The high cost of living

Front matter

THE LIBRARY

OF

THE UNIVERSITY

Preface

The high cost of Hving is not a war product. The war hastened tendencies. It aggravated conditions. It gave opportunities for speculation and extortion. But the cost of Hving was rising rapidly before the war. And it will continue to rise when the war is over unless radical steps are taken to prevent it.

The last few years have witnessed a change in the economic foundations of American life. Competition is passing. Monopoly has entered into almost every process of industry. The laws of demand and supply no longer protect us. A host of intermediaries have wedged themselves in between the producer and the consumer, each one of which is interested in taking as large a profit for himself as possible. This is not only true of food, it is true of almost every necessity of life. Even more important, the control of the land and resources of the earth has diminished production. It has excluded men from the land. It has limited the opportunities of labor. It has checked initiative. It has reduced the amount of wealth produced.

Monopoly is responsible for the conditions which confront us. It operates in the following ways:

It controls the natural resources, the agencies of

• ^7374-3 vi PREFACE

transportation, distribution, and marketing. It has increased prices. It has discouraged agriculture. Tribute is exacted from the consumer at one end of the Hne and the producer at the other.

It reduces the output of wealth of all kinds.

It limits the opportunities for labor and keeps down wages and salaries.

What we are most in need of is freedom; freedom of access to the hundreds of millions of acres of land that are held out of use; freedom of access to adequate transportation; freedom in distribution, in marketing, in competition all along the line. Monopoly stifles. It strangles the labor and industry of the nation. It short-circuits the efforts of the manufacturer and the farmer. Colossal as is the output of wealth in this countiy, the possibilities of production have scarcely been touched. The talent of the country is not free to apply itself as it would if the land and resources were opened up to use. Freedom is the great need of America, freedom from monopoly in all of its forms, but most of all in its control of the land, of transportation, of credit, and of distribution.

It is not the tribute that monopoly exacts, it is the embargo on production that is most costly.

These evils can only be corrected by law, by legislation. Exhortation will not bring relief. Nor will criminal proceedings, trust-busting, or regulation of prices. We have tried this kind of regulation for a

PREFACE vii

generation and monopoly has grown rich and powerful under it. Monopoly now prefers regulation. It is a guarantee against competition and government ownership. The farmer cannot secure relief by his unaided efforts. Nor can the consumer. Relief will only come when the conditions surrounding agriculture and the means of distribution are radically altered. This can only be done by law. And legislation will only represent the producing classes and the consumers when the monopoly interests which now control our life are driven from power and the state becomes an agency of service, of co-operation, of a new freedom. When people rather than privilege rules, then the food problem, the agricultural problem, the social problem will be open to solution.

I have received valued assistance in the preparation of this volume from Miss Gertrude Borchard, assistance which I desire to acknowledge.

Frederic C. Howe.

New York, September, 1917.

Contents

PAOB

Preface v

CHAPTER

Chapter I The Feeding Of The Nation

The feeding of the nation has been left almost wholly to chance and to unorganized, uncontrolled agencies. Production and distribution have been permitted to evolve from the conditions of a halfcentury ago into the highly complex relationships of a whole nation, if not the entire world, with but little official concern for either the producer at one end of the line or the consumer at the other.

Before the coming of great cities each community sufficed for itself. The marketmen or local grocer bartered for food with the neighboring farmer, and the laws of demand and supply regulated production and kept prices at a reasonable figure. This was the condition up to a few years ago.

Cities grew. The nation became a market. The Northwest entered into competition with New England, and California and Florida with the local truck-garden. The steamship widened the market into the world. Canada and the American Northwest, Russia, Australia, and South America produced for the industrial workers of the world, and the prices of cereal and meat products were fixed in London and Liverpool. Refrigerator-cars brought the fruits and vegetables of Florida and California closer to New York than the near-by farm of earlier generations, while the cold-storage plants and terminal warehouses made it possible for perishable commodities to be held for months or years for their ultimate market.

