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New-York tribune. [volume] (New York [N.Y.]) 1866-1924, May 13, 1917, Image 26

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System Designed to Maintain Prices and Support Profits Must
Yield to Effective Governmental Supervision?
The Job Is Too Bin for One Man
I'rofeaaor of Trantportation and Stall*
tica. University of Wisconsin.
AMERICA'S most imminen
war prohlem is to labsist t
considerable proportion 0?
the armiez of her European allies, tt
feed an immense army of her own
and to maintain her civil populatior
?and this fnr an indefinite period
In facing this problem, it must Ik
realized by tho?e who direct the pub
lie pol.cy that our people of al
classes do not realize the r
aature of the situation, and will nol
voluntarily Saibmit to an econo?ny ol
food which ghoul?! pare consumptior
to the very Une of physical efficiency
We too long have been accustomc.
to unstinted appetite to Leerme con
Blatantly patriotic al feeding tinn
until an actual restrict:on of sup
plies is upon us.
The writer recalls one of a-Esop'l
fables in which fl controversy arises
as to the relative merits of the head
the hands and the stomach. Many
0/ the contemporary discussions ol
the food problem, like the conten?
tions of the fable, are so particular?
ized as quite to neglect a part of the
several equally important and neces?
sarily coordinate aspects of the sub?
ject. Just now, for example, the
emphasis is largely upon the volume
of farm production. Certainly, crop?
ping is the foundation of the econo?
mic structure necessary to see u?
through the roming cris; ?. Hut the
making of crops is not al!. There
must follow the equally important,
?md probably more difficult, tasks of
orpanizir.tr the distribution and use
applies. These tasks are quite
as technical in their way as farming,
and they are not to be undertaken
casually as a sort of after-sapper
job by the same agencies that attend
t ? the management of sowing ami
eating. The work of the farm?
? and of the Pepartment of Apri
culture ends with the harvest. The
? tary of Agriculture ha>- a man's
Job in the ?i.reotion of food pro
dtiction. His department is fitted in
ther personnel nor organization to
rol the distribution of farm prod
or to regulate prices to be paid
t 1 the farmer or at retail for food.
Plain Talk in
Regard to Farnins
Right here I wish to pay my re?
spects to a doctrine which seems
about to be made official by act of
Congress?the doctrine that the peo?
ple of this country must guarantee
to farmers a profitable price for then
products as a condition to the enlist?
ment of their efforts in the present
crisis. Is it not clear that, a? things
stand, the farmer has already taken
heavy profits |g war production?
Even now, price prospects are all in
his favor, and his risk, in any event,
can involve only a year's income.
Can Congress be blind to the fact
that the war will involve a tremen
dcus personal net loss in life and
property'.' Why should the farmer,
remaining in physical safety far be
h:nd the lines, invoke the govern
ment to exempt him from any shan
in the personal risk of the nation's
defence? As well might i?ur young
men require a guarantee against
financial loss and personal injury as
a condition of enlistment in the fight?
ing defences of the country! The
disloyalty of farmers and busino.-.-r
men who refuse to enlist their ma?
terial resources in the promotion of
this war without guarantee of profit
is subject t?i universal contempt, and
the motives of politicians who back
such a nu-asure are equally subject
to suspicion. He is most certainly a
dwarfed patriot who asks or accepts
financial immunity when so many are
laying their all upon the altar of
Since so much is already being
?ione in the promotion of food pro
?'uction, that phase of the problem
we will dismiss with the statement
of an ?economic mnxim which ap?
pears self-evident, yet will he widely
disregarded because it places the
welfare of the consumer and the na?
tion above the financial interests of
the producer. It is this: The kinds
und amounts of food products to be
raised and manufactured, should be
officially determined with the object
of realizing the largest possible
nutritive value (not market value)
with the resources available.
