Herbert Hoover to Woodrow Wilson
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In accordance with your instructions, I herewith submit the following report of the activities of the United States Food Administration for the first six months of 1918, and the results of such activities so far as they have become apparent.
All of the efforts of the Food Administration have been directed towards two principal ends, an adequate supply of foodstuffs and feeds for the people of the United States at prices not swollen by profiteering, uneven distribution, or wasteful or expensive practices; and an adequate supply of exportable foodstuffs for our European associates and for our own army. To these ends the activities of the Food Administration may be divided into several distinct groups:
(1) Measures to conserve existing foodstuffs.
(2) Measures to reduce the cost of distribution from producer to consumer and eliminate profiteering.
(3) Measures to secure equal distribution of commodities in which a shortage exists.
(4) Measures to stimulate the production of foodstuffs.
(5) Measures concerned with the purchase of foodstuffs for export and for the United States Government.
(6) Miscellaneous activities indirectly connected with food.
Food conservation measures have been devoted principally to the saving of wheat, meat, fats and sugar for shipment to Europe and for anticipated periods of domestic scarcity, and to the elimination of waste in the handling and consumption of all foods.
Wheat. On January 1, 1918 the best estimates seem to show that there was in the United States 285,000,000 bushels of wheat, and flour in terms of wheat not yet shipped from the mill. The amount required for seeding in the spring was 31,000,000 bushels, and the normal consumption about 42,000,000 bushels per month or 252,000,000 bushels from January 1 to July 1. The smallest carryover which could be considered safe on July 1 was 20,000,000 bushels and at least 10,000,000 bushels was almost certain to remain on the farm. There was therefore no exportable surplus whatsoever. Yet it was vital to the life of the Allied nations that at least 75,000,000 bushels be shipped abroad during this period, and that this be saved out of the normal consumption in the United States.
The basis of the necessary conservation lay in the organized appeal which the Food Administration has consistently made to the people of this country to save wheat and wheat products. Without the voluntary and patriotic response to this appeal which was given, it is doubtful whether the later regulations and compulsory measures could possibly have succeeded. These compulsory measures were in fact little more than an assistance to the people in making their effort to save wheat. The handling of the voluntary conservation campaign was in the hands of the Educational Division. A campaign for membership resulted in the enlistment of between 13,000,000 and 14,000,000 homes, and the distribution to these homes of the various home cards stating the voluntary conservation measures which the Food Administration has requested from time to time. The press of the country has given the Food Administration its most hearty cooperation in the conservation work. Its influence has been extended by outdoor advertising, and by appeals to schools, churches, women’s clubs, public libraries, merchants’ associations, fraternal organizations, and other social groups. The Food Administration has never paid one cent for newspapers space or other forms of advertising aside from furnishing material on which the publicity given was based.
During the months of May and June the decentralization of this work has continued, and at the present time educational directors have been appointed in each State. It is, of course, impossible to estimate the actual saving of wheat products which has resulted from this campaign, but the total saving effected testifies to its efficacy entirely apart from the excellent foundation that it laid for later measures.
In some parts of the country, largely through voluntary campaigns organized locally, great excess flour stocks were turned back to the Government for distribution, thus releasing an equal quantity for shipment abroad. The total flour returned in this manner on which actual reports have been received, amounted to 1,025,94664 barrels.
A voluntary conservation campaign among hotels and public eating places was responsible for a very definite saving through the excellent cooperation shown especially by the larger hotels. It is estimated from reports received that in January 12,000,000 punds of wheat flour were saved, in February 15,000,000 pounds, in March 15,000,000 pounds, in April 25,000,000 pounds, and in May 25,000,000 pounds, or a total equivalent to 2,000,000 bushels of wheat. On March 28 in response to an eappeal from the Food Administration more than four thousand leading hotels patriotically pledged themselves voluntarily to refrain from the use of all wheat products, until the harvest. This campaign proved that an entirely wheatless bread could be manufactured without being entirely unpalatable, something which had not been considered possible.
When the need for greater conservation became apparent in January various compulsory regulations were adopted. The flour mills were required into raise their percentage of extraction to 74 per cent instead of the 69 per cent which had been customary, and to eliminate altogether the sale of patent flours. During the first five months of the year the mills ground approximately 173,467,000 bushels of wheat and produced 38,965,556 barrels of flour. On the old grind it would have taken 4,604,752 bushels more to make the same amount of flour, so that this may be considered a definite saving of that amount.
On February 3, also the bakers were required to suse 5 per cent of substitute flour in all bread, and this amount was increased to 20 per cent on February 24 and to 25 per cent on May 3. After some preliminary experiments the Victory Bread produced under these regulations proved to be uniformly successful, and its use at the present time involves practically no sacrifice on the part of the user. The monthly consumption of flour by bakers in baking bread is approximately 3,000,000 barrels, and as the total output of bread by bakers has increased only slightly, it is estimated that the substitute requirements have effected a saving at the rate of at least 15 per cent for flouor months to July 1, or a total of 1,800,000 barrels, or 7,920,000 bushels of wheat.
Over 50 per cent of the flour used in this country is used in home baking of bread, and it was, of course, necessary that the bakery substitute regulations be supplemented vby some substitute requirement on the part of the home baker. Regulations were issued accordingly about February 1 requiring that no dealer or miller sell wheat flour to an individual consumer without selling an equal amount of wheat flour substitutes. The substitute list invcluded all substitute flours, corn meal, corn grits, oatmeal and rice. The normal consumption of these substitutes amounted to approximately 35 per cent of the wheat flour normally used and that it was estimated that the 50 - 50 rule would rdequire the substitution by the householder of wheat flour substitutes for approximately 25 per cent of the wheat flour formerly used. The effect of the rule, however, has been more marked than this and from reports received from dealers and estimates of actual consumption it appears that during the five months of its operation to July 1 sales of wheat flour to the consumer decreased by at least 50 per cent, equivalent probably to 50,000,000 bushels of wheat.
In addition to the use of flour in bread over 900,000 barrels have been used each month in the manufacture of other bakery products such as crackers and cake, breakfast cereals, macaroni and miscellaneous food. Rules were promulgated requiring manufacturers making use of such wheat flour to limit their consumption to 70 per cent of the amount used in 1917 for the same purpose. This regulation was more difficult to enforce than those previously described, but in the case of cracker manufactuerers the consumption was cut 50 per cent by the use of substitutes, and it is certain that at least a 30 per cent saving was effected. This would amount to 179,700 barrels per month, or 718,800 barrels from March 1 to July 1, equivalent to 3,162,720 bushels of wheat.
Numerous other measures were adopted to effect a further saving. Thus on Februaty 21 a three-quarters of a pound loaf was added to the specified weights for baked bread and a campaign to substitute the three-quarters of a pound loaf for the pound loaf contributed to the voluntary conservation. On April 14 hotes were required to serve only two ounces of Victory Bread to one person at a meal.
