordinary comforts of life if we had con-
served and utilized our opportunities as we should
have done.

And there was no food problem up to a very
few years ago. Food was very cheap. This was
true of all the staple articles, of meat, vegetables,
fruits, poultry, and dairy products. Food was so
cheap that we wasted it. Even the poor wasted it
as of little value. There were no high-cost-of-liv-
ing investigations and no real complaint from the
farmer or consumer.

There is, obviously, land enough to feed ourselves
and all our friends, and feed them in abundance.
Of that there is no doubt. We could maintain ten
times our present population if the land were culti-
vated as it is in some portions of the world where
intensive agriculture has been perfected. The farm
acreage of the United States is nearly seven times
that of Germany, with her 67,000,000 people, or of
France, with 40,000,000 people. This is without
considering the billion odd acres not yet appropri-
ated or unavailable for cultivation, which is equal
to all the land under tillage at the present time.^

iThe total area of the United States, exclusive of Alaska, is
3,026,789 square miles or 1,937,144,960 acres. Of this total 290,-
759,000 acres remain unappropriated for one reason or another,
while 16,522,000 acres are still in pubhc or Indian lands. In 1910
there were 6,361,502 farms in the country and 478,451,750 acres
in inaproved and 400,446,575 acres in unimproved farms. All told,
the farm acreage of the United States in 1910 was 878,798,325
acres. Of the total area of the country only one-fourth was in im-
proved farms.

OUR AGRICULTURAL POSSIBILITIES 15

France almost feeds herself, while in Germany, with
all her intensive agriculture, there are great stretches
of land that are held in great estates and are in a
backward state of cultivation; and Germany could
be placed inside the State of Texas and leave enough
room round about the edges for Switzerland.

We have not yet begun to crowd one another in
this countiy, for people are living at the rate of only
33 per square mile. In little Belgium, the land of
intensive agriculture, there are 671 persons to the
square mile; in France there are 191; in the United
Kingdom, 379.47; in Austria-Hungary, 197.31; in
Switzerland, 236.97, and in Denmark, which coun-
try feeds herself and contributes a great part of the
food supply of Great Britain and Germany, there
are 183.56 persons per square mile.

Only a small part of the land in the United States
is cultivated at all, and a much greater part is
cultivated wastefully or inadequately. Only about
one-half of our cultivable area is under cultivation.
Even in the State of New York, with the best and
most extravagant market in the world at its doors,
only 37 per cent, of the agricultm'al acreage is under
cultivation, or 8,200,000 acres out of 22,000,000
acres. And in that State, with its population of
10,000,000 people, only 375,000 are agricultm-alists,
and 9,625,000 are engaged in other pursuits.

While we have land in abundance and of the most
fertile kind, while we have invented and perfected

16 THE HIGH COST OF LIVING

farm machinery, while the telephone, the trolley,
the motor-car, and the railroad have made com-
munication easy, transportation cheap, and life in
the comitry far more attractive than a generation
ago, certain things are happening to agriculture that,
unless checked, will inevitably bring about condi-
tions similar to those in Great Britain, where four-
fifths of the people live in the city while the country-
side is denuded of people, and the food supply of
43,000,000 people is brought in from the United
States, Canada, Australia, South America, and
Denmark.

Among the outstanding facts bearing on the sub-
ject are :

One — a rapid, unprecedented increase in the
price of food

Two — a stationary production or substantial fall-
ing off in the gross amount of food produced.

Three — a wide-spread sense of discouragement on
the part of farmers, a discouragement which is justi-
fied by conditions.

Four — a rapid increase in the population of our
cities as compared with the rural population. In
1900 the urban population of the United States was
31,609,000. Ten years later the number had in-
creased to 42,623,000, an increase of 34.8 per cent.
During the same period the rural population in-
creased from 44,384,000 to 49,348,883, or an increase
of 11.2 per cent.

OUR AGRICULTURAL POSSIBILITIES 17

Five — during the decade 1900-1910 the number
of farms increased from 5,737,372 to 6,361,502, or an
increase of 10.9 per cent., while the total improved
and unimproved land in farms increased by but
40,206,551 acres, or only 4.8 per cent. Yet while
the increase in farm acreage was but 4.8 per cent,
the increase in the value of the land was 118.1 per
cent. The agricultural land of the country in 1900
was valued by the census at $13,058,007,995. Ten
years later it was valued at $28,475,674,169. While
the rural population increased 11.2 per cent, and
the acreage under cultivation 4.8 per cent., the value
of the land under cultivation increased 118.1 per cent,
and the value of the land per acre 108.1 per cent.

Six — of the total of 878,798,325 acres in farms
in 1910 only about one-half was improved, there
being a total of 400,346,575 acres that were unim-
proved.

Seven — the working of farms in the United States
is steadily and rapidly passing from the hands
of owners to those of tenants with little interest in
efficient agriculture or the improvement of theii-
holdings. In 1880 25.6 per cent, of all farms were
operated by other than owners; in 1890 the per-
centage had increased to 28.4 per cent.; in 1900 it
had increased to 35.3 per cent., and in 1910 it had
still further increased to 37 per cent. In some parts
of the country from 60 to 70 per cent, of the farms
are cultivated by tenants for non-resident owners.

18 THE HIGH COST OF LIVING

Here are some of the economic factors undertying
the food problem. They are not reassuring. They
indicate a decay of agriculture. If unchecked they
involve national disaster. They mean a continuing
increase in the cost of hving, a lower standard of
living, a decadence of the state, and ultimately a
nation of city dwellers on the one hand and a farm-
ing peasantry on the other, like that found in other
countries where the tendencies at work in the United
States have reached their logical conclusion. Rome
passed through such an evolution. So did modern
England. Ireland lost half her people because of
bad agricultural conditions that were only arrested
when the nation undertook a comprehensive agricul-
tural policy in the land-reform legislation inaugurated
by Gladstone.

America is finally awakening to the seriousness
of the food problem. We may be led to a study of
agriculture and the economic legislation necessary
to make farming more attractive. For the ultimate
evil is to be found in the economic foundations of
agriculture, which must be radically changed.

First let us consider the present high cost of living
and the immediate measures for relief. For that is
the immediate condition to be remedied.

CHAPTER III
THE COST OF LIVING AND THE FOOD SUPPLY

" Prices are fixed by the law of demand and sup-
ply," the speculators say. "If the demand is in
excess of the supply prices rise; if the supply is in
excess of the demand prices fall. We do not make
high prices. The laws of political economy do.
You must suspend her laws, not punish us, if you
do not get enough to eat or have to pay more than
you like for food."

That prices are fixed by demand and supply is a
principle of general application when competition is
free and no obstacles prevent the free play of com-
petition. Moreover, if the supply of some article
of general consumption is only a httle below the
demand prices tend to rise far above the prices
which should otherwise prevail. Then as prices ad-
vance the demand slackens and a new equilibrium
is estabHshed. This was the condition which pre-
vailed in our food supply up to a few years ago when
the local market established prices. The farmers
made a comfortable living, and the cost of food was
not an item of serious consideration to any save the
very poor. Food was abundant and prices were
low, as they should be in this countr}^ For food

19

20 THE HIGH COST OF LIVLNG

should be a small item in our budget even with the
prosperity and the great export demand which now
prevails.

But the price of food has mounted skyward. The
poor are suffering from actual want. Persons of
reasonable incomes do not get enough to supply
their needs, while those of relatively large incomes
feel the pinch of the cost of meat, poultry, eggs,
butter, sugar, and many articles that a few years
ago were the commonest of articles upon their tables.

Is there any justification for this situation? Are
the speculators justified in their defense? Must we
control the laws of demand and supply, or is the
trouble that the law of demand and supply is not
permitted to operate and prices are fixed arbitrarily
by the speculators who have themselves created
scarcity conditions?

Statistics of prices and food supply seem to dem-
onstrate several things:

One — ^that the prices we are paying are far in ex-
cess of what we should pay, even with the law of
demand and supply freely operative;

Two — that there is not as much food produced
per capita as there should be and not nearly as much
as could easily be produced; and

Three — ^that the government must step in and in-
sure the free play of the law of demand and supply
and also suspend the operations of the law when the
supply is so much below the demand that artificial

THE FOOD SUPPLY 21

and monopoly prices are created by its operation.
In other words, the farmer and the consumer should
be given the fullest possible assurance of free com-
petition and the consumer should be protected from
any monopoly price because of a shortage.

First, as to the increase in costs of food and the
condition of the great mass of the people in conse-
quence.

The April, 1917, Review of the United States Bu-
reau of Labor Statistics, discussing the rise in wages
as compared with the rise in the price of food, says
that while the former rose nine points from 1912 to

1916, retail food prices rose twenty points. Food rose
in price twice as rapidly as wages. In the four years
from February 15, 1913, to February 15, 1917, flour
increased 69 per cent., eggs 61 per cent., and potatoes
224 per cent., says the same authority. Anthracite
range coal sold in New York for $5.00 a ton in
January, 1915. In January, 1917, its price was
$8.75 a ton.

Mr. Amos R. E. Pinchot, in a statement presented
to the Senate Committee on Finance in the spring of

1917, stated that the rise in wages in the five years,
1912-1917, was less than 18 per cent. In the case
of most professional people, shopkeepers, farmers,
etc., there has been no appreciable increase at all.
On the other hand, the cost of living has gone up to
such a degree that, according to the figures in the
New York Times Annalist, April 23, 1917, the prices

22 THE HIGH COST OF LIVING

of the twenty-five most common and necessary food
commodities of the average family have almost
doubled between April, 1915, and April, 1917. Ac-
cording to Dun's index figures dairy and garden
products increased 84 per cent, in price between
April 1, 1914, and April 1, 1917. Meat went up 46
per cent, in the same period; clothing 49 per cent.;
metals 69 per cent., and foodstuffs 105 per cent.
The figures of the Old Dutch Market, Incoiporated,
of Washington, D. C, show that during the period
mentioned there was an average increase of 85.32
per cent, in a fist of sixty table necessities, including
meats, canned goods, eggs, vegetables, etc. As a
consequence, the poor can no longer buy the same
quality of food they were previously able to obtain,
nor can they buy in adequate quantities.

This is also the testimony of the food committee
appointed by the Commissioners of the District of
Colmnbia, which stated:

^'Interesting figures were obtained," says the com-
mittee, ''from the proprietors of some of the smaller
stores whose business is with the poorer people.
They show clearl}^ that the poor have been com-
pelled to resort to the strictest economy in order to
provide food, on account of high prices. Their pur-
chases are of the cheapest possible articles, and in
smaller quantities than heretofore. The sale of ordi-
nary cuts of meats in this class of stores seems to
have been discontinued, and the meat now pur-

THE FOOD SUPPLY 23

chased consists of hog hvers, hog kidneys, neck
bones, hog faces, etc."

That similar conditions hold true in the poorer
sections of New York is evidenced by the testimony
of Miss Helen Todd, who was appointed to investi-
gate the effect of the high cost of food on school
children and reported that their scholarship had
been measurably lowered through malnutrition.

In the important item of shoes we have the word
of Mr. James Coward, the well-known shoe manu-
facturer, that staple shoes that were sold at $3.95 a
pair two years ago sell to-day for $6.50. Kidskin
that was 32 cents a foot a year ago is now 80 cents
a foot. Ajid the price of shoes is still climbing, with
the prospect that there will be a still greater increase
this year than last.

Contrasted wath these hardships which affect the
great bulk of our people is the economic position of
2 per cent, of them, who own among them 65 per
cent, of the countiy's total wealth.^ It is to this
class and those just below them that the great pros-
perity about which we have heard so much lately
has fallen. The}^ are the stockholders and directors
of the big coiporations which have grown rich on
war profits, the holders of stock in the munitions
industry, and the directors of the loan-floating bank
syndicates. War profits have not gone to clerks,
teachers, professional men, or persons with a fixed

* Estimate of Professor King, of the University of Wisconsin.

24 THE HIGH COST OF LIVING

income. They have increased wages far less than
they have increased costs of food, fuel, clothes, and
rent, but they have enriched the privileged classes
and the producers of war materials and supplies
enormously.^

Is there any justification for this increase in the
cost of food ? Was there such a shortage as explains
the increase of 84 per cent, in dairy and garden prod-
ucts and 105 per cent, in foodstuffs between April,
1915, and April, 1917, as reported by the New York
Times Annalist.

Secretary of Agriculture, Mr. Houston, says that
high prices are not due to actual shortage. There is
enough food produced. Despite a 33 per cent, in-
crease in population between 1899 and 1915, the
production of food per capita has remained substan-
tially the same in many staple foods. It has in-
creased in some and only fallen in a few. His fig-
ures of food production for leading articles of food,
as stated in a published interview, are given in table
on opposite page.

The per-capita production of sugar has increased
threefold in sixteen years; in eggs there is a slight
increase reported, but in meats, milk, and cereals
there has been a substantial falling off. Yet the
price of sugar has risen as have other articles, while
those cereals in which there has been an increase in

* From statement and statistics presented before Senate Com-
mittee on Finance by Mr. Amos R. E. Pinchot.

THE FOOD SUPPLY

25

production have acted much as have those in which
the production has fallen.
We are not therefore paying a scarcity price but

FOOD SUPPLY OF THE UNITED STATES

Total Prodttction

Per-Capita
Production

1899

Meats — beef, veal, mutton,

and pork (pounds)

18,865,000,000

19,712,000,000

22,378,000,000

Milk (gallons)
7,265,804,304
7,466,406,384
7,696,844,000

Eggs (dozens)
1,214,000,000
1,591,000,000
1,811,000,000

Cereals — corn, wheat, and
rice (bushels)
3,333,868,710
3,257,407,468
4,094,986,399

Potatoes (bushels)
273,318,167
289,194,965
359,103,000

Sugar (pounds)
486,006,871
1,688,390,143
2,025,680,000

248.2
213.9
219.6

95.6
81.0
75.5

17.0
17.3

17.8

43.9
35.3
40.2

3.6
4.2
3.5

6.4
18.3
19.9

1909

1915

1899

1909

1915 (estimated) .
1899

1909

1915

1899

1909

1915

1899

1909

1915

1899

1909

1915

a price either artificially created by speculation or
a price unduly high because the supply is not up
to the reasonable demand of the country, just now

26 THE HIGH COST OF LIVING

enjoying an unusual degree of prosperity, in which
the shortage of supply has given the whole output
a higher value than should prevail. Speculation is
unquestionably responsible for a great part of the
increase. And some method of pnce-fixing may be
necessary, even with speculation eliminated, to keep
down prices due to the shortage of some supplies.

But the startling fact is that food production per
capita in the United States is falling. Despite all
of the contributions of the government, of agricul-
tural schools, of farm machinery, there is less food
produced per capita than there was sixteen yeare
ago. Something is the matter with agriculture in
America. These conditions will be discussed in
later chapters.

First let us consider as to whether the alleged
food shortage explains the great increase in prices
and the extent to which the supply of food and its
price has been artificially controlled by the distrib-
uting agencies, middlemen, speculators, etc., which
have come into so much prominence in this field
during the last ten years.

CHAPTER IV

GAMBLING IN WHEAT

A GREAT part of our wheat, the great food staple
of the world, comes from the American Northwest.
This is the country's granary. But the farmer does
not fix the price of wheat as do other producers
of their products. He does not even deal with the
buyer. The price of wheat is fixed for the most part
quite arbitrarily by the grain exchanges and stock-
market quotations in Chicago and MinneapoHs.
And although the farmers produced a bOlion odd
bushels of wheat in 1916, and although the price
reached almost prohibitive figures to consumers, the
farmers have not received any war prices as have
the munition-makers, steel-mills, coal and copper
miners, and other industries stimulated by the war.
The war profits of the farmers have gone to specu-
lators of the grain exchanges of Chicago and Minne-
apolis, which are the price-fixing agencies of wheat,
corn, meat, and other staple articles of food. This
is one of the strangest anomalies of our life. The
price of the chief article of food for a great part of the
civilized world is fixed by a group of men in the
grain-pits of Chicago and Minneapolis who have no

interest whatever in wheat except as a commodity

27

28 THE HIGH COST OF LIVING

whose universal use makes it the easiest of all things
in which to speculate.

Chicago, with its railroad-lines stretching out into
all sections of the countiy, is the headquarters of
the trade in produce. Yet only a negligible part of
the wheat of the country finds its way to this centre.
In 1915, out of 1,000,000,000 bushels only 50,000,000
bushels were actually received in Chicago. But the
board of trade fixes the price of all wheat, either
directly or indirectly. It sells paper wheat in its
daily speculations, and the quotations of the pit are
the market prices of the country. Prices of other
commodities are fixed in the same manner. And
the prices quoted from day to day have no relation
to supply or demand, although the reported supply
is used as a justification of the speculators' prices.^

For instance, in 1916, when the price of wheat and
flour rose to a high figure, the crop was large enough
to cover all domestic needs and leave a surplus of
122,000,000 bushels for export. Since the begin-
ning of the wheat year, July 1, 1916, down to De-
cember only 68,000,000 bushels of the surplus had

* The Chicago Board of Trade, which with the Minneapolis and
Milwaukee organizations is the chief grain-pit of America, specu-
lates daily in about twenty-five million bushels of wheat, which ia
about twice the amount of actual wheat received in Chicago in a
year. Members of the MinneapoUs Chamber of Commerce gamble in
about ten biUions of futures every year, the actual receipts of that
city being about two hundred million bushels a year. For every
bushel of wheat actually sold on the exchange at MinneapoUs fifty
bushels of paper wheat are sold on speculation. See 63d Congress
hearing before Committee on Rules of H. R. 424, pp. 31, 57, 158,
and 159.

GAMBLING IN WHEAT 29

been exported, leaving a visible supply of 63,000,000
bushels, not including millers' stocks and seed re-
quirements, as compared with only 46,820,000 at
the same time in 1915, which was a year of bumper
crops. Yet the price of wheat and flour was forced
up to unheard-of figures.

The corn crop of 1916 amounted to 2,700,000,000
bushels, one of the greatest corn crops in our history,
the maximum having been 3,124,746,000 bushels in
1912 and the average about 2,700,000,000 for the
past twelve years. At the beginning of the year
there remained in the hands of the farmer 1,138,-
000,000 bushels, the greatest carry-over, with a sin-
gle exception, since 1907. Under these conditions
there is little justification for the high prices of
staple foods, in spite of the big export demand.

Through the Board of Trade the big operators
maintain an autocratic control over basic prices.
They drive down prices when the farmer sells dur-
ing the summer months and inflate them as soon as
the supply has been purchased. The speculative
nature of grain prices was shown by the collapse of
the market after November 22, 1916. The rumor
was started that the President was arranging a truce
in th« European war to begin at Christmas and
possibly become permanent. December wheat de-
clined sixteen cents a bushel in spite of all the talk
of a short crop and great European demand. This
particular collapse was due to the powerful packing

30 THE HIGH COST OF LIVING

interests, whose purposes it suited at that time to
"bear" the market and bring down prices. This
break in prices was only temporary, however, and
the price soon cHmbed back to the previous high
level.

For years the farmers of the Northwest have been
protesting against this control of their industry by
men who contribute nothing, who produce nothing,
{ but who take in profits nearly as much as the farmers
I themselves receive for their labor, their capital, and
fc the use of their land. They have appealed to Con-
ii gress and the State legislatures for protection, but
they have appealed in vain. Finally, in North
Dakota they initiated several measures by petition
and submitted them to referendum vote. The mea-
sures were carried by overwhelming majorities at
the election, but the State officials refused to carry
the laws into execution. The Non-Partisan League
came into existence in 1916 as the last recourse of
70,000 farmers in one of the largest agricultural
States in the West. It was a final protest at the
polls against the grain gamblers, warehousemen,
packers, banks, and terminal agencies which con-
trolled the prices, the marketing, the milling, and
the distribution of wheat, corn, and other food
products. The league nominated its candidates for
the legislature and for State offices and swept
everj^hing before it at the election of 1916. Its
platform consisted of a programme for State-owned

GAMBLING IN WHEAT 31

grain warehouses, abattoirs, and grain terminals,
for cheap farm loans and the untaxing of farm im-
provements. It was a programme of state socialism
and modified single tax.

For years the farmers of North Dakota had strug-
gled against the distributers who control the mar-
ket. They are for the most part Americans and
Scandinavians, owning large farms of from 100 to
1,000 acres in extent. At the end of the year they
were often as badly off as they were at the beginning,
and if a bad season intervened they often faced
bankruptcy.^ For years they had presented their
claims before the State legislatures of the Dakotas
and Minnesota. They appeared before Congress.
But they were unable to secure any relief. Yet their
investigations, made after careful scientific study,
showed that nearly one-half of the value of their

' Mr. Cantrill: "Is it your contention that if you can secure the
relief asked for under the Manahan resolution it will result in making
the grain business for these farmers a profitable business instead of,
as to-day, a losing business? That is the point I want to get at.
Is this operation that you complain of forcing the farmers to sell
their wheat at a loss?"

Mr. Drake: " I would answer both those questions in the affirma-
tive. / venture to assert that for the past three years (1911-1914) the
average farmer has raised and marketed his wheat and grain of all ki7ids
in the Northwest at a positive loss."

"There has not been a year in the past three years (in the Red
River Valley of the North) that the average farmer has raised wheat
and after paying for the cost of raising it, has not suffered an actual
loss in the marketing of his product after it has been passed thi-ough
the machinery for distribution provided by this private club, known
as the Minneapohs Chamber of Commerce."

Hearing before the Committee on Rules, House of Representa-
tives, 63d Congress, Second Session, on House Resolution 424, p.
139.

32 THE HIGH COST OF LIVING

wheat crop was taken from them every year by the
warehousemen, grain exchanges, and middlemen,
who controlled the market. The loss from July 1,
1915, to January 1, 1916, amounted to $302,832,000.
For every $4 received by the farmer, $3 was taken
from him by the middlemen, and especially by the
gambling grain exchanges. This much was either
taken from the farmers or added to the price which
the consumer paid.

Speaking of speculation in flour and its cost to
the consumer, Mr. Herbert Hoover says:

"The second — that is, elimination of speculation
and evil practices — is fundamentally the most diffi-
cult and must fill all concerned with the most con-
tinuous and deepest anxiety. How important it is
that we should arrive at some method of excluding
the legitimate' and illegitimate speculation from
trades may be perhaps emphasized if we consider
what has happened during the past year in the mat-
ter of flour. If we assume that the farmer last year
received an average of, at the highest, $1.60 per
bushel for his wheat, then, with the addition of the
normal manufactuiing cost, righteous profits of dis-
tribution, the wholesale price of flour should not
throughout the country in the larger consuming
centres have exceeded $9 per barrel, and yet the
price of flour at a great many centres during the past
few weeks has been as high as $15 per barrel through-
out the country and probably averages over $14.
Some one is taking $5 per barrel on 10,000,000 bar-
rels per month, which is marketed in this country.
If this situation continues, this is $50,000,000 per
month taken out of the American public, and since

GAMBLING IN WHEAT 33

the raise in the price of flour above S9 per barrel,
and before the new crop, we may assume rightly
that over $250,000,000 will have been extracted
from the consumer in excess of normal profits of the
trade and distribution. The manufacturers and
normal traders have not had this difference; it lies
in speculation and outside the genuine trades, and
the higher trading margins forced by the speculative
incidence of war." ^

Speculation in wheat and the robbery of the farmer
is accomplished in three ways. The worst offenders
are the so-called grain exchanges, which operate
in Minneapolis and Chicago and which fix the price
of wheat. The exchanges masquerade as chambers
of commerce or boards of trade. In reality they
are speculative exchanges like the Stock Exchange
in Wall Street. They deal in futures. Controlling
the quotations of wheat all the year round by fic-
titious sales, they fix the price which the farmer
receives. They depress prices during the months
when the farmer sells, and then, after having bought
in the supply on their own terms, they either put
up the price or permit it to assume its normal price
in the markets of the world. They bear the market
when the farmer is selling and bull it after they
have acquired the available stock. The practice is
the same as that which prevails in the cattle markets
at Chicago, Omaha, Kansas City, and elsewhere;

1 Address before United States Senate committee on agriculture
and foroatry, June 19, 1917.

34 THE HIGH COST OF LIVING

it is the same practice as that pursued by the egg
and produce exchanges of Chicago and Elgin, HI.,
and other cities. The price is made artificially low
by stock-market quotations during the season of the
summer, and then in the fall and winter it is arti-
ficially raised against the consumer.

Why, it may be asked, does not the farmer hold
his wheat for the inevitable rise, if this is the prac-
tice ? In the first place, the farmer has to store his
wheat while waiting for the rise. And the ware-
houses are owned or controlled by the same interests
that control the grain exchanges. And they work
in sympathy with the great milling establishments.
The millers will not buy of the farmers direct. ''Un-
less you belong to the Board of Trade" (the grain
exchange), the milling houses say to the farmers
who have organized their own co-operative elevators,
"we will not buy your wheat."

In addition, the cost of storage is so high and the
railroad and terminal facihties are so inadequate
and uncertain that the farmer is often forced to sell
on the buyers' terms. He cannot hold on for six
months, for he has to meet his loans to the bank.
The farmer is usually a borrower. The banks which
advance him money on his wheat, cattle, and corn
are largely under the control of or are influenced by
the same men who own the warehouses, the mills,
and operate on the food exchanges. And a mere
suggestion from the bank is enough to frighten the

GAMBLING IN WHEAT 35

farmer, for he fears that his loan may be called,
his farm may be sold, or he will be denied credit
the following season. The farmer of the West,
whom we think of as the most independent of per-
sons, is often the most helpless. He has but one
market, and he often has to sell or be closed out
when the auctioneer's mallet falls.

In a hearing before the Senate Committee on
Agriculture for the consideration of the Lever food-
control bill enacted in 1917 the following dialogue
occurred between Senator Kenyon, of Iowa, and
Commissioner John J. Dillon, of New York:

Senator Kenyon: Would you abolish these ex-
changes— the Board of Trade in Chicago ?

Mr. Dillon: I would, every one of them.

Senator Ej:nyon : We could reach them by tax-
ation.

Mr. Dillon: I do not know of a Board of Trade
that is anything but a curse.

At the same hearing Senator Gronna, of North
Dakota, made the statement:

"The mills are the big consumers of wheat; that
is, they manufacture it. Minneapolis is the largest
milling city in the world. The farmers are discour-
aged over the prices that they have been receiving
in the years they have had large productions. They
have had to sell the products at less than cost. So much
so that they have gone to work and invested money
and built one terminal elevator in the city of St.
Paul, but after they had the elevator built and

36 THE HIGH COST OF LIVING

stored the grain in it, they did not have any cus-
tomers. The big mills refused to buy from them." ^

A study of the daily cash quotations for contract
grades of wheat on the Chicago Board of Trade,
during the six months from July, 1915, to January,
1916, shows how these manipulations in price are
affected. The crop of the preceding year, 1914,
was sold out in the winter and spring. Then the
prices on stock quotations began to drop. They
fell 30 cents a bushel during the month of May.
There was a drop of 68 cents per bushel from the
last day of April to the lowest prices paid during
August and September. Only market manipulation
could have caused the slump, for the world demand,
which fixes real prices, did not fall off during these
months, and in December, 1915, prices rose again
until they reached $1.38 a bushel. The average
price paid the farmers of the Northwest during the
previous six months, when the price was depressed,
was not above 85 cents on a crop of 468,000,000
bushels.

The Chicago Daily Trade Bulletin, the organ of
the association of grain buyers, or the grain mo-
nopoly, makes what is in effect a confession of how
the manipulation of prices is brought about — a
manipulation always to the disadvantage of the

1 Hearing, Committee on Agriculture, U. S. Senate, 65th Con-
gress, Production and Conservation of Food Supplies, part 3, pp.
218, 241 (1917).

GAMBLING IN WHEAT 37

farmers. It also confesses why the summer price
did not remain low all winter or untO such time as
the farmer might have parted with the bulk of his
crop. The Bulletin says:

"During the first quarter of the year the stated
prices advanced very rapidly, some 38 cents per
bushel, and held to the advance during April and a
part of May, but before the close of that month
nearly 30 cents of this advance was lost. . . . The
year's range — top prices for cash wheat in April and
bottom prices in August and September — shows a
range of 68 cents, $1.66 being high and 98 cents
low. . . . The high prices during the early part of
the year were the result of very heavy exports of
wheat from the United States to European coun-
tries. . . . Speculation helped to force the prices
upward. Aided by bearish operations, prices made
the remarkable descent from the top to the low prices.
When prices reached the lower level an active export
business was carried on, but the purchases and the
business were carried on in such a manner that prices
did not respond so liberally as during the year. . . .
Some reaction followed from the low prices, due
partly to this export buying, but more particularly
to the disappointing movement from the interior,
farmers generally having held back their wheat for
higher prices."

In other words, the speculators had gotten the
1914 crop away from the farmers at a low figure
and then put up the price 38 cents for their own
benefit. They had then sold out to Europe at high
prices and, having cleaned out the 1914 crop, they

38 THE HIGH COST OF LIVING

manipulated the market, bearing it down 68 cents
in order to get the 1915 crop cheap. Having gath-
ered in the first 4,000,000 bushels of the 1915 crop,
they again started an active export business, but
so manipulated the market that the farmer for a
time got no benefit whatever out of it. Then
came the rise in prices in the fall, because at last
the farmer had seen into the game and held back
his wheat — a most disappointing circumstance to the
monopoly.

The lowest fair price to the farmer would have
been the average between the spring level of $1.66
and the January level of $1.38, which is $1.52.
Taking this as a basis, we can calculate the amount
taken by the grain speculators for each month dur-
ing the period under consideration. In September
84,000,000 bushels were sold, the mean average
market price being $1.07, or 45 cents below the fair
level. This would give $37,800,000 as the amount
unjustly taken by the monopoly during one par-
ticular month.

The second method of exploitation by the grain
interests is the loss from the manipulation of export
prices. This is calculated by the difference between
the price at a given American port and the average
Liverpool price of the following month (allowing one
month for passage), less legitimate handHng costs.
Wheat contracted for in Duluth in July was de-
livered a month later in England at an advance of

GAMBLING IN WHEAT 39

57 cents. The advance on wheat contracted for
in August, September, October, November, and
December were, respectively, 63, 74, 71, 77, and 79
cents. The cost of handling between Duluth and
Liverpool before the war, allowing for "legitimate"
profits, was 7 cents. For legitimate costs of han-
dling during the war. Congressman J. E. Kelley, of
South Dakota, reckons 17 cents, including emergency
and double freight-rate costs. On this basis the ex-
port loss during the six months totalled $65,722,-
226. Not all of this vast sum went to the ownei-s
of ships. Ocean freights were enormous, it is tme,
and varied greatly, but 30 cents a bushel to Bristol
Channel from July to November and 35 cents for
December would probably be a fair average. On
this basis the freight manipulation would be about
$37,000,000 and the amount gathered in by the
grain monopoly through export speculation, over
and above their other profits, about $28,000,000.

The third abuse is that effected by fraudulent
practices between the farm and the terminal market.
These, though smallest in actual losses, come closest
home to the farmer. Under this class of exploita-
tion comes the undergrading, short-weighing, over-
docking, and price-gouging. The losses to the farmer
from these causes amount to from 15 to 25 cents
on every bushel sold by him, according to the esti-
mate, in the form of a resolution, of a large conven-
tion of farmers in St. Paul. Even at the con-

40 THE HIGH COST OF LIVING

servative estimate of 12 cents, the loss amounted
to over $55,000,000 on the 468,000,000 bushels sold
between July, 1915, and January, 1916. It has been
stated by Senator A. J. Gronna, of North Dakota,
that as a result of unfair grading the farmers of the
Western States received only 50 per cent, of the
actual value of light-weight wheat. This is brought
about by the system of grading wheat imposed on
the farmers by the grain exchanges and millers, un-
der which the farmers are compelled to sell. Yet
the consumers paid for the same wheat at its un dis-
counted value. The difference went to the middle-
men.

Senator McCumber stated on the floor of the
United States Senate May 1, 1914, that the unfair
and fraudulent grading of grain cost the farmers of
the West and Northwest $70,000,000 a year.

There is a submarine zone about the Western
farmer which costs our people hundreds of millions
annually. This submarine zone is in all respects
like the zone which surrounds the cattle-raiser, the
egg and poultry man, the truckman, and the dairy-
man of the Eastern cities. Only the toll is not taken
by one submarine ; it is taken by many, each one of
which fixes for its own profit the terms on which
the farmer shall be permitted to five. And these
manipulators work in harmon3^ Their activities are
so interlocked that the concern of one is the concern
of all. And they create an inland embargo on food-

GAMBLING IN WHEAT 41

stuffs, which they only permit to pass to market
after their terms are compHed with. These agencies
include the railroads, the warehouses, the terminals,
the slaughter-houses, and the banks. They all work
together through the Boards of Trade. They fix the
price which the farmer receives and the price which
the consumer pays. In 1915 we produced 1,100,000,-
000 bushels of wheat. At 40 cents on the bushel
the consumers paid $440,000,000 in speculative
prices to the grain gamblers. In the same year we
produced 3,000,000,000 bushels of corn, more than
1,500,000,000 bushels of oats, and more than 800,-
000,000 bushels of rye. This was the total for the
entire country. And if the manipulation in wheat
is indicative of the gambling tribute on other prod-
ucts, the loss to the farmers, or excess sum paid
by the consumers, must have amounted to more
than a billion dollars.

In hearings before the Conmiittee on Rules of the
House of Representatives during the 63d Congress,
witnesses for the farmers and grain-growers of the
Northwest laid before the committee how agricul-
ture, and especially wheat-growing, was being de-
stroyed by the practice at the Boards of Trade and
Chambers of Commerce working in harmony with
the warehouses, the millers, bankers, and other
agencies. The testimony showed that the Minneap-
olis Chamber of Commerce is a private and secret
organization like a club. It is managed by a small

42 THE HIGH COST OF LIVING

group of men closely identified through interlocking
directors with the banks, railroads, and public utility
corporations. A large number of the seats in the
Chamber are owned by the banks of Minneapolis, the
railroads, public service coiporations, and other privi-
leged interests. Yet the producers of grain are not
admitted at all. It is impossible for the farmers or
even the co-operative grain-growers' associations to
be admitted to membership in the Chamber even if
they succeed in buying a seat. The Minnesota
Farmers' Exchange was excluded after it had ac-
quired a membership at a cost of $4,200.

The Minneapolis Chamber of Commerce emploj^s
four hundred solicitors who travel throughout the
Northwest discrediting the farmers' organization,
and every^ effort on their part to organize or protect
themselves. The banks are apparently the most
powerful members of the organization and they, in
turn, exercise power over country banks which make
loans to the farmers and co-operative elevators.
The majority of the directorate in thirty years has
always been in the hands of the big millers and ele-
vator men, who buy the gi-ain and whose interest
it is to keep down the price. Competition is de-
stroyed by every possible means. It is a rule of the
Chamber, rigidly enforced, that there shall be no
competitive buying whatever between the members
bidding for grain on the track for shipment to Min-
neapolis. In addition, the price which is offered the

/

GAMBLING IN WHEAT 43

farmer is always the closing price of the Chamber.
That is the price paid the farmer no matter how much
it may have been artificially fixed by speculation.
The farmers, no matter what demand or supply
may be, are at the mercy of the only market which
they have, which is controlled by the grain-pit,
which in turn is controlled by the milling companies
and elevator companies which are the buyers. The
largest commission houses thi-ough which the farmers
sell are owned by the milling and elevator interests.
The farmers' and other co-operative organizations
are financed by the banks connected with the Cham-
ber of Commerce, and they require the farmers, as a
condition of the loan, to ship their grain to the
houses which lend them money. The farmers are
thus coerced into selling to the grain monopoly.
Speakmg of this condition, Mr. Benjamin Drake,
representing the farmers, said: "It is a system of
financial slavery. This system of loaning has been
used all the time to compel shippers to give their
consent to the arrangement that the cormnission
house may sell to the subsidiaries." Mr. Drake
further testified that it required sales in futures
amounting to an aggregate of $4,800,000,000 a year
just to pay the expenses of the organization which
controlled the clearances. This was the trading of
but thirty-seven members of the Chamber of Com-
merce alone. The whole amount of future trans-
actions by the members of the Chamber, he said,

44 THE HIGH COST OF LIVING

might not be less than ten bilUons a year. " In other
words, for a bushel of real wheat sold/' said Mr.
Drake, "more than fifty bushels of phantom wheat
is sold on the floor of the Chamber of Commerce.
And every bushel of future grain which is sold tends
to make the price received for cash wheat."*

No person in the country has given more scientific
thought to the questions of wheat manipulation
than Professor E. F. Ladd, president of the North
Dakota Agricultural College. He has fought for
the farmers of his State for years. He has appeared
before the State legislature, before Congress, and in
the courts. He has published many learned bulle-
tins on the subject. Speaking of the food situation
of the country in May, 1917, he says:

"There is no question in my mind but what the
farmere would handle the situation were it not for
those who are endeavoring to exploit them. The
exploitation of food products is, to my mind, one of
the greatest curses of our day, and the buying and
selling of grain as carried on at the Chamber of
Commerce, etc., is one of the most detestable forms
of gambling practised by certain American people to
the detriment of the great producing and consuming
classes of our country.