Much is being advocated and very
little is being practised with regard
t > the domestic economy of food. A
piactical start will actually have
been made toward a prudential use
of foods when rich and poor shall
dine equally well upon whole wheat
bread, pot roast and vegetable stew;
when breweries and distilleries,
candy shops and elite restaurants
are boarded up, and when a large
proportion of our domestic servant?
are released to more productive occu?
pation. No doubt the consumption
of food in the United States can be
decreased by one-third with le-s di?
comfort than would he required fa
ircrease production by an equal
amount. In other words, it would
b" easier for U3 to save 30 per cent
mere than to produce M per cent
more. And, if we are so thrifty as
to accomplish both, we will realize
enough food in one year to snpply
our own wants for a period of two
years, or to foe?! Eranee and Eng?
in addition to ourse!'.'
Distribution promises to be the
most difficult part of the food prob
|i m. Abundant production and pru?
dential consumption are quite futile
if the various kinds of food stuffs
arc not made available in correct
proportions, at the right place and
:t:tnp, in good condition, and at re.v
; sonable prices. We have absolutely no
effective administrative machinery
which will bring about this correla?
tion of needs, amounts, time and
place in the distribution of supplies.
Jobbing, wholesaling and commis?
sion establishments and their busi?
ness practices are entirely unfitted
to accomplish an equitable, cheap
and expeditious distribution of sup?
plies. They are designed to place
goods where and when they will
I ring the highest prices, and in such
classes and quanities as will main?
tain prices and support profits. We
must now have a distributing system
which will concern itself with food
vr.lues rather than with market
values. Eood distribution must
etase to be a matter of private spec?
ulation ar,d be recognized as a pub?
lic service. It has, by force of cir?
cumstances, become a matter of pri?
mary public "concern?possibly, of
'national existence?and. indeed, ?
I jniblic vtiUty of the first order.
Now. in the field of public utili?
ties, the necessity of regulation is
universally recognised regulation
of ways and means and regulation
of prices. And in the regulation of
public utility rates, conditions of
scarcity, monopoly, and the purchai
ing power of the wel! to do which
are the d?terminants of prices in
private business are no longer con?
sidered relevant. In their stead, the
I bona fide cost of production is the
; basis of fair prices for such com
I modifies and services as are of im?
m?diats public concern.
There has boon no change, save a
.-'ight advance in wages, in the pro?
duction costs of meat, cereals and
sugar during the last \";ir Dp i
which to justify the 60 to 70 per
cent increase in retail price-. War
?rices, thus far, have leen scarcity
prices?not based upon cost of pro
'? djction, but 'jpon "al! the traffic will
;l(ar." Erom now on our distribu
; tion must aim at efficient food net
\ vice at prices approximating aver
; ? costs of production. Even in
; the face of great scarcity, foods
! should become cheaper. It will not
; well become the producers and deal?
ers to longer exploit the distress of
a nation by demanding premium
! prices. We know, of course, that
the farmer and the merchant, if un?
curbed, will endeavor to do this. We
will very soon realize that the Situa?
tion calls for price fixing and in?
come taxation upon a scale never be
j fore seriously contemplated in this
country. Equity in food distribu
| tion has been the matter of gl
concern in European countries. \\
I must not repeat their mistake
Their experience proves that go'
ernment control must be absolut?
Regulation must not be confined t
the way- and means of distribute
and to the fixing < f COBt prices upo
olea, but must ilirect the detei
mination of amounts available to
export, for the army, for ea?-h stat
; and city, and, possibly, for each fam
ily and individual.
In view (if conditions, we canno
? ape the conviction that the polio
of food economy which is adopta
bv the I'nited States may prove fa
be the decisive action in winning o
losing the war. Extreme measure
of regulation must, bo provided, an?
probably resorted to at a very earl;
date, which will direct every prod
fiom fhe selection and consignmen
of se??l- to the tiiial distribution o
farm products, including prie mak
ing, and even the manner of foot
utilization by consumers.
Task Too Big for
Single "Dictator"
To administer the?e policies is e
task quite beyond the grasp-of an*,
pi rsonal "food dictator," nor will thr
widely diffused interests and per?
sonnel of existing "council- of d??
fi nee" admit of an adequate and
scientific handling of the food prob?
lem. Sooner or later, the task ii
bound to fall to a highly specialized
led? ral agency, which will be closely
coordinated with state and local
agencies. The local agencies should,
| in turn, be closely allied with co
0] irative associations of producers
I and dealers.