The result of the measures which have been outlined was uniformly successgful and may be tabulated roughly according to the best figures available:
Saving effected January 1 to July 1
as compared to normal consumption.
Milling regulation . . . . . . . . . . . 4,605,000 bu.
Saving by bakers . . . . . . . . . . . 7,920,000 bu.
Saving by other manufacturers . 3,162,000 bu.
Saving by domestic buyers and public eating places . . . . . . . . . . 50,000,000 bu. 65,667,000 bu.
The following table shows the actual distribution of the 1917 wheat crop in two periods, one from July 1, 1917 to January 1, 1918, and the other from January 1, 1918 to July 1, 1918.
First six months.
Stocks on hand July 1, 1917,
wheat in all positions, excluding
farms 38,000,000 bu.
Visible flour as wheat 8,586,000 bu.
Receipts from farms July 1, 1917
to January 1, 1918 414,341,000 bu.
Imports wheat and flour 17,678,000 bu.
TOTAL Supply for Six Months 428,545,000 bu.
Exports wheat and flour
July 1, 1917 to January 1, 1918
62,745,000
Stocks of wheat January 1, 1918,
excluding farms 132,929,000
Flour at mills as wheat 12,659,000
TOTAL 212,333,000 bu.
Balance six months domestic
distribution 266,212,000 bu.
Distribution per month 44,368,000 bu.
Last Six Months.
Stocks of wheat January 1, 1918
excluding farms 136,929,000 bu.
Flours at mills as wheat 12,659,000 bu.
Receipts from farms January 1,
1918 to July 1, 1918 89,040,000 bu.
Imports wheat and flour 10,354,000 bu.
TOTAL SUPPLY 243,982,000 bu.
Exports wheat and flour 79,246,000
Stocks on hand, wheat June 30,
1918 14,269,000
Flour at mills as wheat 5,943,000
TOTAL 99,458,000 bu.
Balance six months distribution 149,524,000 bu.
per month 24,921,000 bu.
First six months distribution 266,212,000 bu.
Second six months distribution 149,524,000 bu.
Total distribution for food 415,736,000 bu.
Fed on farms, Department of
Agriculture estimate 13,000,000 bu.
Total consumption food and feed 428,736,000 bu.
Per capita food and feed 4.11 bu.
Prewar average per capita 5.30 bu.
It should be pointed out that there was on January 1, 1918, a large supply of flour in transit, and that it is extremely unlikely that the actual consumption in the first six months exceeded the normal 42,000,000 bushels per month. It is probable that some conservation was effected. The actual consumption, therefore, in the last six months must have been at least 27,289,000 bushels per month. The report confirms without question, however, the fact that a saving of approximately 90,000,000 bushels was effected for the twelve months as compared with the normal consumption; and most of this saving occurred after January 1.
This saving was effected equally by all classes of the population. It was accomplished without the slightest disturbances, and without the rise in price which usually accompanies a shortage and causes it to bear so unjustly on the poorer classes. That the saving was essential is shown by the fact that on July 1 the entire stocks of visible wheat and flour amounted to only 20,000,000 bushels and the farm stocks to 8,000,000 bushels, the smallest carryover for many years. In addition to the saving in consumption it was necessary to cut into our carryover from last year to the extent of about 35,000,000 bushels. This cutting down was materially assisted by the action of the farmers in marketing their wheat at the request of the Government.
Grain other than wheat. It has not been felt necessary to organize any general campaign for the conservation of corn, oats, rye, or barley. The tranaportation difficulties in the winter, the low quality of the 1917 corn crop, and the sudden demand for substitute cereals created by the wheat conservation program all contributed to some temporary and local scarcity, and consequent high prices, but these conditions have gradually readjusted themselves. The action of Congress in prohibiting distilling after September 10, 1917, effected a saving of approximately 20,000,000 bushels of corn, barley and rye during the first six months of 1917. The Food Administration has since caused a regulation to be issued which prohibits the use of grain in the distillation of alcohol unless it is below the quality required by Federal Grade No. 6, a quality which is usually unfit even for animal consumption.
On December 10, the President issued a Proclamation limiting the consumption of foodstuffs by brewers to 70 per cent of their 1917 consumption. The amount consumed in 1917 was equivalent to approximately 46,000,000 bushels of barley; 23,500,000 bushels of corn; and 2,000,000 cwt. of rice. Through this regulation it is estimated that there was saved during the first six months of 1918 approximately 8,900,000 bushels of barley; 3,500,000 bushels of corn; and 300,000 cwt. of rice.
Sugar. From the beginning of the Food Administration a continous conservation campaign has been carried on with regard to sugar. The serious shortage which developed in the last three months of 1917 emphasised the necessity for conservation in this staple food and when that shortage became less stringent the general conservation campaign was continued. It was hoped that the available sugar supply would be sufficient during the year 1918 to meet the normal consamption, but as a safeguard manufacturers of confectionery, soft drinks and similar articles were directed to cut down their consumption to 80 per cent of that used during the first six months of 1917. During the spring, as the tremendous need for ships developed, resulting in less tonnage from Cuba and less tonnage for transportation of sugar from distant points, it became clear that more serious conservation measures must be adopted. On May 15 regulations were issued requiring that sales of sugar to manufacturers of less essential food-stuffs be made only upon presentation of certificates,and certificates were issued to these manufacturers by the Federal Food Administrators in such manner as to limit their consumption trom January 1 to July 1 to 80 per cent of the sugar used in the same period of 1917. The previous directions had only been complied with by the more patriotic manufacturers and it is doubtful whether any material conservation would have been effected without the certificate plan. The amount of sugar used by less essential manufacturers was estimated at about 500,000 tons per month in 1917 and the rapid expansion of the business indicated at least a 50 per cent increase in 1918. The saving of sugar probably effected by this means therefore during the first six months of 1918 was at least 100,000 tons. Nevertheless the conditions above referred to have again created the possibility of a serious shortage necessitating more stringent measures after July 1.
Regulations issued to manufacturers of sugar require that all possible sugar must be extracted from the sugar cane or the raw sugar, and that refiners confine their percentage of soft or off grade sugar to the same produced in 1917. The high price of syrups and off grade sugar compared to the standard granulated price stabilized by agreement with the Cuban producers and the refiners had created a tendency to turn sugar into these more profitable fields, but the regulations which have been adopted have practically put an end to this practice.
Meat. The conservation of meat has been a continuous concem of the Food Administration from its institution and the effects of the campaign were perhaps more immediate than in the case of any other commodity. It has been extremely difficult to obtain any direct estimate of decrease in consumption except in the single case of hotels. The reports from hotels indicate that in January there were savings of more than 24,000,000 pounds of meat, and it cannot be doubted that a very large amount of meat was saved in domestic consumption.
