defeat of the submarines, these would be available and might seriously demoralize the demand for American wheat. Two-dollar wheat applies to 1918 crop.—“5. It must be clearly understood that the guaranteed minimum price of $2 per bushel for wheat, set out in the food bill, does not apply to the 1917 harvest, but only to the 1918 harvest, and then under conditions which must be elaborated. There is therefore no determined price for the 1917 harvest. "The result of this situation is that the normal price-making machinery is entirely broken down unless some efficient Government action is brought into play, either (a) the American producer may face a slump in wheat, possibly below his production cost, and (b) the export price of wheat which ultimately determines the real price, is at the will of a single agency; (c) some one must buy the surplus wheat at any given moment, and if the surplus passes into speculative hands it will be held for higher prices later in the year; (d) with stabilized prices, extra hazards are introduced into all distribution links which must be paid for by the consumer. It must be evident that the United States Government can more justly deal with the situation than any of the agencies mentioned." Consequent upon these premises the following course was determined upon: (a) The licensing of elevators and mills; (b) the substitution of government agencies for the broken down marketing machinery; (c) the fixing of a fair price to be paid in government purchases. Price fixing committee.-On August 15, the President announced the appointment of a committee to determine a fair basic price to be paid in government purchases of wheat, and at the same time announced the plan of the machinery by which governmental agencies would operate. The latter topic will be treated under the head of Grain Corporation. The fair price committee consisted of producers, dealers, and consumers of wheat. The constitution of the committee was as follows: President H. A. Garfield, Williams College, Chairman. Charles J. Barrett, President, Farmers Union, Union City, Ga. William N. Doak, Vice President, Brotherhood of Railroad Trainmen, Roanoke, Va. Eugene E. Funk, President, National Corn Association, Bloomington, Ill. Edward F. Ladd, President, North Dakota Agricultural College, Fargo, N. Dak. R. Goodwyn Rhett, President, Chamber of Commerce of the United States, Charleston, S. C. J. W. Shorthill, Secretary, National Council of Farmers Cooperative Association, York, Neb. James W. Sullivan, American Federation of Labor, Brooklyn, N. Y. L. J. Tabor, Master, Ohio State Grange, Barnesville, Ohio. Frank W. Taussig, Chairman, Federal Tariff Commission, Washington, D. C. Theo. N. Vail, President, American Telephone and Telegraph Company, New York City. Henry J. Waters, President, Kansas State Agricultural College, Associated with Department of Agriculture, Manhattan, Kan. On August 30 President Wilson announced that a price had been fixed for No. 1, northern spring wheat or its equivalent at Chicago of $2.20 per bushel. This was done upon the unanimous recommendation of the price fixing committee. In recommending this price the committee stated that it had taken into account both the necessity for encouraging the producer and the necessity for reducing the cost of living to the consumer. Obviously the price should not be made so low as to discourage the farmer in increasing the production of wheat. The farmers must be returned not only the cost of their production, but a fair and probably a liberal profit. On the other hand, in order to relieve the consumer from the excessive cost of flour which has obtained, the price of wheat must be reduced as low as possible. The problem was to strike the golden mean between these two necessities; and as we have seen the judgment of the committee was $2.20 for No. 1 northern spring or its equivalent at Chicago. With the basic price fixed, the prices of the different varieties of wheat at the principal markets are shown by the following table: TABLE OF PRICES AT INTERIOR PRIMARY MARKET. No. 1 Hard Winter, No. 1 Red Winter, basic grades, equivalent of No. 1 Northern Spring. Kansas City, 5 cents less Duluth, 3 cents less Relative Market Basis. New Orleans, basis THE GRAIN CORPORATION. The establishment of the Grain Corporation was forecast in a statement issued by the Food Administrator on August 12 when it was announced that the Government would open agencies for the purchase of all wheat at the principal terminals, these agencies to be in substitution for the broken down marketing machinery of commerce. "In undertaking the purchase of wheat, it was determined to dislocate the normal machinery of the grain and other trades, to the least degree possible, consonant with the elimination of speculation, and, therefore the Food Administration determined to make its purchases at the primary interior terminals through the already existing marketing machinery of the country, and to follow the customs of the trade as closely as possible in its operations. Finance for these operations was provided by the United States Treasury, but the ordinary