The proposed Federal agency
j should be headed by three men of
? economic training and experience.
(Here we are dealing with a purely
'economic question, which shoul?! be
entirely in the hands of expert econ?
omists.) This board should be vested
wth mandatory powers and should
be permitted to use and, in so far
feasible, to work through exist?
ing Federal department,-. There
should be an advisory council com?
?a., ed of representatives of the He
partmenl of Agriculture, the Hureau
of the Census, the (Quartermaster
General's Department, the Federal
?Trade Commission, the Department!
?if Labor and the Department
Commerce. State boards sit nu h
similarity constituted, inclad ng,
haps, governors and the ?ttoi
general on the executive staffs,
having advisory councils '-imp?
of representatives of ssaociationi
producen, distributara and retail
The local boards in eountia
cities should be similar to si
beards in th?'ir organization ind r
aonnel. Such board' hould h
power to search for and invent
foodstuffs, r?-< ? ' i i r" reporta, eomm
deer supplies, determine proj ort lo
distribution, and, when pQcesssry
fix prices. Local boards should
subordinate to itata boarda, and t
state boards subject to the Pads
.lobbing, wholesale and commissi
businesses should be placed urn
state and national incorporatk
subject to ?hi- direction of the abo
mentioned Federal and state boon
exactly as banks are now organil
i nder the Federal Reserve Boai
Their capital should be known ai
audited, ami their methods pr
scribed and rubject t<> supervisio
They should make weekly reports i
to Stocks and -ales, and their annu
earnings and dividends should 1
limite?! to a reasonable return c
their investment.
Just a few words should be sai
here about railway service nr*d foo
storage. The attempt to dissembl
the causes of food prices by plac
ing responsibility upon exorbitar
[freight rates and unfair storag
practices is ?juite unjustified. Th
extent to which freight rates ente
into food prices does not, on the aver
age, exceed ? or 6 per cent of th?
retail price. Never has the cost o:
transporting foodstuffs been so low
'or so small a part of the retail price
as in the United States at the pres?
ent time.
Cold storage is the greatest boon
that could possibly have come to the
censumer. Cold storage operators
should, of course, be kept out of
speculation. This is a simple mat?
ter of regulation. They should bo
subject to supervision, required to
release products upon official orders,
und, in their charges, confinad to the
rctual cost of preparing and storing
perishable supplies.
The Metamorphosis of Desert Lands
Belter, Reclamation Record
ON JUNE 17. 1917, the United
States Reclamation Sendee
will celebrate its fifteenth
birthday. Fifteen years ago Con?
gress passed an act setting aside the
proceeds from the disposal of public
lands for the survey, construction
and maintenance of works for the
I rage and diversion of waters for
the irrigation of arid lands in the
Western states, and the Reclamation
Service began its work of increasing
the number of farm homes and ex
, tending the area of productive lands
in the United States.
Although one of the youngest bu?
reaus of the Department of the In?
terior, the Reclamation Service has
for many years been a potent factor
in the economic life of the arid re?
gion of the West. Perhaps a few
statistics will best indicate how the
service has practically added a new
to the L'nion ilurir.g the last
few year-.
It is estimated that the total irri?
gable area of the reclamation proj
.t present constructed or under
construction in the seventeen arid
mi-arid states amounts to ap?
proximately 2.691,000 acres, com?
prising over 51,500 farms, capable
of supporting a population of over
300,000 persons.
In 1916 the service was prepared
1 to supply water for the irrigation of
?about 1,600,000 acres. Of this area
; about 9.50,000 acres were irrigated,
i Of the irrigated acreage i^O.OOO
! acres were covered by crop reports,
and of this acreage 857,000 acres
i were cropped in 1916, producing
?crops of the value of approximately
$32.400,000. In other words, the
cropped area covered by crop re?
ports exceeded by 200,000 acres the
cropped area of the State of Massa?
chusetts in 1909, according to the
thirteenth Federal Census, while the
value of crops was considerably
larger than that for many of the
smaller or less developed state*.