Prices were fixed not only by a world market but by an all-the-year-around market. The price of butter and eggs in April was fixed in the previous November, just as the price of meat and growing crops was fixed during the harvesting season.

With all these revolutionary changes, with the refrigeration devices and the means for placing the products of the world upon the breakfast-table, the control of a multitude of agencies as well as the production and distribution of food was left to the anarchistic, chaotic direction of thousands of individuals, each of whom was thinking only of maximum profit to himself rather than of the service he was performing for the nation.

Only in a few countries — notably, Australia, Denmark, and Germany — has the control of food been viewed as a matter of government concern or subjected to a unity of direction in the interest of the producer and the consumer. And these countries have worked out means for social control of food in the interest of the nation. In most of the other countries, and in America in particular, the subject has been left to the unregulated license, not of the

THE FEEDING OF THE NATION 5

producer, not of the consumer, but of the distributing agencies which have it in their power to control not only prices but production as well. Unregulated private banking and usury have contributed still further to the disorganization which prevails, while no official concern has been shown for the economic foundations of agriculture, the relation of the people to the land.

The extent to which this whole subject of the feeding of a people has been neglected is indicated by a comparison with finance or industry. To-day the credit of America is organized in every detail. The control of our monetary resources has been so mobilized that it is under the direction of comparatively few men, subject to regulation by the Federal Reserve act. The weekly deposits of the wage-earner in a distant mining-camp are effective for credit purposes in distant China or South America as soon as they are deposited. The total resources of a bank in a farming community are readily mobilized for a two-billion-dollar loan through the district reserve cities, and from them to New York. The credit resources of the country are known, as are the liabilities. Just as the tiny stream emerging from the mountain slopes of Colorado ultimately finds its way to the Gulf of Mexico, so every dollar in every bank in America is potentially organized for the doing of the work of America every moment of time. Yet credit is merely an agent, an agent for production.

And one of its primary purposes is the feeding of the people and provision for their wants.

That which is true of credit is true of many industries as well. The great steel corporations are self-contained industries reaching out to different sections of the country, or even to distant lands, for the more efficient performance of their functions. These corporations own great iron-ore deposits in Minnesota and northern Michigan, in Cuba, and in other foreign parts. They own their own coal-fields and coking plants. They own natural-gas fields and limestone quarries. They own great fleets of vessels which ply upon the Great Lakes, while thousands of miles of railroad have become integral parts of their industrial processes. The Standard Oil Company is a world-wide agency. It owns oil-fields not only in America and Mexico, but in Russia, Roumania, and, in fact, all over the world. It owns fleets of sailing vessels, pipe-lines, and oil-tank cars; it manufactures almost everything that it uses in connection with its activities. It is far more than a self-contained industiy. It owns or indirectly controls banks, trust companies, and hundreds of related industries. The American Tobacco Company reaches from the tobacco plantations of the United States and Turkey to its distributing agency in almost every city in the land. The United States Rubber Company owns rubber-plantations, while the sugar-refineries own sugar-plantations in Cuba,

THE FEEDING OF THE NATION 7

Hawaii, and elsewhere. Every great industry, in fact, is organized and integrated. It has ehminated one profit-taking intermediary after another between the soil and the consumer. It acts with a single mind. It knows from day to day the raw materials available, and through its nation-wide or world-wide statistical bureau it knows the fluctuations in demand. Financial knowledge and industrial knowledge have been mobilized in a hundred great private corporations, and their control has been so concentrated that all of the more important industrial activities of America are susceptible of control from half a dozen great offices, for the most part situated in New York.