The request of the Food Administration for meatless days at homes and public eating places was generally observed until removed in February, because of the accumulation of surplus stocks of meat. In April a general request for the conservation of beef was again made, and a definite program of limitation outlined for the consumer and the public eating place. The result of the conservation campaign can be seen in the very large increase in the export of pork products. This export amounted from January 1 to July 1,1918 to 1,252,557,656 pounds of pork, and 428,079,110 pounds of beef, as compared to 857,984,157 pounds and 231,731,135 pounds respectively for the same period in 1917, an increase of more than 54 per cent over even the very large export made in 1916-1917 before the institution of Food Administration control. The saving also resulted in the accumulation of larger stocks than usual to tide over the period of decreased production. These stocks amounted on July 1 to 973,536,375 pounds of pork and 188,935,476 pounds of beef as compared with 785,759,199 pounds and 139,734,472 pounds respectively in 1917.
Fats. The conservation of fats is one of the measures which has been urged upon the people by the Food Administration from the be- ginning. No complete survey of the fat situation had ever been made, and under Food Administration control it was necessary to make a complete survey with special reference to vegetable oils. A few compulsory measures have been adopted to prevent waste in the use of fats. Thus cotton seed crushers and refiners are required by regulation to extract the greatest possible amount of edible oil. The use of shortening in bread was limited by the bakery regulations so that not more than two pounds of vegetable shortening could be used to one barrel of flour. The use of lard in bread was entirely forbidden and the amount of fat used in other bakery products was also limited. These regulations merely insure that no more shortening is used than is in fact necessary. The general situation with regard to fats is satisfactory and there is a sufficient supply available to meet the requirements and those of the Allies.
Perishable foods. There is, of course, no general shortage of perishable foods, but from time to time special situations have arisen threatening the spoilage of valuable foodstuffs if no action was taken. Thus the transportation difficulties during the winter resulted in considerable difficulty in marketing potatoes so that in the spring of 1918 there remained a very considerable amount of the old crop, in which a serious loss was threatened if it could not be speedily consumed. The Food Administration, therefore, undertook a campaign urging the consumption of potatoes and this was so successful that the entire carryover was consumed by the time the new crop became available.
In cooperation with the Department of Agriculture, and in order to conserve the production of eggs an order was issued on February 11 prohibiting transactions in and shipment of live hens and pullets between February 11, 1918 and April 30, 1918. This order kept a large proportion of laying hens on the farm which would otherwise have been sold, and its effect appears strikingly in the fact that on June 1, there were in storage 5,500,000 cases of eggs, an increase of 11.1 per cent over the quantity stored on the same date in 1917.
A considerable waste of food has always occurred through the action of shippers in shipping foodstuffs and especially fresh fruits and vegetables below grade, or the action of consignees in rejecting cars without cause, resulting in dispute and in the accumulation at railroad terminals of cars containing perishables. The Food Administration has issued a set of special rules defining clearly the rights of the different parties in the sale and shipment of fresh fruits and vegetables, and has used its influence in every case to hasten an immediate adjustment or arbitration between the parties so that no spoilage might occur. It has punished the shipment of foodstuffs not in accordance with contract,and the unjustifiable rejection by consignees because of market conditions. In all more than 2500 cases have been handled by the Enforcement Division under these principles,and the effect of such action has been felt in thousands of additional cases.
Through the Transportation Division we have also attempted to hasten the transportation of perishable products wherever a delay threatened food waste, and have considered and recommended several improved food containers for rail shipment, and improved methods of loading and preparation of car for loading which should effect a considerable saving.
In cooperation with the Department of Agriculture the Food Administration insists that all licensed egg shippers candle eggs before they leave the point of original shipment. Fifteen per cent of the eggs shipped have been customarily lost through lack of candling and it is estimated that a saving of this amount may be effected through this regulation.
The cases in which direct action has been taken to save perishable foods are too numerous and various to detail in a report of this nature.
Home conservation. A general campaign has been carried on by the means outlined under the paragraph on wheat, to bring home to the entire nation the necessity for eliminating all food waste in the home and for reducing the very large garbage production of the past. The result of this campaign appears strikingly in the reports from the collection of garbage in 96 cities including practically every large city in the United States. The total garbage collection in these cities decreased over 10 per cent in the year from May 1, 1917 to May 1, 1918 as compared to the previous year. The amount of garbage grease recovered in twelve cities reporting decreased over 30 per cent in the same period, from 25,698,648 pounds to 17,868,642 pounds.
Export trade. At the request of the Food Administration the war Trade Board has prohibited or limited strictly the export of numerous foodstuffs to neutral countries whenever a shortage has threatened in any given commodity. They have also strictly limited the food stores of ships leaving the United States, and required them in some cases to buy at the other end of their voyage.
A Uniform Bill of Fare for passengers and crew has been adopted with the cooperation of many steamship owners, and labor leaders.
The Food Control Act does not itself directly punish profiteering in foodstuffs. It merely gives the President power to license food handlers other than the producer, retailer and consumer, and issue regulations or orders limiting profits, expensive methods and wasteful practices. Under this provision the President has licensed substantially all manufacturers and wholesale distributors of the staple products, of which a list will be found in the general regulations attached hereto as Exhibit A. As a situation develops with regard to any less important commodities an extension of the licensing system is recommended by the Food Administration.
The general principles of control embodied in the regulations include the following as a
fundamental basis:
(1) Foodstuffs shall be sold on a basis which will not return excessive profits ,or profits in excess of those earned in pre-war times.
(2) Foodstuffs shall pass as directly as possible from producer to consumer without any of the unnecessary resales which enable a number of food dealers to add their expenses and profits to the already high cost of distribution.
(3) No one shall engage in the distribution of foodstuff unless he is actually in the business and is not merely speculating.
(4) Hoarding and long term contracts shall be limited in varying degrees, because they are a ready source of speculation, and increase the opportunity for legitimate dealers to make speculative profits. Hoarding also interferes with an adequate distribution and by decreasing the available supply tends to raise prices improperly.
The Transportation Department has been organized to work with the Railroad Administration to eliminate the delay, financial loss, and violent market fluctuations which result from any restriction on rail distribution. It has concerned itself with individual cases, and with general surveys which will enable us to place in the hands of the Railroad Administration the car requirements for any given crop or district.
The most difficult problem under license control is the limitation of profits. Under the conditions existing in most American food industries there are in each class a few economically operated plants with the best machinery and organization, and a whole series of other competing plants and dealers who do business on gradually increasing cost. The Food Administration, even if it were so inclined, cannot lawfully prescribe a margin for the less economic licensees which will put them entirely out of business. Yet any margin wide enough to return them a reasonable profit will give the larger companies the same large return which they have previously received. This is a condition which has always existed and one which it is scarcely possible to change without a complete reorganization of the industry. A more proper method of reaching these profits is by taxation.