At the present time the Reclama?
tion Service is prepared to supply
?water to 1,770.000 acres on the
reclamation projects, and on the
| basis of past experience it is ex?
i pected that approximately 1,020,000
acres of this area will be cultivated
by the water users this season. This
! haves about 780,000 acre-- available
' for cultivation for which irrigation
water is ready, but which, under nor
mal conditions, would not be culti?
vated this year by the settlers. Of
this area about 8.1,000 acres com?
prise vacant public land and about
, 668,000 acres private and entered
land, Indian land, state land, etc.
? It is estimated that approximately
200,000 acres represent a great num?
ber of small tracts, unused portions
of 20,000 producing farms. Special
effort is being made to bring this
area under cultivation tl
by more or less direct appeal to the
farmer-?. It il also possible that
more direct aid may in- advanced by
making it possible for them, through
Congressional action, to take advan
In the above picture is shown the Roosevelt Dam. holding
hack the precious waters of the Salt River. Arizona, to be used as
needed for irrigation. It is 280 feet high, 1,125 leet crest length,
and the capacity of the reservoir is 1,367,300 acre-feet. Projects
such as this have made it possible for mountains of alfalfa hay like
that shown in the picture to the left to rise in the midst of desert
lands which formerly produced nothing but cacti and sustained
little life except prairie dog colonien. The particular stack which
posed for the accompanying photograph represents two cuttings in
one season from sixteen acre? of land on the* ?Vlinidoka project,
Idaho. It weighed seventy-five tons.
taue of the provisions of the farm
1 loan act, which at present they are
of the prior lien of
the government for the return of
(instruction cost of the projects.
Eliminating these small areas,
there still remain 550,000 i.-res
awaiting cultivation, includii g large
tracts that can be handled to advan?
by I single organization. It is
'??1 that the passage by Con
of ;!ie so-called Taylor bill
(II. R. 2913) will make it possible
to put nearly half of this acreage
into cultivation this year.
Briefly, this bill provides for fur?
nishing water on easy terms for the
cultivation of lands in private own?
ership; for the lease of uncultivated
public lands and the furnishing of
water therefor on easy terms; and,
in case the Secretary of the Interior
"finds it impracticable to otherwise
secure satisfactory guarantee of the
irrigation and cultivation" of public
' r private lands to which the Recla?
mation Service can deliver water, he
may secure the cultivation, under
contract or by government forces, of
such public or private lands. The
bill also provides for an appropria?
tion of 16,000.000 to carry out the
provisions of the act.
The lands comprise?! in these 750.?
000 acres are in general suited for
the production of wheat and other
cereals. Alfalfa and other forage
crops i-re almost uniformly success?
ful. Potat? es, beam and other vege?
table and truck crops can be pro?
duced on considerable tracts. Five
or t?-n thousand aeree of cotton can
led. I..'.bor. of course, must be
provide?! for preparing the land and
starting cultivation, and it is esti?
mated that with the passage of the
bill 2,000 farm laborers would be
i at once, while several times
that number would be needed at har?
vest time.
Based on the present outlook, it
is estimated that, with ample author?
ity and funds immediately available,
the cultivated area on the reclama?
tion projects may be increased,
through special effort by the water
users and th<> service, .'100,000 acres
this year (100,000 acres in small
holdings and 200,000 acres of new
lands) and an ad?litional 250,000
acres in 1918. With the normal an?
nual increase, this would indicate a
cropped area on the projects in 1918
ot possibly 1,700,000 acres, or an
area capable of supporting approxi?
mately 200.000 people and supply?
ing food for a couple of army di?
visions at the front.
In China the Contents of a
| Pay Envelope Are Deceptive
Owing to Wide Fluctuations in the Price of Silver the Purchasing
Power of Fixed Incomes Constantly Varies Kmployes
Hard Hit by Recent Rise
IN THOSE portions of the Y
East where silver is the en
mon basis of currency a
forms the principal medium of <
change the spectacular rise in '
value of the metal in the worl
markets since the war began has ?
veloped many interesting aspects.
( hinn, where silver is bought a
sold like so much wheat or coal
' meat, the steady upward climb
: silver prices has vitally affected I
economic and financial situation.
