Herbert Hoover to Woodrow Wilson

Identifier

WWP19378

Description

Herbert Hoover writes to Woodrow Wilson about the meat problem.

Source

Hoover-Wilson Correspondence, Hoover Institution, Hoover Institution Archives, Stanford, California

Publisher

Woodrow Wilson Presidential Library & Museum

Format

pdf file

Language

English

Text

Dear Mr. President

I feel that we have reached a postiition with regard to the whole meat industry of the country that requires a reconsideration of policy. The situation is one of the most complex with which the Government has to deal, by virtue of the increasing influence that the Government purchasing has upon prices, bytthe necessity of providing for increasing supplies for the Allies, and the consequent reduction of civilian consumption and, with all, the due protection of the producer and the civilian consumer. This change of policy may take the form of more definite and systematic direction of the larger packers as to the course they are to pursue from month to month, or may even take the form of operation of the packing house establishments by the Government.

The General economic forces bearing on the situation appear to me to be -

1. The Allied purchases for both civilian and military purposes in meats, as in many other commodities, have been consolidated by necessity of shipping conditions and by necessity of the Treasury arrangement for advances to the Allies until private trading has been of necessity eliminated.

It is also becoming necessary for the Government to coordinate these purchases with those of our Army and Navy in order to prevent conflict in the execution of orders. This great consolidation of buying has to some extent, and will increasingly, dominate pricesp.

We have, since last September, recognized that the export of purchases of pork products would affect prices and after consultation with important committees of swine growers we last autumn gave a rough assurance to the swine producer of a minimum price which we felt that we could maintain from the export buying and this has been maintained although with considerable difficulties and has been beneficial in stimulationng production. The indications are that these purchases will now be further increased.

The beef purchases have not, up to the present time, been sufficient in volume to more than temporarily affect price, but the present indications are that for some time in the future they will be greatly increased and to a point where they may affect price,s materially.

2. The increased quantities required for export must be obtained by either increased production or by reduction in civilian consumption - probably both.

The reducation in civilian consumption can be obtained much the most equitably by voluntary reduction by the consumer and by moderate restraints such as meatless days, et cetera, and while it may be contended by some that a reduction in consumption may be obtained by increase in price, such conservation is obtained by the elimination of that section of the community with the least purchasing power. In other words, conservation by price becomes conservation for the rich and not for the poor; whereas an extension of the conservation policy now in force places reduction in consumption where it rightly belongs - on those who can save from plenty, and not upon those who save from nourishment.

It appears to me also of the utmost national importance that we shall maintain through the country a complete sense in voluntary reduction in the consumption of all commodities if we are to provide the necessary surpluses either in money, man-power, or material, necessary to winning the war. On the other hand, the adjustment of conservation measures of this type and the surplus required from time to time is extremely difficult without those measure themselves affecting price and developing discontent and criticism in sections of the producing community.

I recognize fully the well-founded objection to any theory of price-fixing, but where the purchases of war necessities in a given commodity have reached such a volume that the purchase of these commodities trench into the domestic consumption, the operation of this purchasing power becomes a condition of price-fixing and, to my mind, all theories go by the borard.

3. The Government is thus faced with three alternatives in the matter of control of meats:

a. To free the Government from all interest in price by abandoning direction of war purchases and to abanon conservation measures because these may also affect price.

This would be a relief to the Government but with growing volume of purchases the price influence will be transferred to uncontrolled agencies who are themselves price-fixing and carries the following dangers:-

It will stimulate profitteering and speculation. Prices in the season of the year of large production can be manipulated downward and in the sparce season will ascend to the point where some classes will be eliminated from consumption. The cost of living thus subjected to abnormal fluctuation will reflect in wage discontent and instability. It will destroy systematic saving of the commodity by individuals and this saving in consumption is a vital national policy. The producer will go through erratic periods of discouragement and of stimulation which must undermine any systematic policy of national or idndividual increase in production, for every period of discouragement cuts off production of animals, which cannot be recovered.

b. To continue as at present the direction of these large purchases with a mixture of partial national policy in production and day to day dealing with emergency.

This is an almost intolerable situation for any Government official in criticism from both producer and consumer and with the growing volume of purchases this criticism must increase. It permits of no constructive policy in production.

c. To stabilize prices based upon cost of production at a fair and stimulative profit to the producer and with stabilization to eliminate speculative risks and wasteful practices and thus some gains for the consumer.

If such a policy is adopted it also follows that it will have a most important bearing on and relation to policies of agricultural production and a long view can be taken and supported.

This course is also fraught with dangers. It leads either to a bvoluntary agreement with the packers as to prices to be paid producers and charged to consumers from time to time: or, to actual operation of the packing plants by the Government. In either case the Government will need to take some financial responsibility in speculative business. In such situation the Government will be under constant pressure from the producers for enhancement of price and from the consumer for reductions. It necessitates the constant action of a commission to determine such prices. It will mean that all the complaints of trade fall upon the Government. The choice of alternatives is one of determination of the maximum contribution to winning the war and the choice of the lesser economic evil between such alternatives.

4. The Legal ability of the Government to give authority to such measures lies in the power to direct contracts for war necessities, to take over and operate plants and to make voluntary agreements to carry out a definite and constructive policy. When purchases are so large as to cut into civilian consumption, it becomes possible to insure manufacturers a complete market, thus eliminating their risk and thereby eliminating some of the margin that they must take in the conduct of a speculative business and it also gives sound reason for directing their policies.

5. For these very reasons it has been necessary to set up partial or complete arrangements of this character in iron, steel, copper, explosives, wheat, sugar and some other commodities. None of these arrangements have evolved out of any governmental lpolicy of price-fixing, or any desire to interfere with the operation of natural trade laws, but are simply the result of the Government being facorced into the issue of becoming the dominant purchaser and thereby, willingly or unwillingly, the price determiner in particular commodities.

We have been struggling as intelligently as possible with the situation in the meat industries with entire inadequacy of definite national policy. Our purchases hitherto have been sufficient to influence the market at times and in the case of pork products have been sufficient to preserve a minimum price. We have been, however, powerless hitherto to properly protect all branches of the cattle industry with its constantly changing economic situation, or to give intelligent direction or assistance to cattle production. As you know, I have never felt that when we arrived at a point to determine the broad policy with respect to a commoditiy that this should be determined at the opinion of any single individual, no matter how sincere and earnest the application of intelligence might be.

I would therefore like to recommend to you to extend the policy which you have already initiated in the matter of many commodities, by early appointment of a board to study the entire situation with regard to the meat industry and the steps that should be taken with regard thereto. I would suggest that, following the precedent that you have already established, a committee should be set up embracing, either the following gentlemen or their delegates directly responsible to them.-

The Secretary of Agriculture as representing the producer
The Chairman of the Federal Trade Commission as representing trade conditions.
The Chairman of the Federal Tariff Board as representing economic thought.
The Secretary of Labor as representing the civilian consumer.
The Food Administrator as having to carry out any given policy determined upon.

This commission should at once exhaustively consider the entire situation in all of its aspects and determine a positive national policy in meats.

I apologize for writing at such length but the subject permits of little brevity.I am

Your obedient servant,
(Signed) HERBERT HOOVER.

Original Format

Letter

Files

http://resources.presidentwilson.org/wp-content/uploads/2018/10/D09382.pdf

Citation

Hoover, Herbert, 1874-1964, “Herbert Hoover to Woodrow Wilson,” 1918 March 26, WWP19378, Hoover Institute at Stanford University Collection, Woodrow Wilson Presidential Library & Museum, Staunton, Virginia.