In some fields the Food Administration has made the experiment of limiting each concern to a reasonable return on its invested capital. This method, however, is extremely complicated in operation, and results in a varying scale of prices for the same commodity in the same market, an extremely unsound condition economically, which is difficult to maintain the affords constant temptation to violate the regulations.
The difficulty of controlling profits is increased tremendously in any commodity the price of which fluctuates. No matter what margin may be provided on the sale of such a commodity, a sudden drop in the price may wipe out all of the legitimate profits which such margin affords on a stable market. Yet a margin wide enough to take care of such losses will return unreasonable profits if the drop in price does not occur. So far as it has been feasible, therefore, the Food Administration has assisted the stabilization of price or has at least taken every method possible to make the fluctuations respond only gradually to economic conditions and thus eliminate violent reactions.
A further difficulty is found in the fact that even the manufacturer or dealer himself cannot accurately estimate in advance what margin will return him a reasonable profit. The Food Administration is, therefore, constantly in danger of setting a margin which will return more than a reasonable profit or one which will cause financial loss and injury to the business involved.
Finally a limitation on profits if too severe may have the direct effect of lessening production. The dealers whose profits are limited lose interest in the cammodity in question and turn their energies to other lines, and the demand of the trade for licensed cam- modities may decrease in a sufficient degree to affect the prices paid the producer for such commodities.
The different methods of control have been worked out independently often with the assistance of the trade in such a manner as seems best suited to the particular problems of the industry in question, avoiding as far as possible the difficulties which have been outlined. The methods of control in each of the important industries will be briefly outlined. It will be noted that the same method can seldom be pursued in two different industries.
Wheat Millers. The first profit control was that of the wheat millers. It was based on a limitation of net profits over and above actual expenses, which net profit was limited by agreement and by regulation to 25 cents for each barrel of flour and 50 cents for each ton of feed. The calculation of net profit is always rather complicated and it was hardly possible to obtain any definite statement of results until three months after the mills had begun to operate. The exigencies of the war situation required a very heavy milling in the fall, and left a period of extremely light operation for the first six months of 1918, resulting in low costs for the first part of the crop year and very high costs for the first part of 1918. The natural result was that excessive profits were earned before January 1, but in most instances these profits were reduced to approximately the permitted margin before July1, 1918. A careful report system enabling all millers profits to be checked is in force and arrangements have been made in cases where the margins were exceeded over the entire period, far sales to the Government at reduced prices in order that the profits may be brought within the prescribed sum. The report of the Food Administration Milling Division is attached hereto as Exhibit H.
When an actual weighted average of the farmer's receipts for four and one-half bushels of wheat is compared to the average Minneapolis mill door price for one barrel of flour the effect of Food Administration control is strikingly shown. On this basis the farmer received for his 1915 crop 98 cents a bushel or $4.41 for four and one-half bushels. The average price of one barrel of flour at the Minneapolis mill door during thus period was $6.08. In 1916 the farmer received an average of $1.44, or $6.48 compared with $9.85 a barrel for flour. Under Food Administration control the farmer has received $2.01 or $9.05 compared with an average of $10.50 a barrel at Minneapolis. The margin has been decreased from $1.67 in 1916, and $2.37 in 1917 to $1.45 in 1918. The speculative profit taken by those who bought the farmer's wheat when offered in quantity in the fall and sold it at an advance in the spring has been wiped out. The decrease in margin was due in part to the elimination of this speculation in wheat and in part to the miller's profit control.
The enforcement of the 25 cent regulation was rendered somewhat difficult by the complicated nature of the bookkeeping required, and the other circumstances referred to above but it was assisted materially by the stabilized price for wheat secured through a uniform agreement voluntarily entered into by a great majority of the flour mills.
On the first of January because of the high price of coarse grains the price of wheat mill feed had increased out of any proper proportion to wheat. Although this did not directly affect the profits of the mills since it was necessarily reflected in a low price for flour, in order to insure a supply of feedstuffs at reasonable prices all mills were required to sell bran at 38 per cent of the price of a similar quantity of wheat. This price was considerably lower than that of other feeds, resulting first in a general tendency among millers and dealers to avoid the regulations wherever possible, and secondly in such an increased demand for mill feeds that the demand could not be supplied. During the first five months of 1918 rules regarding the mixing of feed, dealer's margins, and the differentials on the better grades, were finally perfected so that at the present time the consumer is assured of mill feed on a reasonable price basis compared to that at which the farmer sells his wheat.
Bakers. The great multitude of bakers, many of them operating almost without books, has rendered impossible any complicated system of profit control. The first step taken by the Food Administration was to standardize the size of the loaf at one pound, subsequently modified for conservation reasons so that a three-quarters pound loaf could also be made. With attention concentrated on a definite size of loaf it was practicable in each locality to determine approximately what price per month would return the bakers a reasonable profit, and the Federal Food Administrators in each State or city made public this fair price. Sales of bread at prices above this fair price have been considered to indicate excessive profits unless the contrary could be conclusively proved by the baker. The situation was somewhat complicated by the requirement that bakers use substitutes, which sometimes cost more than wheat flour, but it was found possible to take these considerations into account and change the fair prices locally when necessary. The result of this profit control is that bread has sold at retail for an average price of 8 cents for the 12 ounce loaf and 10 cents for the 16 ounce loaf in most parts of the country.
The effect of the Food Administration regulations on the percentage of the cost of bread received by the various handlers between the producer and consumer appears strikingly in a chart which is attached hereto as Exhibit B. In the first two months of 1918 the farmer received 45% of the money paid by the consumer for a loaf of bread as compared with a general pre-war average of about 30%,and an average in the first half of 1917 of 38%.WHOLESALE AND RETAIL GROCERS.
The profit control of wholesale grocers rests primarily upon the rule that each lot of goods must be sold at not more than a reasonable advance over the actual cost of those particular goods. Subsequently in order to make the changes in price more gradual it was considered wise to require the sale at reasonable margins over the average cost of goods of the same size and kind in the licensees possession. Maximum margins were then indicated for each class of licensed commodities. These margins are gross over selling cost. They have been named after careful consideration of the business involved, so that sales on this margin will not return more than a reasonable net profit on the capital invested, or more than the licensee obtained under pre-war conditions. The maximum margins for wholesalers are as follows
MAXIMUM MARGINS ON SALES BY WHOLESALERS TO RETAILERS.
Commodities Maximum margins
Sugar • • • • • • • 15-35 cents per 100 pounds Wheat flour • • • • • 50-75 cents per barrel
Lard, lard substitutes, bulk (packages of 50 pounds or over) • • • • 1.25-2 cents per pound
Standard hams, bacon • • • 1-2 cents per pound All flours (except wheat) • • • • • • •)
Lard and lard substitutes, in • • • • •)
packages (less than 50 pounds) •) Condensed, evaporated milk • •) 8-10 per cent
Blackstrap molasses in barrels • • • •)
Rice, hominy, grits, oatmeal, rolled oats, corn meal, beans, in bulk (packages of 25 pounds or over) • • • • • • • • • 10-12.50 per cent
Package goods, syrup, canned goods, dried fruits • • • • • • • • • • • • • • 12-15 per cent.