Yet, while this perfection has been achieved in banking, transportation, and industry, the greatest concern of all, the feeding of the people, is wholly unorganized, wholly disintegrated, and up to the present time has not even been studied from the point of view of the producer and the consumer. It is hardly too much to say that the feeding of the people is primarily under the control of the distributing and credit agencies of the nation, which, guided only by the desire for private profit, determine, indirectly at least, how much shall be produced, how much shall be paid for the labor of those who feed America, as well as the price that the ultimate consumer shall pay. And springing from the private control of this, the most important need of the nation, many consequences have followed, consequences which are directly traceable to the neglect by the nation of fundamental economic conditions which must coexist if sufficient food is produced on the one hand and sufficient food is consumed on the other.

It is true, the Federal Government has elevated agriculture to a place in the cabinet. Congress appropriates annually over $20,000,000 for the maintenance of the Department of Agriculture. It gathers information; it encourages production; it advises the farmer about soil, planting, and the care of his farm; it studies soils and the breeding of cattle; it distributes market reports to aid him in the sale of his produce. Nearly all of our States, too, maintain agricultural colleges for the training of boys and girls in scientific agriculture. They teach dairying, farm management, and the production of pedigreed seeds. Farming is being elevated to a science and the potential output of the land is being increased by all these processes. And year by year science is demonstrating that there is no known limit to the yield which can be secured from the land. It has been estimated that 20,000 men properly organized can feed 2,000,000. And the studies of agricultural experts have shown that, with sufficient labor apphed, enough food can be produced on a tiny bit of land to feed a family. Agricultural science has already demonstrated that the limits to the possibilities

THE FEEDING OF THE NATION 9

of nature have not been reached in any country and that many times the present population of the world can be adequately and comfortably fed by the use of the knowledge already existing.

Yet, despite all this expenditure of money and effort, despite the discoveries of science and the introduction of improved machinery, despite the substitution of steam and gasolene for horse-power and the increase in the effectiveness of human labor, the question of feeding America becomes more acute each year, while the high cost of living is a problem which worries not only the worker but the middle classes as well. The war has made this problem acute, so acute, in fact, that the war has passed from one of man-power and munition-power into one of food-power. Not only is this true of Austria-Hungary and Germany, it is true of England, Russia, and France as well. And now America is confronted with the same problem, which is becoming so acute that the public-school classes have been dismissed in order that boys and girls may be organized for the planting and harvesting of crops. The whole nation has been urged to cultivate its back yards and to utilize heretofore neglected fields and parcels of land. The people have been urged to economize, to husband their food supply. Dietary statisticians suggest the substitution of cheap cereals, and the worker is solicitously informed that he can live upon a rice diet if he but makes up his mind to do so. Even the saving of potato-skins has been urged upon the workers by advertisements appearing in the metropolitan press. The farmer is being indignantly prodded to increase the acreage under cultivation, to labor a little harder, while the consumers are appealed to to limit their consumption, already reduced far below the American standard of living by famine prices.

Yet with all these appeals, with the chambers of commerce and countless other organizations bending their efforts in these directions, little organized, intelligent thought is being given to the real problem. Why do boys and girls leave the farms for the cities ? Why do the farmers desert their holdings to become motor-men or workers in the city? Why is our agricultural population relatively decreasing and the acreage under cultivation increasing but slightly in amount? Why, with all the aids of science and countless agricultural experiment stations, is agriculture less attractive than it was to oiu* fathers, and why does the per-capita wealth produced fail to respond to all of the improvements in agricultural production? Why have so many of the advances in civiKzation passed by the farmer? Why is agriculture a neglected if not a despised profession, and why among other industrial classes does the farmer feel that he- is of least concern to the state ? Why do agricultural organizations like the Greenback movement, the Grange, the Equity, and more re-

THE FEEDING OF THE NATION 11

cently the Non-Partisan Farmers' Alliance of the Northwest periodically appear in politics, make a gallant fight, and then their members settle down to a kind of political despair? What is the matter with our food supply? What is the trouble with agricultui'e as a profession? To what is the high cost of living really attributable and with it the health of our children and the lowered standard of living of our people as well ?