The money of China and the Br
ish colony of Hong Kong is base!,
I least for all the larger transnetior
? upon silver, the price of which
. terms of gold determines the intern
tional value from day to day of t
country or colony's entire moneta
circulation. To-day, for examp
China's silver circulation might
worth in terms of gold, say, for tl
sake of comparison, $200,000,000.
; month from to-day, by reason of
; rise in silver prices throughout tl
. world, it might be worth $225,00.
i 000, and then again it might declii
! to $175,000,000 becauie of fallir
silver prices. In this constant
shifting ratio between silver ar
gold is found one of the chief reasoi
f it the complexity of China's cu
rency to the layman.
Since the war began and silvi
started on the upward movemei
that culminated a few months at
when the New York quotatio
touched 79 cents an ounce, con
pared with a pre-war leve! of aroun
45 cents, numerous vexatious pro!
lemi have developed in China, owin
to the constantly shifting value c
: that country's currency basis. Th
rise in silver prices finally reache
a point where the thrifty Chines
laogan to take silver out of circula
tion and sell it abroad. In 191
they are reputed to have sold up
ward of 50,000,000 ounces of th
metal to India. This withdrawal 0
silver from circulation caused seri
ous financial difficulties in d iff eren
parts of China, and banks in a num
bar of cities were compelled to closi
their doors temporarily. The situa
tion finally became so acute that il
was necessary for the governmental
authorities to stop the export of sil?
ver from China without special per?
One of the most interesting feat?
ures of the Chinese currency system,
and which has a direct bearing on
the subject under discussion, is the
fact that all money in China is not
u coined representative of value sup?
ported by government authority, but
is merely a commodity, and that all
trade is barter?the exchange of so
much merchandise for so much
money of such-and-such a kind. In
silver currency, which is the chief
currency, the market value of the
silver is the first consideration, and
o silver coin is merely a convenient
amount of silver.
Chinese Exchange
Rates Deranged
Now, the rise of silver has had
farreaching effects upon the interna?
tional exchanges between China and
the gold-basis countries. Taking the
average price of silver in London
for 1913, 60.458 cents per ounce,
British standard, as the basis, the
average 1913 values of the Hong
Kong dollar and the Shanghai tael
were 47.16 and ??5.49 cents, respec?
tively. Assuming these to represent
par, or 100 per cent, the accompany
ing char* BOW the ?
sffecto -I th.'' valu?- of exehang
Hong Kong an?l Shanghai. Bef
the war demand made itself felt i
-- i I \ ?T price declined in 101 * and
fore part of 1916, the Hong Kl
dollar fell t<> an exchange value
IJ.7'1 cents, or 9.46 p<t ''cnt, un
it? basic value of 17.1?? ci I
price was touched Vug
.! ?? :i year after the war began.
the mean time, the Shanghai t
also dropped sharply, and in July
the aame year touched 56 cent*,
1 1.19 i er than its bs
value of 66.49 cents. Su:
the bar ail* er market
prove, as is shown in the graph, a
both the Hong h mg and Shangl
currency units began t?j climb, ?
former rising to 68 in Jai
ary, or 22 per cent above its ba
value, while the latter went to H9,
cents in February, or 86.66 eel
above i? bs ic value.
there has been ? slight decline, c(
responding to the decline in t
price of bar silver.
Buying Power of
Wages Shrinks
One of the mo?t important effet
of the rise in exchange on Hoi
Kong and Shanghai has had to i
with conditions of employme
throughout the Far East. The pa
ment of salaries in Hong Kong i
China on a gold basis in actual pre
tice means that salaries are paid
silver currency at the rate of ti
day as fixed by the banks for pu
chase of drafts on the United State
This means ;i heavy lose to the en
ploys who is paid on a gold basi
George E. Anderson, American Coi
sul General at Hong Kong, discuss?
the problem at some length.
He says that when exchange is I
40 cents gold to the silver dollar th
employe receives for his gold dVal
or gold allowance $2.50 In silver fo
each gold dollar. When exchange i
at 60 cents gold to the dollar, whic
rate has been approached, in recen
months, he receives only $1.66 in lo
Cal silver currency for each gold dol
lar, while the cost of living in Honj
Kong or China has continu
the same rate or has actually in
creased because of the high rate ol
exchange. A salary base,! on gol<
but paid in silver varies in a wa\
that neither employer nor employ!
can prevent or correct, except by Ax?