The result of these measures has been most successful. Speculation in the wholesale and jobbing trades has been practically eliminated, and the commodities have been moved from the producer to the consumer in the most direct and economical manner, using the established method of machinery. Success has been made easier because the price on some of these commodities was stabilized, and on the balance has fluctuated slightly so that the licensees could adjust their selling prices and obtain sufficient margins to return a reasonable profit in spite of occasional declines in value.
Millers of corn and other cereals. A very much more difficult situation has been presented in attempting to control corn, oats, and barley millers because of the rapidly fluctuating price of the coarse grains. An active competition existing in this field was effective in holding down the prices until the restricted transportation during the winter and the demand for substitutes created by the substitute rules created a sudden shortage and the need for more definite measures. These have been worked out gradually during the months of March, April, May and June, and rules have been agreed upon prescribing definite margins over cost of the raw material at which corn, oats and barley products must be sold. During this period the mills have been required to make weekly reports of cost and selling prices, which have been carefully examined. Reductions have been ordered and made in the case of 218 mills, ranging from 5 cents to $1.00 per hundred.
It has also been considered wise to open the grain exchanges to limited dealings in future, which had previously been substantially forbidden. This dealing, limited to 200,000 bushels, has tended to stabilize the market, and has allowed legitimate millers and dealers to hedge. The possibility of hedging nullifies somewhat the effect of fluctuation, and thus makes less difficult the problem of profit control over these licensees. The new margins have necessarily been made somewhat wider than for a more stable commodity, because while they deprive the miller of profits on a rising market they do not prevent heavy losses on a decline. The margins finally decided upon are based on the cost of the raw material less the proceeds of the feed created in the milling operation.
Old-fashioned, water-ground,
standard, and bolted meal • • • • • 50¢ per hundred pounds bulk product
Pearl meal • • • • • • • • • • • • • • 60¢ per hundred pounds bulk product
Hominy, grits and cream meal • • • • • 80¢ per hundred pounds bulk product
Corn flour • • • • • • • • • • • • $1.00 per hundred pounds bulk product
Barley flour • • • • • • • • • • • • • 95¢ per hundred pounds bulk product
Rye flour • • • • • • • • • • • • • • 90¢ per hundred pounds bulk product
Rolled oats, oatmeal, oat flour • • • • 90¢ per hundred pounds bulk product.
Meat packers. The meat packing business is so complicated in its ramifications, and is so involved with its various by-produots, that it was not considered practicable to prescribe margins over cost. Regulations were therefore issued requiring that no packer make more than 9 per cent upon his capital invested, including borrowed capital, this representing substantially the pre-war return. The enforcement of the 9 per cent restriction presents some difficulties but because of the limited number of packers and their complete accounting it will be possible to check up the results accurately.
In the month of May when a very considerable stock of hog products had been accumulated at a known cost, the Food Administration prescribed that the price of these products should not be raised above that then prevailing without first submitting the proposed raise to the Food Administration and obtaining its approval. This action is an example of another method of temporary price stabilization within the powers of the Food Administration when a considerable stock of goods has been accumulated at a known cost. When the stock is exhausted we must again depend upon some profit regulation.
Sugar. By a uniform agreement with the refiners, the purchase of imported raw sugar was assigned to the International Sugar Committee having representatives from the Allies and the Food Administration. Acting under this agreement the Cuban and Porto Rican crops were purchased at a reasonable price, and divided between the United Statee and the Allies. Under this agreement and with the earnest cooperation of the Marine Transportation Division, The West Indies Transportation Committee and the Shipping Board, nearly 2,000,000 tons have been received up to July 1, practically the same as tmder pre-war conditions. The control of sugar refiners rests upon a prescribed margin of $1.30 per cwt. between the cost of raw sugar to the refiner and the selling price of fine granulated. The results have been entirely satisfactory, and simple of enforcement largely because the price of sugar has been practically stabilized by the purchases referred to. The fixed margins on wholesalers and retailers following the refiners margin have practically assured a fair and even price for sugar throughout the United States, varied only by the freight differentials.
Cottonseed and its products. Speculation in cottonseed and in the oil and meal resulting, had been practically unrestrained throughout the South prior to Food Administration control, and the fluctuations in price exceeded those in any other commodity. The Food Administration rules, however, limited hoarding, speculation and re-sales most effectively and the slowing up of speculation combined with several agreements between the Food Administration and the trade resulted in a price stablization after the greater part of the crop had been marketed and the costs of the raw materials thereby determined. The Food Administration then prescribed naximum spreads ffor ootto seed dealers, for cottonseed crushers, for refiners of oil, and for lard substitute manufacturers which have been consistently enforced. The success of this action has become clear within the last few months. Although the farmer received approximately $10 per ton more for his cottonseed than in the previous year the lard substitutes and cottonseed meal have been delivered to the consumer at no greater cost than in 1917. The price of lard substitutes has been maintained at a reasonable figure throughout the year instead of rising suddenly in the late spring and summer as bas always ocourred after the entire supply has been in the control of lard substitute manufacturers. The price of lard substitutes has been held on the average 5 cents below the price of lard, where a much smaller differential of 2 to 3 cents has customarily prevailed in the past. In carrying out this program the Food Administration has had the best support of the lard substitute manufacturers and refiners who have purchased and held large stockesof oil to carry over the period of short production.
Canning industries. The control of profits in the canning industries has been rendered very difficult by the established custom in the trade of selling for future delivery many months before the goods are actually produced. The conduct of the business, particularly from a financial viewpoint, rested so completely upon this custom that it was felt necessary to make an exception to the usual Food Administration rules prohibiting contracts for delivery more than sixty days after the date of the contract. Here was presented an industry with divergences in cost so great in different sections of the country and in different plants that any differential in price over the cost of the raw product seemed to be impractical. Furthermore, the cost of the raw product constituted only a very small proportion of the total cost. All canners were, therefore, called upon to submit estimates of cost which have been carefully checked over and corrected where clearly in excess of possible costs. The Canned Goods Division then announced maximum net margins over cost in cents per dozen cans, and all canners are required to conform to this net margin in making future sales, and to submit all quotations on such sales. These are examined and canners requested to revise them where they prove unreasonable. It has been deemed impractical for the Food Administration to revise all future contracts, but the canners have been requested and have agreed to themselves revise these contracts whenever it appears that their costs have been over-estimated. As for spot sales it will be comparatively easy when the season is completed to estimate the actual costs and to limit such sales to the prescribed net margin over this cost.