"If the farmer received on the average of $1.30
for his wheat for the past year's crop (and much of
it was sold for less than that), then is there any good

^ Testimony Hearing, Committee on Rules, House of Representa-
tives, 63d Congress, Second Session, Grain Exchange House reso-
lution No. 424.

GAMBLING IN WHEAT 45

reason why that wheat should sell in the same mar-
ket to-day for $3.00 and better per bushel, except
through exploitation on the part of a few food gam-
blers?"

CHAPTER V
THE PACKERS AND THE CATTLEMEN

The cattlemen of the West and Southwest assert
that the meat supply is controlled by the packing
monopoly, just as the wheat of the Northwest is con-
trolled by speculators and middlemen. They, too,
are in the power of speculators which fix the price
paid the producer and the price paid by the con-
sumer as well. The cattlemen produce for the
world market, but they do not sell to their custom-
ers. They sell to the buyers of five or six packing-
houses, who arbitrarily fix the price of meat on the
hoof. The cattlemen have to accept what is offered
or ship their cattle back to the range. They, too,
have no real control over their business and no
means of being assured from one year to the other
that they will receive enough for their cattle to pay
for the cost.

The cattle-raisers have finally organized for pro-
tection just as have the farmers. They have held
conferences, employed counsel, and laid their condi-
tion before Congress. They insist that they do not
fix the price of meat, but they frequently receive
so little that it does not pay for the raising. Numer-
ous investigations have been made, one of them pre-

46

THE PACKERS AND THE CATTLEMEN 47

sented as an exhibit before the Interstate Com-
merce Conmiission in a rate-case hearing during the
winter of 1914-15. The year 1915, despite the Eu-
ropean war and the high prices prevaiKng, is said
by the cattlemen to be one of the most disastrous
in their history, and the statement presented to the
Interstate Conmierce Commission, and sworn to by
the farmers from whose accounts it was taken,
seems to substantiate their claims. The investiga-
tion covered 56 Iowa farmers who had marketed
2,025 cattle between them, or an average of 36 head
per farmer. Of the total 56 feeders all but 3 lost
money, and the latter made a profit of only $667.78
on the sale of 137 cattle. The other 53 lost on an
average of $19.32 per head on their operations.
And the expense of labor and care was not included
in the cost. It was stated that these cases were
typical of the industry.

The exhibit was for the year 1915. Yet, while
this was one of the most disastrous years in the his-
tory of stock-raising, it was a most profitable one for
the packers, who made the largest profits in their
history.

A committee of the American National Live Stock
Association was created for the puipose of securing
some sort of relief. The committee prepared a
comprehensive report on the subject, which showed
that it cost to raise and feed steers for market (in
the Panhandle of Texas) $S.10 per 100 pounds, while

48 THE HIGH COST OF LIVING

the price paid for cattle by the packers during the
primary market season had ranged from $7.50 to
$8.05 per 100 pounds. They asserted that the
prices paid are so manipulated that the prices are
very low during the months when they have to sell
their cattle, while during the months when the pack-
ers realize on their sales the prices are artificially
high.

The cattle-raisers ship in their cattle from the
ranges to the stock-yards of the various cities where
the packing-houses are located. Each morning the
price of cattle on the hoof is fixed by the buyers for
the various establishments, who meet for the purpose.
This the cattlemen can accept or reject. But the
only other market is in a distant city and it, too, is
under the same ownership. So the cattleman has
to sell at the price which is offered or take his cattle
back home. This in many cases he cannot do, for
he has borrowed money from the bank to feed and
market his stock.

The stock-raisers attribute their helplessness to
the control of the cattle business by the four or five
companies which dominate the business. For there
are no public slaughter-houses and there is no com-
petition among buyers. The packers fix the price
paid the producer at one end of the transaction and
the price charged the consumer at the other. They
manipulate and control prices at will. The killing
and packing of cattle is centred in Chicago, Kansas

THE PACKERS AND THE CATTLEMEN 49

City, Omaha, St. Louis, Fort Worth, and St. Joseph,
Mo., which are the centres to which almost all of
the live meat is shipped. But the packing mo-
nopoly extends far beyond the mere buying and
selling of meat products. It includes the ownership
of the stock-yards, refrigerator-cars, oil-mills, and
many banks, all of which work in harmony and
under the control of the packers. The packers also
control the hide business, tanneries, and the produce
of tanneries, as well as glue, button-making, cotton-
seed-oil, soap, artificial butter, etc. The combina-
tion controls the price of the fertilizer which the
farmer uses as well as the refrigerator-cars for the
transportation not only of meat but of fruits, fresh
vegetables, and other perishable products. In fact,
the meat-packers, through their control of banks and
railroad- cars and the virtual ownership of the means
of marketing, possess a more or less complete mo-
nopoly of the foodstuffs of the entire nation. This
monopoly is made complete by the ownership of
local cold-storage plants in all of the large cities.
Local butchers can only buy of the trust because
local slaughter-houses have been driven out of busi-
ness. The supply of meat is thus under the control
of the four or five big packing establishments from
the time the cattle are brought to the stock-yards
until the meat reaches the consumer.

One of the reasons for the incredible power of the
great packers is that they have at their command the

50 THE HIGH COST OF LIVING

banking capital not only of Chicago but of other
financial centres of the West. They are members
of the directorate or are represented in practically
every bank of importance in Chicago. When the
packers are buying the banks are eager purchasers
of cattle paper. The discount rate is | per cent,
to 1| per cent, above that on other gilt-edged com-
mercial paper. Each morning the telegraph an-
nounces the prices Chicago is wiUing to pay for each
quahty of stock delivered on the track. The pack-
ers pay cash and the farmer is so weak financially
that he cannot resist; for the banks which accom-
modate the cattlemen are controlled by the packers
and see to it that the cattlemen sell when the pack-
ers desire. The cattle-raiser has borrowed money
from his bank to raise his stock. The banks in
turn are closely allied with the packers or are owned
by them. And the banks cariying the cattleman's
paper bring pressure on him to sell, ofttimes in the
season of the year when the price has been artifi-
cially lowered by the packers. The procedure is the
same as in the case of wheat. The packers fix a
low price when the cattleman has to sell and then
bring pressure upon him through the banks which
they control to compel him to sell on the packers'
terms.

Thus the packing establishments rather than the
producers control the price of meat. And they seem
to establish the price at the point which will just

THE PACKERS AND THE CATTLEMEN 51

keep the industry alive. Frequently they reduce it
below the production cost. This discourages cattle-
raising and creates a scarcity in subsequent years.
Then the price is raised again and the producers
take heart and increase their output.^

The packers also control the cold-storage plants,
the grain warehouses, and the refrigerator-cars,
which are important links in the system. This en-
ables the packers to destroy any independent com-
petitor; for he is obliged to come to them for cars.
And the refrigerator-car companies are in close aUi-
ance with the railroads through interlocking direc-
torates. The cold-storage-car monopoly enables the
packers to exact tribute from the small shipper and
makes him dependent upon their will.

The cattlemen are coming to see that their only
hope of relief is through political action. They, too,
have come to realize that the abuses under which
they suffer are inherent in the private ownership of
the stock-yards and packing-houses. And they have
recommended that public abattoirs be established,
similar to those in other countries, to which they can
bring their cattle and sell them, not to a single
buyer but in the open market. Every nation in
the world, with the exception of the United States

^ This is one of the main reasons for the falling off in cattle-raising.
We pay enough for meat at retail, and there is land enough all over
the country that could be used for raising cattle, yet the meat pro-
duced in 1909 was only a little over that of 1899, while the per capita
production for the country has fallen from 248 in 1899 to 219 in
1915.

52 THE HIGH COST OF I.TVING

and England, has public abattoirs. We have left
this industry, like distribution, in private hands.
And the cattlemen, like the wheat-growers of the
Northwest, have come to believe that the only way
out of the uncertainties and exploitation under
which they suffer is through government-owned
terminals and packing-houses.^

Here again we find the middlemen destro)dng an
industiy. They first discourage the raising of cat-
tle, sheep, and hogs in the East by the monopoly of
slaughtering, and then, having subjected the indus-
try to their control, they create such uncertainty and
pay such low prices that they discourage the indus-
trj'^ in the West as well. The meat supply, like wheat
and other staple foods, is now not controlled b}^ the
producer; it is controlled by the middleman. And
he has put an end to the operation of the law of de-
mand and supply by destroying all competition.

* Later chapters containing a description of the public-owned abat-
toirs of Australia, Germany, and Denmark show the effect of public
ownership in this field. It frees the producer from monopoly, on
the one hand, and the consumer on the other. See especially the
various measures provided by the several AustraUan statea for
selling meat products and bringing them to market.

/

CHAPTER VI
COLD STORAGE AND FOOD SPECULATION

\

The cold-storage warehouse and the refrigerator-
car are among the greatest devices of our age. With-
out these agencies our city population would be de-
pendent upon the immediate local supply, while
foods of distant lands would be unknown to most of
us. They place the perishable food of every clime
upon our tables all the year around. Even the
poorest dines on foods that were unknown to the
richest a century ago. The cold-storage warehouse
also tends to equahze prices throughout the year.
Eggs, butter, poultr}^, fish, and meat lose but little
in freshness from months of storage, while seasonal
products can be kept at a uniform price by reason
of these facilities.

Yet, instead of being an agency of universal ser-
vice and a means of cheapening the price of food,
cold storage is one of the principal agencies of the
speculator. The cold-storage plant is a warehouse.
It offers easy facilities for a few men to buy up and
store foods and thus control the market. The
operators and owners are in close alliance with the
food exchanges, which fix quotations, and with the
packers, produce men, and jobbers in every large
city. There are seventy-five of these cold-storage

53

54 THE HIGH COST OF LIVING

warehouses in and about New York. They control
the bulk of the city's perishable food supply, in-
cluding fish and meat. There are forty-eight such
plants in Chicago, the food centre of the country.
Many of these cold-storage warehouses work in
co-operation with or are owned by the refrigerator-
car companies, which are owned in turn by the big
packers of Chicago and the West. Here again is
the combination of transportation, terminals, banks,
and food exchanges, which fix the price to the pro-
ducer at one season of the year and to the consumer
all the year around.

The food exchanges speculate in prices of perish-
able food just as they do in wheat. The egg supply
of the countiy, for instance, is controlled by the
Elgin Board of Trade, the Butter and Egg board,
and the Board of Trade of Chicago, which are price-
fixing agencies. They estabhsh prices day by day
for eggs, butter, poultry, and other produce by sales
between the members. They use the same methods
described in previous chapters as to wheat and
cattle. The price of eggs for April delivery is fixed
by the speculators the previous November. Having
fixed the price, the agents of the speculators travel
about and make contracts all over the country for
deliveiy by the farmer in Chicago the following
spring. Having purchased and stored the eggs,
they control the available supply. Day by day the
speculators make the market quotation just as they

COLD STORAGE AND FOOD SPECULATION 55

do the price of securities on the New York Stock
Exchange. These prices are flashed all over the
country and establish the prices even in the small
town or summer resort.

An investigation of egg speculation in Chicago
showed that one dealer and his associates held 43,-
200,000 eggs in storage at the end of 1916. He
made no secret of the fact that he was holding
them for 50 cents a dozen, which meant that they
would sell at 55 cents retail. He even threatened
to sue the aldermen and club women of Chicago for
conspiracy when they threatened to fight his mo-
nopoly. These same eggs were acquired at 19| to
20 cents a dozen in November and delivered in
Chicago and elsewhere the following April and May.
During this period eggs had reached a very high
price. The egg speculators claimed that it was due
to scarcity. Yet their own figures showed that there
were 3,686,533 cases in 1915 and 2,794,295 cases in
1916 in Chicago and other centres. Despite these
hoardings the price of eggs advanced approximately
100 per cent, since they were bought for April de-
livery. One of the egg operators is said to have
made a million dollars profits in a single year and
retired from business. While speculation doubled
the price of eggs, the cost of storage for ten months
is only about 2 cents. Allowing .5 cents for the
retailer, the price of eggs during the winter months
ought not to exceed 30 cents a dozen at the outside.

56 THE HIGH COST OF LIVING

In the spring of 1917 speculation went wild not
only in eggs but in other produce. Prices advanced
to exorbitant figures. An investigation made by
the government showed that eggs had gone through
fifteen or sixteen middlemen's hands in reaching a
market, each one of whom took off a profit. Yet,
while we were paying 50 to 75 cents per dozen for
eggs, the people of England, after two and a half
years of war, were buying the same eggs at from 32
to 35 cents a dozen. In England food speculation
is prohibited.

The prices established in the Chicago Butter and
Egg board do not represent buying and selling of
actual eggs; they represent fictitious sales in "paper
eggs" for the purpose of sending the market up or
down, as the speculators desire. Yet these sales of
eggs that do not exist fix the price of eggs to all
buyers throughout the United States. As a result of
an investigation in Chicago it was said that 4,000
car-loads of eggs that never existed were traded in
by members of the Butter and Egg board. And each
time the eggs were traded in the price was elevated
from I cent to 1 cent per dozen. By these means
eggs which should have sold for approximately 22
cents, if the price had been fixed by legitimate sup-
ply and demand, were selling at from 34 to 35 cents
a dozen in Chicago. The speculators took excess
profits of $6,000,000 on the Easter trade alone in the
United States.

COLD STORAGE AND FOOD SPECULATION 57

These manipulations of eggs, butter, and other
foodstuffs would be impossible without the co-opera-
tion of the Chicago banks, which are an integral part
of the system. The egg speculator is permitted
by the banks to borrow money on his warehouse
receipts on a valuation of only $L50 a case below
the prevailing market quotations, which are almost
always from 50 to 100 per cent, more than the price
originally paid for the eggs. In other words, the
speculator borrows on a valuation which he himself
fixes rather than the price which he paid. This
gives the dealer a big line of credit which he can
use to buy more eggs, upon which he then borrows
money at a fictitious valuation and uses the proceeds
of his loan to buy other eggs. The co-operation of
the banks makes it possible for the speculator to
pyramid his holdings during the storing season and
greatly to enlarge the scope of his operations and
still further monopolize the market.

The attitude of the egg speculators toward the
public has been arrogant in the extreme. Judge
Landis, of Chicago, issued an injunction against
market rigging and forbade any but bona-fide sales.
The officers of the egg board met and worked out
a plan by which they could continue their specula-
tions but accompany each sale with bills, car num-
bers, and entries on their books, just as though an
actual transaction had taken place. The attitude
of the speculators toward the public is expressed in

58 THE HIGH COST OF LIVING

the words of one of the speculators, who said: "Call
it speculation if you will. It is, possibly, from the
standpoint of the gentle public; but we call it suc-
cessful merchandising in South Water Street."

The same practice prevails as to poultry, butter,
sugar, and many other commodities. In fact, almost
every article of food is under the control of middle-
men and food speculators.

Mr. Herbert Hoover, commenting on the extent
of speculation and its cost to the public, stated in
a hearing, June 19, 1917, before the Senate Com-
mittee on Agriculture and Forestry:

" In our commercial distribution we are confronted
daily and hourly with evidence of a large amount
of rank speculation at every link of the distribut-
ing chain by persons not engaged in actual com-
merce of distribution. Thousands of men in this
country who never owned a commodity in their life
have bought canned goods, flour, wheat, and every
food commodity to speculate for the rise, and these
speculations have been prompted to a great degree
by the increased field of forward contracts, which
offer a basis for transfer of titles in commodities not
much speculated in hitherto. Altogether w^e face
the amazing situation of the country producing a
smplus of foodstuffs and paying the highest prices
known to its histoiy.

"There can be no more vivid evidence of the de-
sirability of food control in this situation than a
comparison between our prices and the prices of
foodstuffs in countries where there is some measure
of food administration. I will not traverse the

COLD STORAGE AND FOOD SPECULATION 59

prices of all commodities more than to say, as a
general fact, the average prices to the consumer are
lower in food-controlled countries than in the United
States. Practically the entire wheat supply to Bel-
gium is to-day imported from the United States,
and, despite the extraordinary costs of transporta-
tion, the price of bread is 60 per cent, of the price
in New York City. A large portion of the wheat
in France comes from this country, and yet the price
of bread is, again, 40 per cent, below our own. In
England, where food control was started too late,
the price is 30 per cent, below our price, and in
Canada, again, we see a lower range of prices to the
consumer than in our own country, although the
producer realizes the same price."

Produce exchanges, similar to those described in
Chicago, exist in New York and other large cities.
The quotations which they make are directed by the
distributers and are largely fictitious. Judge Jay-
cox, of New York, called their daily quotations of
prices "untruthful, wilful, deliberate, intentional,
systematic, and fraudulent," as a result of an in-
quiry into their methods. Honorable John J. Dillon,
Commissioner of Foods and Markets of New York
State, says of the food exchanges that they are
"gambling dens."

According to the State food experts, New York
City food speculators made profits of $900,000 in the
week preceding November 18, 1916, on the single
item of eggs alone. The toll for the week of No-
vember 18 was estimated by the State officials at

60 THE HIGH COST OF LIVING

$1,000,000, with the prospect of a still higher exten-
sion the following week unless the power of price-
fixing was taken out of the hands of the speculators.

Control of cold-storage plants is the key to the
food situation, say food ex-perts of New York. Be-
cause of private control speculators corner the supply
of fresh foods and charge all they can get. At the
time of the investigation practically all the available
cold-storage plants in Greater New York and Jersey
City were filled with eggs and other farm produce,
purchased by the speculators during the months
when prices were lowest. Eggs bought at 17 cents
to 19 cents a dozen, says Mr. Dillon, were sold on
November 17 at 60 cents to 70 cents a dozen,
with even higher prices in prospect. The city
consumes 100,000 cases of eggs so stored each
week, which is the basis on which the profits of the
speculators were calculated, Mr. Dillon says: "It
costs only 2 cents a dozen for holding eggs for ten
months. On that basis it is easy to see just how
much is being made out of the manipulation of egg
prices in the city. I estimate that the citizens of
New York City would save from $7,000,000 to
$10,000,000 annually by the establishment of such
[municipal] cold-storage plants."

"The present cold-storage facihties," says Mr.
Dillon, "ai'e not sufficient for New York City. In
consequence, a large part of the storage goods
consumed in the city are held in Chicago, Buffalo,

COLD STORAGE AND FOOD SPECULATION 61

and other outlying points. The facilities for han-
dling supplies are grossly inadequate. The dealers
manipulate what there are, and the individual grower
is in a position where he must sell his fruit or let it
waste on the farm."

Speaking on another occasion of the cold-storage
facilities of New York, Commissioner Dillon said:

"Our cold-storage faciHties are equally inade-
quate. Such as we have are controlled by the
speculators in foods. Neither the producer nor the
consumer has access to them, with the result that
in times like these the speculator is in a position
to exact any price that his greed may dictate for
the food products that he controls through his mo-
nopoly of cold-storage facilities.

"At least $7,000,000 a year can be saved in the
wholesale handling of live poultry in New York
City, $10,000,000 on eggs, and a similar amount on
dressed poultiy. Ten milHon dollars can be saved
on the distribution of butter, and besides these sav-
ings in the necessaiy cost of the physical handling
of these products at the present time, an efficient
system of marketing would save the people mitold
millions in the speculative prices that thej^ are now
pajdng. In the one item of milk alone, $15,000,000
can be saved to the people in the distribution of it."

In its search for reasons for the high price of milk
and the sky-rocketing advance in eggs, the Wicks
legislative committee of New York State brought
out two facts : one, that the New York Central Rail-
road paid $25,000 a 3^ear to the estate of Westcott,

62 THE HIGH COST OF LIVING

the express man, for the "supervising" of milk
shipments to New York from the districts in the
northern part of the State, and, two, that a car-load of
Indiana eggs, sold by the Decatur Produce Com-
pany the preceding June (that is, June, 1916) to a
New York wholesaler at 24| cents a dozen, was re-
sold nine or ten times without leaving the cold-
storage warehouse, until the St. Regis Hotel paid
43 cents a dozen for part of the lot on November
18, 1917.

While the price of sugar was mounting in 1916
great quantities of this commodity were held in
storage warehouses. On October 4, 1916, there were
427,185,758 pounds so held in raw sugar in New
York alone. The stock was held in the government
warehouses under bond. Refined sugar jumped
from $6.75 to $7 per hundred pounds, in spite of the
fact that Great Britain was no longer so large a
consumer as in the preceding year. The 1916 sugar
crop in the United States was the largest in its his-
tory. The Porto Rico crop was also larger by 137,-
000 tons than ever before. This more than made
up for the loss of the German and Austrian supply.
In spite of the unprecedentedly large crops, the 1916
range of prices in the United States was from $4.51
to $6.52 for 96 per cent, centrifugal. In 1915, when
England bought up great quantities, the range was
only from $3.64 to $5.20. Speculation alone is the
cause for the prevailing prices.

COLD STORAGE AND FOOD SPECULATION 63

The cold-storage evil and with it food speculation
can be corrected by the public ownership of the
cold-storage plants, and it can probably be corrected
in no other way. Any one familiar with the attempt
to regulate the prices of public-utility corporations
knows how futile the whole proceeding is. So satis-
factory is regulation to the railroads and public-
service corporations that they would probably fight
as hard now to retain the public-service commissions
as they fought to prevent their creation. They are
the best possible guarantee of existing rates and
charges. The difficulties in the way of rate regula-
tion, even when the utility commissions are intelli-
gent and free from control, are so insurmountable,
and the contests in the courts are so costly and pro-
longed, that decisions favorable to the public have
ceased to be expected. And the regulation of food
agencies by price control, etc., or by criminal pro-
ceedings is so vastly more difficult than the regula-
tion of pubHc-utility corporations, where responsible
officials can be found and the property is in sight,
that it is utterly beyond the power of the govern-
ment successfully to attempt it. Other countries
more courageous or less controlled by these interests
than we recognize the unpracticability of private
distributing agencies and do not permit them in
this field. In Germany, Denmark, and Australia,
the countries where the food supply is successfully
controlled in the public interest, the cold-storage

64 THE HIGH COST OF LIVING

plants, food warehouses, and other distributing
agencies are owned by the cities or the state, and in
consequence monopoKes, corners, or speculation are
either difficult or impossible to maintain.

CHAPTER VII
THE MIDDLEMEN AND DISTRIBUTERS

The gambling operations and the arbitrary con-
trol of prices by the food exchanges of Chicago are
repeated again when food reaches other cities for
distribution. The agencies and the methods em-
ployed are the same, only the city embargo is on a
smaller scale.

No one knows how many middlemen there are
between the producer and the consumer in a city
like New York. Even the individual middleman
only knows the groups immediately above, below, or
around him. And each of these feels that he has a
vested right in his business that should not be in-
terfered with by the government. He resists every
attempt to dislodge him by the opening of municipal
markets or by the regulation of prices. Mr. Dillon
states that there are seven or eight middlemen be-
tween the farm and consumers of New York City,
each one of which adds from 5 to 10 per cent, to the
cost of the food which he handles. vSome of these
are the same persons operating under different firm
names. All but one or two of these middlemen
could be dispensed with if the city or State would
open a central market and provide a public rep-

65

66

THE HIGH COST OF LIVING

resentative to whom the farmer could ship and to
whom the retail dealer could come and buy.

These middlemen have arbitrarily crowded them-
selves into the field and between them take from 50
to 65 cents out of every dollar paid for much of
the food of the metropolis. The waste in New York
City alone from the operations of these agencies is
estimated at from $150,000,000 to $200,000,000 a
year.^

Commissioner Dillon says that the farmers would
produce food enough if they were given an oppor-
tunity to sell on profitable terms. But they cannot

* Second Anrmal Report of the Department 0/ Foods and Markets,
February, 1916.

An investigation made by Miss Laura A. Cauble as to the increase
in the cost of vegetables, fresh fruits, and fish on July 11, 1917,
while the protest against the high cost of living and the Lever bill
were before Congress for consideration, disclosed the following
facts as to the wholesale and retail prices in the city of New
York:

Wholesale

(Dept. of Health

data, July 11. 1917)

Retail

Percentage
of Increase
TO Consumer

Vegetables

(Abundant

supply in

market)

Potatoes

Tomatoes.. . .

Spinach

Lettuce

Fish
Blue

$3.25 per bbl. (160

lbs.)

10 cents qt

15 cents lb

25 cents qt

10-15 cents head

22-28 cents lb. . .
14-20 " " . .
18-25 " " . .
12-16 •' •• . .
12-16 " " . .

264%

689%
1200-1500%
1900-2900%

715%
186%
259%
433%
700%

50 cents-75 cents per

crate (35 lbs.)

75 cents per bbl

100 heads at 50 cents.

13 cents lb

Sea-bass

Cod, whole . .

Porgy

Flounder

7 " "

7-10 cents lb

3-4 •' "

2-3 " "

THE MIDDLEMEN AND DISTRIBUTERS 67

get their produce to market. The city is blockaded
against them. Often their produce is taken by the
commission men and sold and the farmers advised
that there was no market for it or that it had to be
destroyed by order of the health department. At
other times produce fails to realize enough to pay
freight rates. Frequently, food from a distance is
permitted to spoil or is thrown into the river, to
keep up prices. At other times it is held up by
railroad-car shortage and lack of terminal facilities.
The farmer cannot now market directly as he for-
merly could, and he cannot afford a personal rep-
resentative in the city. As a result, he is left to the
tender mercies of a group of distributers acting in
co-operation with the railroads, cold-storage plants,
and packers, all of whom enjoy special, preferential
pri\aleges which the independent shipper cannot
secure.

The food manipulators of New York are given a
practical monopoly of the terminal facilities of the
railroads, which are essential to the disposal of food
to the retailers. Even the State Department of
Foods and Markets of that State, which aims to
help the farmer find a market, is discriminated
against. The various groups of middlemen have
powerful financial and political organizations and
maintain themselves against the unorganized farm-
ers, on the one hand, and the equally unorganized
consumers on the other. If the dealers fulfilled

68 THE HIGH COST OF LIVING

merely the economic function of distribution and
received a reasonable return for the service there
would be little objection; but they multiply them-
selves needlessly and exact speculative profits. To
such an extent have they discouraged the farmers
of New York that of the total food bill of the city,
amounting to $800,000;000 a year, only 5 per cent.,
or S40,000,000, goes to the farmers of the State.

The distributing middlemen are also so powerful
politically that the Department of Foods and Mar-
kets of New York State has never been able to
secure an adequate appropriation from the State
to make a real experiment in co-operative buying
and selling. In 1915 the department began market-
ing various kinds of food products in New York
City. It undertook the disposition of peaches of
which there was a particularly large crop that year.
An agreement was made with the Fruit Auction
Company, and substantial advances were secured
to the fanner and reductions to the consumer as
well.

Deputy Hildebrand, in charge of the auction-
rooms established at Franklin Street by Commis-
sioner Dillon, says that the department is being
fought by raih'oads, by organized business interests
of certain kinds in this city, and by many other
people. In an interview he states:

"The question of apples is always a serious one
in the fall. The average price paid the farmer is

THE MIDDLEMEN AND DISTRIBUTERS 69

from $3 to $5 per barrel for good apples. The con-
sumer pays from $12 to $15 per barrel for the same
apples. Meanwhile the farmer up-State cannot ship
any more. There is no market, it is claimed, or the
railroads cannot give cars, using all available for the
long hauls from the Far West, for instance."

The same situation obtains in all other fruits and
vegetables.

This is the way the railroads join with the dis-
tributing agencies and speculators to discourage local
production. The distributers, in order to destroy
local competition, prefer long-distance shipments.
The railroads encourage this by giving preference
to cai's from Chicago, Kansas City, and other dis-
tant points, which are sent through with the regu-
larity of passenger-trains and often much quicker
than from the near-by New York points.

This is indicative of the many different kinds of
conspiracies which have driven the Eastern farmers
and truckmen out of existence and concentrated
the control of the food supply in the hands of the
middlemen. And the alliances and secret arrange-
ments with railroads, terminals, cold-storage plants,
and other private agencies are so sul^tle and numer-
ous that they cannot be traced or the speculators
brought to trial.

In the matter of the milk supply the big dealers
or distributers control the prices at both ends — •
they fix the price the farmer receives and the price

70 THE HIGH COST OF LIVING

the consumer must pay. The sale of milk in New
York and other large cities is in the hands of a
virtual trust. The consumer must pay their price
or do without milk. Nor do the distributers guar-
antee quality to the consumer although they exact
it from the producer. The volume of milk produced
does not affect the price, as the dealers insist that it
does, for summer or winter the consumer pays the
same rates. The dealer owns the utilities of dis-
tribution— the cans, pasteurizers, and facilities of the
shipping and finishing stations. If one dealer re-
duces the price paid to the farmer the others follow.
This is harmful to the consumer also as it drives
many farmers out of business and reduces the sup-
ply. On the other hand, if one dealer raises the
price to the consumer all do the same. If a retail
dealer refuses to comply with the demand of the
trust his supply is cut off or delivered sour. The
dealer reserves to himself all the advantages of fa-
vorable market conditions in New York.

The report of ex-Assistant District Attorney
O'Malley in 1910 of milk distribution in New York
showed a strong organization in restraint of trade
among the dealers. If a dealer ventured to sell
below the trust prices the '^dead" wagon was sent
over his route, selling milk to his customers at ruin-
ously low prices, till he was driven out of business.
If all else failed his horse was mysteriously poisoned.
Indictments were found against several of the deal-

THE MIDDLEMEN AND DISTRIBUTERS 71

ers in 1910, but they have never stood trial. The
Httle dealers must obey the big ones or they are
forced out of business. The dealers break up co-
operative creameries wherever possible by offering
to buy the milk in the neighborhood of the creamery
and to pay the cartage on it. This was the general
state of affairs that led to 2-cent milk to the pro-
ducer and 12-cent milk to the consumer in the State
of New York.

To counteract these influences the State depart-
ment of foods recommends a milk depot in New
York, with a creamery attached, to take care of all
surplus milk. Prices would be fixed daily accord-
ing to supply and demand. The producers demand
it and have asked the State to build it. They are
willing to pay the maintenance and amortization
charges. The plan was opposed by the dealers,
however, and failed in the legislature.

In the case of anthracite coal there is the same sort
of a monopoly controlHng the output and in alhance
with the railroads as we have in the case of milk,
only the coal syndicate is composed of the producers
themselves rather than the dealers. Nine large op-
erating companies control 75 per cent, of the an-
thracite coal of Pennsylvania, the only source of
supply. Each is closely allied with or owned by
the railroad on whose line it is located. Conse-
quently markets that are advantageous for the rail-
roads, markets which give them a long haul, are

72 THE HIGH COST OF LIVING

much more likely to have their coal delivered more
promptly and cheaply than other places.

It is claimed by the commission on the cost of
living of the commonwealth of Massachusetts that
New England markets were discriminated against
by some of the companies during the year 1916.
Anthracite coal, which cost $7.75 in Boston in De-
cember, 1914, cost $9.50 at the end of 1916. In
other cities and towns of Massachusetts it is con-
siderably higher, reaching $12 and sometimes more.
Some of the companies curtailed their shipments to
New England and the orders of many retailers were
only partially filled. The result was a serious short-
age in many cities.^

The retailer is at the mercy of the operating
companies and the railroads in that he can make
no contract stipulating delivery on a certain date
and at a certain price. He must take his coal when
the railroads can conveniently ship it and at the
price current on the day of shipment. The com-
mission reported that the only solution of the diffi-
culty lay in freeing the production and marketing of
coal from the control and influence of the railroads;
that, since the coal production is in the hands of so
small a group, the sale and distribution of the coal
should be regulated by the Federal Government.
It recommended that a federal agent be given con-
trol over the distribution of loaded cai'S and the

^ Report of the Commission on the Cod of Living, Commonwealth of
Massachvsetts. Report on Anthracite Coal, December, 1916.

THE MIDDLEMEN AND DISTRIBUTERS 73

returning of empty cars ; that the railroads be forced
to give to coal the right of way over other merchan-
dise that is not a necessity of life; and that maxi-
mum prices should be fixed for anthracite coal sold
at the mines.

Not all of the rise in the price of anthracite coal
in the cities of New England has been illegitimate.
There was an actual railroad-car shortage, due to
increased traffic in other commodities, to which
traffic coal-cars were often diverted. The great
jump in water freight rates still further increased
the demand upon rail transportation. And there
were other reasons for the rise in prices, one being
the greatly increased export of this product. Nev-
ertheless, disciimination against certain markets not
favored by the railroad companies was not due to
any legitimate cause but solely to the desire of the
railroads to sell where the hauls were most profitable.

The price of flour rose from $5.80 to $11.25 and
$12 a barrel between 1897 and 1917. Two-thirds
of this rise took place between 1915 and 1917. The
cost of bread rose in proportion. The actual price
of the loaf did not rise quite so rapidly, but this was
compensated for by a diminution in the size of the
loaf. The city in its bread consimiption is, there-
fore, the helpless victim of the grain and flour
manipulators, who increase the price of the ingredi-
ents of bread. ^

^ Report on Bread, Commission on the Cost of Living, Common-
wealth of Massachusetts, January, 1917

74 THE HIGH COST OF LIVING

The city of Boston suffers not only from the
usual embargo on products from outside the city
but is hampered still further by a particularly in-
adequate system of internal transportation of mer-
chandise. This adds to the difficulties of the farm-
ers of Massachusetts in securing a large and accessi-
ble market in Boston and appreciably increases the
cost of living. One of the chief needs of the city in
meeting the situation, says the report on transporta-
tion, is a wholesale terminal market.

This is merely suggestive of the blockade through
which the food and fuel supply of our cities must
pass from the producer to the consumer. It af-
fects every article of daily consumption — meat,
eggs, poultry, fish, butter, fruit, vegetables, coal,
and lumber. Prices are artificially made. They
bear no relation to cost of production, the price paid
the farmer, or the service rendered by the middlemen.
An association fixes the prices at what the traflEic
will bear. An investigation of the prices demanded
for turkeys during the Thanksgiving season of 1916
showed that the middlemen added 100 per cent, to
the cost of the patriotic bird to the consumers of
New York. Their profits were estimated to be in
excess of $1,500,000.

One of the worst results is the destruction of agri-
culture about the great cities, for it is to the interest
of the railroads to bring supplies from as long a
distance as possible. Food from the Far West gives

THE MIDDLEMEN AND DISTRIBUTERS 75

them from ten to twenty times the haul from the
near-by points. And as the railroads either control
or work with the distributing agencies, the latter
can only acquiesce in the proceedings. The farmer
is helpless, as is the consumer. The fact that, as
already stated, of New York's $800,000,000 food bill
only $40,000,000, or 5 per cent., comes from the
farmers of New York State is one reason why
only 40 per cent, of the land of the State is un-
der cultivation and only 375,000 people out of 10,-
000,000 are agriculturists. The railroads have de-
stroyed farming in New York in order that they
may enjoy the earnings that come from a thousand-
mile haul from the Far West.

The food speculators and gamblers form an al-
most endless hierarchy of operators, each one of
whom is interested in inflating the prices as high
as possible in order to secure the largest possible
profit before he passes the produce on to another.
A useful ser\dce is performed by a small portion of
them, but service is secondary to speculation. In
other words, a legitimate function has been con-
verted into a gambling transaction, and in the proc-
ess a large number of perfectly useless intermedi-
aries have wedged themselves in between the pro-
ducer and consumer. It is difficult to tell the cost
in actual dollars to the consumer, or the increase
in price. Farm produce is marketed whose cost to
the consumer is four or five times what the producer

76 THE HIGH COST OF LIVING

receives. Instances of the destruction of great
quantities of food to keep up the combine have
been reported, while the withholding of food to pro-
duce famine prices is so common as no longer to
excite comment.

These manipulators in the food centres of the
countiy fall into several groups, of which the chief
are: (1) the railroads; (2) the refrigerator-cars; (3)
the banks working in sympathy or co-operation with
the other agencies; (4) the food exchanges which fix
prices in the various cities and control the auction
and selling agencies ; (5) the grain elevators and ware-
houses; (6) cold-storage plants and warehouses;

(7) the packing-houses of the Western cities; and

(8) the middlemen, jobbers, and wholesalers who
stand between the terminal agencies and the retail
stores.

These arc the profit-taking agencies between the
producer and the consumer. They not only take
toll for the service they perform, but, what is far
more costly, each is interested in creating a con-
tinuing condition of artificial scarcity so as to col-
lect an additional tribute through speculation.

CHAPTER VIII
THE TRANSPORTATION EMBARGO

England and France discovered, when the war
broke out, that they could not trust their transpor-
tation systems in private hands when the Hfe of the
nation was in the balance, and both countries im-
mediately took over the operation of the railroads.
There was no hesitation, no delay, no two minds
about it. After generations of fervid insistence that
the railroads must be left in private hands, even
those who had been loudest in protest declared that
they must be run by the state.