:. fair rate of exchange from
gold to silver, and basing payment!
upon that rate, without regard tc
the rate of the ?lay. The whole diffi?
culty, of course, is that a given
amount of gold will now buy far less
silver than it would three year-' ago,
and the foreigner who goes into
China and converts his gild ituo the
native currency finds the purchasing
value of his gold has undergone
great shrinkage.
Practically all the commercial
- in Hong Kong that pay em?
ployes on a gold basis, which is c IS
umary in the case of employes or
?inn members brought out from
Europe or the United States, have
established a maximum rate of ex?
change, or in some i*;; 1 rate
of exchange, on the basis of which
salaries are paid. The matter of fix?
ing such a rate, however, is one of
great difficulty, and usually it is fixed
at th? expense of the emp
Actual rate- vary from 10 :
gold to the local dollar. The
average of such rates, according to
the data in hand, is ijgt/t can*.
to the Hong Kong dollar. \
houses pay a bonus in lieu of
exdhs BsuaHy tnis ?( U1
isfactory, and in ease of corn?-*
booses unnecessary Kixinr
??hange at a fair basis if. unqssr
ably the only satisfactory an,
dealing with th<
Difficult to Fix
R.ite on Fair Basis
Th" ordinary <??,;? -,. 0f p^
comn | Kong ij ij,
upon the relaMon of silver to
over period of t
? ht 'bat a fair rat
payment of salaries in Hor,?- K
should be based upon thai re!at
-hip. The average rate of txcha
sed by the govi mment for
collection of fees duiing eight yi
previous to 191 *'? was 3ubsunti
' lid to the liaxiesa dol
Indu year, the rat? \
substantially 45 cents, or inclod
the ordinary bank profit during
eight years, it has been ab
!'?'- cents.
According to Mr. Anderson,
exchange value running over 47
;- cent- gold to the silver dollar
Hon.. abnormal, anda?o
long. When exchanj? jo
to 60 cents, as it ha? darii
the last nine months, the rate isd
to special condition- and d.*j r
represent a fair relation between t
coat of living and a ?fold salar
Many deem it unfair that an ei
or partner paid in j*oM shoi
have his ar'ual sala:y, which com
tc him in silver, depend upon t
fluctuation ; of the silver market.
salary paid in gold should, in th?
opinion, be exchange?! in a salt
actually receive?! in silver at a n
that represents a fair relation
the cost of living in Hong Kor.
Most authorities agree that ate.
rate is 42 or 43 cents.
Getting back to the silver maro
. on" Ands that, while thew
ring nations have been heavy pi
chasers of silver for co:r.:if-e j-j
India has been probabfc/a
of the largest buyer.-, h il se
mated that India's fresh coings*
silver in th" last twelve monthVii
been the largest for any iimli
peri'-?! since the resumption of'j
mintage of rupees, seventeen yac
ago. IT has i - en state?! officiallytb
the purchases made since Febnar*
1916, wire large enough to pror?
for the coinage of SFJO.?OO.OOOwo?
of new rupees. A large portion o!
Ivor purchased has come free
Since the sharp rise of ah*r
which occurred early in the year4?
price has ?leelinel substantially, bo?
lately another upturn has beijun in?
still continues. China ha? bes ?
purchaser of th?- metal, corerlnj
r otherwise, Fut the lead?
ing influence in the market hat be?
luying by the United States |rnri
mage purpose. Aid?
ing bullion houso in Fondos il ?-*"
cussing the silver market litefi*
says that contir .rtti-"-?
upon a starved market may *ewk>)
carry the quotation to a f-gurt*??""
tempting to speculative holden*,^
to a level at which ?.hiness sa>*-'
some ' will become P^*^'
The stock of silver in Sl-*3^
on April 10 last consisted of ?**?
0,000 ounces in sycee? that ft
in the form of cast ingot* or birv
and $16,400,000 in coin, compsn*
with about 30,600,000 ounces in ?yo* I
and $16,700,000 on March 51 ta*

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