WHEAT STUDIES OF THE FOOD RESEARCH INSTITUTE

VOL. VII, NO. 9 (Price $1.00) AUGUST 1931

THE INTERNATIONAL WHEAT CONFERENCES DURING 1930-31

Low wheat prices have provoked distress in agriculture in all countries in which wheat is a prominent crop. In consequence a widespread and intensive revival of agrarian agitation has occurred. Higher wheat prices are sought. The' net wheat-importing countries are in position to raise domes­ tic wheat prices through tariffs and other restrictive regula­ tions; Germany, France, and Italy furnish the outstanding illustrations. The net wheat-exporting countries have at their disposal as instruments for the raising of wheat prices only direct subsidy or indirect bonus, and these have not been applied to any significant extent. In consequence, producers' prices of wheat in the wheat-exporting countries present an extreme contrast with producers' prices in the importing countries which have established high protection. The wheat-surplus-producing countries have held nu­ merous conferences to promote collective action for the pur­ pose of raising wheat prices. Sixteen of such conferences are here reviewed. Broadly stated, the movement for con­ certed action in the international marketing of wheat has developed into a quota plan, which was formally presented at the recent London conference of wheat-exporting coun­ tries. The quota plan for marketing wheat would represent essentially the sale of wheat by negotiation, largely under governmental direction, which would tend to be political. At the London conference only the United States desired a continuation of international marketing of wheat upon es­ tablished grain exchanges. Under the opposition of the dele­ gation of the United States, the quota plan failed of official acceptance. The topic represents a chapter in the annals of governmental control of primary materials. It is the first time an international monopolization has been sought to control a staple foodstuff.

STANFORD UNIVERSITY, CALIFORNIA August 1931 WHEAT STUDIES OF THE FOOD RESEARCH INSTITUTE

The central feature of the series is a periodic analysis of the world wheat situation, with special reference to the outlook for supplies, requirements, trade, and prices. Each volume includes a comprehensive review of the preceding crop year, and three surveys of current developments at intervals of about four months. These issues contain a careful selection of relevant statistical material, presented in detail in appendix tables for reference purposes, and in summary form in text tables and charts. Each volume also includes six special studies bearing on the interpretation of the wheat situation and outlook or upon important problems of national policy. Subjects of issues published in recent volumes are listed inside the back cover. The series is designed to serve the needs of all serious students of the wheat market, in business, government, and academic circles, by summarizing and interpreting basic facts and presenting current developments in due perspective. The special studies are written not merely for students of the wheat market, but as well for various groups of readers who are especially concerned with the fields discussed. Volumes I-VI are now available, bound in red buckram, at $10.00 each. The ten issues of Volume VII will be published monthly from November 1930 to September 1931, except in April 1931. The subscription price for the volume, including a temporary binder, is $10.00. Indi­ vidual issues may also be purchased separately. Orders, subscriptions, and other communi­ cations should be addressed to FOOD RESEARCH INSTITUTE, STANFORD UNIVERSITY, CALIFORNIA; for Great Britain, to P. S. King & Son, Ltd., Orchard House, 14, Great Smith Street, West­ minster, S.W. 1, London; or, for continental Europe, to Martinus Nijhoff, 9 Lange Voorhout, The Hague, Holland.

Entered as second-class matter February 11, 1925, at the post-office at Palo Alto, Stanford University Branch, California, under the Act of August 24, 1912. Published by Stanford University for the Food Research Institute.

Copyright 1931, by the Board o/Trustees of the Leland Stanford Junior University

FOOD RESEARCH INSTITUTE STANFORD UNIVERSITY, CALIFORNIA

DIRECTORS CARL LUCAS ALSBERG JOSEPH STANCLIFFE DAVIS ALONZO ENGLEBERT TAYLOR

The Food Research Institute was established at Stanford University in 1921 jointly by the Carnegie Corporation of New York and the Trustees of Leland Stanford Junior University, for research in the production, distribution, and consumption of food. THE INTERNATIONAL WHEAT CONFERENCES DURING 1930-31