We can no more have a properly functioning so-
cial organism, with its transportation agencies in
private, profit-making hands, quarrelling all the
time with the public, with Congress, with the courts,
the Interstate Commerce Commission, forty odd
State railroad commissions, with cities, chambers
of commerce, farmers, shippers, and consumers all
over the countiy, than we can have a properly
functioning human being with his circulatoiy sys-
tem in outside hands. And we cannot assure ade-
quate protection to the farmer or the consumer, we
cannot secure fair prices until the whole business of

transportation, warehousing, and storage becomes a

77

78 THE HIGH COST OF LIVING

government function as it is in almost every other
civilized state. ^

And this should be done immediately if we are
to protect the farmers who are responding to the
call of the President to plant, to bring forth wealth
from the ground. For they may see their labor
and expenditure go for naught, and the consumer a
few miles away go hungry for food because of the
breakdown of the transportation agencies which have
failed in their undertakings. The submarine block-
ades the British people, but the railroads of the
United States are blockading the people of the United
States.

For over twelve months — in fact, for a half dozen
years — industr}^, agriculture, and the life of the coun-
try has suffered far more seriously than any one
knows from the shortage of cars and the congestion
of roads and terminals. For a year there has been
a famine in fuel in many sections of the country.
Individual industries have been compelled to sus-
pend operations because of car shortage or conges-
tion at terminals. Many factories have been forced
to run at from one-third to one-half of their capac-
ity because of lack of fuel. Coal-mines have been
closed. The bituminous coal-miners of the Middle
West have been reduced to two or three days' work

1 As indicative of how the raili'oads, when publicly owned, co-
operate to encourage agriculture and build it up, see chapters on
Australia and Denmark.

THE TRANSPORTATION EMBARGO 79

a week. The same has been true in the anthracite
region. This was one of the reasons for the demand
for large increases in wages by the miners. Auto-
mobiles have been driven from the factories to mar-
ket by the tens of thousands on their own power.

The farmer suffers from the car famine along
with the manufacturer. So do food dealers. They
were unable to market their produce. The cost of
food has been greatly increased as has the price of
other commodities. Hundreds of millions of dollars
is a conservative estimate of the loss which the
country has suffered by reason of the failure of our
transportation facilities and the inability of the
railroads to utilize what facilities they have. In
addition — and this is one of the unseen costs of pri-
vate ownership of the railways — the productive ca-
pacity of the country is in a state of semiparalysis
which costs the nation far more than the unmediate
loss on existing shipments or the high freight charges.

And this has been a continuing condition for
many years. Some years ago the farmers of the
Northwest saw the result of their year's labor rot-
ting on the fields because of the shortage of cars.
This is one explanation of the high cost of living,
of the prohibitive price of food and of fuel. Food and
fuel cannot reach the market, or when they do reach
the market the terminals and other agencies are in-
adequate to receive them.

The most recent announcement of the railroads

80 THE HIGH COST OF LIVING

was to the effect that conditions in April, 1917, when
there was a shortage of 140,000 cars, were the worst
in history, but that even graver congestion was in
prospect.

This admission was made when the effective con-
duct of the war, the support of England and France,
the suppl^-ing of munitions, the ecjuipment of our
own army and navy, and the feeding of our people
were involved. We have directed millions of farm-
ers to plant and harvest food, to give their labor to
the nation, and when the harvesting has been done,
the whole nation — ^yes, the whole allied world — may
see the successful conduct of the w^ar, which has cost
millions of men and untold billions of wealth, im-
perilled and possibl}' brought to naught by the break-
down of transportation facilities, not on the sea but
on the land.

This embargo on food is a continuing condition.
It recui's each year. It affects the wheat, corn,
and cereal crop of the West as it does the cattle-
raisers. The railroads admit this. Every industrial
centre in the country knows it. The Interstate
Commerce Commission has stated the peril in the
strongest possible words. In its report of January
13, 1917, on the "Car Supply Investigation," the
commission said:

"The present conditions of car distribution
throughout the United States have no parallel in
our history. In some territories the railroads have

THE TRANSPORTATION EMBARGO 81

furnished but a small part of the cars necessary
for the transportation of staple articles of commerce,
such as coal, grain, lumber, fruits, and vegetables.
In consequence, mills have shut down, prices have
advanced, perishable articles of great value ha^'e
been destroyed, and hundreds of car-loads of food
products have been delayed in reaching their natu-
ral markets. In other territories there have been
so many cars on the lines of the carriers and in their
terminals that transportation service has been
thrown into unprecedented confusion, long delays
in transit have been the mle rather than the ex-
ception, and the operation of established industnal
activities has been made uncertain and difficult.
These conditions have made necessaiy a far-reach-
ing investigation by the commission and now ur-
gently demand prompt, decisive action."

The circulatoiy system of the nation must function
freely and adequately. Failure to do so not only in-
creases the cost; what is far more important, it de-
stroys production., It discourages the farmer and
the manufacturer. Probably no single agency, ex-
cept the private monopoly of land and mineral re-
sources, is as responsible for monopoly, for cui'tailed
production and the high cost of living, as the private
ownership of the railways, with the car shortages,
disciimination, and high cost of service. This is
true of coal, of oil, of raw materials, of food and the
necessities of life.

In spite of the orders of the Interstate Commerce
Commission and the agreement of the railroads to

82 THE HIGH COST OF LIVING

correct the evils, the car shortage, and with it dis-
criminations, have not been reHeved. Probably the
evil is beyond relief by the railroads. It Is inherent
in private ownership.

There are hundreds of railroads in the country
each one of which is run as a separate business.
They ought to be run as a single agency. Their
efficiency would possibly be doubled if the colossal
waste now involved in the struggle for individual
business and the best business were ended. To-day
one railroad has its eastern terminals filled with
cars waiting for return freights, while a terminal a
few blocks away is clamorous for empty cars. The
same is tme of locomotives. Needless trains are
run just to maintain competition. Empty trains
pass one another on different railroads for the same
reason. Terminals all over the country are inade-
quate to handle the freight when it reaches them.
They are glutted with cars, some held for weeks
and months by lack of terminal facilities. This is
one explanation of the shortage of cars. Nor can
the railroads meet this situation. The cost of
bringing the railroads up to our needs is colossal.
^Yhi\e railroad securities have been watered until
the roads are capitalized at $75,000 a mile, billions
and billions are needed just to meet present needs,
not to speak of future development, which is only
less urgent. And only the government can provide
this capital.

THE TRANSPORTATION EMBARGO 83

In addition, thousands of different railroad offi-
cials, each one of whom is interested in carrying the
freight that brings the highest return and that insures
the longest haul over his particular road are deter-
mining for us what commodities shall be carried and
what not. There is little thought of the needs of the
whole nation or concern for the industrial and agricul-
tural life of the whole people. Railroading is run for
the railroads. It must be run for national service —
possibly for national existence.

This is not a fanciful condition. In hearings re-
cently held by the Federal Trade Commission, wit-
nesses stated that the railroads diverted coal-cars
from the transportation of fuel to the transportation
of commodities upon which higher rates were ob-
tainable. Coal-cars were diverted to the carrying
of automobiles, and as a result the price of bitumi-
nous coal increased $2 a ton at the mine in one year's
time. It doubled and trebled the price in many
cities. One witness stated that the railroads made
use of the alleged car shortage to coerce the mine-
owners to sell coal to the railroads on the road's
terms. He stated that the railroads refused to
carry coal for ordinary commercial purposes in order
to crowd down the price charged for their own use
by creating a glut at the mines. A coal operator
on the Chesapeake and Ohio road said that one-half
of the 40,000 coal-cai-s o\Mied by that railroad were
being used for the transportation of other commodi-

84 THE HIGH COST OF LIVING

ties at higher rates. Another operator said that the
mines could supply 40 per cent, more coal if they
had means of shippuig it, and that one-third of the
bituminous coal mined in his district went to the
railroads at a price arbitrarily fixed by them.

And what is tme of coal is true of other indus-
tries; it is tme of food, of agricultural produce> and
of other commodities which do not yield the highest
rate to the roads. And this is true in spite of the
efforts of the Interstate Commerce Commission to
correct it, after the most direct and explicit orders
to the railroads.

The life of the nation rests in the hands of the
railroads. Formerly they gave preferential rates
to communities and industries. Now they favor
commodities that pay the highest rates and stai^e
commodities that pay low rates. The whole pro-
ducing power of the nation may be strangled by
reason of a discrimination against fuel, while the
workers may hunger for food and the farmers lose
the product of a year's effort because there is more
money to be made by the railroads in transporting
luxuries than by transportuig food supplies or fuel.
The farmers are patriotically responding to the call
to feed America and her allies. Yet their efforts
may go for naught and their service be in vain
because the transportation agencies cannot or will
not socialize theii' efforts and serve the nation's
needs.

THE TRANSPORTATION EMBARGO 85

This is another reason for immediate pubHc own-
ership. The railroads cannot be trusted at any
time, certainl}^ they ought not be trusted at this
time, to determine for the nation and the allied
cause what freight shall be hauled and what not.
The railroads might be trusted in this matter were
it not for the fact that it is to their interest in many
cases to decide wrongly. That is what is happening
to-day, for it is this wrong decision that has caused
the famine in fuel all over the country.

For the railroads must make money. That is the
first obligation on the directors and the president.
Their patriotism may cany them a long way, but
they dare not cripple theii- property or permit its
earnings to fall. And much of the freight that is
most important to the nation is the freight that
yields the smallest revenue. Every temptation ex-
ists to make the wrong decision. Food and fuel
are carried at lower rates than are non-essentials.
It is, therefore, to the interest of the operators to
neglect low-class freight and favor the high-class
freight that yields the big returns and also to accept,
for the same reason, that freight which gives them
the longest haul.

It is imperative that the government should de-
cide what freight is most urgent. This cannot with
safety be left to be determined by private profit,
even though the railroads are acting under a pooling
arrangement and are endeavoring to serve the nation.

CHAPTER IX

WHY THERE IS NOT MORE FOOD

As a result of the conditions described, agricul-
ture is suffering. The farmer is being driven to the
wall. He has to overcome so many obstacles, his
business is so controlled by others, and he is subject
to so many failures that he grows discouraged.
There is no industry in the country that is as help-
less as that of agriculture and no industry so much
in need of protection. It is not the exhaustion of
the soil, the competition of the better land of the
West, the lack of scientific agriculture, or the greater
and more secure gains from industry that is driving
the farmer from the land; it is the failure of the
distributing agencies, the exactions of the middle-
men, railroads, and bankers that are making agri-
culture unattractive. Under the provisions of the
Lever bill recently enacted by Congress, millions
of dollars have been appropriated for stimulating
meat production through the prevention of cattle
diseases and the conservation of meat and dairy
products. Millions more have been appropriated
for the distribution of seeds, for the elimination of
waste, and for education. Yet a little study would

have satisfied Congress that the farmer does not

86

WHY THERE IS NOT MORE FOOD 87

want outdoor relief. What he wants is a policeman.
The farmers know what is the matter with agricul-
ture. They say that the conditions under which
food is marketed in this country are so bad that
there is little incentive for production.

The farmer does not want free seeds; he wants
a chance to market his produce. Otherwise he says
there is no use in producing. He works hard enough,
but the State by inaction permits his produce to
rot in the ground or to be sold at a low figure or
loss when it reaches the market. This is happening
all over the country. The farmer knows it. Scores
of official investigations have made it plain, and
farmers' organizations have appealed for years for
protection — protection from what is in effect pure
robbery. And the robbery has been so systematic
and so long-continued that in many sections of the
countiy the farmer is givmg up in despair.

A generation ago even the smallest farmer raised
diversified crops. He raised wheat, corn, vegetables,
and fruit, as well as cattle, hogs, sheep, and poultry.
From all these activities he was able to make a
comfortable living. If one crop failed there were
others to fall back upon. And the faraier was
reasonably contented with his lot, as he is in those
countries where he is protected in his calling. The
pnces of food were low. There was little or no com-
plaint about the cost of living.

Marketing was simple. The farmer sold to the

88 THE HIGH COST OF LIVING

near-by store. In most towns there was an open
public market to which the farmer came once or
twice a week, as is still the case in many Southern
cities. He brought his cows, hogs, and sheep to the
local slaughter-house, where he sold to the local
butcher. The farmer, like every other business
man, dealt directly with the buyer, who was compet-
ing with other buyers. Demand and supply estab-
lished prices just as they do where competition is
free. And the prices so established approximated
the reasonable costs of production plus a competi-
tive profit.

As cities grew in population and the market
was widened, the business of distribution became an
important industry. It was specialized. The dis-
tributers found it to their profit to work in har-
mony so that they could fix the prices paid for
foodstuffs. Then they developed distant sources
of supply, partly because of the increased demand,
partly as a means of controlling local prices. With
the development of the cattle-ranges of the West the
raising of l^eef and hogs became a great industry.
Packing centres were developed in Chicago, Omaha,
Kansas City, Fort Worth, and elsewhere to which
the drovers shipped their cattle. For a time the
packing-houses competed with one another, but they
were soon di'awn together by an identity of interest
in keeping down the price of beef on the hoof, on
the one hand, and increasing the price of meat on

WHY THERE IS NOT MORE FOOD 89

the other. Ultimately the packing-houses became
in effect a combine of four or five great firms. The
shipments of meat to Em-ope and the Eastern cities
required refrigerator-cars, and the railroads per-
mitted the packers to take over this business, the
railroads hauling the cars as they do coal-cars and
cars owned by the fast-freight lines and express
companies. Soon the refrigerator-car lines, owned
by the packers, acquired control of the transporta-
tion of meat. Then they entered other fields. The
cars are used for the transportation of fruit, vege-
tables, and perishable produce from California and
Florida. The packing-houses became interested in
other kinds of food, and to-day they are in sub-
stantial control of the distribution of the perishable
food supply of the country through their control
of the transportation and the cold-storage terminal
warehouses which they own all over the coimtry.

The railroads are not only directly connected with
the packing-houses through interlocking directorates
and common ownership; it is to their advantage
to encourage long-haul business. It is to their in-
terest to bring food from as great a distance as
possible. And they co-operate wdth the packers to
discriminate against the supply of cattle by local
farmers. They make it difficult for Eastern farmers
to secure transportation. They shut them out of
the local market. This discouraged local cattle-
raising. Far more effective was the control of the

90 THE HIGH COST OF LIVING

local meat-dealers and the local slaughter-houses
by the packers. This control was brought about
in a variety of ways. The packers erected cold-
storage plants in the cities. Local butchers had to
come to them for meat and especially for canned
meat and by-products. And the packers refused to
sell to them unless they accepted their terms. If
the local butchers insisted on buying local meat,
the packing-houses opened independent butcher
shops and sold meat at so low a figm'e that the in-
dependent butchers were driven out of business.
Or they bought out the local slaughter-houses and
closed them down so that the farmer had no place
to kill his cattle. A quarter of a century ago almost
every town contained a slaughter-house. To-day
they do not exist or do a veiy small business. In
every other country of the world, with the excep-
tion of the United States, cattle are killed at local
abattoirs. And everywhere, with the possible ex-
ception of the United States and Great Britain,
cattle must be slaughtered in public abattoirs.
Private plants are not permitted. As a result, in
Germany there are one thousand public abattoirs,
every city of any size having a meat-killing estab-
lishment, which is one of the show-places of the
city.

The railroads derived no revenue from cattle
driven to market on the hoof and little revenue on
cattle from the neighboring country. They desired

WHY THERE IS NOT MORE FOOD 91

long-haul traffic. And this was to be obtained by
co-operation with the great packing-houses. But,
even aside from this co-operation, the refrigerator-
car companies, the packing-houses, and the railroads
are so interlocked in their ownership, as shown by
the report of the Pujo investigating committee of
Congress, that the railroads would have united with
the packers irrespective of their interest in freight
revenues.^

It is by this conspiracy of the transportation,
packing-house, and cold-storage industries that the
raising of cattle all over the country has been dis-
couraged or killed entirely. It is only partly true,
if at all, that the production of cattle, hogs, and
sheep has been killed by the cattle-ranges of the
West. It has really been killed by the inability of
the local farmer to find a market. And to-day, in
spite of the attempts of the Interstate Commerce
Commission to regulate railroads and refrigerator-
cars, it is very difficult for the farmers of New York
to secure transportation to the city, although the
fanners of California and Texas ship train-loads
of food which are delivered with the regularity of
passenger-trains and frequently in less time than

1 The methods employed by the railroads to discourage or stifle
industry are indicated by the investigations of the Federal Trade
Commission and the Interstate Commerce Commission in relation
to the recent car shortage and the manipulation of the coal market.
Wherever it is to the private interest of the railroads to discourage
an industry they do so. This evil is inevitable under private own-
ership of the transportation agencies.

92

THE HIGH COST OF LIVING

it takes to secure a delivery from a shipping-point
fifty miles away.

Gradually, cattle, sheep, and hogs ceased to be
raised by the ordinary farmer. They, too, secured
their meat from the Western packers. Ultimately
the local slaughter-houses were bought out by the
packers or were put out of business by competition,
and the local meat-dealers became in effect mere
agents of the great packing-houses which controlled
the meat supply.

This is one explanation of the reduction of live
cattle and with it dairying. An examination of the
statistics of cattle in the country shows the extent
to which the raising of cattle of all kinds has dimin-
ished.

The statistics of domestic animals on farms, ac-
cording to the census of 1900 and 1910, are as
follows :

Year

Dairy

Cows

All,
Cattle

Swine

Sheep

Goats

1900
1910

18,108,666
21,795,770

69,335,832
63,682,648

64,686,155
59,473,636

61,735,014

52,838,748

1,948,952
3,029,795

The number of dairy cows increased by only
3,687,104 in ten years, while the number of swine
and sheep decreased by about fourteen million head.
The total loss in all cattle was five and three-quarter
million head at a time when the population of the

WHY THERE IS NOT MORE FOOD 93

country and the consuming power of all classes was
increasing rapidly.

Similar methods are employed by the distributers
to kill off local truck-gardening. Local produce in-
terferes with the control of the market. The rail-
roads again find it to their advantage to bring in
food from a distance, while the middlemen find it
much easier to control prices if they are free from
competition by the neighboring farmers. And all
sorts of discriminations are made against local pro-
duction. The farmers find it difficult and expensive
to get their food into the city. There are no ter-
minals that are free from control. Ofttimes their
consignments are rejected. Often they are left to
rot at the terminals. It is to the interest of the
middlemen to keep down the supply and prevent
anything like an excess supply in the market. In
time the city becomes dependent on vegetables
brought from a distance just as it becomes depen-
dent on meat brought from the packing centres.
And after the middlemen and distributers have
crushed local competition they treat the distant
shippers as ruthlessly as they do the near-by farmer.
They refuse his shipments. They leave consign-
ments to spoil or offer the shipper a price that is
so low that it scarcely pays for transportation. In
the spring of 1917, when Congress was debating the
food bills and the press of the country was ringing
with condemnation of the food speculators, 800,000

94 THE HIGH COST OF LIVING

pounds of spring vegetables were permitted to rot
on the wharfs along the Hudson River. Yet the
poor of New York were on the verge of food riots,
with car-loads of perishable food but a few blocks
away. Commissioner John J. Dillon, commenting on
this situation, said: "Not only were the people of
New York City the victims of such a market system,
but farmers of the South who sent the vegetables
here lost many thousands of dollars in freight charges
and lost labor and money spent to produce the
vegetables. The farmers who sent the vegetables
are receiving curt wires from the commission men,
saying in effect: ' Market oversupplied ; no demand;
your shipment rotted at wharfs for want of buy-
ers; health authorities condemned entire shipment.' "
In recent years Eastern apples could not be mar-
keted, but car-loads of Oregon apples found a prompt
and regular market in the East. Apples which the
farmers of New York are ready and eager to sell
for $2.50 a barrel rotted on the ground fifty or a
hundred miles from the city, while car-loads of West-
ern apples are sold at prices prohibitive to the poor.
Peaches, pears, and other fmits find the city markets
closed against them, while Florida, Maryland, and
distant producers secure cars and buyers in abun-
dance. A few years ago nearly every city was sup-
plied, in part at least, from its immediate neighbor-
hood. To-day the bulk of the perishable vegetables
come from a distance. Even eggs and poultry can

WHY THERE IS NOT MORE FOOD

95

be marketed more readily from Chicago than from
a point within a few miles of the New York City Hall.
The following are some selected farm crops taken
from the census retm'ns of 1899 and 1909, respec-
tively, showing the extent to which food production
has fallen off :^

Crop

1899

1909

Increase or
Decrease

Corn (bushels) . . .

2,666,324,370

2,552,189,630

-114,134,740

Wheat (bushels)..

658,534,252

683,379,259

24,845,007

Rye (bushels) . . .

25,568,625

29,520,457

3,951,832

Barley (bushels)..

119,634,877

173,344,212

53,709,335

Cotton (bales) . . .

9,534,707

10,649,268

1,114,561

Total small fruits

(quarts)

463,218,612

426,565,863

-36,652,749

StrawbeiTies

(quarts)

257,427,000

255,702,000

-1,725,000

Apples (bushels).

175,397,600

146,122,318

-29,275,282

Total orchard

fruits (bushels)

212,365,600

214,683,695

2,318,095

The amount of food produced per capita of our
population has fallen off from year to year or at
best remained stationary even in the face of the
export demand due to the war, as indicated by the
figures on page 96.

There has been, it is true, a noticeable increase in
farm production along some lines. Among these
are California fruits, cereals used in the manufac-
ture of whiskey and beer, sugar-beets, figs, rice, and
olives. The noteworthy increases are in articles in
which the producers have organized for marketing,

^statistical Abstract of the United States, 1914, p. 142.

96

THE HIGH COST OF LIVING

such as the co-operative seHing agencies of California,
or in trust-controlled products which have organized
transportation, or in those articles in which the food

Year

Production Pee Capita

Meats— heef, veal, mutton,
and pork
(pound^

Milk
(gallons)

Eggs
(dozens)

1899

1909

1915

248.2
213.9
219.6

95.6
81.0
75.5

17.0
17.3

17.8

Year

Production Per Capita

Cereals — Com, wheat, and

rice

(bushels)

Potatoes
(bushels)

Sugar
(pounds)

1899

1909

1915

43.9
35.3
40.2

3.6
4.2
3.5

6.4
18.3
19.9

trusts, operating refrigerator-cars, protected their
own supply. In those instances where the farmer
was unable to co-operate, or where he was at the
mercy of the railroads and distributing agencies,
the output of the farm has either decreased or re-
mained stationary.^

1 The California fruit-growers market 67 per cent, of the citrus
crop of that State directly to Eastern markets through a co-operative
agency. There are no middlemen or speculators. They marketed
$50,000,000 of fruit in 1916. The growth of the industry shows
the effect of freeing production from control by the distributers.

Year

Oranges
(boxes)

Lemons
(boxes)

Fig 8
(pounds)

Olives
(pounds)

1899

1909

6.167.000
19.487.000

876,876
2.770,000

12.994.000
35.060.000

5,053.000
16,405.000

WHY THERE IS NOT MORE FOOD 97

The farmer has always been ready and wiUing to
produce. And he has continued to produce even
under an embargo almost as tight as that against
a belligerent country. But gradually one line of
livehhood after another has been taken from him
by the railroads, terminals, refrigerator-car com-
panies, packers, cold-storage plants, or a combina-
tion of middlemen acting in concert with these
agencies.

This is why farming in the Eastern States has
ceased to be profitable. This is why farmers have
abandoned their farms. They have been driven
from them by the distributing agencies who really
control their industry. And when these agencies
had destroyed local competition and built up pro-
duction in the South and West, when the local abat-
toir was closed and the local market-house had
fallen into disuse, when the farmer ceased to pro-
duce for the local market in material quantities,
then these same agencies turned on the big producers,
the cattlemen of Texas and the wheat-growers of
Dakota, the truckmen of the South, and repeated
the same process. They combined against the
cattleman and paid him less than the cattle cost.
They rigged the price of wheat in the grain-pit;
they glutted the local markets with fruits, vege-
tables, and perishables from a distance, and com-
pelled the shippers to accept ruinous prices. Often
they destroyed the shipments to keep up prices.

98 THE HIGH COST OF LIVING

Controlling the cold-storage plants, they are able
to buy and store when the farmer is necessitous,
and then, having secured control of the market, they
boost the price. There is no single trust-controlled
industry in the countiy that is subject to as many
different kinds of monopoly as is food, and in none
of them has there been so much to discourage pro-
duction.

The same conditions prevail as to cereal products.
Scattered all over the country are grain-elevators
and terminals. These, too, are privately owned,
frequently by the directors and stockholders of the
railroads. Into these elevators the grain of the
farmer goes while waiting shipment. Here the
grain is graded and its price fixed by rules estab-
lished by the warehouses and millers. The farmers
of the West are compelled to market their grain
through these elevators just as the cattleman must
market his cattle through the packing-houses. The
methods employed by the grain exchanges, packers,
and warehousemen are desciibed in other chap-
ters.

Closely linked with all these agencies are the
banks of Chicago, Minneapolis, Kansas City, and
the other food-terminal cities. The banks have
branches or connections over the West which make
loans to the farmers and the cattlemen. Through
the interlocking interests of the middlemen and the
banks, the producers are compelled to sell when the

WHY THERE IS NOT MORE FOOD 99

distributei's decree. They first fix the price as low
as possible and then exert financial pressure upon
the fanners to sell at the season when prices are
low. Then after the food supply has been cornered
prices are again fixed by the manipulators for the
nation and the world. As stated in previous chapters
the farmers and cattlemen in the West were forced,
by these methods, to sell their produce year after
year at less than cost.

The control of the food supply of America is more
complete than any one really knows. And no mo-
nopol}^ has been as ruthless in its treatment of the
producers, on the one hand, and the consumers on
the other, as the food syndicates which operate in
all of the larger cities and which control almost
every article of food. This system is so inter-
related that it is impossible to trace the conspiracies
or the cost of the manipulations to the consumer.
In addition to these agencies there are monopoly-
owned steamship-lines that transport nearly all of
the fruits from Florida and Central and South
America, from the Carolinas and the eastern shore
of Marjdand, while the haulage of fruit, of meat, of
fresh vegetables, of poultry, butter, and eggs, and
of perishable products by land is done by the re-
frigerator-car companies, owning thousands of cars,
which are hauled by the railroads at an agreed rate.
The fast-freight lines give their owners an advan-
tage over other competitors, for they can deny cars.

100 THE HIGH COST OF LIVING

if they will, and by a variety of devices prevent
the produce of the competitor from ever reaching
the market. It was the privately owned refriger-
ator-cars that enabled the packere of the West to
perfect their monopoly and drive competition out
of this field. The packing-houses are few in num-
ber but their earnings are colossal. The earnings of
Armour & Company in 1916 were $20,100,000 as
against $7,509,000 in 1914. The earnings of Swift
& Company in 1916 amounted to $20,465,000 as
compared with $9,450,000 two years earlier. The
earnings of Morris & Company, Wilson & Company,
and other packers were equally high, while the earn-
ings of the United Fruit Company shot up from
$2,264,000 in 1914 to $11,943,000 in 1916.

It is a not uncommon experience for farmers to
send a car-load of fruit, of vegetables, or of other
produce to market and be advised that there is no
sale for it, and the shipper will have to lose the
freight as well. After one or more experiences of this
kind the producer goes out of business. He aban-
dons that particular line of production. He per-
mits his fiiiit and vegetables to rot on the ground.
When the dairyman casts up his accounts and finds
that the price he receives for liis milk does not pay
for the feed of his cattle, he goes out of the dairy
business. After the local truck-gardener has seen
his food spoil at the station because of the inabihty
or unwillingness of the railroads to market it, he

WHY THERE IS NOT MORE FOOD 101

throws up his hands. And when the cost of trans-
portation to market is as much as the farmer re-
ceives for his labor, he comes to the conclusion that
there is something wrong with the government that
permits such a thing, and he turns away in despair,
for he sees no prospect of relief.

I have not the slightest doubt but that the pro-
duction of food of all kinds would be increased
enormously aU over the country if the railroads
were in public hands. I believe that the Eastern
markets could be supplied from their own doors
if they were free from the discrimination and em-
bargo which now prevails. One of the greatest of
all obstacles to the revival of farming is the imcer-
tainty of a market and the fear that the transport-
ing and distributing agencies would bring the efforts
of the farmer to naught. Other countries have dis-
covered that these agencies cannot with safety be
left in private hands, and in other countries cities
are surrounded by gardeners and truckmen who
supply the local market.^ They raise cattle, sheep,
hogs, and poultry, and sell directly to the retail
merchants or through the markets of the near-by
cities. These countries have eliminated the private
distributer and have opened up the highways, the
warehouses, and the cold-storage plants and made

^ In Baltimore, where splendid markets are maintained by the city,
the cost of living is very low, while all about the city the business
of truck-gardening has been developed to satisfy the local demand.

102 THE HIGH COST OF LIVING

them agencies of service rather than of profit. Such
a programme is necessary in the United States if
we would bring agriculture back to life again and
reclaim the abandoned farms of the country to labor.

CHAPTER X

DENMARK: AN EXPERIMENT STATION IN
AGRICULTURE

Some years ago I visited the little state of Den-
mark, which protrudes up into the North Sea at
the western corner of Europe. As I crossed the
low-lying moors I was impressed with the snug little
villages, the neat and attractive farmhouses, and
the buildings in the towns. But most of all I was
attracted by the appearance of the country, the in-
tensive cultivation of the soil, the use of every
waste place, of a new kind of agriculture that I had
not seen anywhere else in Europe with the exception
of Belgium and Holland.

The land was not naturally fertile. That was
apparent from the car window. Nature had been
none too generous with this little corner of Europe,
about twice the size of Massachusetts, and with a
population of 2,861,000, about half the population
of New York City, of which about 40 per cent, live
in towns or cities and 60 per cent, in the country.

Copenhagen, the capital city of 500,000, partook
of the prosperity, good order, and cleanliness of the
agricultural towns and country districts. The slums
were almost negligible. There was little evidence of

103

104 THE HIGH COST OF LIVING

poverty. All classes of people seemed to have
leisure. They frequented the restaurants and caf^s,
they went to the Tivoli — the city's pleasure resort —
in the evening by thousands, where rich and poor
enjoyed themselves in a simple, democratic way.
Everything suggested personal and poHtical freedom,
democracy in politics as well as in life.

Denmark has a king, it is true, but he exercises
little power, while the parliament, I learned, was
ruled by the peasants, or small farmers, working
in co-operation with the radicals and socialists.
Women have recently been granted the ballot.
And the upper house of parliament, which is the
obstacle to progressive legislation in most of the
countries of the world, has been shorn of its power.

But Denmark is particularly interesting at the
present time because of what she has done for
agriculture, for keeping her people upon the land,
for the many experiments which she offers to the
world. For Denmark is an experiment station
whose achievements must be copied, in part at least,
if the United States is to save agriculture from de-
cay and keep her people on the soil. Denmark has
done this in the face of natural obstacles far greater
than those which confront any other country unless
it be Holland. And she has done it by law, by the
use of legislation and the control of politics in the
interest of the farmere.

Fifty years ago Denmark lost her choicest posses-

DENMARK: AN EXPERIMENT STATION 105

sions, Schleswig and Holstein, to Germany. Cheap
agricultural produce from the American West threat-
ened her home as well as her foreign market. Politi-
cal and industrial depression settled upon the people.
There was little to justify hope under these condi-
tions. Yet to-day Denmark is one of the wealthiest
countries in Eui'ope in proportion to its population.
The average deposits in the savings-banks are
$77.88. In England they are only $20.62 and in
the United States $31.22. The number of depositors
in the banks is higher than in any other country,
being 51 out of every 100. And 78 per cent, of the
savings are in the rural districts. There is a tele-
phone in nearly every fair-sized farm, while Danish
cattle, Danish bacon, and Danish eggs are recognized
for their superiority all over the world. Before the
war Denmark supplied Germany with a considera-
ble part of her cattle; the Danish dairies supplied
England with butter and the British people with
bacon and eggs. There were no high-cost-of-living
investigations in Denmark; there are no monopolies
or trusts, and, while the country has few persons of
great wealth and relatively little industry, more
has been done for education, and intelligent edu-
cation, than in almost any countr}" in the world.

How was this brought about in the face of a
niggardly nature, a chilly, inhospitable climate, in
a relatively poor state surrounded by greater powers ?

The movement began with education — a strange

106 THE HIGH COST OF LIVING

kind of education that has no exact counterpart in
the world. The nearest approach to it in this coun-
try is the Gaiy system, with this important differ-
ence, that the Gary system is primarily designed
for the cities while the schools of Denmark are for
farmers. They were conceived by an insurgent
bishop, Grundvig by name, who insisted that the
schools of the country should be shaped to the needs
of the country. He saw that education should be
agricultural and the culture of the country should
be the culture of the farmer. He spent his life, as
most agitators do, without seeing the results of his
efforts come true. But to-day there are eighty-two
of these people's high schools in Denmark, each one
of which is independent in its administration and
each of which is a centre of politics, of discussion,
of propaganda, of agricultural training. The years
of attendance are from 16 to 35; the boys attend in
the winter and the girls in the summer. The cost
to the pupil, including board and lodging, is about
forty dollars a year. Text-books are but little used.
Classroom work of the ordinary kind is of secondary
importance. The schools idealize country life and
the nobility of manual toil. To attend one of these
schools is the ambition of the peasant. He is taught
the history of his country. He learns the songs of
Denmark. He acquires a strong body. In addi-
tion, the curriculum includes farm accounting, nat-
ural science, drawing and surveying, bookkeeping,

DENMARK: AN EXPERIMENT STATION 107

and agricultural economics of all kinds. Round
about the schools are experimental farms. The stu-
dent learns about agriculture and the conduct of the
thousands of co-operative societies which are to be
found all over Denmark. He acquires a love for
farming and a scientific appreciation of its possibil-
ities and its joys. About 10,000 pupils attend these
schools every year.

The Danish fanner is the most intelligent farmer
in the world. And he has a culture of his own,
gained from the emphasis which has been put upon
farming by the nation. For not only education
but legislation and the politics of the state are con-
centrated on agriculture as the predominant inter-
est of the people. And as a result of education, a
widely read press, and endless political organizations
the famier has become the ruling class in the state.
He dominates parliament. Members of the min-
istry are chosen almost exclusively from among the
peasants, and the railroads, taxation, and social
legislation are directed to the intelligent upbuild-
ing of agriculture.

And back of everything else, and in a sense ex-
plaining it, is the relation of the people to the land.
Fifty years ago Denmark was divided into great
estates as still is a great part of Europe. The
feudal system had survived. The great landown-
ers, the titled nobility of the country, ruled parlia-
ment in their own interests. They shifted the taxes

108 THE HIGH COST OF LIVING

onto the peasants. They kept theni in ignorance.
They refused to amehorate the condition of the
agricultural worker, who was little better than a
serf. Denmark was a landed oligarchy, the upper
house of parliament being a kind of House of Lords.

All this has been changed. The Danish farmer
is no longer a tenant. He owns his own farm.
And being an owning famier, he has eveiy stimulus
and ambition to improve his farm. In this he is
like the French, Swiss, and Dutch peasant. To-day
90 per cent, of the farmers of Denmark own their
own farms as compared with 63 per cent, in the
United States. In the South and West the percent-
age of farm ownership in this country is very much
lower. In the new State of Oklahoma farm owner-
ship amounts to only 45 per cent., in Alabama to
40 per cent., and in Texas to 48 per cent. And in
many counties throughout the West farm owner-
ship has dwindled to 30 per cent, of the farming
population.

The Dane appreciated that the first necessity of
successful agriculture was ownership. For the his-
tory of every country shows that tenant farming is
wasteful and indifferent. It leads to the exhaustion
of the soil. The tenant has no ambition ; he makes
no effort to improve his farm; he has little politi-
cal and social interest whether it is in Ireland or
America. And home ownership has changed the
entire psychology of Denmark. It has changed

DENMARK: AN EXPERIMENT STATION 109

agriculture and politics as well. For as soon as the
Dane acquired a farm he began to have many other
interests. He protested against the rulership of the
landed aristocracy and, being in the majority, he
sought a more democratic form of government.
Year by year his control of parliament has been
strengthened, until to-day the peasant, with the
more radical groups from the towns, controls the
government of the country.

And being a home-owning farmer and realizing
its advantages, the peasant worked out a construc-
tive plan for breaking up the remaining feudal es-
tates and for distributing the land among his sons
and the workers of the city. An appropriation of
$10,000,000 was first made, to be allotted by an
agricultural commission to persons who desired to
acquire faiTns costing in the neighborhood of $1,200.
The applicant needs only provide 10 per cent, of the
cost; the state provides 90 per cent. The would-
be farmer must be indorsed by other farmers and
have had some experience in agriculture. He pays
interest at the rate of 3 per cent, upon the loan
advanced by the state and is given from thirty to
forty years in which to repay the capital loan in
annual instalments of from 1 to 2 per cent. The
new farmer is aided by his neighbors. The state
itself sends agents, who instruct him in planting, in
dairying, in the rotation of crops and the care of
the soil. Under this law the number of peasant

110

THE HIGH COST OF LIVING

owners have increased year by year, until to-day
nine out of ten farmers own their own farms.

These farmers of Denmark are distributed as
follows :

Size of Farms —
Acres

Number op

Farms in This

Class

Total Number

OF Acres in

Class

Averaoe Size
OF Farms

Less than 1 3^2 • • •

lJ^-133^

131^-40

40-150

150-650

More than 650. .