The Food Control Act contains no limitations on the fixing of profits for producers of fish, such as it contains with regard to agricultural producers, and it has been considered wise to limit the price which could be paid for salmon, sardines, and tuna to be canned. Maximum prices have been named after conference with the fishing industries which return a fair profit to those industries, and assure an adequate supply of canned fish. On this as a basis margins have been named for the canners.
Dried fruits. The producers of dried fruit located in a fairly limited area have agreed to limit their prices for these commodities to a figure, which, while far higher than normal and returning a large profit, is somewhat less than they might have obtained under present market conditions.
Perishable commodities. The question of cutting down the cost of distribution of perishable commodities such as fresh fruits, and vegetables, poultry, eggs, butter, cheese, milk, fresh fish, and fresh meats, has proved an extremely difficult one. Apart from the cold storage commodities, hoarding is practically impossible, and the law of supply and demand operates very freely, but is affected by the temporary and varying conditions in each locality. The rapid fluctuations in price, the necessity for disposing of the goods on short notice, and the spoilage which frequently occurs necessarily result in large losses which must be made up in the general conduct of the business in order that expenses may be paid. A margin over cost is, therefore, usually impracticable. The Food Administration has bent its efforts to the elimination of all deceptive, wasteful and unfair practices which tend to defeat in any way the law of supply and demand. Prompt and accurate accounts must be rendered. Commission merchants are confined to reasonable commisions. Goods must be promptly unloaded and disposed of freely.
The commodities which can be placed in cold storage are subject to a somewhat more extensive profit control. Definite margins have been prescribed for dealers in poultry and eggs in cold storage, and butter and cheese. The rules limit resales. The margins have been made liberal but are sufficiently low to prevent any speculative profits and to discourage the speculation which has often occurred on a rising market.
Because of the delayed egg production this spring a period of scarcity in eggs arose in the month of January, and it was necessary to fix a definite maximum price at which the remainder of the 1917 cold storage eggs must be sold. The action undoubtedly prevented a tremendous rise in prices and unreasonable profits. This was possible because the cost of these eggs had long been determined, and similar action has been taken from time to time where shortages of this character have developed in a stored commodity. Thus in January, 1918, reasonable prices for butter then remaining in storage were named, and distributors of frozen fish agreed to a fair maximum advance over the cost of their stock.
It has been found feasible to limit very strictly the operations of butter and egg exchanges, so that speculative trading, fictitious sales and the possibility of manipulating the market have been eliminated. The Elgin Butter Board has been closed. Speculation in cold storage commodities has also been discouraged by limiting the amount of money which cold storage warehousemen may loan on commodities stored, and by prohibiting the dealing in these commodities by public cold storage warehousemen. The Food Administration has insisted upon the marketing of stocks held in storage more than a year, even at a loss, but has so regulated the outgo as to prevent a complete demoralization of the market and heavy losses.
Cold storage. All public cold storage warehousemen have been required to file their rates with the Food Administration, and are forbidden to change them except on thirty days notice. The rates have been checked over and corrected where excessive. Cold storage products are required to be so labeled in order that excessive profits may not be made by selling them as fresh.
Retailers. The food Administration has no direct control retailers, and no power to impose license regulations. In nearly every city, however, investigations have been made by the Federal Food Administration, and a fair price list published based on the known cost, and certain margin prescribed for the guidance of the administrators. Methods have been found through publicity, through the power to cut off supplies from licensed wholesalers, and otherwise to enforce a compliance with the fair price list. A new Retail Division has just been organised to coordinate this work.
III
MEASURES TO SECURE EQUITABLE DISTRIBUTION
Except in commodities where a serious shortage exists it has not been found necessary to take any compulsory measures to secure equitable distribution. The Food Aministration, however, through its Inland Transportation Division, has cooperated with the United States Railroad Administration is securing an adequate distribution of railroad cars in those districts and for those commodities where a surplus exists. They have also arranged with the Railroad Administration for a careful survey of the car situation on western lines in anticipation of a heavy grain crop movement. The work of the Division has contributed largely in securing transportation facilities for food, and thus enabling these supplies to flow where they are most needed.
The shortage in wheat flour compelled the adoption of rules prescribing that no mill should ship into any territory more than 70 per cent of the amount of flour shipped in the same period of 1917, and limiting all jobbers to 70 per cent of the amount handled by them in the same period of 1917, and requiring from them the same accumulation of excessive stocks in any particular locality while a shortage existed in the entire country. Their operation was complicated by the shifts in population, but short of a complete certiticate system, the results proved as satisfactory as could have been accomplished.
A rule was also issued limiting the distribution of flour to individual consumers to 25 pounds in rural communities. While this rule is not equivalent to scienctific rationing, it tended to slow up the distribution of flour and impress upon purchasers the fact that flour should be used sparingly. The success of these rules together with the conservation effected is evidenced by the tact that there have been no complaints of flour shortage in any part of the country, such as existed in the case of sugar in the fall of 1917 before the Food Administration machinery was in effect.
Sugar. Ever since the shortage of 1917, best
sugar has been distributed through the Beet Sugar Distributing Committee, an agency of the Food Aministration, to the jobbers engaged in auger distribution, on a pro-rata basis, and these jobbers have been requested to handle their customers in the same manner. The gradual development of the sugar shortage, however, has led to the installation of a new system to secure equitable distribution. Rules have been issued limiting the sale of sugar by anyone to wholesalers, retailers or manufacturers except upon the presentation of suger distribution certificates. These certificates are issued by the Federal Food Administrators to the various retailers and manufacturers in their State on the basis of their sales in recent months, modified where it appears that any State has been receiving sugar in excess of its quota. The working out of this system is still in an experimental stage.
IV
MEASURES TO SECURE ADEQUATE PRODUCTION
The matter of the stimulation of production has been assigned by the President primarily to the Department of Agriculture. The question, however, is intimately connected with the work of the Food Administration, and success cannot be attained without adequate production. All measures taken by the Food Administration are carefully considered with a view to their effect upon production, and in a number of cases direct action has been taken to secure the proper result.
Wheat guaranty. The guaranty of $2 per bushel provided by the Food Control Act and the campaign for increased production undertaken by the Departman of Agriculture resulted in an increase in the winter wheat acreage from 40,634,000 acres in 1917 to 42,170,000 acres in 1918, and in the spring wheat acreage from 19,039,000 acres to 22,489,000 acres.
Sugar beets. On the application of the growers of sugar beets the Food Administration appointed commisions to investigate the cost of producing sugar beets, and have reported that a price of $10 per ton would secure a production equal to that of 1917. The payment of this price was recommended to all beet refiners and will be paid, although it will result in a somewhat higher price for domestic sugar than for imported sugar. The result of this arrangement has not been as successful as was hoped. The sugar beet crop has decreased from 806,700 acres to 689,700 acres, and the crop estimates show a falling off from 6,250,000 tons in 1917 to 5,980,000 tons in 1918.