It cannot be that this problem is insoluble. It cannot be that a civilization that can perfect wireless telegraphy, the flying-machine, and the modern battle-ship ; that can organize science to systematize warfare — it cannot be that a people who are able to perfect medicine and whose discoveries have speeded up science in every realm of hfe is impotent before this, the greatest social problem of aU, the feeding of the people. There must be knowable economic reasons which underlie the discouragement of the farmer and the decadence of his industry. It must be possible to trace the economic forces at work to their source, and after ascertaining the proximate causes for these conditions to correct them by constructive political action. We have done this in industiy. We have produced the dollar watch, the $350 automobile, marvels of mechanical and engineering skill. Electricity has been made the servant of man, aiding him in a million ways. The power of Niagara has been harnessed and is distributed for thousands of miles to cities, towns, and individual factories. The desert lands of the Far West have been reclaimed by the storage of water, and heretofore barren wastes have been made to yield three or four crops a year. The bottoms of the sea have been compelled to yield up their secrets, as have the inscriptions of prehistoric times. Yet to-day the first industry of man, that of keeping himself alive, remains the least organized and certainly the least sociaHzed of any modern service.

Chapter II Our Agricultural Possibilities And Problems

The explanation of these problems is not to be found in the niggardliness of nature or the character of oui" people. There is land enough and water enough and labor enough to produce all the food we need. As a matter of fact, the United States should be the cheapest country in the world in which to live. Ours should be a land of overflowing abundance; not for the few but for everybody; not of a few articles but of every kind of food. Wages are high, it is true, but labor is more productive here than elsewhere. We have perfected machinery as have no other people, and it is more universally used. We have resources more fertile than those of all Europe. We have every variety of climate and every kind of food. The soO is so fertile that it needs but Httle enrichment, while our race is recruited from the most versatile in Europe. No people have been so inventive; none have harnessed steam and electricity to increase the power of man, and nowhere, unless it be in Austraha, is there so large a product per man as in the United States. There should be no difficulty about food, fuel, houses to live in, or any of the ordinary comforts of life if we had conserved and utilized our opportunities as we should have done.

And there was no food problem up to a very few years ago. Food was very cheap. This was true of all the staple articles, of meat, vegetables, fruits, poultry, and dairy products. Food was so cheap that we wasted it. Even the poor wasted it as of little value. There were no high-cost-of-living investigations and no real complaint from the farmer or consumer.

There is, obviously, land enough to feed ourselves and all our friends, and feed them in abundance. Of that there is no doubt. We could maintain ten times our present population if the land were cultivated as it is in some portions of the world where intensive agriculture has been perfected. The farm acreage of the United States is nearly seven times that of Germany, with her 67,000,000 people, or of France, with 40,000,000 people. This is without considering the billion odd acres not yet appropriated or unavailable for cultivation, which is equal to all the land under tillage at the present time.^

iThe total area of the United States, exclusive of Alaska, is 3,026,789 square miles or 1,937,144,960 acres. Of this total 290,- 759,000 acres remain unappropriated for one reason or another, while 16,522,000 acres are still in pubhc or Indian lands. In 1910 there were 6,361,502 farms in the country and 478,451,750 acres in inaproved and 400,446,575 acres in unimproved farms. All told, the farm acreage of the United States in 1910 was 878,798,325 acres. Of the total area of the country only one-fourth was in improved farms.

OUR AGRICULTURAL POSSIBILITIES 15

France almost feeds herself, while in Germany, with all her intensive agriculture, there are great stretches of land that are held in great estates and are in a backward state of cultivation; and Germany could be placed inside the State of Texas and leave enough room round about the edges for Switzerland.