68,000
65,000
46,000
61,000
8,000
822

25,000
450,000
1,150,000
5,900,000
2,100,000
1,150,000

. 37 acres

7.00 "

25.00 "

97.00 "

263.00 "

1,400.00 "

The average size of the 248,000 farms of the first
five classes, which comprise nine-tenths of the land,
is but 39 acres. Of these, 68,000 farms average less
than one-half an acre each. The veiy large farms
of the old feudal nol^ility comprise only about one-
tenth of the total agricultm-al area.

The people's high schools form the educational,
and fai'm ownership the economic, foundation of
agriculture in Denmark. And each reacts upon the
other. The peasant is willing to pay for education
because he realizes that it increases his efficiency and
the output of his farm. And education, in turn,
trains the farmer to self-reliance, to a knowledge
of politics and of co-operative group action as
well.

As a result of these two agencies, Denmark has
become an agricultural state par excellence. One

DENMARK: AN EXPERIMENT STATION 111

middleman after another has been eliminated, until
to-day the peasants form a producing, distributing,
and banking organization, handHng through their
thousands of co-operative organizations eveiy line
of business which affects their life. The railroads
are owned by the state and are run for the farmers.
Freight rates are adjusted so as to place Danish
produce in Germany and England at the lowest pos-
sible cost. Before the war steamships plied from
Danish ports to England with the regularity of ex-
press service, so that Danish butter and eggs could
be laid fresh in the British market. Earnings of the
railroads are kept low in order to encourage agri-
culture. The express, telephones, and telegraph
business are also under state management.

But the Danish peasant is not a sociahst although
he works in harmony with the radical parties.
The Dane thinks in terms of self-help. He rehes
upon himself rather than upon the state. He is a
co-operative. Co-operation began in the early
eighties with dairying. Prior to 1881 each farmer
made his own butter. In that year a few farmers
got together and organized a co-operative daiiy.
The venture proved so successful that other farmers
organized similar dairies. To-day there are 1,087
co-operative dairies with a total membership of
158,000 farmers, who own three-fourths of the cows
of the coimtry. Nearly 95 per cent, of the farmers
are members of these dairies, which shipped nearly

112 THE HIGH COST OF LIVING

$1,000,000 worth of butter a week to England before
the war.

The success of co-operation in dairying induced
the fanners to build co-operative slaughter-houses.
To-day there are nearly 40 of these farmer-owned
abattoirs, which slaughter 1,500,000 hogs annually
and have a membership of 101,0 )0. 'i'iio raising
of hogs was greatly stimulated by the co-operative
movement, and the business has grown from 23,400
hogs to over 1,500,000. Even the egg business,
which in many ways is the most interesting of all,
has been organized along co-operative lines. Al-
most every farmer is a member of an egg-collecting
society. The farmer does not take his eggs to the
near-by store and sell them for whatever he can
get. He sells them himself. The country is divided
into circles or districts. The egg association collects
the eggs from the individual farmers and takes them
to the near-by warehouses. Each egg is stamped
with the name of the producer and the date of its
delivery, so that any complaint may be traced.
The eggs are then sent to Copenhagen, where they
are packed and classified for export. In 1896 the
egg-export business amounted to about $2,000,000.
By 1908 it had grown to $6,600,000. Danish eggs
have a reputation of their own. They are always
fresh and they bring high prices.

The peasant has pushed his co-operative activities
into other fields. Some years ago the middlemen

DENMARK: AN EXPERIMENT STATION 113

controlled the English market. They controlled the
bacon industry. So the farmers organized a selling
agency of their own known as the Danish Bacon
Company of London. It immediately destroyed the
meat trust and in addition it assured the farmer
a sure market for his produce. Banking is also a
co-operative undertaking. There are 536 co-opera-
tive savings-banks in the country whose deposits
amounted to $208,500,000 in 1906. The farmer also
buys at cost. He buys through central agencies in
Copenhagen, which then distribute the commodities
to the various co-operative selling societies scat-
tered all over the state. The farmer buys food for
his cattle in this way. He buys his machiner}^ as
well as his own household supplies. A co-operative
store is to be found in every village. The turn-over
of the purchasing societies alone in 1907 amounted
to $17,500,000. The farmer also buys and now
manufactures his own fertilizer by co-operation.
There are peasant canning factories, creameiy sup-
ply companies, as well as co-operative organiza-
tions for the insurance of live stock against hail and
other storms. As a matter of fact, there is scarcely
an activity or a need that is not covered by one
or more co-operative associations. And there is
scarcely a line of agricultural economy that is not
promoted by the state or by an organization de-
signed for this purpose.

Co-operation is another expression of home-

114 THE HIGH COST OF LIVING

ownership. For the tenant is rarely a co-operator.
He has no permanent interest in his farm. He
moves from place to place and is interested only
in getting as much out of the soil as he can before
he moves to another farm.

The Danish peasant has realized dividends from
his education, from home-ownership, from co-opera-
tion and the control of the state in his own interest.
In thirty years' time the export trade in farm prod-
ucts has increased 600 per cent., while the standard
of living and the education and culture of the peo-
ple has been raised to a higher general average than
that of any country in Europe. The annual exports
to England amount to nearly $90,000,000, of which
$51,000,000 is in butter, $30,000,000 is in bacon,
and the balance is in eggs. The total export trade of
the country is approximately $380 for every farm,
of which 133,000 of the 250,000 in the country are
of less than 13| acres in extent, the average of all
the farms of Denmark being but 43 acres. The ex-
port business alone amounts to $9 per acre in addi-
tion to the domestic consumption as well as the
support of the farmer himself.

The peasant uses the state in many other ways.
Commissions are sent abroad to study foreign mar-
kets and foreign needs. Stock is bred from the best
animals. Chickens are selected for their qualities
as egg producers. The soil is studied and reports
are made upon it. Nothing is left to chance. Ma-

DENMARK: AN EXPERIMENT STATION 115

chinery, too, has been universally introduced. The
government grants $100,000 a year to six expeiiment
stations in breeding. There are, in addition, over
100 co-operative local experiment stations founded
by the farmers. Cattle, horses, and hogs are studied
with as much care as is industiy in other countries.
There are breeding societies and other agencies for
ascertaining the best kind of Hve stock. And the
animals are cared for with all of the skill of veter-
inary science. Drastic measures are taken against
the foot-and-mouth disease, and tuberculosis is
guarded against often by giving each cow her own
drinking-vessel.

Democracy is a very loose term. It means differ-
ent things in different countries. But, taking all of
the elements into consideration, Denmark is possibly
the most democratic countiy in the world. It is
democratic industrially as well as politically. Special
privileges have been eliminated. There is no para-
sitical class. The government is mn by t*he pro-
ducers. And Demnark and Australia are almost
the only countries in the world where this is true.
Ordinarily the pri\dleged classes are in control.
And they legislate in their own interest for the pro-
tection of monopoly, special privilege, and the ad-
vantage of their class. In Denmark, government,
education, and the machinery of distribution and
exchange are in the hands of the farmer, who has
educated himself in statesmanship, in agricultural

116 THE HIGH COST OF LIVING

science, and in co-operative business, until this little
state is almost as self-contained in its activities as
was the market of a small town in New England a
hundred years ago.

CHAPTER XI

HOW AUSTRALIA CONTROLS THE FOOD
PROBLEM

From the beginning of the AustraHan settlement
there has been a marked tendency toward state so-
ciaHsm and the control of property in the public
interest. The Australian colonies are, in fact, the
only colonies of Anglo-Saxon stock that have aban-
doned the laissez-faire philosophy which prevails in
Great Britain, the United States, and Canada. The
railroads were obviously destined to be owned by
the state, owing to the fact that lines had to be
built to develop the interior of the country and to
open up the mining regions. Private capital would
not imdertake such ventiu-es or was only availa-
ble at exorbitant rates. Even to-day railroads are
being built with the aim of developing sections of
the country which will not be profitable for genera-
tions. But they open up the territory and justify
themselves in this way. As soon as existing lines
become profitable extensions are built into new ter-
ritoiy. This keeps down profits. There were 18,-
653 miles of railway in the commonwealth in 1912,
of which only 1,755 miles were in private hands.
Of these nearly one-half were timber and mining
lines not open to the public. Freight rates and

117

118 THE HIGH COST OF LIVING

passenger fares on the private lines are double and
sometimes treble those on the state-owned railways,
and the former make no concessions in time of
emergency.

As in Germany, Denmark, and Switzerland, the
railroads are operated for the upbuilding of the
state. As Australia is primarily an agricultural
nation, the aim is to aid the farmers in every pos-
sible way. An instance of such assistance in times
of stress is the activities of the railways of Victoria
in the drought of 1914, when they carried live stock
from the affected areas to the green state forests
along the seacoast. The railways also hauled wa-
ter for household and stock use to the dried-up
areas.^ The government railways are equipped with
refrigerator-cars and can accommodate the model
travelHng dairies sent out by the state for the in-
struction of farmers. This is indicative of the oper-
ating policy. The railways are treated as are the
roads and highways. They are means of communi-
cation, not for profit but for pubHc service.

New South Wales, Victoria, Queensland, South
Australia, and West Australia have splendid work-
shops for the manufacture and repair of rolling-stock.
An instance is cited in which the government shops
at Newport, in competition with private works on
a contract for engines, bid so much lower than the
private interests that the latter accused the man-

* Elwood Mead, in Metropolitan Magazine, January, 1917.

AUSTRALIA AND THE FOOD PROBLEM 119

ager of the government works of not knowing his
business. An official investigation revealed the fact
that the Newport bid not only allowed for reason-
able profit but might even have been made lower
still. ^ New South Wales has the biggest railway
mileage in the commonwealth, having one mile
for each 457 people.

All of the Australian states and New^ Zealand
operate a number of agencies to aid the farmer to
market his produce. The railroads are the chief
means of promoting agriculture and for protecting
the farmer. Among these agencies are commercial
agents to investigate foreign markets. Wharves and
docks at the seaports are owned by many of the
states, as are also ship-building yards and cold-
storage warehouses. Grading of produce for ex-
port is a function undertaken by some of the states
to keep the shipper up to certain standards. A
careless shipper is not allowed to spoil the market
for the others. This is also the Danish practice.

As a result of all these activities freights have
been lowered in price and the service has been im-
proved. The Austrahan shipper can send his butter
12,000 miles to England for one cent a pound and
his fresh meat over the same distance for f of a
cent a pound. To send food from California to
New York, one-third the distance, costs three times
as much.

^ Australia's Awakening, W. G. Spence, 452.

120 THE HIGH COST OF LIVING

Just after the war broke out Australia found her-
self with an unusually large wheat crop on hand
and an insufficient supply of vessels to transport it,
owing to the withdrawal of steamers from that part
of the world. The government immediately ar-
ranged with the British Government that all the
ships carrying troops to England should carry grain
in their holds. No middleman was allowed to de-
rive any benefit from the government aid. The
government bought the wheat at a fixed price of
75 cents a bushel cash and is to pay an additional
sum when the sales are completed and expenses de-
ducted. Over 150,000,000 bushels were bought by
the government in these transactions.'

In 1915 the cost of living rose so high that the
govenmient went into the meat, sheep, and hog
exporting business to England in order to eliminate
the middleman.-

The state of South Australia is one of the most
advanced in regard to export arrangements under
government management. It handles the export
business of the state by a produce export depart-
ment which was established in 1893 and began
working the following year. It was designed pri-
marily to help the small farmer, who was practically
unable to reach the markets of the world. The
department receives produce at the port of ship-

1 Elwood Mead, Metropolitan Magazine, January, 1917.
^International Year Book, 1915, article on "Australia."

AUSTRALIA AND THE FOOD PROBLEM 121

ment, usually Port Adelaide, and sells it in the
London market. Rates for freight and insurance
were so high on small shipments that the small
farmer was practically excluded no matter how
great the demand for his produce. Only collective
action, undertaken by the state, could help him.
The export department takes charge of his goods
even before it reaches the port of shipment; the
farmer merely delivers to the nearest railway sta-
tion, which is state property. The produce export
department eliminates the distribution, it being the
only broker involved, turning over to the producer
the profits that usually go to the middleman and
deducting only the necessaiy cost of marketing.
The department has no secrets. Its accounts are
public, showing every transaction down to the last
cent of receipts and expenditures.^

The export department handles perishable goods
and frozen food, calls for fruit, etc., at any railway
station, contracts for cargo space on steamships,
and sells the goods to the world markets, all at a
small charge, which is about one-half what the
Tasmanians pay a private firm for the same work.
Eggs, poultry, lambs, butter, wine, grain, honey,
rabbits — anything for which there is a demand or
prospect of a demand — comes within the category
of produce handled by the department. Live
stock is slaughtered, dressed, frozen, and shipped.

» Newest England, Henry D. Lloyd, 323, 324.

122 THE HIGH COST OF LIVING

Arrangements are made for pushing and advertising
the colony's wines.^

Abattoirs are also owned by the states or the
cities as they are all over Europe. In 1908 slaugh-
tering-yards were built at Port Adelaide, with a
capacity of 8,000 lambs per day and cold-storage
facilities for 20,000 carcasses. The poultiy export
department did an interstate trade of $600,000 in
1907 in addition to $100,000 worth sent to New
Zealand and $10,000 to England. In 1908 the prof-
its of the slaughtering and freezing plants, after
allowing all expenses, were $8,700, nearly all of
which was on the refrigerator-plants. The com-
modities sold by the export department of South
Australia in 1909 were as follows : lamb and mutton,
276,119 carcasses; wine, 55,618 gallons; fruit, 153,-
904 cases; eggs, 51,943 dozen; honey, 95,468
pounds; oranges, 1,645 cases; lemons, 400 cases;
besides poultry. The total export value in that
year was $1,414,086.^

In July, 1913, the city of Adelaide opened at
Port Adelaide one of the largest and most extensive
abattoirs in the world. The total area of the
land belonging to the slaughter-houses is 626 acres.
"Belonging to the markets are seventeen large
motor-lorries, with specially constructed, isolated
van bodies, which deliver at the butchers' shops"

^ State Experiments in Australia and New Zealand, Wm. P. Reeves,
vol. I, p. 383.

2 Australia's Awakening, W. G. Spence, p. 458.

AUSTRALIA AND THE FOOD PROBLEM 123

on a time-schedule. The city also has municipal
cold-storage plants.^

Even in the early days of the produce export
department the state proved itself a good business
agent. When there was little goods for export it
rented its cold-storage rooms to butchers, produce-
dealers, etc. It lost money for a long time, it is
true, on its rabbit-sorting and refrigeration, but it
received indirect returns in the greater capacity of
the country to raise sheep through the mitigation of
the rabbit pest.

When stock is delivered at Port Adelaide and the
government does the slaughtering it returns the
skin and fat to the owner but reserves to itself
the other by-products, which it uses scientifically.
Even live poultry is received, killed, and dressed,
graded, frozen, packed, shipped, insured, and sold
by the government, and the amount remitted, all
according to a schedule of charges furnished the
producers in advance.

In 1909 the minister of agriculture estimated that
the produce export department had added $10 an
acre to the value of all lands in South Australia fit
for growing lambs, butter, wine, or fruit. As soon
as the export department paid 4 per cent, on its
capital the charges were to be reduced. Even be-
fore 1900 it showed a profit of 3 per cent, on the
capital in vested. 2

^ The Collectivist State in the Making, Emil Davies, p. 71.
^Newest England, Henry D. Lloyd, pp. 325^.

124 THE HIGH COST OF LIVING

The middlemen in South Austraha were robbing
the farmer of his dairy profits; so in September,
1906, the government started a dairying estabhsh-
ment which in 1909 was turning out foui* tons of
butter a week. As soon as its success was demon-
strated $375,000 more was appropriated for exten-
sions to the plant. The butter is guaranteed to be
first-class and good prices are secured; also a wider
market, owing to the confidence in the state butter.*

New South Wales has an export department and
government-owned port facilities at Sydney, but
up to 1903 did no selling for its clients as is done
in South Australia. The harbor trust of Sydney
shows a substantial return on a capital invest-
ment of $25,725,000, and the Melbourne harbor trust
made a profit of $302,060 in 1908. Both are state
institutions.

Victoria pursues a similar policy. It receives,
grades, and ships fiTiits, butter, rabbits, tobacco, and
other things. It represents the shippers collectively
in making contracts with steamship companies for
freight, these contracts including the use of refrig-
erating-chambers. It arranged for the first di-
rect steamship communication between Victoria and
Manchester. Even as early as 1901 it had done so
much for the dairy industry that the mider-secretary
of agriculture was able to say: "Victoria is now
the largest exporter of butter except Denmark."

* Avstralia's Awakening, W. G. Spence, p. 459.

AUSTRALIA AND THE FOOD PROBLEM 125

The government grades the butter in its cold-storage
warehouses at Melbourne and packs and ships it.
At fii'st the cold storage was free to the dairymen,
but later a charge was made. In Victoria most of
the butter exported is stored by the government in
its refrigerator-plants. Inferior butter is marked
"pastry brand."' In the same way the poultry
export in Victoria has been aided, size and weight
of shipments being regulated by the government.
The government cattle inspectors kill diseased cattle
without compensation to the owner. The govern-
ment began experimenting with the export of fro-
zen rabbitS; which were received at its cold-storage
chambers and sorted, and thus turned what had
been a pest which threatened the pastures in Vic-
toria into a source of profit.

In New Zealand all the butter exported is graded
and stored in government refrigerator-plants. At
first a bonus was granted to dairymen producing a
certain amount for export, but after the trade was
well established the bonus was dropped. The
function of grading has been carried on by the
state since 1896. In fact, it was New Zealand that
originated the system of grading for export. It
also grades for domestic use. At first the innova-
tion caused loud complaint as an interference with
personal liberty, but it was soon rightly understood.

1 State Experiments in Australia and New Zealand, Wm. P. Reeves,
vol. I, pp. 379, 383.

126 THE HIGH COST OF LIVING

This colony also provides cold-storage facilities
at a low charge. It maintains a produce commis-
sioner in London. That government undertakings
of this sort are familiar in New Zealand may be seen
from the matter-of-fact tone of the following news
item from a New Zealand paper in 1900:

"The agricultural department has decided to
make its first shipment of poultry to London in
February. The department has arranged to kill
and dress all birds sent to the depots to be estab-
lished at each of the four chief ports, and it will
also be willing to send them to the home market
at the risk of the owner. A small charge will be
made for killing, dressing, and packing. The cost
of shipping the birds to London will be equally
reasonable."^

At one time New Zealand products were under
the domination of a shipping ring. In order to
break the monopoly the government threatened to
establish a line of its own, and the ring was broken.
The parliamentary committee appointed to investi-
gate the matter even advised the government to
look into the possibilities of procuring steamers for
conveying coal purchased by the government at the
port of shipment and the opening of retail agencies
mider state control.

The state of West Australia, stretching across
the whole western third of the continent, has its own
steamers for carrying meat from the sheep-raising

1 Newest England, Henry D. Lloyd, p. 333.

AUSTRALIA AND THE FOOD PROBLEM 127

districts of the north to the centres of population in
the south. In 1913 three of these steamers were
owned by the government of West Austraha. The
Honorable John Scadden, prime minister, in an in-
terview in the Ltbor Leader on February 20, 1913,
called these steamers an important step in the con-
trol of the food supply. "Previously," says Mr.
Scadden, "the traffic was in the hands of a com-
bine, but by our intervention and the starting of
state butchers' and grocers' shops we have effect-
ively broken the back of the food and meat tmst
and have already reduced the price of meat from
one shilling (24 cents) to 5 pence (10 cents) per
pound, and soon we shall have complete control of
the coastal shipping service. This is only the con-
sistent corollary of the state ownership of the rail-
ways."*

After the drought of 1914 the state of Victoria
chartered ships on which 50,000 tons of hay were
transported from South America for the draft an-
imals to be used in the next season's ploughing.
This action on the part of the state was an im-
portant factor in producing the unusually large crop
that followed the drought. The state spent $3,-
000,000 in these transactions.^

* The CoUectivist State in the Making, Emil Davies, p. 33.

* Elwood Mead, Metropolitan Magazine, January, 1917.

CHAPTER XII

OPENING UP THE LAND TO SETTLEMENT

The Australian states and New Zealand suffered
from oppressive monopolies of various kinds, in-
cluding land, money, and steamships. Tracts of
75,000 acres of fine land, occupied by a population
of a half-dozen families, were not uncommon. In
1891 nearly 18,000,000 acres of land were held by
1,615 people, while 100,000 people occupied less than
300,000 acres. In 1898 21,000,000 acres out of
34,000,000 were held in tracts of 5,000 acres or
more. Much of this land had been dishonestly
acquired. Tenancy was developing of as bad a
sort as in the mother country. ^ Of those who oc-
cupied their own land 50 per cent, were mortgaged
so heavily that their interest payments amounted
to a rack-rent. On the other hand, the state-built
railroads increased greatly the value of some of the
large tracts that had been bought for a small sum
in the early days of the colony. Rail-lines were
sometimes built just to bring the produce of a single
big sheep-raiser to market. Public improvements

1 Newest England, Henry D. Lloyd, 126-133.
128

OPENING UP THE LAND 129

on these large, isolated tracts still further increased
their value. The war with the Maoris, causing a
debt of several million pounds, was fought merely
to secure more lands for the monopolists — at least,
that was the result. Absentee landlordism flourished
and an exodus began to take the place of immigra-
tion into the colony. Although New Zealand could
have supported 10,000,000 people easily, it found
itself with a scarcity of land for 750,000. Companies,
banks, and speculators had secured control of the
resources of the countiy. The landowners, more-
over, had devised a system of taxation that bore
heavily on improvements and very lightly on land
values.

The small farmers were incensed at having to
pay more taxes for eveiy improvement made while
the great landowners who made no improvements
went free. It is true that in 1878 Sir George Grey
had introduced the land tax into New Zealand, but
it was soon repealed and replaced by the sort of
property tax the landowners wanted. Neverthe-
less, the efforts made by Grey bore fruit, and thirteen
years later he declared New Zealand to be the first
country to have a fair land tax.^

The first step toward a land tax was taken in

1892 and was very cautious. The legislation of this

and the following years aimed to prevent future

monopoly in land and to break up by purchase,

» N^est England, Henry D. Lloyd, pp. 121, 134, 138.

130 THE HIGH COST OF LIVING

compulsory if necessar}^, the monopoly already ex-
isting. The ultimate object of the laws was to
repopulate the large estates with tenants of the
state. Underlying the legislation was the philos-
ophy that land should be held only for use and for
such use as was for the public good — the public to
be the judge of what was good.^

Under the new laws improvements were not
wholly exempt from taxation. In fact, only $15,-
000 worth escaped taxation. Land values, except
in the case of small properties, were taxed after
mortgages had been subtracted. When the land
value exceeded $25,000 above improvements it was
subject to a progressive land tax.^

In order to prevent future monopoly, it was pro-
vided that not more than 640 acres of the lands
resumed, or bought back, by the state might be
bought or leased by one party, if the land in ques-
tion was first-class land. In the case of second-class
land a maximum of 2,000 acres might be taken,
and in the case of sheep lands, 4,000 acres. If the
would-be purchaser already owned this amount he
could not increase his holdings.^ Mineral and oil
lands were reserved to the state. PubHc lands
might still be bought in freehold but not the lands
the state bought back.

Certain restrictions as to area, improvements,
etc., are put upon the resumed lands when they are

» Idem, p. 137. « j^em, p. 116. » Idem, p. 138.

OPENING UP THE LAND 131

resold, to prevent monopoly and insure utilization.
If the purchaser does not obey these requirements
his farm will be taken away. Resumed lands, al-
though not sold in freehold, are sold on "lease in
perpetuity/' and everything is done to make this
sort of purchase attractive. Such a leasehold may
be passed on by the farmer to his children or may
be leased by him, sold, or mortgaged, but it always
remains under state restrictions regarding use, the
prohibition of speculation, and sale to other specu-
lators. The land may not be kept idle. The lease-
holder owns all the value he puts into the ground,
and all the improvements he makes, for the state
guarantees him this value even if he has to give
up his lease through some fault of his own. The
whole scheme is designed to promote home owner-
ship by poor men, who can in this way get land
without a cash payment. Of course, each appli-
cant is investigated as to character and financial
status. He must have enough capital to work the
holding for a year. Distribution of the land to be
parcelled out is made by lot.

The state proceeded cautiously in working out
the plan. Only $250,000 was asked from Parlia-
ment as the appropriation for the first year's pur-
chases. Within a very few years the sum appro-
priated had risen to $2,500,000 annually. In re-
suming lands small estates are not taken. And in
breaking up the large estates those who have been

132 THE HIGH COST OF LIVING

working on the land as laborers are given the first
chance to lease before it is thrown open to the
public.^

The example of New Zealand has been followed
by Queensland; South Australia, West Australia, and
Victoria, each of which has enacted laws for the
resumption of private lands suitable for farming.
The laws have failed in New South Wales owing to
the opposition of the Labor party, which insisted
that the plan would benefit only the large land-
owners who would be glad to unload their holdings
on the state.

The Closer Settlement Board of Victoria was cre-
ated for the purpose of developing farm colonies,
with an appropriation of $2,500,000 annually for
five years. It may purchase land and divide it into
farms not to exceed $7,500 in value, agricultural
laborers' blocks not to exceed $1,000, and workmen's
allotments not to exceed $500 in value. By the end
of 1907 the board had purchased forty estates,
aggregating 207,788 acres at a cost of $7,293,225.
The number of holdings made available was 1,216.
The plan has not been a very brilliant success, how-
ever, because of the absence of a proper land tax,
so that the price of land has been too high. A land
tax and compulsory purchase are needed to produce
the best results.^

^ Newest England, Henry D. Lloyd, pp. 139-146.
2 Australia's Awakening, W. G. Spence, pp. 465-466.

OPENING UP THE LAND 133

The Australian states and New Zealand retain
the ownership of the beds of streams and a strip
of the land on either side. Thus no community is
ever in danger of being held in bondage by the
owners of riparian rights and much costly litigation
is avoided.^

Irrigation settlement in Victoria is entirely under
government control. The state has built the weirs,
reservoirs, canals, channels, etc. The water, bed,
and banks of streams are exempt from alienation
forever. Fortunately the state established this
policy before private companies had a chance to
lay claim to these lands. West Australia has car-
ried out a very large and successful water-supply
scheme costing nearly $15,000,000.2

The Australian theory with regard to mineral
lands is that they belong to the state and it does
not part with them. Coal lands are leased, not
sold. The output of the mines is not taxed, the
state contenting itself with indirect returns. The
lessee must fulfil certain requirements in working
the mines and must employ a certain amount of
labor. He is not permitted to hold the lands idle
until his neighbors develop the surrounding terri-
tory; and if he postpones working his mines he for-
feits his lease. The state receives its returns in the
settlement of a larger population in the district,

^ Elwood Mead, Metropolitan Magazine, January, 1917.
^ Victorian Agriculture, Thomas Cherry, p. 264.

134 THE HIGH COST OF LIVING

increased national wealth, and greater railway re-
turns.*

New Zealand owns and operates coal-mines and
sawmills in the state forests. The state embarked
on these undertakings recently and in order to
break monopoly prices of coal and timber.^

All the states except Tasmania have some system
for financial aid for the man on the land. In South
Australia the credit agency is the state bank.
West Australia has an agricultural bank and Vic-
toria a Credit Foncier. In 1908 over $8,000,000
was lent to the farmers by these and other state
agencies.

New Zealand set up its advances-to-settlers office
in 1895 and was the first state to lend money on
agricultural security. The author of the scheme
was Sir Joseph Ward, later minister of railways in
that colony. Loans at first were limited to a max-
imum of $12,500. The sum was later raised to
$15,000. Interest rates were 6 per cent., including
1 per cent, for amortization.^ The plan benefited
the whole colony except a small group of financiers.
The help to the farmers was returned to the citizens
in the shape of lower interest rates for themselves.
The state never exacts usury, offers no cut-throat
mortgages, charges no commission and no fee ex-

^ Australia, J. W. Gregory, p. 121.
* Elwood Mead, Metropolitan Magazine, January, 1917.
3 State Experiments in Australia and New Zealand, Wm. P. Reeves,
vol. I, p. 334.

OPENING UP THE LAND 135

cept for actual expenditure. Any amount may be
borrowed, from $125 to $15,000. The state has
never foreclosed, it does not try to induce the bor-
rower to take more than he really needs, and he has
usually thirty-six and one-half years to pay back.
It advertises widely the fact that it is ready to lend
money on agricultural security. The state lends
60 per cent, on freehold property and 50 per cent,
on leasehold property. By 1901 over $9,000,000
had been lent to settlers.

The South Australian Advances to Settlers act
was passed in 1896, one year later than the New
Zealand law. The lending office is the state bank.
By 1902, after six years of operation, the trustees
had lent $3,565,000. The interest rate is 4| per
cent. The state bank forced the bankers to de-
mand lower interest from the farmers by competing
with them. The state bank of South Australia
lends money to the farmer not only on his farm but
also on his shipments, if they have been approved
for export.

The Victoria law dates from 1896, that of New
South Wales from 1889. In the state of Victoria
4,000 families have been enabled to secure farms
through state provision for aid to settlers and 6,000
workmen have been provided with homes in the
city.

Queensland lends money to farmers for the build-
ing of co-operative sugar-mills. This has been done

136 THE HIGH COST OF LIVING

to insure the working of the industry by white labor
only and is part of the "White AustraHa" move-
ment. Any group of farmers who desire to begin
the cultivation of sugar and have no mill in the
neighborhood where they can market their cane
can petition to the government. An official is sent
to investigate as to the suitability of the land for
sugar-raising and the character of the farmers. The
planters then incoiporate and make application for
the amount needed. The money is lent on the
security of the mill and land. The construction
superintendent is a state official, and "progress pay-
ments" are made on the loan as the building pro-
ceeds. By 1899 eleven of these mills had been
built and were paying a profit averaging 9| per
cent.^

Throughout the continent the laissez-faire theo-
rists have been pretty well won over to state social-
ism. Doctor Cockburn, minister of agriculture in
South Australia, once said: "If you bring hope into
the life of the farmer, and make him sure of his re-
ward and that his profits will not be taken away
from him, you make him more efficient. Instead of
sapping private enterprise we are assisting private
enterprise. We are not anxious to organize patri-
archal institutions but fraternal ones." ^

All of the Australian states have approached the

* Newest England, Henry D. Lloyd, pp. 312, 330.
» Idem, p. 330.

OPENING UP THE LAND 137

food problem and the land problem in much the
same way. They have realized that the farmer must
be protected from certain kinds of monopoly just
to insure that he will be able to market his produce.
And the Australian states have freed both agricul-
ture and industiy by public ownership of the rail-
roads, terminals, slaughter-houses, and marketing
agencies, and by so doing have opened up the cir-
culatory agencies of the country to the free play
of initiative. In addition, the produce export de-
partments collect, grade, and provide transporta-
tion from the farmer to his ultimate destination, thus
insuring the best possible market for his produce.
Australia recognizes that the individual faimer,
12,000 miles from his market, cannot possibly do
his own marketing or insist upon a fair remunera-
tion for his produce. Only through co-operative
associations or the state can this be secured. And
Australia has adopted the state as a market agency
just as Denmark has adopted voluntary co-operation.
Under these arrangements the farmer is assured
of the best market available and full value for his
produce. There are no middlemen between him
and the consumer, no gamblers, speculators, and
private storage agencies that destroy or withhold
food in order to force up prices. The arteries of the
state are free from obstacles, and the prosperity of
these countries attests the wisdom of the policy
pursued.

138 THE HIGH COST OF LIVING

In addition, these distant states are recognizing
that land, from which all wealth ultimately comes,
is designed for use and that use is the only justifia-
ble title to occupancy. And they are breaking up
land monopoly by taxation, by farm colonies, and
by cheap credit, and are placing farmers upon the
soil. Australia has had the same experience as the
United States, where land was seized by monopolists
or acquired at a few cents per acre, and, being prac-
tically free from taxation, was held for speculation,
for grazing, or for some other use not beneficial to
the country. To defeat these monopolists and end
tenancy land has been taxed at a heavier rate than
buildings, while state-aided farm colonies have peo-
pled great stretches of unoccupied land.

AustraUa, hke Denmark and Germany, has dis-
covered that the state must play an important role
in the protection of its producers and that such
protection can only be secured when certain func-
tions are performed by the state itself.

CHAPTER XIII
FOOD CONTROL IN GERMANY

While England and the United States have en-
deavored to regulate monopoly by penal statutes,
Germany, like Australia, has solved the problem
through public ownership of the distributing agen-
cies. And it is only through ownership that the
host of speculators, middlemen, and forestallers can
be eliminated.

Even before the war the more important agencies
of distribution were owned by the empire, the states,
or the cities. This has been the policy of Germany
especially since the days of Bismarck. It is part of
the programme of state socialism which has made
Germany so efficient in the war.

Among the agencies owned by the state or the
cities for the easy control of the food supply are the
following :

(1) The railroads, fast-freight lines, express com-
panies, and parcel-post;

(2) The slaughter-houses, stock-yards, and cold-
storage plants;

(3) The markets in the cities; and

(4) In many towns the wholesale purchase and

sale of food by the authorities to keep down prices

and eliminate speculation.

139

140 THE HIGH COST OF LIVING

The transportation agencies of Germany have
been operated by the state for a generation. They
are run for service and the up-building of all classes
within the empire. That is the sole motive of op-
eration. Although the railroads earn over $200,-
000,000 annually as net projfits, profit has always
been secondary. That the German railroads are
efficient even the opponents of public ownership in
this country admit. They are operated to help
industry, to build up agriculture; and none of the
greater nations have done as much for scientific
agriculture as has Germany. And the railroads
have contributed greatly to the ability of that coun-
try to feed itself. No one, least of all the railway
officials, would listen for a moment to the suggestion
that farm produce for Hamburg, on the North Sea,
should be brought from East Prussia because it
would benefit the railroads or that municipal mar-
kets should not be started because it would injure
the retail butcher or grocer and depreciate real-
estate values. Nor w^ould the protest of private in-
terests against pubUc abattoirs be seriously listened
to by parliament or the city council, nor would any
limitations on the size or kind of packages that can
be carried by parcel-post be permitted.

As a result of this policy Hamburg is fed by farm-
ers and market-gardeners round about Hamburg.
Berhn is fed through the intensive cultivation of
the land around Berlin. And every provision is

FOOD CONTROL IN GERMANY 141

made to encourage such local food supply, includ-
ing even cattle, hogs, and sheep.

The parcel-post is a marketing agency widely
used for feeding the urban population without the
interv^ention of any dealers or middlemen. Some
years ago, in company with a group of American
visitors, I attended a private dinner-party given by
a member of the Reichstag in Berlin. As we en-
tered the dining-room our hostess pointed to the
flowers upon the table, and said: "These fresh
flowers were brought this morning by the postman.
Not only that, but the vegetables, eggs, butter,
poultry, in fact, all of the fresh food for the dinner,
came by parcel-post. I buy most of my supplies
in this way from a farmer who lives many miles
out in the country. He comes to Berlin three or
four times a year; he calls on all of his customers,
who give him standing orders, which he fills three or
four times a week. The deliveries are made in a
few hours by parcel-post, almost as fresh as when
they left the garden. If I want to give a dinner-
party I send him a postal card or call him on the
telephone. That is the way I do my marketing."

The parcel-post is used as a marketing agency all
over Germany and tens of millions of food packages
are distributed yearly by this means. There are
no middlemen at all; no one but the farmer and the
Hausfrau.

Almost every city, too, owns its own slaughter-

142 THE HIGH COST OF LIVING

house. All meat must be slaughtered in the public
abattoir. There are no private packing monopolies.
Private slaughtering is not permitted. All anhnals in-
tended for food purposes are slaughtered under the
strictest police and veterinary surveillance. The
whole subject is covered by a special code of rules
which went into effect in 1903. The farmers bring
in their cattle to the nearest town; they are there
examined by skilled veterinaries who are specially
trained and examined for that calling. The most
humane methods of killing have been adopted, while
the sanitary rules are very stringent. And instead
of the slaughtering of meat being concentrated in
a few cities, as it is in this country, and under the
control of five or six great companies organized as
a trust, there were in 1914 over 1,000 public slaugh-
ter-houses of which at least 100 had stock-yards in
connection with them. This was in a country about
the size of Texas and with two-thirds of our popula-
tion. These abattoirs are elaborate and costly in-
stitutions. Many new ones have been built in
recent years. They are constructed of concrete or
brick, are designed with great care, and some of
them are almost as artistically planned as a garden
village. They are as clean and wholesome as con-
stant flushings can make them. The cities take
pride in their slaughter-houses as they do in their
schools or other public structures. In a report on
the municipal markets and slaughter-houses in Eu-

FOOD CONTROL IN GERMANY 143

rope, published by the Department of Commerce
and Labor in 1910, we find the foUovsdng report by
United States consulates:

"The Barmen estabhshment is a model of its
kind and is modern in every way in its construction.
It was built in 1894 at a cost of 3,500,000 marks
($833,000). . . . The ventilation is perfect and so
effective that not the slightest odor is noticeable.

"The Berlin abattoir, located in the northern
part of the city, was built in 1881 at a cost of over
$4,250,000 and covers an area of nearly 115 acres.
It is regarded as one of the model institutions of
its kind in Germany and one in which the most
modern hygienic methods are used.