Milk producers. During the winter the price of milk rose steadily to the consumer. On the one hand it was claimed that the milk producers were profiteering, and on the other hand the increased cost of producing milk, resulting from the high price of feeds and other causes, was imposing a loss on the producer which would result in the killing off of the herds. Commissions were appointed in the large milk producing areas to examine into the cost of producing milk and to name a price by agreement between the producers, distributors and the public which would return to the producers a reasonable profit. The operation of these commissions, resting upon the consent of the parties involved, has been somewhat restricted, but in most cases they have prevented excessive profits on the one hand andassured that the necessary production of dairy products be continued.
Potatoes. The campaign to conserve the existing crop of potatoes has already been referred too. A complete loss of potatoes remaining from last year's crop would undoubtedly have resulted in a serious discouragement to 1918 production.
Meat. In a statement issued on November 3, 1917, the Chief of the Meat Division stated that in order to stop the sudden break in prices paid for hogs at the Center Market the Food Administration would use its best efforts to prevent the price going below a minimmn of $15.50 per cwt., and that it would try to stabilize the price of hogs farrowed in the spring of 1918 so that the farmers could count on getting for each one hundred pounds of hog thirteen times the average cost per bushel of the corn fed into the hogs. The Food Administration has no financial or statutory means to effect this result, but by its control over the buying orders for export and for the Government it is conceived that it will be possible to maintain the price named. This action was taken on the advice of practical hog men as a necessary step to secure the absolutely essential supply of hog products required for the war.
The success of the action taken appears graphically in the number of hogs marketed during the first six months of 1918, 21,144,356, as compared with 19,511,026 in the same period of 1917. In spite of extraordinary exports the stocks of hog products in store on July 1, 1918, amounted to 973,536,375 pounds as compared to 785,759,199 pounds on July 1, 1917.
With regard to beef, on the advice of the producers no action was taken last fall. A commission recently appointed by the President has recommended a course of action somewhat simiar to that taken with regard to hogs but this has not yet been put into force.
V
PURCHASE AND SALE OF FOODSTUFFS
The Food Control Act authorizes the Food Administration to buy and sell wheat flour, meal, beans and potatoes, and for the purpose of such buying and selling the Food Administration Grain Corporation was organized upon the passage of the Food Control Act. Through this corporation the Food Administration has bought large quantities of wheat for resale to the mills, and has also purchased large quantities of wheat and flour for shipment to Europe. The total purchases and sales of the Grain Corporation for the first six months of 1918 and for the month of May and June are as follows:
M A YWheat purchased $10,124,190.79
Wheat sold 13,393,648.46
Flour purchased 45,425,113.67
Flour sales 42,230,367.68
Wheat exported
(as wheat) 192,539 bu.
Beans purchased 3,048,353.84
Beans sold 949,885.03
Cereal products
purchased
Cereal products sold
Return flour sold
for export
Total domestic
sales, estimated 14,343,533.49
Total sales for
export, estimated 42,230,367.68
J U N E
Wheat purchased $10,289,740.15
Wheat sold 12,596,241.63
Flour purchased 44,932,198.50
Flour sales 43,264,764.65
Wheat exported
(as wheat) 90,887 bu.
Beans purchased 1,949,992.11
Beans sold 964,173.33
Cereal products
purchased 7,154,127.90
Cereal products sold 4,981,530.75
Return flour sold
for export 698,530.75
Total domestic
sales, estimated 13,560,414.96
Total sales for
export, estimated 48,944,825.15
SIX MONTHS
Wheat purchased $83,551,975.79
Wheat sold 121,968,797.01
Flour purchased 237,708,722.76
Flour sales 201,262,154.89
Wheat exported
(as wheat) 5,130,942 bu.
Beans purchased 7,932,793.68
Beans sold 2,764,501.24
Cereal products
purchased 7,620,002.06
Cereal products sold 4,981,530.75
Return flour sold
for export 1,120,392.66
Total domestic
sales, estimated 114,733,298.25
Total sales for
export, estimated 217,364,078.30
The flour purchases listed above were made through the Milling Division and the total volume of purchases from January 1 to July 1 amounted to 17,616,544 barrels which wore resold for export and for the Army and Navy. The orders were alloted on a capacity basis between the mills who desired to participate in export business, and subsequently each mill who could ship flour commercially was required to furnish 30 per cent of its output for these purposes. A statement showing the amaunt of the wheat flour purchased and alloted through the Milling Division and Grain Corporation fran October 1917 to May 1918 is given below. The value of the 1918 shipments is given in the list of Grain Corporation purchases.
|
MONTH |
ALLIES |
ARMY |
WAREHOUSE |
MISC. |
TOTAL |
|
October |
1,088,255 |
- |
- |
- |
1,088,255 |
|
November |
2,218,127 |
- |
- |
- |
2,218,127 |
|
December |
2,381,537 |
- |
- |
- |
2,381,537 |
|
January |
2,132,081 |
538,571 |
- |
- |
2,670,652 |
|
February |
2,141,422 |
332,842 |
- |
- |
2,474,264 |
|
March |
1,747,393 |
726,542 |
99,230 |
34,130 |
2,607,295 |
|
April |
2,0830263 |
642,433 |
269,193 |
3,890 |
2,998,779 |
|
May |
2,527,443 |
482,389 |
148,157 |
79,608 |
3,237,597 |
|
June |
2,625,759 |
820,830 |
31,745 |
149,623 |
3,637,957 |
|
TOTAL |
18,945,759 |
3,543,607 |
548,325 |
267,251 |
23,304,463 |
The Grain Corporation has also arranged for the purchase of coarse grains by the Allies and the Belgian Relief amounting for the month of June to $7,442,257.
The Division of Coordination of Purchase was organized for the purpose of coordinating purchases of all kinds of food by the Army, the Navy, the Allied Governments, the Red Cross, the Belgian Relief and the Y.M.C.A. The Food Purchase Board, composed representatives from the various departments, first decides whether a commodity shall be taken under general control. If such control is decided upon no purchases are made except in accordance with a plan for supervision and allotment formulated and carried out by the Division of Coordination of Purchase.
A list of the total purchases made in this manner for the months of May and June is as follows: This does not include cereals or cereal products which have been handled through the Grain Corporation.
