What was accomplished in this instance should interest any community, and for that reason I will ill.u.s.trate it with an example of "economic waste" found in the United States.
You may have eaten a "Kansas City" steak in San Antonio, Texas, if not at Corpus Christi or Brownsville. (I am an adopted "native" of that region and inordinately proud of it.) If you had investigated the history of that steak I think you would have been somewhat surprised.
The steer which produced that steak might have been raised in the valley of the Rio Grande. After that the animal had taken a trip to Oklahoma, where better pasture put more meat on its back. Still later a farmer in Missouri had fattened the steer on the very cream of his soil, and after that it had been taken to Kansas City or Chicago to be butchered and "storaged."
It might then have dawned upon you that a great deal of wasted effort was hidden in the price of that steak, though no more than in the biscuit that was wheat in North Dakota, flour in Minneapolis, biscuit in San Francisco, and a toothsome morsel to follow the steak. You would be a dull person indeed if now some economic short cut had not occurred to you. The steak might have been produced by Texas gra.s.s and North Texas corn, and the like, and it need never have traveled farther than San Antonio. The biscuit might have been given its form in Minneapolis.
It was so in Germany before the military social economists took a hand in the scheme, though the waste was by no means as great as in the cases I have cited, seeing that all of the empire is a little smaller than the Lone Star State.
But the little trundling there was had to go.
In the winter of 1915-16 this budding economic idea was still in chrysalis, however. The several governments still looked upon it entirely as a measure for the conservation of their railroads. What is more, they were afraid to give the principle too wide an application. In the first place, the extension of the scheme into the socio-economic structure seemed difficult technically. It was realized that the reduction of traffic on the rails was one thing, and that the simplifying of distribution was quite another. To effect the first the Minister of Railroads had merely to get in touch with the chiefs of the "direction," as the districts of railroading are called. The chiefs would forward instruction to their division heads, and after that everything was in order.
But distribution was another thing. In that case the several governments did not deal with a machine attuned to obey the slightest impulse from above, and which as readily transmitted impulses from the other end. Far from it. Not to meddle with distribution, so long as this was not absolutely necessary, was deemed the better course, especially since all such meddling would have to be done along lines drawn a thousand times by the Central European socialist.
But the food shark had to be checked somehow. The unrest due to his sharp practices was on the increase. The minimum-maximum price decrees which had been issued were all very well, but so long as there was a chance to speculate and h.o.a.rd they were to the ma.s.ses a detriment rather than a benefit.
Let me show you how the food shark operated. The case I quote is Austrian, but I could name hundreds of similar instances in Germany. I have selected this case because I knew the man by sight and attended several sessions of his trial. First I will briefly outline what law he had violated.
To lay low what was known as chain trade throughout Central Europe, _Kettenhandel_, the governments had decreed that foodstuffs could be distributed only in this manner: The producer could sell to a commission-man, but the commission-man could sell only to the wholesaler, and the wholesaler only to the retailer.
That appears rational enough. But neither commission-man nor wholesaler liked to adhere to the scheme. Despite the law, they would pa.s.s the same thing from one to another, and every temporary owner of the article would add a profit, and no small one. To establish the needed control the retailer was to demand from the wholesaler the bill of sale by which the goods had pa.s.sed into his hands, while the wholesaler could make the commission-man produce doc.u.mentary evidence showing how much he had paid the producer. Under the scheme a mill, or other establishment where commodities were collected, was a producer.
Mr. B. had bought of the Fiume Rice Mills Company a car-load of best rice, the car-load in Central Europe being generally ten tons. He had brought the rice to Vienna and there was an eager market for it, as may be imagined. But he wanted to make a large profit, and that was impossible if he went about the sale of the rice in the manner prescribed by the government. The wholesaler or retailer to whom he sold might wish to see the bill of sale, and then he was sure to report him to the authorities if the profit were greater than the maximum which the government had provided. To overcome all this he did what many others were doing, and in that manner made on the single car of rice which he sold to a hunger-ridden community the neat little profit of thirty-five hundred crowns.