We have not yet begun to crowd one another in this countiy, for people are living at the rate of only 33 per square mile. In little Belgium, the land of intensive agriculture, there are 671 persons to the square mile; in France there are 191; in the United Kingdom, 379.47; in Austria-Hungary, 197.31; in Switzerland, 236.97, and in Denmark, which country feeds herself and contributes a great part of the food supply of Great Britain and Germany, there are 183.56 persons per square mile.

Only a small part of the land in the United States is cultivated at all, and a much greater part is cultivated wastefully or inadequately. Only about one-half of our cultivable area is under cultivation. Even in the State of New York, with the best and most extravagant market in the world at its doors, only 37 per cent, of the agricultm'al acreage is under cultivation, or 8,200,000 acres out of 22,000,000 acres. And in that State, with its population of 10,000,000 people, only 375,000 are agricultm-alists, and 9,625,000 are engaged in other pursuits.

While we have land in abundance and of the most fertile kind, while we have invented and perfected farm machinery, while the telephone, the trolley, the motor-car, and the railroad have made communication easy, transportation cheap, and life in the comitry far more attractive than a generation ago, certain things are happening to agriculture that, unless checked, will inevitably bring about conditions similar to those in Great Britain, where four-fifths of the people live in the city while the countryside is denuded of people, and the food supply of 43,000,000 people is brought in from the United States, Canada, Australia, South America, and Denmark.

Among the outstanding facts bearing on the subject are :

One — a rapid, unprecedented increase in the price of food

Two — a stationary production or substantial falling off in the gross amount of food produced.

Three — a wide-spread sense of discouragement on the part of farmers, a discouragement which is justified by conditions.

Four — a rapid increase in the population of our cities as compared with the rural population. In 1900 the urban population of the United States was 31,609,000. Ten years later the number had increased to 42,623,000, an increase of 34.8 per cent. During the same period the rural population increased from 44,384,000 to 49,348,883, or an increase of 11.2 per cent.

OUR AGRICULTURAL POSSIBILITIES 17

Five — during the decade 1900-1910 the number of farms increased from 5,737,372 to 6,361,502, or an increase of 10.9 per cent., while the total improved and unimproved land in farms increased by but 40,206,551 acres, or only 4.8 per cent. Yet while the increase in farm acreage was but 4.8 per cent, the increase in the value of the land was 118.1 per cent. The agricultural land of the country in 1900 was valued by the census at $13,058,007,995. Ten years later it was valued at $28,475,674,169. While the rural population increased 11.2 per cent, and the acreage under cultivation 4.8 per cent., the value of the land under cultivation increased 118.1 per cent, and the value of the land per acre 108.1 per cent.

Six — of the total of 878,798,325 acres in farms in 1910 only about one-half was improved, there being a total of 400,346,575 acres that were unimproved.

Seven — the working of farms in the United States is steadily and rapidly passing from the hands of owners to those of tenants with little interest in efficient agriculture or the improvement of theiiholdings. In 1880 25.6 per cent, of all farms were operated by other than owners; in 1890 the percentage had increased to 28.4 per cent.; in 1900 it had increased to 35.3 per cent., and in 1910 it had still further increased to 37 per cent. In some parts of the country from 60 to 70 per cent, of the farms are cultivated by tenants for non-resident owners.

Here are some of the economic factors undertying the food problem. They are not reassuring. They indicate a decay of agriculture. If unchecked they involve national disaster. They mean a continuing increase in the cost of hving, a lower standard of living, a decadence of the state, and ultimately a nation of city dwellers on the one hand and a farming peasantry on the other, like that found in other countries where the tendencies at work in the United States have reached their logical conclusion. Rome passed through such an evolution. So did modern England. Ireland lost half her people because of bad agricultural conditions that were only arrested when the nation undertook a comprehensive agricultural policy in the land-reform legislation inaugurated by Gladstone.

America is finally awakening to the seriousness of the food problem. We may be led to a study of agriculture and the economic legislation necessary to make farming more attractive. For the ultimate evil is to be found in the economic foundations of agriculture, which must be radically changed.