"In the municipal meat-inspection department
657 persons were employed, including one director,
47 veterinary surgeons, 15 assistant veterinaiy sur-
geons, 14 section superintendents for the trichina
department, 26 assistant superintendents, 121 male
microscopists and 120 female, etc."

Consul-General T. St. John Gaffney describes the
municipal slaughter-house in Dresden as follows:

"Dresden has completed the erection of a model
slaughter-house the construction of which covered
a period of four years and which cost $4,300,000.
There are 68 buildings which are not only the largest
from point of size but also the most modern in mat-
ter of equipment perhaps in all Europe."

The Dresden abattoir was completed in 1910. It
lies just outside of the city. It is located on the
river Elbe and is connected with the railroad.

144 THE HIGH COST OF LIVING

Live meat is driveu in from the neighborhood or
is brought in by water or rail. The cattle, hogs, and
sheep are either sold on the hoof to the local butcher
or the meat is sold at retail to buyers. The abattoir
is built of concrete. It includes a great cold-storage
plant. There is a fine hotel and administration
building attached, and the entire floor space, cover-
ing about 94 acres of land, is paved with cement so
that it can be flushed with the use of a hose. The
place is so clean that a woman can walk about the
place in the daintiest clothes.

The slaughtering of cattle, like the transportation
of all food, is under exclusive public control. There
is Uttle chance for monopoly because combination
is very diflficult. The farmers and butchers barter
in the open. Cold-storage facilities can be rented
by any one, for they, too, are public. There is thus
no chance for the middleman. The price is fixed
by demand and supply from day to day, with only
the local butcher between the consumer and the
farmer. Moreover, everything is sanitary. One of
the impelling reasons for public slaughtering is to
insure wholesome meat.

Here is another link in the chain of publicly owned
institutions for insuring freedom from monopoly of
the food supply of the nation. And nothing con-
tributes more to diversified farming and the local
supply of meat in every community than municipal
abattoirs. Every farmer raises cattle, sheep, and

FOOD CONTROL IN GERMANY 145

hogs. The farm is kept in a high state of fertility
in consequence, while the farmer's income is supple-
mented by the sales of live stock.

Abattoirs are not operated for profit. The fees
charged may only cover the cost of construction and
operation. Over one-third of the pubHc slaughter-
houses of German}^ show profits of from 4 per cent,
to 6 per cent, and one-quarter of them show profits
of from 6 per cent, to 8 per cent.

As a matter of fact, the United States is the only
nation in which private slaughtering is permitted,
with the possible exceptions of Great Britain and
Turkey. But even in Great Britain many cities
own their abattoirs. Switzerland has possessed
public slaughter-houses for centuries, as have Hol-
land, Denmark, Scandinavia, the Balkan States,
Austria-Hungaiy, and Russia. Napoleon compelled
all French towns to close their private slaughter-
houses and erect public ones. And many of the
French abattoirs are splendidly constructed. Italy
and Spain have had public abattoirs since the Middle
Ages, and in recent years these have been greatly
improved. The Swiss, Dutch, and Scandinavian
cities have in recent years erected abattoirs that are
comparable to those in Germany.

The market is also a public institution in almost
all European cities and has been for centuries.
This still further prevents speculation in food sup-
plies. It offers a place for the sale of fresh vegetables

146 THE HIGH COST OF LIVING

and foodstuffs of all kinds. In almost every Ger-
man town there is an open market in or near the
public square which is used in the early morning
and then cleared away at nine or ten o'clock. Large
enclosed markets are also found in most of the cities
in which vegetables, meat, fish, and other farm prod-
uce are sold. In Berlin there are fifteen such mar-
kets. These local market-halls are usually supplied
from a central wholesale terminal market, located
upon the railroad, river, or waterwa}^, into which
food is brought by the farmers and sold at pubhc
auction or at private sale to the retailers. The
municipal markets frequently have ice plants and
cold-storage plants attached in which space can
be rented as in a safety-deposit vault. The public
authorities supervise the markets and the dealers
to insure proper prices and sanitary conditions.

In addition to the public ownership of all of the
agencies for the handling of food, price regulation
was quite common even before the war. The price
of bread was regulated by municipal authorities.
Food monopolies have been broken down in some
cities by this process, while a number of municipal
bakeries have been erected. In 1910, for instance,
certain octroi duties or custom taxes on food enter-
ing the cities, which had been imposed by the im-
perial customs tariff law of 1902, were abolished.
Butchers did not reduce the price of meat in con-
sequence, and the local authorities stepped in and

FOOD CONTROL IN GERMANY 147

either established, or threatened to estabHsh, piibhc
meat-markets. The desired results were secured.
In Stuttgart prices for meat, uniform for the whole
city, were fixed monthly by a joint committee of
representatives of the town council and the butch-
ers' guild.

Some towns have long dealt directly in milk and
other farm produce. The reason assigned for the
municipal sale of milk is to reduce infant mortality.
Berlin owns dairies on the municipal irrigation farms
— the same farms which supply the city's institu-
tions and poor relief. The milk is distributed from
seventy centres, usually schools. Dortmund has a
model municipal dairy for the use of its pubHc in-
stitutions. Bielefeld subsidizes a co-operative dairy-
company and pro\ades it with kiosks for the sale of
milk and carts to carry it to the working-class sec-
tions of the town. Labor organizations and co-
operative societies sometimes share with the town
in the cost of establishing such services. The cen-
tral municipal milk depot of Mannheim obtains its
supplies from co-operative dairies.

Leipzig, Ulm, Magdeburg, and other cities carry
on dairy-farming and stock-breeding on a com-
mercial basis. The city of Stuttgart encourages
the formation of co-operative societies of consumers
for the purchase of milk direct from the producer.
This city intended at first to undertake the busi-
ness of itself distributing milk, but finally decided

148 THE HIGH COST OF LIVING

on the other plan as a compromise method of elim-
inating the middleman.

In the years 1911-12, when there was a shortage
of meat in Germany, many cities engaged directly
in the meat business. The wide administrative
powers possessed by the cities made it easy to do
so, and the towns were encouraged in this action
by the state governments. In Prussia the state
urged the towns "to take steps to induce butchers
to sell meat at reasonable prices or, failing this, to
set up their own meat depots, to obtain supplies
of cheap fish and sell them in public markets,
and to insure regular and abundant suppHes of
vegetables and other foodstuffs, so that the daily
food outlay of the working classes might be re-
duced."

Encouraged by the government, over 200 towns in
all parts of the countiy contracted for supplies of
foreign meat. The Berlin statistical office made in-
quiries in 1913 among 62 important towns and found
that 60 of them, with a combined population of over
15,000,000, had organized their meat supply in 1911
and 1912 for the purpose of relieving the scarcity
of meat and moderating its price. Foreign meat was
purchased in quantities from Russia, Holland, Rou-
mania, and other countries. Sometimes meat was
sold direct to the public and sometimes through
butchers at prices agreed upon by the municipal
authorities. The city of Berlin sold $1,875,000 worth

FOOD CONTROL IN GERMANY 149

of meat in this way. The public got the meat 20
to 30 per cent, cheaper than fresh domestic meat,
yet the undertaking was carried on at a profit in
almost all cases. Occasionally a town reported
small losses. A few towns like Offenbach-on-Main
did not stop with these measures but continued
systematically in the meat business. Offenbach
opened shops and established a sausage factory.
Other cities began pig-fattenmg and rabbit-breeding
on an extensive scale or gave financial assistance to
co-operative societies and individuals who did so,
on condition that they sold a certain amount of
produce annually to the people of the city. Other
towns entered upon contracts with farmers' organiza-
tions and chambers of agriculture for the supply of
definite quantities of meat at fixed times.

An even larger number of town councils did effec-
tive work in reducing the cost of living by pur-
chasing sea-fish and selling it practically at cost.
In the same way vegetables and potatoes were sold
at cost at public depots.^

Before the war the advisability of continuing such
activities as a permanent feature of municipal ad-
ministration was a debated question, although it
had been proved conclusively that when necessary
they could be carried on by cities without loss and
to the advantage of large sections of the population.

* Dawson, Municipal Admirmtration in German Cities, pp. 224-
245.

150 THE HIGH COST OF LIVING

As a matter of fact, many of the arrangements de-
vised as temporary relief have been put on a per-
manent basis.

When the war came, therefore, the groundwork
had been laid for an efficient control of the food
supply. General measures for conserving the sup-
ply were under the control of the federal council,
but the cities did effective work in co-operating and
in distributing the food among their inhabitants in
accordance with the new regulations.

Early in 1915 all stocks of wheat, corn, and flour
were seized by order of the federal council, with
the understanding that they would be distributed
among the cities according to population. All busi-
ness transactions in these commodities were for-
bidden from January 26 on. Municipalities were
charged with the duty of setting aside suitable sup-
plies of preserved meat. Owners of corn were to
report their stocks immediately, which were requisi-
tioned by the government at a fixed price. A gov-
ernment distribution office was established for the
regulation of consumption and the proper distribu-
tion of the stocks among communities. Other
measures of a less drastic nature had been adopted
by the federal council previously.

In the middle of February, 1915, the federal coun-
cil expropriated all the domestic stock of oats, with
the exception of seed oats and the grain neces-
sary for fodder for horses. They also fixed the

FOOD CONTROL IN GERMANY 151

maximum price of oats at $12.50 per metric ton.
In March, 1915, the Frankfurter Zeitung reported
that the government had decided to seize and regu-
late the distribution of oil-cake and other manu-
factured fodder in which it was said prices had been
forced up by speculators. Also the number of pigs
in the country was to be reduced from over 25,000,-
000 to about 18,000,000 to provide a supply of meat
for the cities.

In July, 1915, the military authorities of Bavaria
issued an ordinance providing for a year's im-
prisonment of any dealer charging excessive prices
for articles of daily consumption, including food,
heating, and lighting substances. A similar pen-
alty was provided for those withholding stocks from
sale in order to secure higher prices and for retail-
ers refusing to sell to intending purchasers.

In regulating the prices of grain and fodder the
country was divided into four districts in which
prices varied according to local conditions. Corn
prices remained about the same as before. Prices
of rye were fixed at $55 per ton (220 marks) for the
Berlin district; 215 marks for the eastern district;
230 marks for the western district. The price of
wheat was fixed at $10 above lye, with an increase
at a certain date of 1^ marks every two weeks.
Barley as fodder and oats were placed under a uni-
form price throughout the empire.

The Vienna government confiscated the 1915

152 THE HIGH COST OF LIVING

vegetable crop, including peas, lentils, and beans,
to prevent speculation and reduce the high prices.

The city council of Hamburg appropriated 12,-
000,000,000 marks in February, 1915, with which
to purchase a supply of foodstuffs, fodder, and other
articles, that the city might be prepared for even-
tualities. A commission was appointed to have
charge of obtaining these stores.

Smoked meat is sold by the city of Charlotten-
burg in thirty-two publicly announced places, ac-
cording to the Kommunale Rundschau} None of
this meat is sold to butchers or dealers. In the
thirty-two places designated by the city no other
meat than that dealt in by the city may be sold.
Each purchaser may obtain a maximum of only four
pounds, and the meat may not be resold. Prices
are fixed for the various kinds of meat. Charlotten-
burg also sells potatoes and potato-fiour through
certain dealers at fixed prices.

Municipal meat and fish halls were established in
Wilmersdorf several years ago. One of the chief
purposes of the fish halls was to stimulate the use
of cheap sea-fish. The purpose of the meat hall was
to moderate the price of meat. In this case what
was begun as a temporary enterprise at a time of
high meat prices was kept as a permanent institu-
tion during the war.

The undertakings of the httle town of Ostrowo,

» Issue of June 21, 1915.

FOOD COxNTROL IN GERMANY 153

in East Prussia, with 16,000 inhabitants, in the busi-
ness of purveying food are typical of what many of
the German cities accompHshed. Early in the war
this city began laying in stocks for its people in
spite of its nearness to the Russian border. The
city appropriated over 300,000 marks to secure a
supply of bacon, fat, etc. The money was appro-
priated from the city treasury. When the Russian
invasion threatened in November, 1914, the city
moved a part of their stores inland. The city se-
cured a large part of its stocks from the Central
Purchasing Company in Berlin, in whose ware-
houses the goods were left till needed, on payment
of a small storage fee. The food was sold direct
to the consumer in the town hall, abattoir, and mar-
ket hall. Some of it was sold through butchers and
merchants on city account at prices fixed by the
city. Purchasers were restricted to inhabitants of
the city, partly to prevent dealers from selling to
people in neighboring places at higher prices. The
city council also made agreements with egg-dealers
to purchase eggs at 1.40 marks per mandel (16 eggs),
to be delivered by them every week. The eggs were
then sold to the inhabitants at the same price. The
city also began the selUng of sea-fish early in the
war and kept it up till the hot months, when it
was discontinued till the following fall. These were
sold through butchers and merchants, who were
given a modest commission. The city also sold

154 THE HIGH COST OF LIVING

fish from its own lakes. If bought at the lake shore
they were released at very low prices. From all
these transactions the city has sustained no loss.
On the contrary, it managed to make money, out of
which it bought a refrigerating-plant for the munic-
ipal abattoir, with a capacity for freezing 900
zentner of meat. The rest of the profits went to
poor relief. These enterprises of the city have had
a salutary effect on the prices of all food in the
town.^

The difference between the German and the
American method of controlling prices is this: Ger-
many realizes that the state must own certain
things, such as railroads, terminals, slaughter-houses,
etc., and operate them for service so that the cir-
culatoiy system of the nation shall be free from
private interests; while we in the United States
make no distinction between such industries, which
are natural monopolies and competitive business,
and cling to the idea that competition will somehow
regulate prices. And when we discover that com-
petition does not operate and that monopoly ap-
propriates the field, we attempt to regulate the
abuses of monopoly by fines, imprisonments, and
criminal proceedings against offenders. We create
and legalize monopoly by the methods we adopt;
while Germany uses a surgical operation and cuts
out the parasitical agencies that gather around the

^ Kommunale Rundschau, October 11, 1915.

FOOD CONTROL IN GERMANY 155

natural monopolies. In consequence the food sup-
ply of the nation moves freely in response to the
needs of the people. The only middleman is the
government itself.

It is now proposed that the Federal Government
create an even more elaborate system of regulation
of price-fixing, etc. But such a programme would
require an army of men to regulate the food sup-
ply of 100,000,000 people. And cost far more to
provide such regulation than would pay interest
on the property of the packers, of cold-storage and
terminal warehouses all over the country. If these
agencies were owned by the public they would be
self-supporting just as they are to-day. They would
cost the government nothing to maintain. Then
they would be open and public. Conspiracies would
be veiy difficult as would the forestalling of food to
increase the price artificially. If every farmer,
jobber, and retailer could place his own food in
storage the law of demand and supply would regu-
late prices all through the year, just as it does for
non-perishable stuff, such as clothing, furniture,
watches, automobiles, etc. But what is far more im-
portant, with these agencies in public hands produc-
tion would be encouraged. Facilities would be offered
to market local produce. There would be an end
to the conflict which now prevails between the rail-
roads and the local farmer. And this conflict is far
more costly than speculation. It discourages agri-

156 THE HIGH COST OF LIVING

culture in the Eastern States and often ultimately
destroys it. This is the unseen cost of private own-
ership in this field. It cannot be measured. But
it is one of the prime causes for the decay of farm-
ing, of stock-raising, of dairying, and of market-
gardening all around our cities and particularly in
the East.

CHAPTER XIV
FROM PRODUCER TO CONSUMER

I AM convinced that America would be the cheap-
est place in the world to live in were industry and
agriculture free from the many obstacles to produc-
tion and the many agencies which take tribute from
the consumer. There is land enough ; there are men
enough; there is willingness enough to produce fuel,
food, lumber, and all of the necessities and comforts
of life if the obstacles that lie in the path of agricul-
ture and industry were swept away, as has been
done in some industries and as has been done to
all industry to a greater or less extent in other
countries.

\Vhat can be done to eliminate unnecessary costs,
middlemen, speculators, and dealers? How can
the producer be brought to the consumer and the
farmer be insured that protection in the marketing
of his product that is essential if he is not to be
discouraged from producing at all? Before trying
other remedies, such as regulation, price-fixing, etc.,
why should not the very simple expedient be tried
of freeing industry and agriculture from the control
of parasitical agencies and the laws of supply and
demand be given a chance to operate? We had
such freedom up to the advent of monopoly in the
nineties and we had no cost-of-living problem.

157

158 THE HIGH COST OF LIVING

Moreover, this is the procedure adopted in the
countries where the problem has been reasonably
solved.

What are the necessary steps to secure such free-
dom of production and distribution in the food
supply?

(1) Let us begin at the farm. It is obviously im-
possible for each farmer to find his own market in
the distant city. It is absurd that he should ship
his produce in broken lots at excessive freight rates
and have no responsible consignee to whom his
produce can be sent for sale. The first step is to
organize shipments from the farm. And this is not
difficult. It can be done by the creation of a State
department of markets, with provision for county
or local warehouses, to which any farmer can bring
his produce and receive a receipt for it from a State
agent or a representative of the farmers' organiza-
tion if it is done by co-operation. Then the com-
bined consignments of all of the farmers can be
shipped to the city market in car-load lots irrespec-
tive of individual ownership. This would mean a
saving in freight rates to the individual. It would
relieve the isolated farmer of the necessity of seeing
his produce through to the city, where in many in-
stances he is defrauded of the value of his produce
by the consignee or paid a nominal price fixed by
the fictitious sales made by the exchanges. This is
the Australian method, where the State produce

FROM PRODUCER TO COxXSUMER 159

export departments receive the produce from the
farmer at the railroad station and take it to the
State-owned terminals on the seaboard, where it is
either sold for domestic use or is exported to Eng-
land, and an accounting rendered to the farmer.

Such a system of marketing has also been worked
out by the citron-growers, orchard-owners, grape-
growers, and wine men of California. They have
formed co-operative market associations which col-
lect, pack, and ship the produce of all the members
to the Eastern markets. They have agents or con-
signees in the cities who receive and sell the com-
bined shipments and account to the central agency
in California for the sales, which agency in turn
settles with the individual members.^ This, too, is

^ The California Fruit Growers' Exchange, a co-operative society,
has been in existence twenty-one years. It handled $50,000,000
worth of perishable fruits in 1916 at a cost of 1.78 per cent, for bring-
ing its products to the wholesaler in eastern markets. It makes
deliveries to 2,500 wholesalers. It maintains agents all over the
country who handle the products of the exchange and dispose of
shipments either at auction or by private sale. There are no divi-
dends and no profits. The organization is managed by the fruit-
growers, and has cut out all middlemen except the local wholesaler
and the retailer. In 1916 the exchange forwarded 12,000,101
boxes of oranges, lemons, and grapefruit, or 67 per cent, of the total
citrus fruits shipped from California. As a result of its activities
the citrus-fruit growers have greatly increased their returns from
the crop. In addition, losses from bad debts and all other causes
totalled only $102.73 in the year 1916. It cost them 5.65 cents per
box, or 1.78 per cent, on the delivery value of the fruit. It presented
and collected from the railroads claims amounting to $111,557. It
has accumulated a balance of $159,064, available for refund to its
members. The exchange is nation-wide in its activities. It in-
cludes a total of 162 shipping associations, and maintains 77 sales
offices. About 8,000 members are served by it on a co-operative,
non-profit basis at a negligible cost.

160 THE HIGH COST OF LIVING

the plan in universal use in Denmark by the dairy-
men, cattle and hog raisers, the egg and poultry
men, who collect, pack, ship, and market directly
to their customers through co-operative agencies.
Possibly voluntary co-operation is too difficult for
diversified farming and truck-gardening in this
country. As an alternative, a State department for
collective marketing, such as is proposed in New
York, with county agents who would receive, ship,
and sell at the final market, is the best solution.
This would cut out the soHcitors for the city dealers,
it would reduce the cost of transportation, and would
give the farmer a responsible agent, under surety
bond, in the city to whom he could look to sell
and account for his shipments.^

(2) In every large city there should be one or

* The following is a description of the methods by which the
Danish farmer reaches his market in London. It was published
in the New York Evening Mail:

"Just picture what goes on in Denmark, a country where farmers
are prosperous. Consumers buy cheaply, and there are no rob-
bers who stand between them. In this country the farmers are
not prosperous, the consumers do not buy cheaply, and there are
robbers between them. In Denmark, on a country road in the
afternoon, one can see a man wearing the cap of the Farm-
ers' Co-operative Association pushing a cart through the village,
gathering from each house a dozen or two dozen eggs, tubs of butter,
and packages of cheese. As he takes the produce he stamps the
eggs and records the quantity delivered in the record book of the
member. At the end of his three or four mile trip he meets a half
dozen other men at a small transfer-station owned by the co-
operative association. At the transfer-station great wagons or
trucks are loaded with the products brought in by the hand-carts,
and the trucks haul their loads to a near-by railroad-station. At
the railroad-station enough is concentrated to fill a railroad-car.

"The raib:oad-car proceeds to a seaport, where it meets scores

FROM PRODUCER TO CONSUIVIER 161

more large terminal markets owned by the State
or the city. They should be located on the rail-
roads and water-fronts. They should be built over
the tracks so that produce could be unloaded easily
and placed in temporary or permanent storage.
The terminal warehouses should be operated by the
department of markets which should receive and
sell consignments from inland points. These ter-
minal warehouses should be of adequate size for all
kinds of produce. They should contain cold-storage
and refrigerator establishments into which perish-
able commodities could be placed, either in bulk or
in small compartments, which could be rented by
the shipper, by retail dealers, or by any individual
consumer, like the safety-deposit boxes of a trust
company. The warehouse should be equipped for
meat, fish, fruit, poultry, butter, eggs, vegetables,

of additional cars loaded with the products of the association from
all parts of Denmark. At the seaport a ship, owned or chartered,
is waiting, and the train-loads of products are put aboard and started
for England. In England the ship is unloaded into the warehouse
of an EngUsh co-operative association to whom the Danish asso-
ciation has sold. Between these two associations the produce has
been contracted for on a sUding scale for a year in advance. Be-
tween the farmers of Denmark and the working men of London
there is no middleman.

"Take out your note-book and make a memorandum of the
middlemen who stand between the farmers of Iowa and Wisconsin
and the working men of New York and New England.

"Observe that the Danish produce moves in bulk — full carts,
full trucks, full cars, full ships. That is the economy of transporta-
tion. Contrast it with our postmaster-general's proposition that
individual farmer and consumer shall meet by using the parcel-
post. He wants each of the million famihes in New York to receive,
in separate shipments, one chicken, one package of butter, one
dozen eggs. That is the height of waste in transportation."

162 THE HIGH COST OF LIVING

and all kinds of perishable products. The purpose
of the warehouse is to create conditions similar to
those that obtain in non-perishable products whose
price remains the same throughout the year. If
storage were provided for any one who desired it
at a low rate it would be almost impossible for
monopoly to exist, for monopoly becomes increas-
ingly difficult as the number of persons engaged in
a business is increased. If the farmer, the buyer,
the wholesale and retail dealer as well as the con-
sumer himself were able to buy and store for the
future, combinations to keep up price would be next
to impossible. Under such conditions the most
perishable produce would have a competitive value,
just as has clothing, furniture, machinery, dry
goods, or any other cormnodity whose value is de-
termined by the cost of production rather than the
abihty of those who control it to effect a corner.^

The terminal warehouse should be provided with
auction-rooms for auctioning produce at public sale
in bulk. Here daily sales of consignments could be
made to retailers as is now done by the private
consignees in the large cities. Only, under existing
conditions the consignees and auction brokers are
too often in collusion. They fix artificial prices and
work in co-operation with the railroads, commission-

* For a description of how terminal warehouses owned by the state
operate to protect the farmer and the buyer, see Chapter XI, on
"How Austraha Controls the Food Problem."

FROM PRODUCER TO CONSUMER 163

men, and exchanges to reduce the return to the
farmer and increase it to the retailer. The public
auctioneer should be licensed by the State. He
should be under the supervision of the department
of markets and should be compelled to give a
surety bond for the honest fulfilment of his duties.
Or the auctioneer could be a State official, and the
expense of his office could be borne by a small com-
mission on sales, as has been done in New York.

Such a warehouse and selling agency under State
control is urged by Commissioner Dillon of New
York. By this plan all of the middlemen will be cut
out and there will be substituted a public agency
which will receive the produce of the farmer at sta-
tions throughout the State, which will give the farmer
credit for what he brings in to the shipping station,
and then ship the combined deliveries to the city
in car-load lots and effect a substantial saving in
freight rates. And in order to cut out the middle-
men he would have the State or city erect a $3,000,-
000 terminal warehouse and wholesale food market,
conveniently located in the city, to which the prod-
uce could be shipped. In connection with the
warehouse he would establish three co-operative
stores, located in different parts of New York City,
to which retailers and consmners could go and pur-
chase food directly from the farmer through the
department of markets. Into the terminal the
railroads would bring the produce from the agencies

164 THE HIGH COST OF LIVING

in the country districts, where it would be stored
or sold to the retailers. By this means the entire
process of collecting, storage, and sale would be un-
der public control from the producer to the retailer.

The marketing of products through public agents
in New York City was tried in a small way by the
department of markets and foods in 1915. One
of the products first handled was peaches, in which
there was a particularly large crop. An agreement
was made by the department of markets with the
Truck Auction Company to sell the fruit at the
receiving terminals daily at public auction. The
producer was charged 5 per cent, on the sales, 3
per cent, being for the services of the auction com-
pany and 2 per cent, going to the department of
foods and markets for expenses. The result was
advantageous to both the producer and the con-
sumer. The former received from 15 per cent, to
25 per cent, more than he had previously received
from the dealers. "The publicity of the auction
sales and prices caused a better distribution and a
larger consumption than formerly and also reduced
the price to the consumer." This is Mr. Dillon's
opinion of the experiment.

The department also succeeded in raising the price
which the farmer received for his apples and at the
same time reduced what the consumer paid for them.
In this experiment also the object was to eliminate
the dealer. The department announced that on

FROM PRODUCER TO CONSUMER 165

market reports on the condition of the crop, $2.75
to $3 a barrel would be a fair price for apples of the
best grade. This was the price, therefore, which
the farmer asked. During the preceding year, when
the crop was smaller and the export demand greater,
the farmer had been receiving only $1.50 and $2 a
barrel from the dealers. As a result of the experi-
ment with apples the consumer bought his apples
at one-third less than in the previous year despite
the higher prices received by the producer. The
department made an arrangement with several of
the large retail chain stores by which they bought
the apples daily at auction and agreed to sell them
at a price not to exceed 20 per cent, advance. The
press gave the whole matter much publicity, which
resulted in a generally lower price for apples to the
consumer.

When the department tried a similar experiment
with hay it failed because the railroads would not
permit it to make sales on railroad premises, a right
which they freely accorded the private dealers.
They would not even give any assurances as to the
time of delivery of the hay, probably at the request
of the dealers. Yet these same railroads, particu-
larly the New York Central, have made strenuous
efforts to develop the handling of California fruits
to New York and equipped an auction-room on
their premises on the mere prospect of getting this
trade. There is, of course, greater profit in the

166 THE HIGH COST OF LIVING

long haul than in the short haul for the railroads.
And for reasons of their own the dealers as well as
the railroads prefer long-distance shippers. At any
rate, they get in their cars from Chicago, Kansas
City, and other distant points to New York with
the regularity of passenger-trains and often much
quicker than from central New York State.

Such a public terminal would automatically end
the power of the middlemen. The local dealer
would buy directly from the farmer through the
farmers' representative or at public auction. The
price of all commodities dealt in would be fixed by
private and public sales. These prices could be
published in a bulletin printed for that purpose as
is done in some cities. Actual sales would fix prices
instead of fictitious quotations by the egg, butter,
poultry, and other exchanges, which deal in futures
or paper sales. It would be impossible to deal in
futures or to establish a price months in advance
for farm produce. For the farmer himself would
be able to place his food in storage if he so desired.
He could hold it for a month or for six months. So
could the retail dealer. There would be no dealings
in futures, for all the buyers and sellers would be
in active competition all the year round, and the
law of supply and demand would fix the basic
prices as is done in all non-perishable commodities.

(3) A series of local markets, both enclosed and
open, should supplement the central terminal mar-

FROM PRODUCER TO CONSUMER 167

kets. These markets should be well located. They
should be owned and managed by the city. They,
too, should contain cold-storage facihties or refriger-
ator space to be rented to stall-holders or retail
merchants. The stall rentals should be on a basis
suflScient to pay maintenance charges and cost of
operation and no more. There should be public
supervision of prices and requirements for their re-
port and posting.

The success of local markets depends on location,
on size, on the variety of produce offered for sale,
on cleanliness and attractiveness and the creation
of the marketing habit among the people. Local
markets have existed all over Europe for centuries.
Many cities in America operate markets, and the
number is rapidly increasing. A survey of the
municipal public markets of the United States by
the State bureau of municipal information of New
York in 1917 shows that forty-four out of fifty-six
cities say their markets are a success; that they
tend to keep down prices; that they bring producers
and consumers together; and that through the cre-
ation of competition with retail dealers they insure
better produce and render a real service to the
community.

Only a few American cities have given the public
market a chance. The Southern cities, especially
Baltimore, Washington, Charleston, New Orleans,
as well as Cleveland, have had markets for a long

168 THE HIGH COST OF LIVING

period of time and have honestly endeavored to
make them a success. And these cities have materi-
ally reduced prices. Retail dealers and real-estate
interests have prevented markets being opened at
all in many cities or have prevented them being
built or operated in a manner to attract customers.
The city of New York had permitted its markets
to fall into disuse. Population had shifted away
from them. During the early months of the Euro-
pean War the advance in prices led to the use of
city-owned open spaces under the bridge approaches
as open markets. Representatives of the city went
out into the country and encouraged the farmers to
make use of these spaces at a moderate rental.
Four markets were opened for the sale of fruits,
vegetables, meats, poultry, and other produce.
Almost overnight these previously vacant places
became teeming market-places for rich and poor
alike, as many as 100,000 persons a day making use
of them. Prices immediately fell, and buyers were
able to save often as much as 33^ per cent, on their
purchases. Prices were also reduced in the stores
throughout the city, while the farmers, who had
previously had a very precarious sale for their prod-
uce, now began to sell directly to the consumer as
had been the practice a generation ago. But the
real-estate owners and dealers organized a protest
against the competition of the market, and, respond-
ing to this demand, the city authorities fixed an

FROM PRODUCER TO CONSUMER 169

almost prohibitive rental on the market spaces,
which either destroyed the markets or discouraged
their use.

Some years ago the municipality of Cleveland es-
tablished an open market for the sale of fish by the
fishermen of Lake Erie, who had been compelled
to sell their catch to the fish trust which controlled
the local market. Fish had been selling at from 15
to 20 cents a pound. The city fixed a price to the
fishermen of 3 cents a pound, the price they had
been receiving, and sold fish directly through a
committee to dealers throughout the city at 5 cents
a pound. As a result the trust met the city's price
while fresh fish were obtainable instead of storage
fish which had been under refrigeration for months.

Fish should be the cheapest of food on the sea-
board cities. Yet the sale of fish is almost com-
pletely in the hands of combinations or trusts, which
control the price paid the fishermen and the price
as well as the quality of fish that the local dealer
can buy. As a result, fish for which the fisherman
receives 3 cents a pound at the wharves is sold a few
blocks away at from 15 to 20 cents. Yet the city
could easily end this monopoly by the opening of
fish wharves to which the fishermen could bring
their catch daily and sell at retail or at auction,
as is done all over Europe where fish is the universal
food of the poor.

The city of Baltimore, with its three big munic-

170 THE HIGH COST OF LIVING

ipal markets, has reduced the price of a number of
articles of food. On June 22, 1917, fresh eggs were
selling there at 36 cents a dozen, as compared with
48 cents in New York City. Ham was 30 cents a
pound, bacon 38 cents, and sirloin steak 25 to 32
cents. The reason why food is relatively so cheap
in Baltimore is that the principal products come
from within a hundred miles of the city. The mar-
kets are municipally owned and the rentals are re-
duced to a minimum, thus making it attractive for
the farmer to come to town and sell. The highest
price paid for a stall in the meat section is $48 a
year. Under the sheds the prices range from $24
to $36 per year, while street stalls cost only $22 a
year. Farmers who come in irregularly pay 25
cents a day. As compared with these rates, the
price for market space in New York is $1.50 per
square foot, which is a prohibitive price for the
farmer from the districts outside the city, while
the stall-holders pay from $1,500 to $3,000 a year.

The superintendent of city markets in Baltimore
says that most markets fail because the farmers
have not been encouraged to come in and sell direct.
The markets are frequently controlled by profit-
making manipulators. The Baltimore markets are
more than self-supporting, although no attempt is
made to derive revenue from them for other than
market purposes.

(4) The meat supply can never be controlled save

FROM PRODUCER TO CONSUMER 171

through local public abattoirs. Inasmuch as the
Western ranges produce cattle for the entire coun-
try, the great packing establishments in Chicago,
Kansas City, Omaha, Fort Worth, and elsewhere
should be operated by the national government.
Only by such ownership can the cattle-grower be
shielded from the practices described in a previous
chapter, and the consumer be protected from mo-
nopoly prices.

In addition slaughter-houses should be built and
operated by individual cities all over the country.
This would encourage the raising of cattle, hogs, and
sheep by local farmers, an industry which has been
killed by the railroads and the great packers of the
West. This would be a good thing for both con-
sumer and producer, while the diversification of
farming would not only make agriculture more
profitable, it would enrich the farm as well. More-
over, it is great waste to carry live cattle across the
country to be killed and back across the country
to be sold. This increases the cost; it insures a
control of the industry by the packers and owners
of the refrigerator-cars and forces the local butcher
to comply with the terms of the meat trust, which
drove the production of local beef out of the market
a generation ago. The local butcher had to buy
from the trust or be put out of business. If he re-
fused, the trust opened a competitive store and com-
pelled the local butcher to come to terms. Public

172 THE HIGH COST OF LIVING

slaughtering, too, is sanitary. It insures meat that
is free from disease and reduces the possibiHty of
combination and price-fixing because it cuts out
all operators save the farmer and the local butcher.

(5) The waste in the delivery of milk due to com-
peting distributers which cover the same territory
is one explanation of 3-cent milk to the farmer and
12-cent milk to the consumer. But even imder the
present wasteful methods of distribution it should
not cost from three to four times as much to bring
milk to the consumer as the farmer receives for pro-
ducing it, and if it does, then the methods of dis-
tribution should be radically changed and the waste
eKminated.

Two perfectly feasible plans have been suggested
for cheapening the cost of milk. One is that the
State or city provide receiving stations to which
milk can be sent in bulk from the country. Here it
would be received from the railroads and delivered
by public authority or by licensed delivery agents to
depots all over the city. Such depots could be
opened in the groceries, butcher shops, drug-stores,
and even in the schools, so that buyers could pur-
chase milk in bottles from the depots instead of
having it delivered.

The other suggestion is that the sale of milk should
be taken over by the city entirely. The city could
be divided into districts and, instead of a dozen
milk wagons covering eveiy street, a single delivery

FROM PRODUCER TO CONSUMER 173

would suffice. The delivery wagons could be owned
and operated by the city, or the right to deliver
could be granted to individuals under bond to the
city that they would not charge more than a fixed
price; and the license should be revoked if the agree-
ment was violated or the milk was watered or other-
wise depreciated. It is believed that milk could be
sold, under such an agreement, at from 6 to 8 cents
a quart instead of 10 or 12 cents, which is the pre-
vailing price. Then the farmer would be assured a
permanent market; he would be able to insist upon
a fair price and would be protected in his dealings
all along the line. Then it would be to the interest
of the city to promote cattle-raising in the neighbor-
hood, not only for dairy but for food purposes.
The distributers could not play one section of the
country against the other; they could not beat
down the producer by bringing in milk from another
territory and, after having developed the industry
in one part of the country, play the producers against
one another as was done during the milk strike of
the farmers in New York State. When it is consid-
ered that the life of the babies of the city depends
on milk, that it should be the commonest of food
products, it needs no demonstration that the city
should be as much concerned over its milk supply
as it is over sanitation, cleanliness, or any other
subject that affects the life and well-being of the
people. But only by eliminating the middlemen

174 THE HIGH COST OF LIVING

and opening up a direct connection between the
producer and consumer can the present monopoly
and high prices which prevail be broken down.

(6) This leaves only the means of transportation
to be considered. And the railroads are the key to
the whole food problem. For the railroads are the
main link in the chain of distribution. And they
are not run for service but for profit, and largest prof-
its are to be made from unsocial methods of admin-
istration. This is the main reason why the trans-
portation agencies cannot be left in private hands.
Moreover, they are interlocked with so many other
agencies and so many other monopolies that their
operation by the government would automatically
break the power of the warehousemen, packers, ex-
changes, and other parasites that live off the in-
dustry of the country and contribute little or noth-
ing to it.