Something went wrong, however. Mr. B. was arrested and tried on the charge of price-boosting by means of chain trade. When the rice got to Vienna he had sold it to a dummy. The dummy sold it to another dummy, and Mr. B. bought it again from the second dummy. In this manner he secured the necessary figures on the bill of sale and imposed them on the wholesaler. The court was lenient in his case. He was fined five thousand crowns, was given six weeks in jail, and lost his license to trade. _Preistreiberei_--to wit--price-boosting did not pay in this instance.
After all, that sort of work was extremely crude when compared with some other specimens, though the more refined varieties of piracy needed usually the connivance of some public official, generally a man connected with the railroad management. Many of these officials were poorly paid when the war began and the government could not see its way clear to paying them more. The keen desire of keeping up the shabby gentility that goes with Central European officialdom, and very often actual want, caused these men to fall by the roadside.
There was a little case that affected three hundred cars of wheat flour. Though Hungary and Austria had then no wheat flour to spare for export, the flour was actually exported through Switzerland into Italy, though that country was then at war with the Dual Monarchy! Thirty-two men were arrested, and two of them committed suicide before the law laid hands on them. The odd part of it was that the flour had crossed the Austro-Hungarian border at Marchegg, where the shipment had been examined by the military border police. It had then gone across Austria as a shipment of "cement in bags," had pa.s.sed as such into Switzerland, and there the agents of the food sharks in Budapest had turned it over to an Italian buyer. n.o.body would have been the wiser had it not been that a shipment of some thirty cars was wrecked. Lo and behold, the cement was flour!
They had some similar cases in Germany, though most of them involved chain trading in textiles. The unmerciful application of the law did not deter the profiteer at all, any more than capital punishment has ever succeeded in totally eradicating murder. There was always somebody who would take a chance, and it was the leakage rather than the general scheme of distribution that did all the damage. Whatever necessity and commodity had once pa.s.sed out of the channel of legitimate business had to stay out of it if those responsible for the deflection were not to come in conflict with the law, and there were always those who were only too glad to buy such stores. The wholesaler received more than the maximum price he could have asked of the retailer, and the consumer was glad to get the merchandise at almost any price so that he could increase his h.o.a.rd.
But the governments were loth to put the brake on too much of the economic machinery. They depended on that machinery for money to carry on the war, and large numbers of men would be needed to supervise a system of distribution that thwarted the middleman"s greed effectively.
These men were not available.
The minimum-maximum price scheme had shown itself defective, moreover.
In theory this was all very well, but in food regulation it is often a question of: The government proposes and the individual disposes. The minimum price was the limit which any would-be buyer could offer the seller. In the case of the farmer it meant that for a kilogram (2.205 pounds) of potatoes he would get, let us say, five cents. n.o.body could offer him less. The maximum price was to protect the consumer, who for the same potatoes was supposed to pay no more than six and one-half cents. The middlemen were to fit into this scheme as best they could.
The one and one-half cents had to cover freight charges, operation cost, and profit. The margin was ample in a farm-warehouse-store-kitchen scheme of distribution. But it left nothing for the speculator, being intended to stimulate production and ease the burden which the consumer was bearing. Not the least purpose of the scheme was to keep the money out of the hands of food-dealers, who would h.o.a.rd their ill-gotten gain. The government needed an active flow of currency.
All of which was well enough so long as the supply of food was not really short. But when it grew short another factor entered the arena.
Everybody began to h.o.a.rd. The quant.i.ties which the authorities released for consumption were not intended to be stored, however. Storing food by incompetents is most wasteful, as the ma.s.sacre of the pigs had shown, and h.o.a.rding, moreover, gave more food to the rich than to the poor; so for the time being it could not be encouraged too openly, despite the revenues that came from it.