GREAT BRITAIN
PRODUCT MAY JUNE
|
Bacon and hams |
$68,911,958.98 |
$23,419,675 |
|
Butter |
1,512,000. |
3,503,733 |
|
Cheese |
4,379,200. |
2,301,325 |
|
Cottonseed oil |
7,117,600. |
- |
|
Lard |
11,687,832. |
11,827,200 |
|
Milk |
2,130,800. |
3,780,300 |
|
Meat products |
23,502,890. |
12,262,067 |
|
Canned fruits and vegetables |
- |
1,890,140 |
|
Dried fruits and |
- |
610,405 |
|
Miscellaneous |
93,750. |
1,916,125 |
FRANCE
|
Hog Products |
4,290,000. |
- |
ITALY
|
Miscellaneous |
1,680,000. |
- |
BELGIAN GOVERNMENT
|
Miscellaneous |
830,097.95 |
- |
BELGIAN RELIEF
|
Miscellaneous |
- |
14,917,500 |
RED CROSS
|
Miscellaneous |
924,530.90 |
- |
ARMY
|
Miscellaneous |
3,690,137.67 |
5,462,714 |
NAVY AND MARINE CORPS
|
Miscellaneous |
1,933,682.50 |
3,768,823 |
|
TOTAL |
$132,684,480.00 |
$87,289,008 |
The total food commodities handled through the various Divisions of the Food Administration may be briefly stated as follows:
Grain
Corporation MAY JUNE
|
domestic sales |
$14,343,533.49 |
$13,560,414.96 |
|
sales for export |
42,230,367.68 |
48,944,825.15 |
|
Cereal allotments |
- |
7,442,257.00 |
|
Coordination of purchase |
132,684,480.00 |
87,289,008.00 |
|
TOTAL |
$189,257,381.17 |
$157,236,505.11 |
The work of facilitating export sales has been materially forwarded by an agreement with the Railroad Administration whereby preferential rail shipment is given upon the application of our Transportation Division. Copies of all Allied orders for foodstuffs are filled with the Transportation Division for this purpose.
VI.
MISCELLANEOUS ACTIVITIES
The work of the Food Administration has brought it in touch with various fields indirectly connected with food. These are outlined in the report of the Division of Collateral Commodities attached hereto as Exhibit C-1,2. They relate to ice, to ammonia used in ice manufacture, to sisal and binder twine required for the harvest- ing of the wheat crop, to food containers of all kinds, to arsenic for insecticides, and to glycerine.
A voluntary agreement signed by the ammonia manufacturers fixed a reasonable price for ammonia and provided for the allotment of the supply by the Interdepartmental Ammonia Committee consisting of members of the War Departmnt, Navy Department, Department of Agriculture, Department of the Interior, Counsel of National Defense and the Food Administration. The conservation of ammonia has been effected by a campaign for the harvesting and storing of natural ice and for the economical use of ammonia in ice manufacture and refrigeration.
Control of ice prices and questions of adequate supply have been handled by the local Food Administrators, usually through voluntary action and with the cooperation of the ice manufacturers.
A voluntary agreement with the manufacturers of binder twine has fixed a reasonable margin for such manufacture, and has assigned to the Food Administration the purchasing of all binder twine and the allotment of supplies. The Food Admdnistration has carried on lengthy negotiations with the Commission Reguladora of Yucatan, and has at last succeeded in securing a sixteen cent price on a supply of sisal for the balance of the year 1918.
By voluntary agreement with the jute bag manufacturers a reasonable price for these imported commodities was agreed upon, providing only a reasonable profit for the manufacturers. The Food Administration arranged to import four million bags during the course of the negotiations in order to secure a more reasonable price.
The canning Division has always interested itself in the production of tin plate for canning purposes, and with the aid of the Tin Plate Conservation Committee, the production of tin plate has been stimulated so that a tremendous output in months of May and June has been secured. The importation of the necessary palm oil was arranged for by the Food Administration with the British Government.
The entire arsenic industry has been placed under license and reasonable margins fixed. The price has been greatly reduced and speculation brought to an end. It has been necessary to curtail some of the nonessential uses of arsenic, such as glass manufacture, in order to secure an adequate supply for use in lnsecticides.
A conference with soap manufacturers of the country was held on May 23 with the object of formulating a plan for tho increased production of glycerine.
There were on June 1, 1918, 6,926 personS working For the Food Administration, of whom 2,657 were paid and 4,269 were working on a voluntary basis. The report of the Office Director attached hereto as exhibit D 1-2, shows how these workers were distributed.
The work at Washington is divided among a number of divisions. The Educational Division, the Home Conservation Division and the Hotel and Steamship Division are concerned primarily with conservation problems. The commodity Divisions have charge of formulating the different policies of control over the licensed trades. They usually have the permanent or temporary assistance of experts in the trade with which they are dealing, in order to secure a complete knowledge before action is taken. These experts have usually served without compensation and have succeeded in keeping the Administration advised of technical conditions in the trade, and have interpreted to the trades the national necessities and the purposes of the Food Administration. These men make no decisions, and have nothing to do with the purchase or sale of foodstuffs or with the enforcement of the regulations.
The work of the Inland Transportation and of the Water Transportation Division has already been described. The Enforcement Division is concerned with the enforcement of the regulations of the Food Administration. The License and Report Division has charge of the technical end of issuing licenses, collecting reports, and sending out regulations. The Law Department is concerned with the giving of legal advice and with the formulation of regulations worked out by the different commodity divisions.
All of the divisions are located in Washington, except that the principal offices of the Cereal Division are in New York, with subsidiary offices throughout the country where the Grain Corporation business in the purchase and sale of wheat is also conducted. The Sugar Division has offices in New York and Chicago and the Meat Division in Chicago
Up to July 1 the Milling Division has also had representatives at numerous points throughout the States but their functions have now been taken over by the Cereal Division and the Federal Food Administrators.
There is a Federal Food Administrator in every state, and in most instances a deputy Food Administrator in every county, or other unit, numbering at the present time about 3200. The Federal and deputy Food Administrators serve without pay. They are concerned with the enforcement of the regulations, with the bringing home to the people of the State the necessity of food conservation, and with the administration of any distribution plan such as the Sugar Certificate System. The tendency of the Food Administration been more and more to decentralize these functions. The Federal Food Administrator is in fact the representative of the Food Administration to the people of his State.
The activities of the Food Administration in enforcing the regulations are outlined in the report of the Enforcement Division which is attached hereto, and marked Exhibit E. The report shows that 815 cases of summary discipline were handled up to June 1, 1918. Many other cases of violations brought to the attention of the Food Administration were settled without imposing any substantial penalty.
It has been found necessary to set up a Division of Canadian Relations and one Mexican Relations, each in charge of a man familiar with these countries. Cordial relations with the Canadian Food Board have thus been maintained and the two governments have consistently acted in harmony with regard to all matters of food. It has been especially necessary to cooperate with regard to exports and imports of foodstuffs, in order that the policy of one country might not be millified by a conflicting policy elsewhere, and that it might not be necessary to set up any impossible economic barriers along the boundary.
There have been numerous problems to be worked out owing to war regulations and the changes in business conditions created by these regulations, especially with relation to intertrading. Through the Division of Mexican Relations the Food Administration has kept in close contact with the State Department and the War Trade Board in their dealings with Mexico, and has made full recommendations to the War Trade Board as to the amount of foodstuffs which can be furnished to Mexico in the present emergency.
From time to time new divisions are added as the necessity arises, and especially in the case of the Federal Food Administrator's offices, a considerable growth is likely during the coming year.
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