If the government is not willing to acquire and
operate the railways, substantial freedom could be
secured by the expansion of the parcel-post into a
food-distributing agency as it is in all European
countries. The government could acquire express-
cars and refrigerator-cars and cars for package
freight and have them hauled by the railroads just
as are the express and fast-freight cars at present.
The limits on the size and weight of parcels should
be abolished and the post-office become a distribut-
ing agency for such commodities as are essential to

FROM PRODUCER TO CONSUMER 175

the life of the community. Individual farmers
could ship directly to individual consumers or re-
tailers. They could thus be assured of means of
transportation and of delivery as well. Moreover,
rates and charges should then be fixed by the gov-
ernment, as they are in the parcel-post, rather than
by the carriers, who have it in their power not only
to decide what freight shall be carried and what
not, but also to fix arbitrarily the rates for carriage,
which in many instances are so prohibitive as to
kill the industry.

With an unlimited parcel-post, local gardening,
the raising of poultry, eggs, butter, etc., and their
direct shipment to market would become a possi-
bility, as it was in the days when each farmer drove
to the near-by town and sold his produce to his own
customers. There is nothing extraordinary about
such a proposal. The parcel-post is used all over
Europe as a means of marketing directly and for
cutting out of the middlemen.

The proposals herein suggested merely open up
the distributing agencies. They offer a free means
of circulation between the consumer and producer.
They destroy all of the useless middlemen and make
it impossible for them to live. They re-establish
conditions that prevailed all over the country up
to a generation ago. And the high cost of living
only appeared with the coming of these agencies
that should have reduced the cost of living and

176 THE HIGH COST OF LIVING

been of great service to the producer as well. But
instead of being a boon to society, the distribut-
ing agencies and warehouses have become a burden.
But with the circulatory system free and unimpeded,
with the highways under public control, with all of
the terminals and warehouses operated for service
rather than for profit, then conditions similai- to those
which prevail in the making and sale of watches and
automobiles would be established and the law of
supply and demand would operate on the produc-
tion and distribution of food and establish a price
at the cost of production as it does in all other in-
dustries and activities where free competition pre-
vails. And this is the only alternative short of a
socialization and government control of the whole
subject.

CHAPTER XV
OTHER ITEMS IN THE FAMILY BUDGET

Food is but one item in the family budget, al-
though it is the most important item so far as na-
tional vitality is concerned. Yet it is in food that
economies must first be made. Rent must be paid
to avoid eviction. The landlord is inexorable. Fuel
must be had to keep from freezing. The worker
and his family must be clothed, and the bread-
winner must go and come from work by street-car
no matter how little is left in the weekly pay envelope
for food. So the worker reduces his rations. The
investigations made in many cities show that the
change for the worse in the dietary of the poor dur-
ing these years of prosperity is of so serious a sort
that the commonest necessities of a few years ago
have become luxuries to millions of people. Meat
is a rarity, and only the cheapest varieties can be
purchased at all. Eggs at 50 cents a dozen are re-
served for the sick, and milk at 12 cents a quart is
doled out only to the babies, if obtainable at all.
The high cost of food means a reduced diet all around.

The other items of first importance in every fam-
ily budget are rent, fuel, clothing, and some pro-

177

178 THE HIGH COST OF LIVING

vision for sickness. Rents are rising and rising
rapidly. The increase in rents in New York during
the spring of 1917 was on the basis of 10 per cent,
all around. Now, increase in rents are primarily
traceable to increasing land values, and year by
year the land values of the city increase with popu-
lation and industry. They are a social product.
The annual increment to the value of land under-
lying New York City is in the neighborhood of
$150,000,000. The ground-rents of the average city
amount to from $150 to $250 a family. The total
ground-rent in the city of New York is approxi-
mately $200,000,000. Year by year the tribute ex-
acted by the ground-landlord increases, and year
by year the standard of living of the people is
reduced.

Ground-rents of every kind are passed on to the
consumer. The great department store which pays
a quarter of a million dollars ground-rent for a piece
of land which a generation ago was used as a cow-
pasture, passes the rental on to the buyer just as
the tenement-owner passes it on to the tenant.
And rent approximates about one-third of the
average worker's income, of which from one-third
to one-half goes to the landowner, who grows
richer year by year by the increase of population
and the growth of society.

Increasing land values levy tribute on the worker
and the consumer at every turn. They grow while

THE FAMILY BUDGET 179

he sleeps. The value of the land underlying a city
is increased by every baby that is born. At a hear-
ing before a committee of the Assembly of the State
of New York during the winter of 1917, a represen-
tative of the real-estate interests of New York City
protested against any tolerance being shown the
advocates of birth control among the poor, and gave
as his reasons for opposing a bill permitting the dis-
semination of information that every baby bom in
the metropolis added $1,000 to the value of the
land. The baby, rich or poor, was born into the
world with a permanent mortgage on its efforts of
$50 a year, or five times that sum when he became
the head of a normal family of five.

Other costs have gone up. Coal reached famine
prices in almost every city in the country during
the winter of 1916-17. It shot up from $3 to
$6, and even $12 a ton. The increase probably
averaged from 50 to 100 per cent, all over the
country. In the city of New York coal prices were
almost prohibitive. Yet the anthracite coal-fields
are but a few hours away, and despite the shortage
of labor many coal companies reported that they
had mined more coal than in the preceding year. All
through the West the same was true. Prices were
doubled and trebled. Factories closed down for
lack of fuel. Cities were without coal. Yet the
Middle West is underlaid with coal, and the miners
who had received an increase in wages but a few

180 THE HIGH COST OF LIVING

months before called for a second conference and
demanded a further increase because they were
unable to work more than two or three days a week.
This was due to a general shortage of cars and the
inability of many operator to secure any cars at
all. The tribute of the coal barons is a tribute of
land monopoly just as is the ground-rent of the
city.

Railway transportation costs the nation nearly
$4,000,000,000 a year, or nearly $200 for every fam-
ily of five. This is a burden which the worker car-
ries. It amounts on the average to one-quarter of
the wage of the workers of the country. And
transportation costs are ultimately paid by the con-
sumer. They come out of the pay envelope of per-
sons of small means. For the great bulk of the
freight of the country is on staple articles of uni-
versal consumption.

The house in which the worker lives pays tribute
to the lumber trust which owns or controls 105,000,-
000 acres of timber-land. The worker pays tribute
to the steel trust for the apartment in which he
lives. Food, fuel, rent, lumber, and lumber prod-
ucts; all kinds of clothing, shoes, almost every
article of universal consumption has steadily in-
creased in price during the past three years until
the persons living on a fixed income, teachers, clerks,
professional men, are far worse off than they were
ten years ago, while the millions of men and women

THE FAMILY BUDGET 181

working for a wage, and who have received even a
substantial increase in incomes are relatively poorer
than they were before.*

Why is it that the gains in wealth creation, the
marvellous inventions, the harnessing of power, the
increase in labor productivity more rapid than in
any previous age in history, should have passed by
all but a small handful of persons? Why should a
generation have so altered conditions that 2 per
cent, of the people own 60 per cent, of the wealth
of the country? Why should the advance in civili-
zation mean such a terrible burden to the great
bulk of our people when the wealth produced each
year is greater than the accumulated wealth of the
United States but thirty-five years ago? In 1916
we produced $45,000,000,000 of wealth. That is
$450 a person, or $2,250 for every family in the
coimtry. It is a sum adequate to raise a family in
comfort even at the present high cost of the neces-
sities of life. The explanation is not found in the
increased cost of labor, for the total wages paid in
the United States in 1916 amounted to but $5,320,-
000,000, or 11 per cent, of the total wealth produced.
And despite the increase in wages, the wealth pro-
duced per man has increased far more rapidly than
the increase in wage. In fact, it is a commonplace

^ As shown in Chapter III, wages have increased not more than 18
per cent, during the past two years, while the cost of Uving, based
upon sixty articles of universal use, has gone up 85.32 per cent.

182 THE HIGH COST OF LIVING

of experience that high wages usually mean low
labor cost. Nor is the explanation to be found in
the exhaustion of natural resources, or a demand
far in excess of the supply. Some changes have
taken place in our life during the past generation
that intercept the gains which should have come to
society from the marvellous discoveries, inventions,
and increase in production.

The explanation is to be found in monopoly which
has become all-pervasive. It has entered into almost
every industry and controls almost eveiy necessity
of life. And an examination of the more important
items in the family budget enumerated above shows
that the control of the land and the natural resources
of the nation is the most important monopoly of
all. It involves food, fuel, lumber, building ma-
terials, iron, steel, copper. It involves the land
underlying the city, the sites of our homes whether
we own or rent them, whether in the city or the
country. To-day the resources of America are un-
der the control of a group of monopolies and trusts
while the land is kept out of use by the prohibitive
prices at which it is held.

Monopoly of natural resources and with it the
denial of opportunity to work and monopoly of
transportation are the primary causes of the increase
in the cost of living, of the necessities and comforts
of life. The monopoly of land, of fuel, timber, and
other natural products can be reached by taxation.

THE FAMILY BUDGET 183

These it will open up to use while the transportation
monopoly can only be solved by public ownership
and the substitution of the idea of service in this
important agency for the idea of profits.

CHAPTER XVI
FREEING THE HIGHWAYS OF THE NATION

I HAVE no doubt but that the wealth of the
country would be increased by billions of dollars
annually if the railroads were in public hands.
The paralysis to our energies from the private own-
ership of the means of communication cannot be
stated in figures. But just as the freeing of credit
by the Federal Reserve Act released the productive
power of the country, so the freeing of the trans-
portation agencies would have the same effect.
We do not know how many coal-mines remain un-
opened because there are no cars or facilities to
transport the fuel; we do not know how much oil
and timber would be produced, how many indus-
tries would be awakened, how many acres of land
would come under cultivation if the country were
assured of cheap, adequate, and equal transporta-
tion facilities.

No one knows the productive power of an indi-
vidual or a nation. We have not begun to approach
it in any country, least of all in the United States.
And when it is considered that tens of thousands of
automobiles have been driven on their own power

184

FREEING THE HIGHWAYS 185

from Michigan to distant cities, when tens of thou-
sands of miners are standing idle at the mouth of
the mine, when whole industries are shut down for
lack of fuel, and building projects are suspended
because of the breakdown in transportation, we get
some suggestion of the terrible waste from the
failure, the inevitable failure, of private ownership
of the transportation agencies of the nation.

These conditions cannot be corrected by the rail-
roads. There are too many conflicting interests at
work to permit of it being done. There are also so
many other monopolies interrelated with the rail-
roads that it is frequently to the interest of railway
operators and directors to continue these abuses.
They can only be ended by public ownership.

Moreover, the railroads hold the key to the high
cost of living, of food, fuel, timber, and all of the
necessities and comforts of life. For the railroads
are interlocked with all of the monopolies which
control these products and service. They are in-
terlocked with the refrigerator-car companies, pack-
ers, warehousemen, coal-dealers, food exchanges, and
cold-storage warehouses; with the coal-mines, the
lumber, the iron, steel, oil, and other monopolies.
The power of these monopolies would be materially
reduced if the railroads were integrated into the
life of the nation, and were free from the countless
discriminations and abuses which now prevail.
Food gambhng and speculation would crumble to

186 THE HIGH COST OF LIVING

the ground if the favoiitisni, the struggle for long-
haul traffic, but most of all if the profits from in-
terlocking industries were ended and the food and
industrial wealth of the country were free to move
unimpeded from producer to market.

There is a possible alternative to complete gov-
ernment ownership that avoids many of its alleged
evils but secures many of its advantages. It offers
a simple means of relief to some of the conditions
referred to. And that is through the expansion of
the parcel-post system into an express and fast-
freight service. This involves an act of Congress
or an executive order from the postmaster-general,
enlarging the limits as to the size and weight of
packages and the kind of freight that can be trans-
ported, and the extension of authority to the post-
office to enter the transportation business.

This proposal could be quickly set in motion. It
could be made operative in a few months' time.
There exist in the United States a large number of
private car companies and fast-freight lines which
own about 225,000 cars. They maintain offices,
solicit freight, and perform a vast freight business
midway between the express companies and the rail-
roads. They have haulage contracts with the rail-
roads similar to those of the express companies.
There are thousands of refrigerator-cars owned by
the packing-houses, and flat-cars and coal-cars
owned by private coal corporations.

FREEING THE HIGHWAYS 187

Here is a ready-made agency, already working in
harmony with the railroads and well known to ship-
pers all over the countiy, that could be mobihzed
into a great transportation agency. The govern-
ment could acquire these cars and merge them into
a single company under the control of a transporta-
tion director with power to compel their haulage by
the railroads, under arrangements similar to those
which prevail with the express and fast-freight lines.
No great administrative reorganization is involved
in such a transfer. A central office in Washington
Hke the Weather Bureau could collect reports as
to the transportation needs of different sections and
different industries. It could organize its car ser-
vice as a "flying squadron" to meet these demands.
It could use its cars as the refrigerator companies
now use their cars, which are utilized to their capac-
ity all the year round by being sent where refriger-
ator-car service is most urgently needed. It could
run its cars on any railroad. It could decide
whether the transportation of food, fuel, or other
commodities was the most urgent. Quite as im-
portant, it could use the cars to their full working
capacity. To-day a freight-car moves on an aver-
age only thu'ty miles in twenty-four hours, yet its
potential service ought to be from seventy to a
hundred miles a day. Undoubtedly the railroads
could carry a very much greater tonnage, possibly
double their present tonnage, if the motive power

188 THE HIGH COST OF LIVING

and equipment were mobilized for most effective
use, and for use where most needed to meet the
nation's emergencies.

There would be great economy in the merging of
all these fast-freight and express lines under govern-
ment control; and a still greater economy in the
utilization of cars to their full capacity. A central
authority, thinking of all the needs of the nation,
could determine what commodity should be moved
and what not. It would send its ''flying squadron"
where most needed. Perishable commodities could
be saved. Food shortage could be prevented. Fuel
could be placed where it is needed and at rates that
industry could stand. Cars could be run full both
ways. Transportation could be speeded up. And
freight rates could be adjusted on a basis suited to
the service performed rather than to the arbitrary
classification which now prevails.

The proposal would involve a relatively small ex-
penditure, for cars can be constructed at a cost of
less than $1,000. It would involve little organiza-
tion, for a single office force of any one of the fast-
freight lines could handle all of the lines involved.
Rates could be simplified. Instead of a million
commodity rates a score would suffice. The rates
paid to the railroads for haulage might be the same
as those now paid by the fast-freight lines. They
might be fixed on a car-mile or a ton-mile basis for
haulage, irrespective of the contents of the car.

FREEING THE HIGHWAYS 189

This would repay the railroads for service rendered,
and they could not complain. Moreover, and this
is important, it would enable the government to
classify freight rates as it saw fit.

Thousands of offices could be closed. Possibly the
Post Office Department need only increase its per-
sonnel and change the limits now imposed on the
parcel-post; for the parcel-post in some countries
in Europe will cany a ton of coal or a piano if the
shipper desires. But the great gain would not be
in these economies, colossal though they would
probably be. The great advantage would be in the
freeing the nation, in releasing the energies of the
manufacturer and the farmer, in making it possible
to increase the production of wealth and bring about
its proper distribution unimpeded by the conflict
which now results from hundreds of roads struggling
for their share of the traffic, and for long-haul
traffic irrespective of the requirements of the nation
as a whole.

Such an experiment, too, would incite the rail-
roads to do their best. It would automatically
compel them to effect economies, to develop initia-
tive, just as the building of municipal electric-light-
ing plants has compelled privately owned plants to
reduce rates and improve service to meet the com-
petition which the community offered.

The effect of government competition is seen by
the effect of the parcel-post on the express companies.

190 THE HIGH COST OF LIVING

It is carrying over 400,000,000 parcels a year, al-
though it is less than four years old. It carries a
4-pound package at a profit, whereas the express
service loses money on a 20-pound package. And
it delivers these packages promptly and at a low
cost. These 400,000,000 packages would probably
not have been carried at all by the express com-
panies, for their business has not been materially
diminished in volume by the competition of the
government. The parcel-post has created new busi-
ness. It has increased the wealth produced and
been of incalculable service to the producer and
the consumer.

It is probably no exaggeration to say that the
wealth of America could be increased materially,
possibly by 10 or 20 per cent., if those who pro-
duced knew that they had at their command an
impartial, prompt, and adequate means of transpor-
tation; while the people of America might have the
cost of living reduced by a billion dollars a year
by the ending of the exclusive private control of the
transportation agencies of the nation. We dare not
blink this situation. We are kept in ignorance of
the actual conditions which prevail. Only the rail-
roads know how bad it is. And they will not let
the country know. But the blockade which now
exists is only less of a menace to the success of the
nation and the Allied cause than the submarine
peril. For it not only affects our ability to supply

FREEING THE HIGHWAYS 191

ourselves and our allies, but our ability to produce
freely as well. The circulatory system of a nation
must be kept open. And it can only be kept open
by the government itself.

CHAPTER XVII
THE EMBARGO ON FARMING

Up to the present we have been discussing dis-
tribution, the conditions which prevail in the mar-
keting of food, and the effect of the many monopoHes
which have forced themselves into this field on the
cost of living as well as upon agriculture. From
this point on we shall consider production; why
there is not more food produced; why men do not
go out to the land; why boys and girls drift to
the city with no compensating drift back to the
farm. This is, of course, the most important ques-
tion. For the United States could feed itself and
almost feed Europe if our opportunities were utilized
as they should be, or as they are in some parts of
Europe.

Many persons have come to the conclusion that
the decay of agriculture is inevitable, that we can-
not check the drift of people to the city, a drift that
has been going on all over Europe as well. They
say the city is so much more attractive than the
comitry, it has so much more to offer that people
will, of com'se, go to the towns. There are some,
too, who feel that society really gains by the change
that is going on. There can be little real life in
isolated groups. The city is the civilizing agency,

192

THE EMBARGO ON FARMING 193

and the world will advance more rapidly when the
detached farm is gone and some new form of agricul-
tural organization takes its place. And such per-
sons believe that the solution of farming is through
wholesale production and the organization of agri-
culture along modern industrial lines. The food
we need should be produced by specialization, by
gangs of men working as in great manufacturing
plants, the farms being operated by large companies
or under socialistic or semisocialistic organization.
Under such an arrangement one farm would be
devoted exclusively to dairying, another to the
raising of poultry, another to truck-gardening, and
the large estates of the West and South to wheat,
cattle, cotton, tobacco, and large-scale plantation
production. It has been estimated that with agri-
culture organized as is industry 20,000 men could
feed 2,000,000 people, and that millions of farmers
could be released to other lines of activity.

It is, of course, a very wasteful system under
which men remain on the farm all the year round
when their working period is only six or seven months.
There is also a waste in the raising of diversified crops
on each farm. It requires far more labor per unit
of production than would be necessarj'- for large-
scale production. Moreover, under existing condi-
tions the individual farmer is unable to own tractor
ploughs, machines for planting and harvesting, the
use of which labor-saving devices would be possible

194 THE HIGH COST OF LIVING

if farming were organized as is industry on large
units of land in which individual ownership were
merged as it is in the trusts and corporations.

It is possible that some such organization will be
the ultimate form of agricultm'e when individual
property has given way to collective ownership.
But such an organization is a long way off, and the
working out of such large-scale farming will only
come after efforts have been exhausted to redeem
agriculture along lines with which we are familiar.

And before we abandon the old organization of
agriculture, or condemn the farmer for leaving the
land we should be satisfied that he is really leaving
the farm from choice, and is not being driven from
it by conditions that can be corrected. And there
is evidence enough that men really want to be farm-
ers, and that they will go to the land by millions
if it is made reasonably easy and profitable for them
to do so. But they must have some hope that they
will be able to make as decent a living as they can
in the city, and that they will not lose the results
of their efforts through exploitation by the many
predatory interests that surround the farmer and
make agriculture the precarious industry that it is.

Even without such assurance millions of men re-
main in the country under what are almost intol-
erable economic conditions. There are 5,000,000
agricultural workers or farm-hands in the United
States whose position is certainly far from attrac-

THE EMBARGO ON FARMING 195

tive. They work long hours, they receive relatively
low pay, they have few of the comforts and pleasui-es
of the city.^ There are also 2,354,676 tenant farm-
ers, and the life they lead and the precarious returns
they receive are not such as to lure men to farming
or to retain boys and girls on the farm who have
been reared in tenant families.

Men not only remain on the farm under the most
difficult economic and social conditions, but three
centuries of experience proves that the hunger for
land is probably the most powerful economic mo-
tive known to man. It is as operative to-day as
it was in the days of our grandfathers. In the
years just before the European War several hundred
thousand farmers moved from Iowa, Kansas, Ne-
braska, and the northwest into the undeveloped
regions of western Canada. They were drawn by
the free or the comparatively cheap land of a new
countr}^ And it is free land that has been the at-
traction that has peopled America from the begin-
ning. It was this rather than religious or political
liberty that lured the English, the Scotch, and the
Irish, the Germans and the Scandinavians to this
country from the first colonists in Massachusetts
and Virginia down to the pioneers who fiUed in the
Western prairies after the Civil War. Generation
by generation the sons of settlers, the discontented

^ See Report of Commission on Industrial Relations, vol. 1, p. 320,
and vol. 10, pp. 9059 et. seq.

196 THE HIGH COST OF LIVING

from the cities, and the immigrants from Europe
moved westward on to the virgin lands awaiting
their settlement.

No hardship was severe enough to halt the move-
ment and no tales of suffering and privation de-
terred the colonists of the East or the immigrant
from crossing the continent. The settlers suffered
from cyclones and tornadoes. They lived through
cropless years in dugouts and hastily constructed
shacks. They suffered from drought. Their cattle
perished. They had no companionship and few
of the comforts of life. Their children had no
educational opportunities; there was no means of
communication and few visitors relieved the monot-
ony of existence. Yet the lure of free land was
stronger than any hardships. It filled in a conti-
nent. In a few years' time the great stretches from
the Mississippi to the Rocky Mountains and the
Pacific slope were divided into homesteads and peo-
pled by the Anglo-Saxon race. Even the "Great
American Desert" was not so desolate as to be
able to defy the land hunger of the settler.

Such is the magnetic power of the land. It
defies all obstacles. It lures, as does the quest
for gold. It attracts the Anglo-Saxon, the Teu-
ton, the Latin, and the Slav. The experience of
America and Australia, the more recent experience
of Canada, the peopling of the reclamation proj-
ects, even the settlement of human beings in the

THE EMBARGO ON FARMING 197

Imperial Valley of California, where the heat is
so terrible that women can live there only a por-
tion of the year, proves the hunger of people for
the land.

But the free land of the West is all gone. It has
passed out of the hands of the government. No
longer do the open prairies, unfenced and un-
owned, keep down the price of land. No longer
does a free homestead to be had for the asking free
the would-be farmer from the necessity of being a
farm-hand or a tenant on the land of another. The
age-long movement of people toward the setting
sun came to an end about the close of the last
century when the remaining Indian reservations and
Oklahoma, were thrown ODen to the landless of the
earth.

The enclosure of the public domain ended the
first great era of American history. It marked the
close of an era in the history of the world. For
the enclosures of the free land ended the freedom
of choice enjoyed by the city worker, it ended
the freedom of choice of the would-be farmer, in
a sense it ended the freedom of the western world.
And when the free land was gone, all land began
to hare a monopoly price irrespective of its real
value. It acquired a speculative value. No longer
was land desirable only because of its greater fer-
tility or nearness to the city. All land now had a
scarcity value, a value due to the fact that all of

198 THE HIGH COST OF LIVING

the land was privately owTied. Then the price of
land began to rise. It rose with great rapidity.
A million incoming immigrants increased the de-
mand, not only for land, but for food as well. And
this increasing demand upon a limited supply af-
fected all land values. It has been especially oper-
ative during the past few years. Fifty years ago
land in Iowa, Illinois, Kansas, Nebraska, and the
Dakotas was held at from $3 to $5 an acre. To-
day it is held at from $100 to $300 an acre. In
Texas it is the same. In California land which a
generation ago could be had for the asking is held
at from $500 to $1,000 an acre. The farming land
in America is held at a higher price than it is in
England. Only in such intensively cultivated coun-
tries as France, Holland, Belgium, and Denmark is
the value of agricultural land equal to that in the
central states of America.

Even in the East the price of land is prohibitive
to the would-be farmer. Only by the most intensive
application can he make enough to keep up pay-
ments and make a decent living. Frequently he
loses his whole investment through failure to meet
the charges against him.

This speculative price of land is one explanation
of the decay of agriculture and the failure of farming
to keep pace with our needs. The earth is closed
against the would-be farmer. The man of aver-
age capital is unable to buy or to make a living

THE EMBARGO ON FARMING 199

on the land at the price which he has to pay
for it.

The rapidity with which land has increased in
value in recent years is indicated by the census
returns. In 1900 the farming land of the United
States had a value of $13,058,007,995. A decade
later it was valued at $28,475,674,169. In ten
years' time farming land increased in value by
$15,417,666,174 or 118.1 per cent. The value of
the land per acre increased 108.1 per cent. Dur-
ing this period the increase in farm acreage was
but 4.8 per cent., and the number of persons en-
gaged in agriculture but 11.2 per cent. The in-
crease in the value of agricultural land was not
the result of increasing acreage under cultivation,
nor yet in the number of farmers. The increased
value was a monopoly value, due to the enclosure
of the free land, and the increasing pressure of
population upon the soil. It is an "unearned in-
crement," a social value due to the necessities of
society and the increase of population.

The cheap land of our fathers has disappeared
just as the free land of our grandfathers disappeared
a generation earlier. And dear land places an em-
bargo on farming. It explains the drift to the
city. It drives the sons of farmers away from the
country. They cannot buy land. It is held at a
price beyond its economic value. And men are
unwiDing to become tenants or agricultural laborers

200 THE HIGH COST OF LIVING

when they can make more money and enjoy greater
comforts in the city.

This is one obstacle to agriculture. This is one
explanation of why we do not produce more food.
The earth is closed against labor.

Men in the mass are always trying to satisfy their
needs along lines that are easiest. By something
like telepathy they know of the avenues of effort
that are most remunerative even when those op-
portunities are in far-away Alaska. And the end
of the centuries-long movement to the land, which
has been going on since the discovery of America,
is not wholly due to the attractiveness of the city
or its comforts and pleasures; it is due rather to
the fact that the land is now closed against the
worker by the speculative prices that act as an em-
bargo against him.

CHAPTER XVIII
LAND FOR THE LANDLESS

Not only is the would-be farmer excluded from
the land by prohibitive prices, but hundreds of
millions of acres are held in great estates, while
over 400,000,000 acres of land enclosed in farms
is not under cultivation at all. This is particularly
true of the West and South where vast manorial
domains of tens of thousands and even millions
of acres are held by individuals and corporations.
While food has almost reached famine prices to
the poor, while milHons of people are herded in
tenements and about the great industries, while
humdreds of thousands of farmers have migrated
to Canada and nearly 40 per cent, of our 6,000,000
farmers are tenants, there exists in this country
land enough, if converted into moderate-sized farms,
to provide comfortable homes for at least 30,000,000
people.

And if the land were cultivated as it is in France,
Denmark, Switzerland, and Belgium there is prac-
tically no limit to the millions who would find a
free and adequate livelihood from the land. For
the United States is peopled at but 30 persons to

201

202 THE HIGH COST OF LIVING

the square mile, while in a number of countries in
Europe, where the soil is no more fertile than it is
here, ten times as many people live.

We are familiar with the feudal ownership of
land in Europe and the great estates of the old
aristocracy in Russia, England, Germany, and
Austria-Hungary. Our indignation has been
aroused over the rack-rented tenants of Ireland
who, to the number of millions, were driven to
America by the oppressions of English landlords.
Great Britain is divided into great estates, owned
by the aristocracy, from which the people have
been driven into the cities, in which four-fifths of
the population now dwell. Persons of Scotch de-
scent in this country remember the stories of the
enclosures of the land of Scotland by the aristoc-
racy, of how the peasants were sent from the homes
their ancestors had held for centuries, of how they
had been driven almost into the sea, and how hun-
dreds of thousands of them came to America to es-
cape the oppressions of the landowning class. Yet,
while we are familiar with these conditions in Europe,
few people realize that a feudalism has come into
existence in the United States similar to that which
still prevails in a great part of Europe, a system
which, up to the French Revolution, was the pre-
vailing method of landownership in all of the Euro-
pean countries. Some American States, in fact, are
more closely owned than are any of the nations of

LAND FOR THE LANDLESS 203

Europe, with the possible exception of Russia. And
the condition of the tenant farmer working upon
the great plantations of Texas, Oklahoma, and many
of the Southern States is but slightly better than
the condition of the Irish tenants who were driven
to this country in the hungry forties to escape
starvation.^

The most unfortunate page in our history is the
story of the wastage of our public domain. It
amounted originally to 1,850,000,000 acres. It
cost us less than five cents an acre. The great
bulk of this imperial domain lay to the west of the
Mississippi. And it is out of this domain that the
great feudal holdings of the West have been carved.
From the largesses of the government in the form
of subsidies to the railroads and for other internal
improvements, 337,740,000 acres were taken. This
is an empire equal to one-sLxth of the total area of
the United States. It is an area three times the
size of France, with a population of 43,000,000 souls.
A great part of this domain was given to the Pacific
railroads. All told, between 129,000,000 and 150,-
000,000 acres were donated to the Northern Pacific,
Atlantic Pacific, Union Pacific, Central Pacific,
Kansas Pacific, and Southern Pacific railroads.
This does not include 8,000,000 acres granted to
the railways m the State of Texas. These land
grants alone would have more than paid the cost

1 See Chapter XX, "The Tenant Farmer."

204 THE HIGH COST OF LIVING

of these railroads had the government undertaken
their construction.

The grant to the Northern Pacific Railway is
estimated to have been worth $1,000,000,000.
Had the land been sold directly to settlers at the
prices later received by the railroad, five trans-
continental railroads could have been built from
the sale of the land alone. An exhaustive investi-
gation of the grant to the Northern Pacific was
made by a committee of Congress, which reported
that the entire cost of the railroad had been paid
for out of the land grants and that a surplus of
$41,281,000 remained to the company. The com-
mittee stated in its report to Congress:

"The undersigned supposed that all that could
be asked of the government in the exercise of the
most prodigal generosity would be a sufficient
amount of lands to enable the company to con-
struct its road without costing it a single dollar of
its own money, and that either of the foregoing
hypotheses shows a surplus of many millions more
than are necessary for that purpose. It has oc-
cmred to them that it might be to the interest of
the people of the United States generally to look
after the surplus, whatever it may be."^

Mr. Wilson, for many years commissioner of
the land department of the Illinois Central Rail-
road, stated that if properly managed the Northern
Pacific land would build the entire road connecting

' Public Domain, Donaldson, p. 889.

LAND FOR THE LANDLESS 205

the then terminus of the Grand Trunk through to
Puget Sound, fit out an entire fleet of sailing vessels
and steamers for the China Sea, India, and coast
trade, and leave a surplus that would roll up to
millions. He deemed the probable value of the
land grant $990,000,000, its possible value $1,320,-
000,000.1

It is out of these railroad land grants that many
of the bonanza farms of the West have been carved.
They are to be found from Canada to Mexico and
from the Missouri River to the Pacific Ocean. The
Texas Land Syndicate No. 3 owns, or did own,
3,000,000 acres in Texas. Another British land
company owned 300,000 acres in Kansas. The
Duke of Sutherland owns hundreds of thousands
and Sir Edward Reed controls 1,000,000 acres in
Florida. Another English syndicate controls 2,000,-
000 acres in Mississippi. There are Dutch, British,
and German syndicates whose estates exceed a
million acres. Fifty-four individuals and syndicates
own 26,710,000 acres, an area greater than seven of
the more populous Eastern States with a popula-
tion of 8,359,000 people.

Much of the land so acquired was obtained by
fraud. False entries were made, and when the
land was patented to the individual claimant it
was inmiediately transferred to corporations and

' The United States in Our Own Times, E. Benjaruiu Andrews,
p. 4.

206 THE HIGH COST OF LIVING

individuals, dummy claimants being used for this
puipose. The amount of these fraudulent enclosures
will never be known. Some years ago there ap-
peared in Everybody's Magazine an investigation
of land monopoly upon the Pacific coast. ^ It re-
cited the story of how a poor German butcher had
landed in this country in 1850; of how he crossed the
continent and began to acquire land. In a genera-
tion's time he and his partner secured possession of
14,539;000 acres of the richest land in California and
Oregon. His holdings covered 22,500 square miles,
an area three times as great as the State of New
Jersey with its population of 1,500,000 souls. It is
said that a man may travel upon a single estate in
California from the northern to the southern bound-
ary of the State without traversing any other prop-
erty.

This same article tells how 100 men in the Sacra-
mento Valley, California, came to own 17,000,000
acres; of ranches of twenty and even a hundred
miles in extent; of individual estates twice the
size of Belgium and bigger than all Switzerland,
bigger even than the combined area of New Hamp-
shire, Massachusetts, Connecticut, and Delaware.
Other investigations have been made of the extent
of the land monopoly and of the methods employed
in acquiring these great estates. An exhaustive
study, made by Mr. William R. Leighton, of Omaha,

1 Everybody's Magazine, May, 1905.

LAND FOR THE LANDLESS 207

Neb., was published in the Boston Transcript.^
It states that more than 150,000,000 acres have
been illegally or collusively appropriated from the
public domains-
Official investigations have recently been made
in California of the large land holdings in twenty-
one counties in that State. The investigation did
not include 5,000,000 acres owned by the Southern
Pacific Railroad or the immensely valuable Spanish
land grants in San Diego and Los Angeles Counties.
In San Diego County there is the Santa Margarita
grant of 240,000 acres and the Irvine holding of
nearly 200,000 acres. The report showed that four
men in Kern County owned nearly 1,500,000 acres.
All told, 292 men owned 2,339,315 acres and 433
men owned 5,968,556 acres. This investigation only
included holdings in excess of 2,000 acres; whereas,
if estates in excess of 1,000 acres had been taken,
the exhibit would have shown a far larger portion
of the State to be in monopoly holdings.

The United States census gives some indication
of the extent of these great estates and the land
monopoly which prevails. From the census re-
turns of 1900 it appears that of the 841,000,000
acres of land under cultivation 200,000,000 acres
are in farms whose average size is 4,230 acres. These
farms are owned by 47,276 persons. One-fourth of
the total agricultural acreage of the United States

1 Issues May 20 to July, 1905.

208 THE HIGH COST OF LIVING

is owned by .0006 per cent, of the population. This
area is considerably greater than the combined
area of Germany and Great Britain, whose combined
population is 110,000,000 souls. Yet here in free
America one-fourth of the cultivated land is owned
by a handful of persons, whose number is less than
that of a good-sized suburb of an Eastern city.

Speaking of this situation, the Public Lands Com-
mission appointed by President Roosevelt said:

"It is apparent that in very many localities and
perhaps in general a larger proportion of the public
land is passing into the hands of speculators than
into those of actual settlers who are making homes.
. . . Nearly everywhere the large landowner has
succeeded in monopolizing the best tracts whether
of timber or agricultural land. . . . The com-
mission has had inquiries made as to how a number
of estates selected haphazard have been acquired.
Almost without exception collusion or evasion of
the law and spirit of the law was involved." ^

But land monopoly is not confined to the West.
It is found all over the South as well. Even in our
Eastern States round about the great cities men of
wealth are acquiring great estates for residential
purposes. Here the land is being diverted from the
production of wealth, badly needed in the near-by
cities, into pleasure estates.

The reports from the land-settlement colonies in
Europe show that a man can support himself in

' Senate Document No. 154, 58th Congress, Third Session, p. 14.

LAND FOR THE LANDLESS 209

comfort on a farm of 40 or 50 acres. In little Den-
mark the majority of the farmers, who as a class
are the most prosperous in the world, live in com-
fort on farms of less than 20 acres. If the 200,000,-
000 acres held by a handful of persons were divided
into 50-acre tracts they would provide farms for
4,000,000 farmers or 20,000,000 people.

That which is true of agricultural and grazing
land is true of timber-land as well. An investiga-
tion by the Bureau of Corporations of the Depart-
ment of Commerce in 1914 reports that "1,694
timber-owners hold in fee over one-twentieth of
the land area of the entire United States from the
Canadian to the Mexican border. These 1,694
holders own 105,600,000 acres. This is an area
four-fifths the size of France, or greater than the
entire State of California, or more than two and
one-half times the land area of the six New Eng-
land States. Sixteen holders own 47,800,000 acres,
or nearly ten times the land area of New Jersey.
Three land-grant railroads own enough to give 15
acres to every male of voting age in the nine Western
States where almost all their holdings lie. In the
upper peninsula of Michigan 45 per cent, of the
land is held, mostly in fee, by 32 timber-owners.
In Florida 52 holders (mostly timber-owners) hold
one-third of the land in the entire State."*

^Report Bureau of Corporations on "The Lumber Industry,"
parts II and III, p. xviii.