But the h.o.a.rder is hard to defeat. The consumer knew and trusted the retailer, the retailer was on the best of terms with the wholesaler, and the rapacious commission-man knew where to get the goods.
He made the farmer a better offer than the minimum price he usually received. He paid six cents for the kilogram of potatoes, or even seven.
Then he sold in a manner which brought the potatoes to the consumer for eleven cents through the "food speak-easy." The middleman and retailer had now cleared four cents on the kilogram, instead of one and one-half cents; their outlay deducted, they would make a net profit running from two and one-half cents to three and one-half cents per 2.205 American pounds of potatoes. This sort of traffic ran into the tens of thousands of tons. The food shark was making hay while the weather was good. The entire range of human alimentation was at his mercy, and often the government closed an eye because the food shark would subscribe handsomely to the next war loan.
In the winter of 1915-16 I made several trips into the country to see how things were getting along. On one occasion I was in Moravia. I had heard rumors that here the food shark had found Paradise. It was a fact.
Near a freight-yard in Brunn a potato-dealer was installed. He bought potatoes in any quant.i.ty, being in effect merely the agent of the Vienna Bank Ring that was doing a food-commission business as a side line. I don"t know why the government permitted this, except that this "concession" was a _quid pro quo_ for war-loan subscriptions.
A little old Czech farmer drove up. He had some thirty bags of potatoes on his sleigh, all well protected by straw and blankets. The food shark looked the load over and offered the minimum price for that grade, which on that day was eighteen h.e.l.lers the kilogram, about one and three-fourths cents American per pound avoirdupois.
The farmer protested. "My daughter in Vienna tells me that she has to pay thirty-six h.e.l.lers a kilogram," he said.
"Not according to the maximum price set by the government, which is twenty-one h.e.l.lers just now," was the bland remark of the agent.
"That is all very well, sir!" returned the farmer. "But you know as well as I do that when my daughter wants potatoes she must pay thirty-six h.e.l.lers or whatever the retailer wants. She writes me that when she stands in the food-line she never gets anything. So she does business with a man who always has potatoes."
The food shark had no time to lose. Other farmers came.
"Eighteen h.e.l.lers or nothing," he said.
The farmer thought it over for a while and then sold.
The reader uninitiated in war-food conditions may ask: Why didn"t that farmer ship his daughter the potatoes she needed? He couldn"t, of course. The economic-zone arrangement prevented him. That zone was the means which the government employed to regulate and restrict distribution and consumption without giving money an opportunity to tarnish in the hands of people who might not subscribe to war loans. The zone "mobilized" the pennies by concentrating them in the banks and making them available _en ma.s.se_ for the war.
Yet the fact was that the daughter of the farmer, buying potatoes clandestinely, may have bought the very product of her father"s land.
Who in that case got the eighteen h.e.l.lers difference? The middlemen, of course. That the poor woman, in order to feed her children, might have been able to use to good advantage two kilograms at thirty-six h.e.l.lers, instead of one, is very likely, but this consideration did not bother the food sharks known as the Vienna Bank Ring.
On one occasion the same group of food speculators permitted two million eggs to spoil in a railroad yard at Vienna because the price was not good enough. The Bank Ring was just then agitating for a better price for eggs and hoped that the maximum would be raised. But the government was a little slow on this occasion, and before the price went up, "according to regulation," the eggs were an unpleasant memory to the yard-hands. Naturally, n.o.body was prosecuted in this case. I understood at the time that the Bank Ring presented to the Austrian government a sort of ultimatum, which read: "No profits, no war loans." The government surrendered.
The fact that many of these speculators were of the Jewish persuasion caused a revival of a rather mild sort of anti-Semitism. Several of the Christian newspapers made much of this, but the government censors soon put an end to that. This was no time for the pot to call the kettle black. The food shark came from all cla.s.ses, and the Austrian n.o.bility was not poorly represented.
There was the case of the princely house of Schwarzenberg, for instance.
