The Greater Danger

The high price of food not only harassed the housewife, it harassed an Administration caught in the middle of a world crisis. Last week, testifying on the President's $350 million relief bill, Herbert Hoover showed how acute that crisis had become.

The world could not feed itself. The U.S., Canada, Argentina and Australia, representing only 8% of the world's population, were supplying 90% of the world's food exports. They would have to do better or the world would starve.

Facts & Contradictions. Hoover's testimony limned a desperate situation. England's crops had been badly damaged by spring floods. Much of Europe's winter wheat had been destroyed by Europe's winter. He described some shocking contradictions in policy. Europe's soil was exhausted. And yet, Hoover charged, "we, including our Allies, have been as busy as bees destroying the capacity to manufacture fertilizers." German nitrogen and phosphoric acid plants were being dynamited because they could be converted to munitions manufacture. The world's total nitrogen production (2,600,000 tons) is more than 1,000,000 tons short of world requirements.

Other facts & figures showed the difficulties under which the nations labored, trying to keep their populations alive. From a prewar base period, when the world fared moderately well, China's farm draft power (horses, tractors, etc.) had dropped 20%; Italy's, 26%; Austria's, 40%; Yugoslavia's, 54%; Poland's, 64%; Russia's, 65%. Food distribution was slowed by the war wreckage of transportation systems, resulting in spoilage.

The Critics. But what more could the U.S. do? The U.S. was exporting some $3 billion in food, 10% of its total food stocks, a third of its total wheat production. Critics of the Administration program cried out not for more generosity but for less. On one hand were those who thought the program would impoverish the U.S. On the other hand were those who believed that such continuing abnormal exports, creating shortages at home, would send prices into the final runaway inflation.

The Bin. Actually, the U.S. could stand the drain on its food resources without even tightening its belt. Production was high. The Agriculture Department predicted a bumper 1947 wheat crop of 1,240,000,000 bu., compared to 1,185,000,000 last year. Despite 14 million more mouths than before the war, per capita food consumption in the U.S. had increased 16%. In 1946 the U.S. supplied the world with a net of $6.6 billion of goods and services, but this was only 3.4% of the total value of goods & services produced by a comparatively fat and wealthy land. Far from scraping the bottom of the food bin, the U.S. was only spooning out its resources.

The Explosion. The second charge was more serious. Certainly the most important factor in current food prices was the abnormal exports. The Government's much-criticized support buying, as Harry Truman said, was so far a negligible factor (see BUSINESS). But a sensitive price structure reacted violently to the slightest change in normal domestic supply. Washington economists figure that the index of farm prices rises 17 points every time the U.S. sends $500 million worth of food abroad. This index has risen from 209 in March 1946 to 280 in April 1947.

Hitched up with the galloping prices of other commodities, galloping farm prices could certainly carry the nation headlong into a bust. Voluntary price cuts of industrial commodities would slow down the wagon. But as long as the U.S. continued its policy of trying to feed and rehabilitate the rest of the world, farm prices would kick up their heels. The question for the Administration was whether this danger was greater than the collapse of the rest of the world.

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