210 THE HIGH COST OF LIVING

The report shows that these holdings are inter-
locked in such a way that they form substantially
a single holding. It states further: "The Southern
Pacific has 4,318,000 acres in northern California
and western Oregon and, with the Union Pacific,
which controls it, millions of acres elsewhere. The
Northern Pacific owns 3,017,000 acres of timber-
land and millions more of non-timbered land. The
Weyerhauser Timber Company owns 1,945,000
acres. In Florida, three holders have 4,200,000
acres and the 182 largest timber-holders have over
16,990,000 acres, nearly one-half the land area of
the State. In the whole investigation area the
1,802 largest holdings of timber involve 79,092,000
acres of timber-land, and in addition some of these
holders own 10,652,000 acres lying in timbered
parts but not now bearing merchantable timber.
Finally, to timber concentration and to land con-
centration is added, in our most important timber
section, a closely connected railroad domination.
The formidable possibilities of this combination
in the Pacific Northwest and elsewhere are of the
gravest pubHc importance. In the last forty years
concentration has so proceeded that 195 holders,
many interrelated, now have practically one-half
of the privately owned timber in the investigation
area (which contains 80 per cent, of the whole).
This formidable process of concentration in timber
and in land certainly involves grave future pos-

LAND FOR THE LANDLESS 211

sibilities of impregnable monopolistic conditions
whose far-reaching consequences to society it is
now difficult to anticipate fully or to overesti-
mate." ^

So closely interrelated are these colossal holdings
that of aljout SO per cent, of the privately owned
timber of the country three holders have 14 per
cent., 90 persons have two-fifths, and 195 have nearly
one-half. In other words, at least one-half of the
standing timber in the United States is owned by
less than 200 holders; and these 200 again are
either interlocked corporations or individuals act-
ing in all essentials as a unit. They fix and con-
trol the output and the prices of timber and lumber
and in so doing the price of furniture, building ma-
terials, and all the thousands of industries that are
dependent upon timber and timber products.

Here is another economic phenomenon for the
most part overlooked by the government, by econ-
omists, and by agencies which are urging considera-
tion of the food problem. Here are hundreds of
millions of acres of land arbitrarily held out of use
by their owners, lands, too, obtained in large part
by fraud and collusion, which are now being used
not for the production of wealth but to exclude
hungry humanity from the land. That these lands
would be tilled if men had an opportunity to till them
is indicated by the eager rush of settlers whenever

1 Idem, "The Lumber Industry," part I, pp. xxii and xxiii.

212 THE HIGH COST OF LIVING

an Indian reservation is opened up to use; it is
indicated by the fact that hundreds of thousands
of men are working on these estates as agricultural
workers or as tenants. There is no shortage of
land in America and no unwillingness on the part
of men to go to the land. We ourselves have cre-
ated the conditions which confront us, conditions
which we must now take steps to correct.

CHAPTER XIX

EXPLOITING THE WOULD-BE FARMER

Growing out of the conditions described in the
preceding chapters is a more or less organized sys-
tem of exploitation or fraud in the sale of land. It
is going on all over the country, especially in the
West and Southwest. Persons of foreign birth who
have accumulated some savings are probably the
worst sufferers, partly from their ignorance and
partly from their desire to acquire a piece of land
they can call their own. The reclamation projects
constructed by the Federal Government at great
expense in the West, estates which are being broken
up and placed upon the market are advertised over
the country. The wonderful fertility of the land
is portrayed in glowing colors, while easy terms of
payment are held out as an inducement to the
weary worker to lure him to what in many cases
involves a loss of his investment. But the practice
is not confined to the West and South. The selling
of land at speculative prices on onerous terms and
under conditions which involves almost inevitable
failure is a common practice all over the country.^

^ As Commissioner of Immigration many requests have come to
me to direct immigrants to land colonies. I have had conferences
with representatives of many of the projects, for it has been my
belief that the immigration problem was a land problem; that if

213

214 THE HIGH COST OF LIVING

The man who wants to buy a farm has no means
of rehable information. He knows nothing of the
condition of the soil, of the faciHties for marketing,
of the kinds of crops to be planted. He is com-
pelled to canvass a wide territory. If he buys at
a distance he must depend on the statements of a
land agent. There is no such thing as a nation-
wide clearing-house or bureau of information to
which the would-be farmer can go for information
on which he can rely.

Thousands of persons are being exploited or at
least led into ventures in which they lose all of their
accumulated savings every year. They are the vic-
tims of more or less unscrupulous promoters and cor-
porations organized for the purpose.

A thorough investigation of the experiences by
would-be farmers has been made by the Land-Colony
Commission of California. It sent out investigators
to secure statements of men who had purchased
small holdings and who, in large numbers, had been
defrauded by individuals and corporations operating
as alleged development companies. The experiences

some means could be found to get the immigrant to the land on easy-
terms he would quickly absorb our institutions and become a per-
manent asset to the country. But all of the projects presented
were open to suspicion and many of them were thoroughly dishonest.
There was Uttle chance of the immigrant making good, and in most
cases the land was to be sold at a highly inflated price. Usually
there were no advantages in the neighborhood, there was no means
of marketing, no schools, and a five-to-one chance that even if the
land did produce a living it could not be disposed of. Hundreds of
such projects are to be found throughout the Western States. They
are speculative enterprises pure and simple.

EXPLOITING THE WOULD-BE FARMER 215

of these land-hungry people, most of whom had spent
a great part of their Ufe in the slow and laborious
accumulation of a little money with which to buy
a home in the country, are pathetic in the ex-
treme.

One of the reports was from a colony of Russians.
They had accumulated $150,000 for the purchase
of a large tract of land. This represented the sav-
ings of years. A land company in California in-
duced them to invest their capital in a tract of land
which was represented to be very fertile. The first
year the colonists obtained but a scanty crop. But
they persevered. The second year the crop was
no better. Finally they sent to the State university
for an expert who, after investigating the land, re-
ported that it was practically worthless. It was
unsuited to agriculture.

Reports of hundreds of other cases have been
gathered by the commission. Here is the story of
an Itahan. His age was forty. He had worked as
a farm-hand in Nevada. He saved enough money
to buy 30 acres of land, for which he paid from $100
to $110 an acre. The first year the total value of
his crop was $150. The second year it was $200.
The third year it was $165. He was unable to
make a living. The land was worthless. It had
been unloaded on him by one of the many dis-
honest land-speculation companies which flourish
in the State. Describing his experience in a report

216 THE HIGH COST OF LIVING

to the commission, he said: "The soil is poor hard-
pan. I sunk in the place more than $5,000. I
could hardly make a Hving. The land does not
produce enough. If I had kept the money in the
bank at 4 per cent, interest I would have more
now, not figuring my labor."

A second settler was a miner. He had a wife and
three children. He bought 10 acres of land at $100
an acre. In addition he spent $750 on improve-
ments. The first year the total value of his crop
was $90, the second year $130, and the third year
$57. In addition he had a cow, two hogs, and some
poultry from which he derived a few dollars more.
He says that the land he bought is worthless for
small farming.

Another settler worked in a logging-camp. He
bought 20 acres of land at $100 an acre. This he
had to improve at an expense of $435. He put his
savings into farm implements, a cow, and some other
live stock. The first year he realized $150 from the
farm and $15 from his poultry. "The land pro-
duces nothing," he says. "Will work outside and
pay up in one or two years. I have paid $1,500 for
the land, which does not produce enough to pay
expenses. I now have no money to put in a crop.
I was told that the land would produce a volunteer
crop the first year, enough for a Hving and to meet
the payments. But the crop hardly paid the cost
of harvesting. Ten acres out of the 20 are worth-

EXPLOITING THE WOULD-BE FARMER 217

less except for pasture. The second year I had no
money to put in a crop at all."

This sort of exploitation is organized as a business.
Agents of steamship-lines, alleged immigrant banks
which have the confidence of the foreign popula-
tion, circularize and urge the ignorant foreigners to
buy land frequently far from their place of resi-
dence. The desire to escape from tenancy, the am-
bition to leave something to their children, the hope
of becoming a home-owner leads men to listen too
credulously to the dishonest advertisements and
statements of land agents and land corporations
which have acquired great stretches of land at a
low price which they seek to unload upon unsus-
pecting buyers.

There are no laws for the protection of the would-
be farmer from this sort of exploitation. And there
are no agencies to which he can go and be guided
in his purchase. He buys land at a high price.
He is induced to pay down as large a sum as can be
squeezed from him. He then has insufficient capi-
tal to equip the farm. He is without credit or is
forced to pay usurious interest. His annual pay-
ments or interest charges use up his surplus in-
come. A bad season or inability to market his
crops leaves him a prey to money-lenders. In a
year or two he becomes discouraged and throws
up his hands when, if he had been aided in his
efforts, he would have possibly made a good farmer.

218 THE HIGH COST OF LIVING

The experience of one man is immediately known
to others. The misfortune of one ahen is known
to the whole colony. The exploitation of a single
immigrant deters hundreds from venturing into
the country no matter what their hunger for land
may be.

This is a subject that should receive immediate
congressional action. There is evidence that hun-
dreds of thousands, possibly millions, of foreigners
are planning to return to Europe when the war
is over. They are going back to Italy, Hungary,
Poland, Bohemia, and Russia. They will leave the
mines, the munitions factories, and the cities and
take with them the savings accumulated during this
period of prosperity. Many will undoubtedly re-
turn— although the great majority of them plan
to remain. And many of them are leaving America
because they desire to acquire a farm and beheve
that land will be cheap in Europe after the war.
Many of these aliens, possibly the majority, were
farmers in their old homes. Many of them would
acquire farms in this country if land could be se-
cured at a reasonable price and colonies could be
organized in which persons of the same nationality
could live together. For that is the kind of farm
life they have been accustomed to at home. But
only the government can promote such a project.
Only the government can organize colonies, insure
protection, cheap credit, and provide marketing

EXPLOITING THE WOULD-BE FARMER 219

facilities, all of which are essential to the new
agricultural programme. This subject wiU be dis-
cussed in a later chapter.^

^See Chapter XXIII, "A New Agricultural Programme."

CHAPTER XX

THE TENANT FARMER

If one would know the reasons for the decadence
of farming in the United States he should read
the testimony of tenant farmers and farm-laborers
gathered by the Industrial Relations Commission.^
And the conditions disclosed in the Western States
where the inquiry was made are the same as would
have been discovered had the inquiry been made in
the Southern or Eastern States. For farm tenancy
is fast becoming a rule in the United States despite
the almost limitless resources of the country. So
long as the public domain was open to settlement
men would not work as tenants or as agricultural
laborers. They took up a homestead of their own.
And this is always the instinct of men. They pre-
fer to work for themselves rather than for another.
It was this motive that lured immigration to the
United States from the very beginning. It was this
that filled up the continent by settlers who gen-
eration after generation moved westward to the
Pacific Ocean. But when all the land had been taken
up, when it began to acquire a speculative value,
then tenancy appeared. And year by year the
number of tenants has increased until in some sec-

1 Report of Commission on Industrial Relations, vols. 1 and 10.

220

THE TENANT FARMER 221

tions home-owning farmers are almost the excep-
tion. As early as 1880, 25.6 per cent, of all farms
in the country were operated by others than own-
ers. In 1890 the percentage had increased to 28.4
per cent. By that time most of the land had been
taken up. And during the next ten years farm
tenancy jumped to 35.3 per cent. By 1910 it had
reached 37 per cent. In that year out of a total of
6,361,000 farms 2,354,676 were operated by tenants.
Tenancy increased 16.3 per cent, during the pre-
vious ten years and farm ownership only 8.1 per
cent.

It is impossible to have a healthy agriculture
under the tenant system. Tenancy is destructive
of good farming. It discourages initiative. It
leads to shiftlessness. There is no incentive to
the tenant to be a good farmer. At the end of
the term, usually one year, all of the improvements
made by the tenant pass to the owner. The tenant
may take away the crops but nothing more. As a
consequence, the tenant does nothing to improve
or enrich the land. He refuses to make repairs.
He selects such crops as will give an immediate
return with the least possible labor. He permits
the buildings and improvements to go to decay.
He exhausts the land by failing to fertilize it. In
time he abandons the property because it is no
longer profitable.

Tenancy leads to indifferent cultivation. There

222 THE HIGH COST OF LIVING

is no stimulus to efficiency. The tenant is careless.
He has to pay what the landlord demands or
what some other applicant will pay for the hold-
ing. If the tenant increases the fertility of the
land it is made an excuse for an increase in rent.
If he is thrifty and industrious, if he makes the
farm more productive, if he drains and irrigates,
the advantage all accrues to the owner or to some
other tenant who will pay an increased rent for
the property because of his exertions.

In this country the tenant has no security what-
ever. He may be evicted at the end of the year.
Competitive tenancy such as everywhere exists in
America is destructive of farming. It leads to rapid
deterioration of the farm.

The Commission on Industrial Relations found
that tenancy in the Southwestern States is already
the prevailing method of cultivation and that it
is increasing at a very rapid rate. In Texas the
number of tenant farmers in 1910 was 219,571.
They operated 53 per cent, of the farms in the State.
In Oklahoma and other Southern States the condi-
tions are much the same.

Speaking of the effect of tenancy on the tenant
and the low standard of life which prevails among
the tenant farmers, the commission states:*

"Under this (the tenant) system tenants as a
class earn only a bare living through the work of

* Report of Commission on Industrial Relations, vol. 1.

THE TENANT FARMER 223

themselves and their entire families. Few of the
tenants ever succeed in laying by a surplus. On
the contrary, their experiences are so discouraging
that they move from one farm to the next in the
constant hope of being able to better their condition.
Without the labor of the entire family the tenant
farmer is helpless. As a result, not only is his wife
prematurely broken down but the children remain
uneducated and without the hope of any condition
better than that of their parents. The tenants
having no interest in the results beyond the crops
of a single year, the soil is being rapidly exhausted
and the conditions, therefore, tend to become
steadily worse. Even at present a very large pro-
portion of the tenants' families are insufficiently
clothed, badly housed, and underfed. Practically
all of the white tenants are native-born. As a
result of these conditions, however, they are de-
teriorating rapidly, each generation being less ef-
ficient and more hopeless than the one preceding.

"A very large proportion of the tenants are hope-
lessly in debt and are charged exorbitant rates of
interest. Over 95 per cent, of the tenants borrow
from some source and about 75 per cent, borrow
regularly year after year. The average interest
rate on all farm loans is 10 per cent., while small
tenants in Texas pay 15 per cent, or more. In
Oklahoma the conditions are even worse in spite
of the enactment of laws against usury. ^ Further-
more, over 80 per cent, of the tenants are regularly
in debt to the stores from which they secure their
supplies and pay exorbitantly for this credit. The
average rate of interest on store credit is con-
servatively put at 20 per cent., and in many cases
ranges as high as 60 per cent.

1 See Chapter XXII, "The Farmer and the Banker."

224 THE HIGH COST OF LIVING

"The leases are largely in the form of oral con-
tracts which run for only one year and which
make no provision for compensation to the tenant
for any improvements which may be made upon
the property. As a result, tenants are restrained
from making improvements, and in many cases
do not properly provide for the up-keep of the prop-
erty.

"Furthermore, the tenants are in some instances
the victims of oppression on the part of landlords.
This oppression takes the form of dictation of
character and amount of crops, eviction without
due notice, and discrimination because of personal
and political convictions. The existing law pro-
vides no recourse against such abuses.

"As a result both of the evils inherent in the ten-
ant system and of the occasional oppression by land-
lords, a state of acute unrest is developing among
the tenants, and there are clear indications of the
beginning of organized resistance which may result
in civil disturbances of a serious character.

"The situation is being accentuated by the in-
creasing tendency of the landlords to move to the
towns and cities, reheving themselves not only
from all productive labor but from direct respon-
sibility for the conditions which develop. Further-
more, as a result of the increasing expenses incident
to urban life there is a marked tendency to demand
from the tenant a greater share of the products of
his labor.

"The responsibiUty for the existing conditions
rests not upon the landlords but upon the system
itself. The principal causes are to be found in the
system of short leases, the system of private credit
at exorbitant rates, the lack of a proper system of
marketing, the absence of educational facilities,

THE TENANT FARMER 225

and last but not least the prevalence of land specu-
lation.

"A new factor is being introduced into the agri-
cultural situation through the development of huge
estates owned by corporations and operated by
salaried managers upon a purely industrial system.
The labor conditions on such estates are subject
to grave criticism. The wages are extremely low,
80 cents per day being the prevailing rate on one
large estate which was thoroughly investigated;
arbitrary deductions from wages are made for
various purposes; and a considerable part of the
wages themselves are paid in the form of coupons,
which are in all essential particulars the same as
the "scrip" which has been the source of such
great abuse. Furthermore, the communities exist-
ing on these large estates are subject to the complete
control of the landowning corporation, which may
regulate the Hves of citizens to almost any extent.
There is an apparent tendency toward the increase
of these large estates, and the greatest abuses may
be expected if they are allowed to develop un-
checked."

Tenancy is another explanation of the condition
of agriculture in the United States. And students
of the subject, from John Stuart MOl down to date,
have condemned tenancy as a curse to a state. It
is a curse not only to the tenant but to the nation
as well. It is destructive of self-respect and inde-
pendence. It leads to ignorance, to improvidence,
to the decay of agriculture. Every nation in Eu-
rope that has tolerated tenancy has had to pay the
price of it, whether it be in Ireland, England, and

226 THE HIGH COST OF LIVING

Scotland or in Prussia, Russia, Austria-Hungary,
or Belgium. The political and social condition of
the people, the reaction and the class mle, the
ignorance and the poverty, the decadence of the
peasantry are inevitable consequences of attempt-
ing to build a state on a system of farm tenancy,
which is but the modern equivalent for the old
feudal relationship of master and serf. Many of
the countries of Europe have realized the results
of the system, notably Denmark, France, and
Great Britain in Ireland. Systems of state aid
to tenants who would be owners have been worked
out while security for improvements and fixity of
tenure have been insured by law. America almost
alone among the nations has left the tenant to
shift for himself unprotected by the state in any
way.

CHAPTER XXI
OPENING UP THE LAND TO AGRICULTURE

Agriculture waits on a constructive policy.
Not of education but of economic change. And
the lion in the pathway of the production of food
and the distribution of people from the city is land
monopoly, the holding of land out of use and the
indifferent utilization of much of the land that is
under cultivation. This is the great obstacle to
farming.

How can this obstacle be overcome? How can
idle landholding be ended? How can we limit
the amount of land a man may own to that which
he actually needs and cultivates? How can we
break up the 200,000,000 acres held in great estates
and throw open to use the 400,000,000 acres en-
closed in farms but not cultivated by the owners?
How can the would-be farmer be placed on the
land and a system of ownership be substituted for
tenancy? There is land enough for millions of
workers and homes for tens of millions of people in
this rich country of ours if means were devised for
bringing the landless man and the manless land to-
gether.

These are problems of practical statesmanship.
They are no more difficult than the problems al-

227

228 THE HIGH COST OF LIVING

ready worked out by the Federal Reserve Banking
act, the farm loan board, and the many constructive
measures of Congress for the promotion of industry
and shipping.

The solution should make it as easy as possible
for any one to go to the land who desires to do so.
We should recognize that it is natural that some
men who find the farm uncongenial will want to
go to the city and that men in the city will want
to live in the country. And it should be easy for
such a shift to be made. It should be easy to be-
come a farmer, almost as easy as to become an
artisan. That should be the aim of legislation.
There should be the greatest possible freedom of
movement, of choice. It ought to be possible for
one generation to live in the country and the next
generation to try the city. It ought to be possible
for the misfit worker to become a farmer and the
misfit farmer to become an artisan. We cannot
organize the American people into industrial castes
as is the case in Europe. And we ought not to
try to do so. Rather there should be opportunity
for change. Men should have as wide a choice as
possible. Not the choice of becoming a tenant or
a farm-laborer but a farm-owner.

Of all the measures proposed for the solution of
these problems the taxation of land values is the
simplest and most effective. It will do more than all
other measures combined to create that fluidity of

OPENING UP THE LAND 229

movement from the city to the country and from the
country to the city that should be the principle
of industrial eflSciency and of industrial democracy
as well. The immediate effect of increasing the
taxes on land would be to check speculation. And
speculation is the real reason why men want more
land than they can use. They are holding it against
the needs of society. This is not only true of farm-
ing land, it is true of city land as well. This is why
one-half of the land enclosed in farms is not under
cultivation; this is why the West and South, aside
from the plantations and ranges that are econom-
ically dedicated to large-scale production, are di-
vided into great manorial holdings like those of
feudal Europe.

This reform, known generally as the single tax,
is comparatively easy to inaugurate. It can be
put into effect by the legislature of any State or
by a county where home rule in taxation exists,
by an act which exempts from local taxation all
houses, barns, improvements, growing crops, ma-
chinery, and personal property of every nature and
description. By merely exempting these kinds of
property from taxation all taxes will automatically
fall upon the land. No other taxes will be levied.
As a result the taxes on land will be automatically
increased. And if the tax is heavy enough it will
discourage the holding of land for any other pur-
pose than production. Such a change would not

230 THE HIGH COST OF LIVING

materially burden the speculator, it is true, if the
tax rate were inconsiderable. But if the tax upon
the land was increased to 2 per cent, on the actual
value it would become such a burden that the owner
would seek some means of escape from it. A tax
rate of 2 per cent, on land valued at $100 an acre
would amount to $2 per acre. On a 10,000-acre
farm the taxes would amount to $20,000. On a
100,000-acre farm they would amount to $200,000
a year. Quite obviously men would be driven
either to sell their land or put it to productive use
under such a tax. They would either cultivate it
themselves or dispose of it to would-be farmers.
They would cut their estates up into small holdings;
they would accept easy terms of payment; they
would offer generous terms to tenants; they would
pay higher wages to farm-laborers.

About our cities, even in the Eastern States, mil-
lions of acres of land are being held idly, indifferently,
and by inertia just because it costs little to so hold
them. The owner hopes that some day he \^1 be
able to realize a profit. And a slight increase in the
taxes on land would bring much land onto the market
while a very small tax upon the great ranges of the
West, on the plantations of the South, on the mil-
lion-acre estates of Texas, California, Oregon, and
Washington would lead to their being broken up
for settlers.

And if the lax upon the land were made suffi-

OPENING UP THE LAND 231

ciently heav}^ men would take only such land as
they actually needed or as they actually worked,
whether it was ten acres or a hundred acres. They
would pay an annual tax to the State, not unlike
the rental now paid the landlord. But they would
then be free from all other taxes, and in addition
the great quantities of land brought onto the mar-
ket would materially cheapen the rental of all land.
For as taxes on land are increased the price of the
land diminishes. If the tax amounted to 5 or 6
per cent, on the selling value land would have very
little value. For such a tax would make specula-
tion impossible and the holding of land idle so costly
to the owner that he would give it up.

And the taxation of all land values up to the full
amount of the rental value is the aim of those who
beheve in the single-tax philosophy. They would
tax land heavily as a means not only of freeing the
land but of freeing man as well. This would end
tenancy; it would end all land speculation; it would
end land monopoly forever. For then men would
hold no more land than they actually used, and as
land would exist in abundance for all it would be
impossible for owners to hold men either as tenants
or as agricultural workers. Men would own their
own farms and work for themselves. And that is
the ideal of a democratic agriculture.

Moreover, the untaxing of all kinds of farm im-
provements would encourage men to build, to make

232 THE HIGH COST OF LIVING

their places more attractive. Just as many cities
seek to encourage factories in their midst by exempt-
ing them from taxation, so the exemption of all
kinds of farm improvements will lead to better
farms. This is one way to improve the farm and
a very easy way. For it is automatic in its oper-
ation.

It is rather remarkable that the countries that
have gone furthest in the untaxing of improve-
ments and the taxation of land values are agricul-
tural states. During the ten years just before the
war the provinces and cities of western Canada had
made many experiments along these lines. Such
cities as Vancouver, Edmonton, Calgary, Prince
Rupert, in fact, almost all of the cities west of
Manitoba, have taken taxes off houses and improve-
ments while the country districts have levied taxes
on unimproved and wild land to end the specula-
tion which prevailed. Very remarkable changes
followed the shifting of taxes to the land. Land
became cheaper as speculation was discouraged.
Home-ownership increased. Men built homes.
The towns expanded over a wider area. Free from
the fear of taxes, men made improvements on their
property.

Influenced partly by the experience of Canada
the Farmers' Non-Partisan League of North Dakota
inserted in its platform in 1916 a declaration for the
exemption of farm improvements from taxation.

OPENING UP THE LAND 233

They, too, desired to end the alien and speculative
ownership of land which was retarding the growth
of the State. And one of the measures passed by
the farmers' majority at the session of 1917 was an
act materially reducing the taxes on improvements
and with it a permissive measure permitting cities
to do as they pleased in the matter of exemptions.
In 1916 the people of California voted at a referen-
dum election to collect all taxes for State and city
purposes from a single tax on land. Everything else
was eliminated from the tax system of the State.
And the measure received 250,000 votes. In 1909
Lloyd George carried through his budgetary pro-
posals in Great Britain which provided for a greatly
increased tax on land values, although this measure
was conj&ned for the most part to city land. In
Germany Adolph Wagner, the great financial ex-
pert, has been urging the taxation of land values,
and over three hundred cities have adopted what is
in effect a heavy tax on land values, although the
German land taxes are in the nature of a tax on the
"unearned increment" or speculative increase in
land values rather than a tax on the capital value
of the land which is here proposed. Most of the
provinces and cities of Australia have adopted the
measure in part as shown in a previous chapter.
And the reports from Australia indicate that it has
checked speculation, led to the breaking up of the
great landholdings, and aided the conmiunities in

234 THE HIGH COST OF LIVING

cariying through the farm-colony programme which
has been greatly extended in these countries.

When the war is over it seems probable that all
of the warring countries in Europe, as well as Can-
ada and Australia, will be forced by necessity to
resort to the taxation of land, not only as a fiscal
measure but as a means of rehabilitating the state
and of finding homes for the returning soldiers.

Not only will the taxation of land values end
speculation and break up land monopoly, it will
automatically determine the size of farms. In some
localities where truck-farming is the rule farms will
be small. They may be of not more than 10 or
20 acres. In other sections there will be farms of
from 40 to 50 acres that can be cultivated by a
single man, while in the grazing States of the West
the land wiU be divided into cattle-ranges much as
it is to-day. For men will take only such land as
they can profitably use. The taxes will not be ad-
justed to the amount of land. They will be ad-
justed to the value of the land. Taxes will be low
on land of little value. They will be high on land
about the city or of high fertility. The basis of the
tax is the value, not the amount, of land. And the
value of land is always determined by its location,
its fertility, its value to society.

Under the proposal men would only pay for what
society gives them. They will pay for advantages
enjoyed in location, in the inherent value of the

OPENING UP THE LAND 235

land, in the values, in fact, which society itself has
created. On the other hand, everything that labor
produced would be free. It would be untaxed by
the city or the State.

The freeing of the land from speculation will also
bring about that condition of fluidity of labor re-
ferred to earlier in this chapter. Men will be able
to leave the city who are weary of city life with
something of the ease with which they now leave
the farm. The man with a few hundred dollars
can then have a fling at farming with but little
risk. And with cheap land working in co-operation
with cheap credit supplied by the farm-loan boards
the chief obstacles to the tenant, the agricultural
worker, and city dweller will be removed and men
will be able to pass to the land almost as easily as
the country-bred boy now passes to the mill or the
factory. Then society will have a wonderful fluidity.
Men will no longer live in fear. They can go to the
land if they choose to do so. They can look forward
to old age with courage and equanimity.

Under such conditions, too, the farm would soon
lose its isolation. Farm colonies such as are being
developed in many countries would be the natural
form of organization. Men would live close to-
gether from choice, as they do in the farming vil-
lages that are found all over Europe. For the iso-
lated farm is traceable to the fact that men are
always seeking to get as much land as possible.

236 THE HIGH COST OF LIVING

But with land held only for use men would take
only as much as they themselves could cultivate.
For the agricultural worker would become an owner.
He would work for himself. So would the present
tenant. For the opening up of land to use and its
most profitable use would automatically end ten-
ancy just as it would end the surplus labor which
now permits the farmer to hold more land than he
himself can cultivate.

The taxation of land values would be to America
like the discovery of a new continent. It would
open up hundreds of millions of acres. It would
greatly increase production. It would solve the
food problem and the high cost of living. For free
home-owning proprietors would be able to co-
operate as they are not able to do to-day. They
would have a sense of independence and freedom
that is only foimd in countries where peasant pro-
prietorship prevails. For free land makes free men.
It is the home-owning peasant that explains the
democracy of France. It is the home-owning peas-
ant that explains the democracy of Switzerland,
Holland, and Denmark. Wherever the relations of
the people to the land is on a basis of ownership
rather than of tenancy there we find liberty, freedom,
and democracy. For a home-owning people are a
free people — free politically, socially, industrially.

And what is time of agricultural land is true of
the mineral resources, timber-land, and city land

OPENING UP THE LAND 237

as well. As has been shown, a handful of men own
105,600,000 acres of timber-land.^ They control
the price of timber and Imnber products as well.
The iron ore of the country is owned by a half-
dozen iron and steel corporations that acquired it
as waste land or at a very low figure. They have
capitalized it for billions of dollars. The anthra-
cite coal of Pennsylvania, the bituminous coaJ of
Ohio, West Virginia, Indiana, Illinois, Colorado,
and the West and South is also owned by a few
great corporations. The same is true of the oil
and the natural gas. It is true of copper and
other natural deposits as well. And within a gen-
eration's time these deposits placed in the ground
by natiu-e have become the private possession of
monopolies which fix the prices we pay for almost
every necessity of life. The land in the city, whose
increasing value is the explanation of high rents
and tenement conditions, is enriching its owners
year by year by the growth of population and the
needs of society.

Taxation is an easy means of ending these monop-
oHes as it is of ending the monopoly of agricultural
land. A slight tax on the millions of acres of timber-
land owned by the Southern Pacific Railroad or the
Weyerhauser S3aidicate would end the timber mon-
opoly. It would force the owners to sell. They
would have to let go their holdings to meet the de-

» See Chapter XVIII, p. 209.

238 THE HIGH COST OF LIVING

mands of the tax-gatherer. And when it is con-
sidered that a great part of these colossal holdings
were obtained by fraud, fraud so universally ad-
mitted that it is not even denied in the West, the
justice of such a retaking of a portion of the nation's
resources should not be open to question. The
Standard Oil Company holds great stretches of land
under lease which it does not develop. The coal
corporations and railroads have immense hold-
ings of coal land that they hold out of use as a
means of keeping up the price of that which is pro-
duced. If these hoardings were taxed at their
capital value, at the value for which they have
been capitalized by their owners, they would have
to be developed or be sold to some one who would
develop them.

Lower rents would follow more houses. And
more houses would follow the ending of land specu-
lation. There would be more coal and timber pro-
duced if those who owned these resources had to
develop them to pay the taxes. And the high
cost of living is not a problem of food alone. It is
a problem of better homes, of more comforts, of a
higher standard of living as well. And far more
important than the freeing of the means of distri-
bution from monopoly control is the creation of such
conditions of economic freedom that the wealth in
the land will be opened up to man and the resources
now held out of use will be released to labor.

OPENING UP THE LAND 239

What society really wants is more wealth and a
more equitably distributed wealth. We want more
food, more houses, more clothes, more fuel, more of
the comforts and necessities of life. And the aim of
society should be to increase the production of these
things and then see that those who produce them re-
ceive the full result of their labor. These should be
the first and most important aims of government.
Possibly if these two functions were properly per-
formed there would be but little need for jails, for
prisons, for institutions of all kinds. Possibly the
improvement in the condition of the people would
be so marked that the evil conditions under which
so large a portion of the people live would pass
away and a new kind of society would come mto
existence born of the absence of poverty, of igno-
rance, of fear.

And the opening up of the resources of America
to use would increase the wealth produced as would
no other change in our economic life. For if the
land and the mineral resources, the timber-land, and
the sites for homes in the cities and suburbs were
freed from the dead hand of idle ownership there
would be a marvellous increase in the wealth pro-
duced and an even more mai'vellous change in its
distribution. What we most need is a new freedom
in agriculture, in industry, in labor. And that will
come when means are applied for the ending of the
monopoly which now prevails.

CHAPTER XXII
THE FARMER AND THE BANKER

Up to the passage of the Farm Loan act for the
advancement of money to farmers at low rates of
interest and on long-term mortgages the farmer was
in an almost hopeless position in so far as credit
was concerned. But the Farm Loan act offers no
reHef to the would-be farmer who wants to buy
land nor yet to the tenant who has no real estate
to offer as security.

Credit is as vital to agriculture as it is to industry.
The farmer must borrow a part of the purchase
price to acquire his land. He must borrow to build,
to drain, to clear, to improve. He must borrow
for farm implements, to plant his crop, and even
to pay wages for harvesting. But the whole fab-
ric of credit, with the exception of the reHef now
available to owning farmers through the farm-loan
banks, is organized against the farmer. He is
more discriminated against than any class of bor-
rowers. Yet a properly organized system of bank-
ing would make the promotion of agriculture a
matter of first concern. Credit in the United
States is so controlled that the interests which need
credit the least command it most readily and on

240

THE FARMER AND THE BANKER 241

the lowest terms. Money can be borrowed for
speculation on the New York Stock Exchange at
from 2 to 3 per cent. The wheat speculators, food
speculators, and middlemen of Chicago, Minneapolis,
and elsewhere have every facility extended to them
by the banks. Credit to the exi;ent of billions can
be had for speculation, yet Stock Exchange credits
are not used for production at all. They serve no
really useful purpose. They are extended for
gambling purposes; for the purchase and holding
of stocks and securities. Money for sky-scrapers,
for industry, and loans on commercial paper is
available at from 4 to 6 per cent, and in un-
limited quantities. Yet the farmer, when he comes
to market the most secure of all commodities,
wheat, corn, cattle, and the produce of the farm,
has to beg for assistance, while the tenant farmer,
the man who most needs encouragement, has to
pay loan-shark rates to secure any credit at all.

Here is another obstacle to agriculture. Here is
a further economic explanation of the decay of
farming. The farm-loan banks have relieved the
owning farmer who has security to offer. He can
now borrow at 5 per cent, interest and on long-
term loans. No longer need he go to the local banks,
the broker, or the private money-lender. And this
will aid in checking the drift to tenancy and alien
farm ownership which is largely traceable to fore-
closures. But nothing has been done to aid the

242 THE HIGH COST OF LIVING

would-be farmer who has nothing to offer but his
labor. There is no provision for the tenant farmer
except such as he secures from the local banks or
the store which has a claim upon his produce.
And the extortion of the banks and money-lenders
of the South, the Southwest, and the West is al-
most incredible.

The Comptroller of the Currency has investigated
usury and the excessive rates charged by the banks.
A similar investigation was made by the Commission
on Industrial Relations. In the South and West the
tenant farmer is continually in debt. He rarely es-
capes.

An elaborate report of the practices of the banks
in Oklahoma was made to the Comptroller of the
Currency by Judge L. C. McNabb, of the county
court of Sequoyah County. It describes how the
bankers and money-lenders keep the farmer in
bondage, of how they increase the rates and com-
missions, of how the farmer once involved is rarely
permitted to get free, and how as a result his farm
is finally foreclosed and he is reduced to the posi-
tion of tenant or farm-laborer. Probably in no State
in the Union have the banks contributed more to
the destructio nof home ownership than in Okla-
homa which a few years ago was one of the richest
agricultural States in the nation.^

The farmer, says Judge McNabb, usually makes

1 Report of Comptroller of the Currency, 1915, pp. 218^.

THE FARMER AND THE BANKER 243

his first loan just before the spring planting, that
is, in February or March, in order to put in his
crop. He has to sign a mortgage on his horses and
some 75 or 100 acres of his land. The banker in-
sists that he must plant nearly all of his land in
cotton, in which crop the banker sees the most
money, even if it would be more to the farmer's
advantage to plant some of it in grain. Finally,
he receives $200 as a loan and makes out his
note for $237.50, payable at "potato-digging" time,
about July 1. He is thus pa3dng interest at the
rate of 55 per cent, per annum. He has no ready
money on July 1, for he has planted no potato crop
and never intended to do so. But the banker gra-
ciously allows him to renew his note, although com-
plaining about the difficulty of getting money.
The rate of interest is now greatly increased. The
farmer's note now reads $287.50, payable October
1, which is an interest rate of 100 per cent, per
annum. On October 1 the process is repeated, for
the farmer still has no ready money, although he
has now begun picking his cotton crop. He hast-
ens the picking, takes some of the crop to town, and
pays off a considerable portion of the loan. On the
remainder he pays $10 a month for each monthly
extension, which usually amounts to an interest rate
of about 60 per cent, a year. During the fall and
winter he again pays off some of the principal but
extends the rest, a process which goes on through

244 THE HIGH COST OF LIVING

the picking season till the year is up and it is again
February or March and he must borrow anew to
plant his crop. Had he put forth his best efforts
he could have paid the whole note in full during
the picking season, but the banker flattered him
upon his good credit and encouraged him not to
pay up in full. By March, then, he has paid $137.50
in interest on the original loan, but finds that he
still owes $100 on the sum first borrowed.

The new note now must be $300 and interest. It
is made out for $347.50, due July 1, with promises
of extensions. When he renews in July he signs for
$397.50, payable October 1. Again he makes pay-
ments on the principal in the fall and pays $10 a
month for each renewal on the remainder. But his
family needs clothes and other things and he has
to keep most of the money he gets for his crop.
When the cotton is all gathered in the middle of
the winter he finds he owes $200. Of this sum
$147.50 is interest, of which $50 has been paid in
five monthly "extensions" besides the $97.50 on
the face of the note.