The family is not of German blood to any extent, as the name would seem to imply. Nowadays it is distinctly Bohemian, and in Bohemia its vast estates and properties are located. The managers of the Schwarzenbergs had a corner on almost everything that was raised in the localities of the family"s domains. In the winter of 1915-16 they forced up, to unheard-of heights, the price of prunes. The prune was a veritable t.i.tbit then, and with most people in Central Europe it had come to be the only fruit they could get in the winter. Its nutritive value is great, and since every pfennig and h.e.l.ler had to buy a maximum in food values the demand for prunes soon exceeded greatly the supply--so everybody thought.
But the trouble was not a shortage. The crop had been good, in fact.
Orchards, so far as they had not been harmed by the paucity of copper for the manufacture of vitriol and Bordeaux mixture for the extermination of tree parasites, had not suffered by the war. The trees bore as usual, and fruit crops were generally what they had been before.
Nor had there been an increase in operation expenses, aside from what little extra pay there was given those who gathered the crop.
But the Schwarzenbergs and a few others made up their minds that they, too, would get a little of the war profits. They also were heavy investors in war loans.
So long as this corner was confined to prunes and other fruits the thing presented no great problem--as problems went then. But the activity of this particular ring did not stop there. Its members dealt in everything the soil produced.
During the first months of the war there had been set aside by the several military authorities certain agricultural districts from which the armies were to be supplied with food, forage, and the like. The idea was not a bad one. The armies were voracious consumers, and a scheme which would concentrate over as small an area as possible the supplies needed meant a great saving of time and effort when shipments had to be made.
That would have been very well had the several governments bought all supplies from the producer direct through the medium of a purchasing branch of the commissary department. Such was not the case, however. The government continued to buy through war purveyors, who had, indeed, been curbed a little, but only in exchange for other privileges. Standing in well with the military, these men were able to sell out of the commissary-supply zones what the armies did not need--poultry, b.u.t.ter, fats, and eggs, for instance. These little side lines paid very well. I remember discovering on one trip that near Prague could be bought a whole goose for what in Vienna two pounds would cost. Since the Bohemian geese are never small birds, and weigh from nine to twelve pounds, this was a case of five to one. When in the cities b.u.t.ter was almost a thing unknown, I was able to buy in Bohemia any quant.i.ty at the very reasonable price of twenty-seven cents American a pound. In Vienna it cost one dollar and thirty cents a pound after the food shark had been satisfied.
The military-supply-zone arrangement made exports from districts affected to the large population centers impossible, except upon special permit, which was not easy to get by the man who had no "protection," as they put it in Austria. The food shark always interfered. In doing that he had a sort of double objective. Scarcity was forcing up the prices in the cities, and when the government had been persuaded that the prevailing maximum price was not "fair to the farmer" the shark had a reservoir to draw upon.
I found a similar state of affairs in Galicia. On the very outskirts of Cracow I ran into a veritable land of plenty. The military zone had completely isolated this district, and while elsewhere people had not seen b.u.t.ter in weeks, it was used here for cooking, and lard served as axle-grease. Finally the zone was opened to the civilian consumer. But this concession benefitted only the food sharks. In the population centers prices remained what they had been.
I found similar conditions in Germany, though the cause was not entirely the same.
The Mecklenburg states still have a government and public administration scheme that has come down to our day from the Middle Ages without much modification. They have no const.i.tution as yet, and they would have no railroads, I suppose, were it not that their neighbors had to get access to one another through these princ.i.p.alities. The two countries are hard-boiled eggs indeed. And the Mecklenburgers are like their government. I understand that some enlightened ruler once offered his people const.i.tutional government, but had a refusal for his pains.
Enough food had been h.o.a.rded in Mecklenburg to meet all Germany"s shortage three months. But n.o.body could get it out. The Imperial German government had no say in the matter. The several German states are as jealous of their vested rights as any American State could possibly be.
And the Mecklenburg government had little influence with its farmers.