machinery of the Treasury for making purchases and receiving money for routine government expenditure, was found ill adapted to trading operations." It was therefore determined to set up a corporation after the fashion of the Emergency Fleet Corporation, the whole of the stock of which should be owned by the United States Government. The United States Food Administration Grain Corporation was organized by the authority of the President, with a capital of $50,000,000, its direction being in the hands of the Grain Division of the Food Administration and its officers as follows: Working in cooperation with the Grain Corporation was the United States Millers' Division of the Food Administration comprised of the following gentlemen representing nine milling zones of the country: Chairman, James F. Bell, Minneapolis, Minn. Northwest: Albert C. Loring, Minneapolis, Minn. St. Louis and Illinois: Samuel Plant, St. Louis, Mo. Chicago and Milwaukee: Bernard Eckhardt, Chicago, Ill. Plan of operation of the grain corporation and milling division.— The following is selectively quoted from the handbook of the Policies and Plan of Operation, Food Administration Grain Corporation and Milling Division. "The Executive Officers at New York, as well as the thirteen (13) Second Vice-Presidents, act without remuneration and in an entirely voluntary capacity and further have divested themselves of all financial interests in grain activities while this service continues. "OPERATIVE ORGANIZATION. The United States is divided into fourteen (14) zones centering about geographically and commercially terminal markets. "The Food Administration Grain Corporation is represented in each of the fourteen (14) zones resident at terminal markets by a Second Vice-President, who acts as Government buyer of wheat at that point. He is entrusted with the responsibility of administering the Grain Corporation in his particular zone and in cooperation with the Federal State Administrator as to enforcement of the legal phase of the work." Buying terms.-"The Grain Corporation will buy grain only as unloaded in elevators at terminal points where a Zone Representative of the Grain Corporation is located, either in form of elevator receipts or because unloaded in mills under agents' directions. "Direct consignments to the Grain Corporation will be subject to one per cent (1%) administration charge. Shipments to the Government are not encouraged on account of the extraordinary service required for grading, etc., and multiplication of Government machinery. It is expected that regular trade channels, with their organizations built up through years of experience, can more efficiently, and with less expense, care for this business. Licenses.—“(a) Under the law all elevators handling wheat or rye, and all mills of over 100 barrels, must have licenses, but elevators that do not handle wheat or rye may claim exemption if they desire under present regulations. "(b) All applications for licenses should be made to License Division, Law Department, Food Administration, Washington, D. C. Grain Corporation Agents have license application blanks to forward on any request and facilitate issuing. "(c) After the application is executed and forwarded to Washington, the elevator or mill may continue to operate, until advised application refused, for a reasonable time. "(d) These licenses were required by September 1 and elevators or mills requiring such licenses now operating without same are subject to the penalties of the law. "(e) License conditions require no storage of wheat or rye for anyone except the Food Administration for longer period than 30 days, but in special instances the New York Agency of the Food Administration will modify these regulations on a proper showing made by request on the prescribed form, which must be signed by the miller desiring such modifications, approved by the division milling committee, endorsed by the zone grain agent, and forwarded to the general office. "(f) License regulations as to 30-day storage, of course, will be replaced, if under the general agreement of the Grain Corporation with elevators, the Grain Corporation directs the retention of stocks of wheat in store. "(g) The elevator operator must protect himself against difficulties through any conflict with the storage regulations. The Food Administration suggested a wording for a clause giving the elevator the right to sell stocks on expiration of 30 days; this clause to be added to warehouse receipts and storage tickets issued September 1. The Food Administration does not require this clause, but will require the elevator operator to see that no storage is allowed longer than 30 days, except for the Food Administration, this 30-day limitation applying only to wheat and rye. Relations with terminal elevators.-"(a) If the Food Administration requires space for wheat or other supplies needed for allied or domestic movement, it may exercise powers to requisition storage space, regardless of such space being used for other grain or regardless of outstanding contracts for such space, but it will do this only as last resort. |