First let us consider the present high cost of living and the immediate measures for relief. For that is the immediate condition to be remedied.

Chapter III The Cost Of Living And The Food Supply

" Prices are fixed by the law of demand and supply," the speculators say. "If the demand is in excess of the supply prices rise; if the supply is in excess of the demand prices fall. We do not make high prices. The laws of political economy do. You must suspend her laws, not punish us, if you do not get enough to eat or have to pay more than you like for food."

That prices are fixed by demand and supply is a principle of general application when competition is free and no obstacles prevent the free play of competition. Moreover, if the supply of some article of general consumption is only a httle below the demand prices tend to rise far above the prices which should otherwise prevail. Then as prices advance the demand slackens and a new equilibrium is estabHshed. This was the condition which prevailed in our food supply up to a few years ago when the local market established prices. The farmers made a comfortable living, and the cost of food was not an item of serious consideration to any save the very poor. Food was abundant and prices were low, as they should be in this countr}^ For food

20 THE HIGH COST OF LIVLNG

should be a small item in our budget even with the prosperity and the great export demand which now prevails.

But the price of food has mounted skyward. The poor are suffering from actual want. Persons of reasonable incomes do not get enough to supply their needs, while those of relatively large incomes feel the pinch of the cost of meat, poultry, eggs, butter, sugar, and many articles that a few years ago were the commonest of articles upon their tables.

Is there any justification for this situation? Are the speculators justified in their defense? Must we control the laws of demand and supply, or is the trouble that the law of demand and supply is not permitted to operate and prices are fixed arbitrarily by the speculators who have themselves created scarcity conditions?

Statistics of prices and food supply seem to demonstrate several things:

One — ^that the prices we are paying are far in excess of what we should pay, even with the law of demand and supply freely operative;

Two — that there is not as much food produced per capita as there should be and not nearly as much as could easily be produced; and

Three — ^that the government must step in and insure the free play of the law of demand and supply and also suspend the operations of the law when the supply is so much below the demand that artificial

THE FOOD SUPPLY 21

and monopoly prices are created by its operation. In other words, the farmer and the consumer should be given the fullest possible assurance of free competition and the consumer should be protected from any monopoly price because of a shortage.

First, as to the increase in costs of food and the condition of the great mass of the people in consequence.

The April, 1917, Review of the United States Bureau of Labor Statistics, discussing the rise in wages as compared with the rise in the price of food, says that while the former rose nine points from 1912 to

1916, retail food prices rose twenty points. Food rose in price twice as rapidly as wages. In the four years from February 15, 1913, to February 15, 1917, flour increased 69 per cent., eggs 61 per cent., and potatoes 224 per cent., says the same authority. Anthracite range coal sold in New York for $5.00 a ton in January, 1915. In January, 1917, its price was $8.75 a ton.

Mr. Amos R. E. Pinchot, in a statement presented to the Senate Committee on Finance in the spring of

1917, stated that the rise in wages in the five years, 1912-1917, was less than 18 per cent. In the case of most professional people, shopkeepers, farmers, etc., there has been no appreciable increase at all. On the other hand, the cost of living has gone up to such a degree that, according to the figures in the New York Times Annalist, April 23, 1917, the prices of the twenty-five most common and necessary food commodities of the average family have almost doubled between April, 1915, and April, 1917. According to Dun's index figures dairy and garden products increased 84 per cent, in price between April 1, 1914, and April 1, 1917. Meat went up 46 per cent, in the same period; clothing 49 per cent.; metals 69 per cent., and foodstuffs 105 per cent. The figures of the Old Dutch Market, Incoiporated, of Washington, D. C, show that during the period mentioned there was an average increase of 85.32 per cent, in a fist of sixty table necessities, including meats, canned goods, eggs, vegetables, etc. As a consequence, the poor can no longer buy the same quality of food they were previously able to obtain, nor can they buy in adequate quantities.