United States Food Administration Recommendation on Wheat Prices

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UNITED STATES FOOD ADMINISTRATION
Washington

To the President of the United States:

The undersigned Committee has been asked by you to recommend the price which the government should pay for the 1917 crop of wheat.

In its deliberations the Committee has kept constantly in mind the three following factors:

1st. The fact that the United States is at war.
2nd. The need of encouraging the producer.
3rd. The necessity of reducing the cost of living to the consumer.

The normal laws of supply and demand have been violently interfered with and Congress has undertaken to offset this disturbance by conferring extraordinary powers upon the President to stabilize prices. Each of the foregoing factors grows out of conditions which have received the careful attention of the Committee. Chief among them are: That the wheat yield in a great and important section of the country has this year been below the normal; that over against this situation is the crying need among the whole body of the population, especially the wage earners, that the rising tide of costs shall be stayed and reduced as rapidly as possible consistent with the welfare of the producer; that the government is at the present time engaged in the great task of reducing and stabilizing costs of other staple commodities; that the wheat of the world is abundant for its needs even disregarding the stores in Russia, but because of lack of shipping and war conditions the burden of supplying wheat to the allies and to neutral nations rests for the time being upon the United States and Canada.

Your Committee has also considered the fact that the government price for the 1917 wheat crop is in effect a continuing guaranty until the minimum price guaranteed by Congress for the crop of 1918 goes into effect. (July 1st, 1918). It has considered the relation of the 1918 minimum price guaranty to the price here recommended. It has also considered the effect which an early termination of the war would have upon the wheat markets of the world.

In reaching its conclusion the Committee has been guided by the principles you have announced, that a fair price should be based upon the cost of production for the entire country plus a reasonable profit. We have relied upon the cost estimates for the crop of 1917 furnished by the United States Department of Agriculture, checked by the results of our independent investigations and the evidence submitted to the Committee by producers and their representatives.

The Committee has considered the regulations recently established by the United States Food Administration Grain Corporation for the different grades of the wheat through which all transactions in wheat are to be standardized and speculation to be entirely eliminated. Also that profits to the grain dealer, miller, and flour dealer have been regulated and reduced by the Grain Corporation, effecting a material reduction in the cost of flour.In consideration of the foregoing facts and circumstances, this Committee respectfully recommends that the price on No. 1 Northern Spring wheat, or its equivalent, at Chicago be $2.20 per bushel.

Respectfully submitted,