In March this $200 must be added to the $200
he needs to make his crop. He now no longer finds
the banker gracious. In fact, he is threatened for
not having paid more on his old notes, and fore-
closure is broadly hinted at. The farmer is now
thoroughly frightened and glad if the banker will
let him have further credit on almost any terms.

THE FARMER AND THE BANKER 245

He makes out his note for $487.50, payable July 1.
When he comes for his renewal in July the banker
agrees, provided a cold $75 interest is added. The
note now reads $562.50, containing 75 per cent,
compound interest. The poor farmer becomes
discouraged and loses hope of pajdng all he owes.
He tries desperately to borrow money from other
sources. He is now closely watched by the banker
for fear that he will try to "beat it." Now he must
bring practically all he gets for his crop to the bank
and fairly beg for enough to clothe and feed his
family, who, by the way, have all worked hard
gathering the crops and have received no reward
beyond their barest necessities. In desperation
he finally does try to "beat it," and steals out some
of his cotton to sell to people who are looking out
for just such opportunities. During all this time
the note has been reduced only to $300. He can
get no more credit at the bank, although he may
succeed in borrowing enough from friends to make
his next crop. Meantime, he has had to renew the
old note again at ruinous interest, which makes it
$466.50. In the fall the banker takes as much of
the proceeds of his crop as possible, and yet, after
the season's picking, the farmer still owes $400.
His chattels are now demanded, advertised, and
sold at public auction, and the farmer is ruined.

Mr. McNabb says there are thousands of such
cases in Oklahoma alone. Those who fight against

246 THE HIGH COST OF LIVING

the system are ruined politically. The banks, by
standing together, can put up and elect their own
man as State treasurer. Honest bankers, he says,
are the great exception in Oklahoma, for the system
is such that good men are driven away from it.

Usuiy is practised on a vicious scale all over
this part of the country. An investigation of
conditions was made by the Comptroller of the
Currency in 1915.^ His report showed that on
loans of small amounts, such as the tenant farmer
is compelled to accept, the interest rates rose as
high as 100, 200, and in small sums as high as 2,000
per cent. In some sections the banks have been
charging rates that were ruinous to their customers.
A Texas national bank with a surplus and capital
of $250,000 in a city of 15,000 sent to the Comp-
troller, in response to a special request, a statement
of all loans made by it between August 1, 1914, and
November 27, 1914, upon which the interest was
more than 8 per cent, per annum. The statement
showed that the rate charged by this bank ranged
anywhere from 20 to 100 per cent, on short-term
paper. In general the high interest rates, which
sometimes exceeded 100 per cent., were on the
smaller loans, while notes for $1,000 or over rarely
paid more than 10 per cent, or 15 per cent, interest.
As a matter of fact, the extortionate interest rates
were almost all to the most necessitous borrowers,
who were for the most part tenant farmers. In-

^ Annual Report of the Comptroller of the Currency, 1915, p. 23.

THE FARMER AND THE BANKER 247

terest rates of 10 per cent., 20 per cent., and 30 per
cent, were so common as to seem to be the rule in
this bank.

In June, 1915, a number of national banks in
the South and Southwest were required by the
Comptroller's office to make a report of all loans
made by them between May 1, 1915 (the date of
the last previous statement), and June 23, 1915,
on which the interest, discount, or commission was
12 per cent, or more, providing the amount of the
interest, discount, or commission exceeded $.50.
At this period money was particularly easy to get,
so that it is safe to infer that the rates charged by
the banks, excessive as they were, were probably
not so high as they had been during the preceding
twelve months. The reports in each case were
made under oath by executive officers of the banks.
Most of the banks under investigation were in small
towns in Georgia, Louisiana, Texas, and Oklahoma.
Names of banks and of borrowers are omitted in
the Comptroller's report.

Of the 105 loans reported by a certain national
bank in Texas, in a town of 2,000, 71 bore interest
at 25 per cent, or more. Four were at 100 per cent,
or more. A national bank in Oklahoma reporting
112 loans at rates exceeding 12 per cent, admitted
that 84 of them bore interest at 25 per cent, or more.
In 15 cases the rate exceeded 100 per cent., in one
instance even reaching 514 per cent, on a small
sum loaned for seven days.

248 THE HIGH COST OF LIVING

As part of the exhibits in its investigation of
usurious interest, the Comptroller's office asked a
certain national bank for the record of its loans
to one particular borrower chosen at random from
a number to whom a series of loans had been made.
The bank was requested to send in a list of all the
loans made to this borrower during the preceding
twelve months. The bank submitted under oath
a list of 29 loans made to the borrower, a woman
living on a farm six or seven miles from the town
in which the bank was located. The loans were
all for small sums and on short time, the largest
amount being $620, which was borrowed for twenty-
three days. The interest rate on the 29 loans ranged
from 36 per cent, to 2,000 per cent, per annum.
Of the 29 loans 21 bore interest at the rate of 100
per cent, or more. Fortunately, in this case the
borrower was able to pay all the notes in full.

One Oklahoma bank in its list of loans at interest
rates exceeding 12 per cent., issued from January 1,
1915, to November 10, 1915, reported 184 at rates
exceeding 150 per cent., 75 of which were at rates
exceeding 300 per cent. Thirty-three paid interest
charges of 500 per cent, per annum or more. In the
town in which this bank is situated there are two
national banks and two State banks, and one
might suppose that competition would reduce these
high rates. But the borrower apparently derives
no benefit from any such competition. The list of

THE FARMER AND THE BANKER 249

loans submitted by the other national bank in this
town showed no more moderate rates of interest
than in the first bank.

Another Oklahoma national bank, in its sworn
statement, reported that the lowest rate charged by-
it on loans between September 2, 1915, and Novem-
ber 10, 1915, was 10 per cent. Its average on all
loans issued dming this period was 25 per cent. In
another national bank the average interest rate was
36 per cent, and in a third 40 per cent., the rates
at this bank ranging from a minimum of 8 per cent,
to a maximum of 300 per cent.

Here again are reasons why men do not become
farmers and why those who do so often fail. The
wonder is that agriculture has not been more com-
pletely destroyed than it is. Free seeds will not
help these evils. Nor will education. The eco-
nomic foundations of agriculture have been neglected.
The farmer has been compelled to fight, unaided and
alone, against such odds that he is discouraged and
often in despair. If the evidences of the Commis-
sion on Industrial Relations, if the evidences of a
casual traveller in the South and Southwest can be
accepted as representative, then there is the most
urgent need of a comprehensive programme of na-
tional and State legislation for the protection of the
farmer and a big, constructive programme on the
whole subject of agriculture as well.

CHAPTER XXIII
A NEW AGRICULTURAL PROGRAMME

Reference has been made in previous chapters
to the experiments of Denmark and Australia on
the control of the food supply and the development
of agriculture along new lines. These countries
have worked out a comprehensive programme for
the ending of tenancy, for easy credit, for placing
men upon the farm, and for aiding them in many
ways in the marketing of their produce. Germany
has adopted a similar policy, and several hundred
thousand persons have been placed on the land as
home-owning farmers. Even Russia had a big pro-
gramme in process of development before the com-
ing of the war, while Great Britain has spent hun-
dreds of millions in the conversion of the Irish ten-
ant into a contented home-owner.

As a result of these efforts tenancy has all but
disappeared in Denmark, while in Ireland home-
owning will soon be the rule. Denmark has become
the world's agricultiu-al experiment station. There
is little emigration from that country. The peo-
ple are too prosperous at home. To such an extent
has education been carried, and so fully protected

250

A NEW AGRICULTURAL PROGRAMME 251

is the farmer in the marketing of his produce through
the thousands of co-operative societies that are
found in that country, that a man is able to make a
comfortable Hving from a few acres of land.

Since the war broke out nearly all of the warring
nations of Europe have worked out more or less com-
prehensive agricultural policies, all following sub-
stantially the same lines and all looking to financial
and other support from the state. And all of these
projects include cheap credit, long-term loans, and
the purchase and sale of land for farming purposes
by the state.

As long ago as 1903, Great Britain undertook a
solution of the Irish question by the subdivision of
the great estates owned by the EngHsh gentry. In
thirteen years the government has expended $550,-
000,000 in the purchase, subdivision, and settlement
of 9,000,000 acres of land, or about one-third of the
total area of Ireland. An unhappy, poverty-stricken
country is being converted into a nation of home-
owning farmers. It is expected that by 1920
tenancy will have almost ceased to exist, at vir-
tually no cost to the empire. The money appro-
priated for the purpose is being repaid by the pur-
chasers in instalments, with interest. A royal com-
mission for England and Scotland is now engaged
in making a census of estates and is framing a law
under which land will be subdivided and sold to
returning soldiers at the close of the war.

252 THE HIGH COST OF LIVING

In the five years prior to the war Germany ap-
propriated over $200,000,000 in buying and pre-
paring farms for settlers. Waste land was reclaimed.
In the years prior to 1907 the number of holdings
under 5 acres in extent increased by 316,678, while
in the same period holdings over 100 acres de-
creased by 20,744. It is said that in the neighbor-
hood of three-quarters of the agricultural land in
the empire is now in small holdings. This work is
carried on under a settlement commission. Even
the great estates in East Prussia, Posen, and Pome-
rania are being parcelled out, much as was done by
Stein and Hardenberg a hundred years ago. Speak-
ing of this policy, the official report on land settle-
ment says:

"The existence of such large landed estates [as
those of East Prussia] not only hinders the national
progress of the peasant class, but, greatest evil of
all, it is the principal cause of the diminishing popu-
lation of agricultural territories, because the work-
ing classes, finding no chances of moral or economic
improvement, are driven to emigrate to the great
cities and manufacturing districts. Scientific re-
searches also prove that small farms nowadays are
more profitable than large, above all, small live-stock
improved farms, the importance of which for the
nutriment of the people is constantly increasing.

''In 1913 the German Government provided for
the compulsory purchase of 70,000 acres of land.
Speaking of the areas which were subdivided, it was
stated: 'Where formerly there had been at one end

A NEW AGRICULTURAL PROGRAMME 253

of the social scale a few rich landowners, often non-
residents and exercising an undue political influence,
and ai the other end a large number of poverty-
stricken and discontented peasants and farm-labor-
ers, there is now a great middle class of society,
devoted to the empire for what it has done for its
members.'"

In the last ten years the Russian Government
improved and equipped farms for 3,000,000 settlers.
It contracted in the United States for millions of
dollars' worth of farm machinery to be delivered
after the war, so that homes could be provided for
the returning soldiers. As long ago as 1893 New
Zealand realized the evils of land monopoly and farm
tenancy. The first experiment was very successful,
in three years' time the number of people on a
single estate having been increased from 40 to 1,000.
During the twenty years from 1893 to 1913 New
Zealand appropriated $65,000,000 for buying, sub-
dividing, and settHng large estates. During these
years the agricultural population grew more rapidly
than that of the cities, and in twenty years' time it
doubled. When the present war began New Zea-
land led the world in the per-capita value of its
agricultural exports.

The same policy has been followed by other
Australian states. Since 1909 over 3,000,000 acres
of land have been bought, subdivided, and sold to
settlers, and over $40,000,000 has been loaned to

254 THE HIGH COST OF LIVING

the colonists by the state. Speaking of these re-
sults of this settlement policy, the premier 0/ Vic-
toria, in his budget speech in 1914, said:

"The settlement policy is a demonstrated success.
Over large areas in widely separated districts more
than ten times as many families are settled com-
fortably under attractive social conditions as were
there five years ago, and they are obtaining returns
from their holdings that even less than five years
ago were regarded as impossible. The demonstra-
tion that famihes can be fully employed and obtain
a comfortable living on from 20 to 40 acres of irriga-
ble land not only insures the financial success of
our investment in irrigation works but gives a new
conception of the ultimate population which this
state will support and the agricultural wealth it
will produce."

The land-settlement policies of all these countries
are substantially alike. They provide for the pur-
chase of land by the government or the use of the
public domain. The land is divided into holdings
which can be cultivated without the aid of other
labor. The size of the holdings depends upon the
nature of the soil and the kinds of crops produced.
Applicants for farm ownership are examined to as-
certain their fitness and general moral worth. The
would-be farmer is required to make an initial
deposit of possibly 10 per cent, of the total capital
outlay as an assurance of good faith. The farm,
when sold, is equipped with a dwelling and out-

A NEW AGRICULTURAL PROGRAMME 255

buildings, with such cattle as may be necessary,
and sufficient working capital for one year's opera-
tion. Usually the farmer is not required to pay
interest on the capital cost for several years. Then
from 3 to 4 per cent, interest is charged and 1 per
cent, additional for the ultimate extinguishment of
the debt in thirty or forty years.

Usually the state co-operates with the farmer by
providing advice and supervision from experts or
from the agricultural colleges. Efforts are made to
locate the farmers in a colony or village so that the
settlers will have some social intercourse. Schools
are provided, and recreation as well. Farmers are
aided to organize co-operative buying and selling
societies so that they can acquire goods at cost and
sell in the best markets.

The state-aided settlements in all these countries
have been a success. They have not proved a
burden to the taxpayers in any country where the
plan has been carried out. In some instances they
have earned a profit. Under the stimulus of own-
ership the farmers have built better homes. Own-
ing only sufficient land for a single man to cultivate,
they have brought a larger acreage under cultiva-
tion. They have improved their live stock and
purchased more labor-saving machinery. They have
piped water to the dwellings and developed irriga-
tion projects. The number of live stock has been
so largely increased in New Zealand — and the same

256 THE HIGH COST OF LIVING

is true of other countries — that the farmers amor-
tize their loans in a shorter time than that provided
by the state. The Canadian commission says of
the New Zealand experiment:

"Throughout the country a higher and better
civilization is gradually being evolved. The young
men and women who are growing up are happy and
contented to remain at home on the farm and find
ample time and opportunity for recreation and en-
tertainment of a kind more wholesome and elevating
than can be obtained in the city."

When the war is over, it is safe to assume that
most of the countries of Europe will turn their at-
tention to the intensive cultivation of the land.
England will endeavor to feed herself instead of
being dependent upon America and Denmark.
The Russian revolution will open up hundreds of
millions of acres of land to the peasants of that
country. Germany will undoubtedly extend farm
colonization projects successfully started before the
war. Canada was already experimenting with this
policy as well as with the taxation of land values
to break up large estates, and will seek to lure
settlers not only from Europe but from the United
States. Even Mexico has worked out an agri-
cultural programme in some of her states patterned
upon the experiments in Europe. All the world
will compete for able-bodied men in order to meet
the burdens of this war and to re-establish their in-

A NEW AGRICULTURAL PROGRAMME 257

dustry and life. And partly in anticipation of these
conditions, the State of California has created a
State colonization commission which is projecting a
big programme for the colonization of home-own-
ing farmers in that State. Legislation has been
enacted, and an appropriation of $250,000 has been
made with which to buy a large tract of land. The
federal farm-loan board is to be asked to co-operate
in the development of a colony as described above.
It is planned to purchase 10,000 acres of land, and
with the aid of experts to determine the size of farms,
the kind of agriculture to be adopted, the character
and grouping of houses and farm buildings, and the
educational, recreational, and co-operative agencies
that can be developed in connection with it. The
State imiversity is co-operating in the project. It
is planned to limit the right of settlers to speculate
by restricting the right to sell their purchases. The
individual farms, fully equipped, are estimated to
cost about $5,000, to be paid for by the owners
within fifty years' time, with interest at the rate of
4 per cent. A minimum capital of about $1,500
is to be required from each applicant, a large part
of which is to be used as working capital.

A similar measure, known as the Grosser bill,
is now before Congress. It looks to the creation
of a rotary fimd of $10,000,000 for the purpose of
developing farm colonies, the farms to be either
sold or leased to settlers under terms similar to those

258 THE HIGH COST OF LIVING

pro\aded in the California measure. Public lands
and reclamation projects will be used for the pur-
pose. It has been suggested that the money de-
posited in the postal savings-banks should be used,
and as the payments by settlers come in from year
to year, that the fund be rotated, and that new
colonies be opened in different parts of the country
to serve as experiment stations for States or private
persons that are willing to carry out similar projects.
The State-aided farm colony plan does not fully
meet the agricultural problem. It does not solve
the difficulties of marketing or of transportation.
It does not provide cold-storage warehouses or
terminals. Nor does it insure cheap land, which is
essential to successful agriculture. It does, how-
ever, lend the aid of science to agriculture. It does
provide education and direction by experts. It
offers very cheap credit. Most important of all,
ownership awakens ambition and hope. It insures
permanency of tenure. It aims to re-establish con-
ditions similar to those which peopled America with
immigrants in the days when land was to be had for
the asking, and places agriculture on a firmer founda-
tion of security than that which now prevails.

CHAPTER XXIV
THE NEW ERA IN POLITICS

The old order has gone, never to return. The
war has discarded the economic and political ideas
which have dominated our life for three centuries.
The laissez-faire philosophy that the government
should do as little as possible is a thing of the past.
It was the natural and the inevitable philosophy of
a people endowed with a continent so rich in eveiy
resource that we felt it could never be exhausted.
We could hardly wait until our inheritance had been
squandered.

Unfortunately, we did not distinguish between the
things the state should retain and the things that
should be open to private possession. We did not
distinguish between the activities which the state
itself should perform, if it desired to preserve free-
dom for all, and the acti\dties which could be left
in private hands. Had we done so, had we taken
guidance in recent years from the experience of
other countries, we would not now be facing the
gravest problem that can confront a nation.

And the condition of agriculture is a direct conse-
quence of this policy. We have wasted our re-
sources and permitted hundreds of millions of acres

259

260 THE HIGH COST OF LIVING

of land to pass out of our hands into the possession
of speculators. These and other forces are de-
stroying agriculture. A diminishing agricultural
population means diminishing food production. In-
creasing city population means increasing food con-
sumption. This means an increasing cost of living,
an increase that is bound to continue unless a vio-
lent reversal of our land policy is brought about.
The city uses up people. It destroys their virility.
The country is the great vitalizing force. Yet peo-
ple are being crowded off the land, not because they
are unwilling to go to it, but because our land laws,
transportation agencies, inadequate credit, and mar-
keting facilities are gradually stifling the agricultural
life of the nation and bringing about premature ag-
ricultural decay. In my opinion America is face to
face with the gravest kind of a problem. In some
respects it is one of the gravest economic problems
that has confronted the country. We cannot have
a healthy life unless we have a healthy agriculture.
We cannot have healthy agriculture unless econo-
nomic and social conditions make agriculture attrac-
tive. And students of the subject are coming to
see that this can only be brought about by the in-
terposition of the government in an intelligent,
constructive, and scientific way to protect agricul-
ture as well as the farmer from the exploitation from
which he is suffering.
The poHcy we have pursued has brought us face

THE NEW ERA IN POLITICS 261

to face with one of two consequences. Either we
will travel the road of Rome and Great Britain, in
which countries agriculture was destroyed by bad
economic conditions permitted or created by the
state, or we will dedicate ourselves courageously to
the ending of the abuses and apply the surgeon's
knife to the privileged interests that have gained
such control of the economic foundations of our life
that farming must inevitably cease to be a profitable
occupation. If present tendencies continue we will
not be able to feed ourselves. Food prices will rise
to exorbitant heights. The standard of living of
the poor and even of the well-to-do will be lowered.
The future of the United States is involved in the
agricultural problem, which is the primary industry
on which the life of the state depends.

Bad as is the system of distribution, costly as it
is to the consumer and to agriculture, it is far less
ominous to our national life than the economic con-
ditions under which farming is compelled to be car-
ried on, conditions which have become so bad that
only a big, revolutionary change of attitude by the
States and the nation will save it from decay and the
farm from extinction.

Rome survdved many disasters; she could not sur-
vive the disappearance of husbandly m Italy. It
was the source of her power. When the Roman
farmer was driven from the land and crowded into
the cities, there to exist by such labor as there was,

262 THE HIGH COST OF LIVING

aided by state doles, the nation deteriorated and
with it the moral and political fibre of the people.
And while ancient Rome is separated by two thou-
sand years from the United States, the causes for
the decay of Roman life are the same as those which
are undermining the farm in America to-day.

Great Britain has passed through the same evo-
lution and for the same reasons. Two centuries ago
England was self-contained. She fed herself. The
English yeoman is one of the traditions of the na-
tion. Industry came. The land which had once
been owned in common by all of the people or tilled
under a system of freehold or easy feudal tenure,
passed into great estates, which were let out to ten-
ants at competitive rents, or were dedicated to sport
or to grazing. Year by year the number of people
engaged in agriculture diminished and year by year
the acreage devoted to food was reduced. Those
who owned the land lived from the profits of indus-
try, shipping, banking, and the ground-rents of the
cities. They were indifferent to the land, because
it was not necessary that they should cultivate it,
while the laws of the country and the system of ten-
ancy and of taxation discouraged free ownership
and encouraged the idle holding of the land. At the
present time one-half of the land of England is owned
by 2,500 persons, while scarcely 300,000 people out
of 43,000,000 have any interest in the land through
ownership at all. There are few owning farmers in

THE NEW ERA IN POLITICS 263

England. The agricultural population is a tenant
population. The same thing happened to Ireland,
which unhappy coimtry lost one-half of its people
as a result of alien landlordism and the excessive
rentals which were exacted from the cotters by the
English landlords, who lived in London from the
rentals of their estates. Ireland has been greatly
improved b}^ the legislation of the last generation,
under which a large part of the land has been ac-
quired by the state and divided into small holdings,
which are sold to the tenants on easy terms. But
England has refused to extend the Irish land acts
to England, Scotland, and Wales, while the system
of taxation, by which the local taxes are borne by
the tenant, while the land itself is practically free,
has placed such a premium on idle land holding
that the great-estate-owners find it to their profit
to hold land out of use or to cultivate it carelessly
or use it for pleasure.

As a result of the land and taxation laws four
persons out of five in the United Kingdom live in
cities. Only 20 per cent, of the population is on
the land. The population is driven to the towns,
where it competes with the labor already there,
keeping down wages, forcing up tenement rents and
gradually weakening the strength and fibre of the
people. Underlying the other explanations of the
condition of England is the decay of agriculture,
the system of landownership and the exclusion of the

264 THE HIGH COST OF LIVING

people from the land. This has not only made her
dependent on other countries for her food supply, it
has impaired the moral and physical life of the
nation.

The United States has left agriculture a prey to
the same economic forces. The farmer has received
but little consideration in legislation. He has strug-
gled in vain against a multitude of exploiting agen-
cies, on the one hand, while the economic founda-
tions of agriculture have been left to the free play of
economic forces that have gradually placed an em-
bargo upon farming and made it almost impossible
for the would-be farmer to gain access to the land
and make a decent living after he has gotten there.

And just as the high cost of living waits upon a
wide extension of state activities to free the dis-
tributing agencies of the country from private mon-
opoly, so the encouragement of agriculture waits on
a comprehensive programme of legislation to free
the would-be farmer from the prohibitive conditions
that now discourage farming.

It is necessary to look at farming from a new
angle. The free land has gone. The old order has
ended. The new order involves provision for a new
freedom. It involves freer access to the land, free-
dom in transportation, cheap credit, and a new or-
ganization of agriculture along socialized lines, so
that the farmer will enjoy the advantages of living
in communities similar to those described in the

THE NEW ERA IN POLITICS 265

last chapter. It requires but little imagination to
visualize a farm life that would be alluring to mil-
lions of people. It has been done in the garden
villages of England and Germany, where expert
town-planners, architects, builders, and educators
have built new towns or subui-bs in which every
possible convenience has been provided at a very
moderate cost by the substitution of the co-operative
motive for the speculative motive. Increasing land
values have been kept for the community. The
houses have been designed not to rent, but to sell
on easy terms. Water, gas, and electric light and
power have been produced by the community and
sold at cost. Co-operative buying and selling have
cut out the unnecessary middlemen, while provision
for education and recreation has added cultivation
and happiness to persons of small means, who have
been lifted from the sordid siu"roundings of the tene-
ment into a standard of reasonable comfort by the
substitution of the co-operative motive for that of
private profit and the elimination of the specula-
tive element from the community.

The same thing can be done for agriculture. It
can not only be made attractive to millions, but
profitable as well. And such a programme of agri-
culture-building involves the various elements de-
scribed in the preceding chapters, just as the prob-
lem of city-building, which has made such progress
in other countries, involves the combination of simi-

266 THE HIGH COST OF LIVING

lar co-operative elements. Among the measures
that must be incorporated into a programme for
the reclamation of agriculture are the following:

One — the taxation of land values as a means of
ending speculation and the cheapening of land.
Other reforms are dependent upon easy access to
the land and the ending of all ownership but own-
ership sanctioned by cultivation. No man has a
right to more land than he will use and use profit-
ably. No man has a right to withhold the resources
of the earth from others. Land is the common en-
dowment of humanity. It is the gift of nature to
all people. The only title sanctioned b}' justice is
the title of use, and taxation is an easy method and
a just method for opening up the resources of the
earth to labor.

Two — credit must be socialized. Next to the land
it is the most essential of all elements to the en-
couragement of agriculture. There is no reason why
the farmer should pay 10 per cent, interest on his
loans for the mere privilege of transportation to
the market. Certainly it is one of the absurdities
of our system that money can be had by hundreds
of millions for speculation on the stock exchange,
for speculation in wheat and corn and meat, in eggs
and in poultry, at from 3 to 5 per cent., while the
farmer, with the best security in the world, has to
pay from 10 to 12 per cent, for his commercial loans.

Credit should be an agency for production. Bank-

THE NEW ERA IN POLITICS 267

ing should be an agency of service. Yet our credit
resources are concentrated in the speculative cen-
tres, principally in New York, when if our banking
system were designed for service and adjusted to
the encouragement of production, it would be dis-
tributed as widely as possible throughout the
counti"}'.

Agriculture waits on such an extension of the
farm-loan act that the farmer can borrow to market
his crops, so that the tenant can borrow to operate
his holding, so that the tenant and the farm-laborer
can borrow to buy a piece of land and become a
home-owTier. We must end the conditions described
in earlier chapters in Texas and Oklahoma, where
the farro.ers and the tenants are the prey of the
banks, which make use of their power not only to
keep the farmer in subjection but to secure posses-
sion of the land by foreclosure as well.

Three — tenancy must be ended. It has no place
m any country, least of all in Ajnerica. Tenancy is
a curse to the tenant. It is a curse to the land.
Tenancy means shiftless cultivation. It means the
exhaustion of the soil. It means lack of initiative,
industry, or ambition. Wherever tenancy is found
there we have ignorance. There we have a decay
of civic virtues. There we have the kind of condi-
tions that prevailed in Ireland, that prevail to-day
in England, that prevail in every country that has
failed to concern itself over the condition of the

268 THE HIGH COST OF LIVING

tenant and take steps to end these conditions by
converting the tenant-farmer into a self-respecting
owner. The stories of how Ireland has been con-
verted from a land of poverty and ignorance into a
prosperous country are but indicative of the change
which comes even to the poorest when the alchemy
of ownership is permitted to play upon the worker
and awaken even the most shiftless into self-respect,
ambition, and a desire for better things.

Four — all of these elements enter into and form
part of the farm colony. This is the natural organ-
ization of farming. Co-operative farming is to be
the farming of the future. Not compulsory co-op-
eration; not state [socialism, but the farm colony in
which many of the present wastes will be eliminated
and the extortion of land speculator, money-lender,
and distributor will be ended. The farm colony in-
volves cheap land. In those countries that have de-
veloped it, the entrance of the state into the market
as a buyer has immediately increased the price of
land. Like every other activity of society it added
to the unearned increment of the owners. Land-
value taxation is a necessary corollary of the farm
colony. Otherwise the land speculator will reap the
advantages of the change by an added burden to the
colonists.

Credit, too, must be provided at a cheap rate and
on easy conditions. And such credit can only be
supplied by action of the state under some such

THE NEW ERA IN POLITICS 269

agency as the farm loan board, which is now hniited
in its advances to existing farmers. And in those
countries which have developed the farm colony, the
buyer is given from thirty to fifty years in which to
pay for his purchase. His interest rate is from 4 to
5 per cent., which includes an annual payment for
the amortization of the loan. In this way the
farmer is relieved of the fear of foreclosure; he is
free from the tyranny of the local banker, who is
too often in collusion with the distant miller, ware-
houseman, speculator or food exchange. Cheap
credit also permits of the purchase of machinery, of
modern equipment and the buying of good stock,
seeds, and other accessories to modern farming.

The farm colony is planned in all its details as is
the garden city. There is provision for education
and recreation. The houses are reasonably close
together. There are stores, schools, telephones, and
other accessories of modern life. Materials and sup-
plies are bought in quantities, which reduces the
cost. Co-operation is provided in buying and selling.
Marketing is made easy, and the farmer is protected
by the state in the marketing of his crops. The
farm colony aims at the creation of a self-contained
life, with as many of the advantages and pleasures
which the city offers as possible.

Five — finally the means of distribution must be
socialized. The story of Australia and Denmark
indicate the extent to which railroads become an

270 THE HIGH COST OF LIVING

agency of service when owned by the state. Freight
rates are cheapened. Low rates are provided for the
transport of would-be farmers from one part of the
country to the other. Farm-laborers are carried
where needed. Low rates are made on fertilizers and
farm machinery. The local freight agent becomes
the representative of the farmer in the receipt and
transhipment of his produce to the state-owned
abattoir, or cold-storage warehouse, while the ter-
minals at the seaboard or in the cities are part of a
nation-wide system for collective marketing with
the minimum of cost to the producer and the con-
sumer as well. The collection and grading of prod-
uce for export and sale, the substitution of a public
for a private agency in the accounting of the pro-
ceeds, the organization even of water transport, are
all part of the new programme of agriculture which
must be undertaken by the State and the nation if
we would free the production of food from the ex-
tortion of the chain of speculators and middlemen
wliich now encompass the producer from the mo-
ment his produce leaves the farm until it reaches its
ultimate destination, possibly five thousand miles
away.

The motive of such a programme is not paternal-
ism but freedom. There are some things which the
state must do just to insure freedom. When these
functions are left in private hands freedom is de-
stroyed. Far from state ownership in these fields

THE NEW ERA IN POLITICS 271

being out of harmony with our traditions, they are
of the veiy essence of that freedom that lies at the
heart of our achievements in industry, in commerce,
and in the whole economic field. Free land explains
the first three centuries of our life. Free access to
opportunity is the one big factor that has changed
the immigrant peasant of Ireland, Scotland, Scandi-
navia, Italy, or Germany into the free-minded
American citizen. And it is in those fields of en-
deavor where freedom is still preserved that Ameri-
can ingenuity and American skill have made the
most remarkable advances.

And agriculture waits on a programme of freedom
— freedom of access to the land, freedom of access
to transportation and marketing and cheap and
adequate credit. With these assured we can safely
rely on the desires of men to take them to the land,
as it has for thousands of years, in every country
and in every clime, when opportunity was open to
them.

INDEX

Abattoirs, monopoly of, p. 51;

German, p. 141; necessity for

public, p. 171
Agriculture, possibilities of, pp.

13, 18; area, United States,

p. 14; outstanding facts of,

p. 16; why unprofitable, p.

97; suggestions as to, p. 192;

gravity of, p. 260; Rome and

England, p. 261
Anthracite coal, monopoly in, p.

71
Australia, land taxation in, p.

129; land colonies in, p. 131;

land settlement in, p. 235

B

Baltimore, markets in, p. 170
Bankers, power of, p. 98
Boards of Trade, p. 41

California, fruit-growers, pp. 96,
159; land monopoly in, p.
207; state colonies in, p. 257

Canada, single tax in, p. 232

Car shortage, p. 80

Cattlemen, p. 46

Cattle-raising, losses in, p. 47; re-
duction in production, p. 72

Chicago Board of Trade, p. 28

Cleveland, fish markets in, p. 169

Coal, production of, limited by
railroads, p. 78; cost of, p. 179

Cold storage, pp. 53, 60

Co-operation, in California, p.
96; Denmark, p. Ill; in
marketing, p. 159

Copenhagen, p. 103
Corn crop, p. 29
Cost of living, increase of, p. 21
Credit, essential to agriculture,
p. 240; new forms of, p. 266

D

Dairy farming, Germany, p. 147
Demand and supply, law of, p. 19
Denmark, p. 103 ; marketing in,

p. 160
Distribution of food, p. 67
Dresden, abattoirs of, p. 143

E

Exports, manipulation of, p. 38;
Denmark, p. 114

Farm colonies, pp. 250, 268
Farmers and usury, p. 242
Farming, unprofitable, p. 31;

proper conditions of, p. 228
Farms, number of in United
States, p. 17; size of in Den-
mark, p. 110
Fast-freight hues, government

ownership of, p. 186
Finance, organization of, p. 5
Fish markets, Cleveland, p. 169
Flour, speculation in, p. 32
Food, disorganization of produc-
tion, p. 3; exchanges, pp. 54,
56; reduction in production
of, p. 95; distribution of, p.
100; possibilities of produc-
tion, p. 101

273

274

INDEX

Foodstuffs, increase in cost of, p.

22; production, p. 24
France, population of, p. 14
Fraud in land grants, p. 205; in

sale of land, p. 213
Free land in United States, p.

196

G

Gambling in wheat, pp. 27, 43

Garden villages, England and
Germany, p. 265

Germanj'^, population of, p. 14;
food control in, p. 139; mar-
kets, p. 145 ; comparison with
American methods, p. 154;
land colonies in, p. 252

Grading, fraudulent, grain, p. 39

Grain exchanges, p. 33

Great Britain, food supply in,
p. 16; agricultural conditions
in, p. 262

Groimd-rents, New York, p. 178

H

Home ownership, farmers, p. 221
Hoover, Herbert, pp. 33, 58
Housing question, p. 180; effect
of land tax on, p. 238

Immigration, to Europe after

the war, p. 218
Increase in cost of hving, p. 21
Industry, organization of, p. 6
Ireland, land colonies in, p. 251;

conditions in, p. 263
Irrigation, Australia, p. 133

colonies, Denmark, p. 109;
AustraUa, pp. 128, 130; taxa-
tion, AustraUa, p. 129; col-
onies, Austraha, p. 131; specu-
lative value of, p. 198; mo-
nopoly, pp. 202-206; specula-
tion, freeing from, p. 235;
colonies, Russia, p. 253
Land values, increase of, p. 17

M

Marketing, difficulties of to
farmers, p. 94; organization
of, p. 158

Markets, Germany, p. 145;
United States, p. 167; New
York, failm'e of, p. 168

Meat, retail dealers, p. 90; re-
duction in production, p. 92;
supply, Germany, p. 148

Middlemen, p. 65; abohshed in
AustraUa, p. 124

MUk, p. 69; direct sale of, in
Germany, p. 147; municipal
control of, p. 172

MinneapoUs, Chamber of Com-
merce, p. 42; Board of Trade,
p. 28

Monopoly, meat,. p. 48; banking,
p. 49; slaughtering, p. 51;
food, p. 99; extent of, p. 182;
land, pp. 202-206; timber, p.
209; effect of single tax on,
p. 237

N

New York, food monopohes in,
p. 67; state-market proposals,
pp. 160-164

Non-Partisan League, pp. 30,
232

Ladd, E. F., p. 44
Laissez-faire philosophy, p. 259
Land, unimproved, p. 17; own-
ership of, Denmark, p. 107;

O

Ocean freights, p. 39
Oklahoma, usuiy in, p. 242

INDEX

275

Pacific railroad grants, p. 203
Packers, pp. 46-48, 88; profits

of, p. 100
Parcel-post, p. 175; in Germany,

p. 141
Pinchot, Amos R. E., p. 21
Population, urban, p. 16; density

of in various countries, p. 15
Price regulation, Germany, pp.

146-151; United States, p. 155
Production of food, p. 24
PubUc lands, pp. 197, 203
Public selling agencies, p. 109

R

Railroads, combination with
middlemen, p. 69; England
and France, p. 77; importance
of, p. 84; government owner-
ship of, Australia, p. 117;
Germany, p. 140; transporta-
tion, cost of, p. 180; power of,
p. 185

Refrigeration, Austraha, p. 125

Rent, increase of, p. 177

Resources, waste of, p. 259

Retail prices, p. 66

Rome, agricultural conditions in,
p. 261

Russia, land colonies in, p. 253

S

Den-

Savings-banks deposits,

mark, p. 105
Shoes, increase in cost of, p. 23
Single tax, p. 228

Slaughtering, public, Germany,

pp. 141-143
Speculation in wheat, pp. 33-37;

in food, pp. 55-59
State socialism, Australia, pp.

117-137
Sugar, p. 62

Taxation, land values, Australia,
pp. 129, 266

Tenancy, p. 117; America, p.
108; Denmark, p. 108; farm-
ers', p. 220; extent of, p. 221;
conditions, p. 222; ending of,
p. 267

Terminal markets, p. 161

Timber-land, monopoly of, pp.
180, 209

Transportation, importance of,
p. 84 (see Railroads) ; organiza-
tion of, p. 174

Truck-gardening, p. 93

U

United States, agricultural con-
ditions in, p. 157
Usury, Oklahoma, pp. 242-247

W

Wages, increase of, p. 21
Wealth, inequitable distribution

of, p. 23
Wealth production in the United

States, p. 181; possibihty of,

pp. 184-190
Wheat exchanges, p. 27

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