INTRODUCTION Economic distress breeds political action. prices were sought by wheat producers in When, in the early summer of 1929, the exporting and importing countries; warn­ prices of wheats in the United States, ings that these bilateral efforts implied the Canada, Argentina, and Australia ap­ equation of larger supplies with current proached a dollar a bushel, with corre­ demands at higher prices fell on unwilling sponding positions in other exporting ears. The price declines which antedated countries and in importing countries except the onset of the business depression were as modified by tariffs, this was the signal for particularly distressing to wheat growers. a flare-up of agrarian agitation. The im­ The subsequent realization that the decline provement in wheat prices during mid­ in wheat prices was in part the concomitant summer and partially maintained into the of a world-wide business depression has autumn did little to as- not served as a consola­ suage distress of wheat tion. Just now interna­ growers. In midsummer CONTENTS tional commentators take of 1930 the wheat price PAGE occasion to declare that touched one dollar a Introduction ...... , 439 tariffs and other restric­ bushel at Liverpool, with The Earlier Conferences . ... . 440 tions have contributed to The London Conference of declines below that fig­ May 18-23, 1931 ...... 451 the decline in the price of ure in the exporting Concluding Observations .. 463 wheat; on the other hand, countries. This recession Appendix ...... 467 one must say that the de­ reintensified agrarian un­ cline in price of wheat rest, both in importing has contributed to the and in exporting countries. That other raw erection of tariffs and other restrictive materials suffered corresponding price de­ regulations. Political interventions are not clines served in no wise to make low prices likely to be invoked by prosperous pro­ less unacceptable to wheat growers. The ducers; the controls of rubber, nitrate, intervening year and a half has witnessed sugar, tin, silk, and other raw materials did many restrictive interventions designed to not arise from high prices. Political inter­ improve wheat prices in net importing vention is provoked by low prices. countries. On the other side of the picture It is the purpose of the present study, stand numerous proposals to influence up­ combining description and exposition, to ward the still further depressed price of portray the occurrences, objectives, and wheat in exporting countries. Some of deliberations of the several international these were internal, as in the case of the conferences, devoted largely or exclusively pegged wheat price of the United States to wheat, which have been held during this Grain Stabilization Corporation; but oth­ interval. In the case of agriculture, politi­ ers sought collective action. The agitations cal intervention is all the more easily pro­ which were primarily internal became es­ voked because agriculture is so wideflung an sentially international. Wheat growers occupation, and the rural popUlation repre­ probably took their cue on "concerted sents so large and influential a proportion action" from the League of Nations and of the public. Even in pre domina tingly in­ sought thus to secure alleviation through dustrial countries, the rural population is co-ordination of policies. politically strong and able to secure excep­ While net wheat-importing countries tional favors, as has been well illustrated have sought (among other things) to de­ in the sugar subsidy in England. vVe take velop self-containment, the net exporting it that the wheat conferences are to be countries have sought to expand or at least judged from this standpoint. That agrarian retain their volumes of exports. Higher unrest is frequently exploited, in further-

WHEAT STUDIES, Vol. VII, No.9, August 1931 [ 439] 440 TIlE INTERNATIONAL WIlEAT CONFERENCES DURING 1930-31

ance of political objectives lying outside ing countries have been willing to raise the of agrarian relations, does not serve to con­ price of bread to their urban classes, in tradict this view. order to favor their landlords and peasants. In the broad sense, the movement em­ Nevertheless, monopolization lies inherent bodied in the series of conferences devoted in all plans for international control of the to wheat involved something approaching marketing of wheat. The past decade has an international monopolization of wheat. witnessed many attempts on the part of pro­ It is beside the mark to urge the dire dis­ ducers, with assistance of governments, to tress of producers and to suggest that the control the marketing and raise the prices producing countries would display a be­ of primary materials. The case of wheat is nevolent attitude toward consumer coun­ noteworthy especially for the number of tries. It is to be conceded that the ultimate countries involved. It is also noteworthy best interests of urban classes everywhere because of the social importance of bread would be advanced by restoration of pros­ which is the staff of life of white peoples perity in agriculture and net wheat-import- and represents the focal point of the dietary.

1. THE EARLIER CONFERENCES In the deliberations of the International 1. Conference at Geneva, January 6-9, Economic Conference, held in Geneva in 1930 1927, the world-wide distress of agriculture 2. Conference at Geneva, February 17- was accorded significant attention. But these March 24, 1930 deliberations were based upon the unstated 3. Conference at Bucharest, july 21-23, assumption that the price level had become 1930 stabilized. It was indeed realized that the 4. Conference at Sinaia, July 30-Au­ prospect of continued outturn of new gold gust 1, 1930 at an undiminished rate was not promising, 5. Conference at Warsaw, August 28-30, but the contraction was not envisaged to 1930 happen within a decade; therefore, no secu­ 6. Conference at Geneva, September 10 lar decline of the price level was then -October 4, 1930 feared for the early future. The likelihood 7. Conference at London, October 1- of an imminent decline in wholesale price November 14, 1930 indices, representing the recession phase of 8. Conference at Bucharest, October a trade cycle, was not entertained. We take 18-21, 1930 it that it is the price declines of the last two 9. Conference at Warsaw, November 10, years, superimposed upon the distress in 1930 agriculture existing prior to 1927, which 10. Conference at Belgrade, November have provoked the political reactions of 10-13, 1930 wheat growers and other producers of agri­ 11. Conference at Geneva, November 17- cultural products and led to efforts toward 28, 1930 concerted action. 12. Conference at Geneva, January 12- No lcss than sixteen international con­ 14, 1931 ferences have been held during 1930 and 13. Conference at Bucharest, February the first half of 1931, devoted to wheat and 16-18, 1931 the other cereals exclusively, or largely to 14. Conferences at Paris, February 23-28, the cereals in connection with consideration 1931 of other agricultural and economic prob­ 15. Conference at Rome, March 26- lems. It will perhaps simplify the chrono­ April 2, 1931 logical survey to list these in advance. Of 16. Conference at London, May 18-2:3, these sixteen conferences, five were con­ 1931 ducted under the League of Nations.t We propose to consider the fifteen earlier conferences briefly in. the present section, 1 The League of Nations is issuing two new vol­ umes of reports on the agricultural crisis, one of and to treat the last in greater detail in which appeared on June 15, 1931. ' section II. THE EARLIER CONFERENCES 441

THE GENEVA CONFERENCE OF had acquired strength since the Interna­ JANUARY 6-9, 1930 tional Economic Conference of 1927, cul­ This meeting was called by the Economic minated in a conference held in Geneva Committee of the League of Nations with during the stated interval under the title of the evident desire of maintaining continuity Preliminary Conference with a View to in the consideration of agricultural prob­ Concerted Economic Action." This rather lems set up at the International Economic ambiguous title, in view of the mainob­ Conference in 1927. The participants repre­ jective of the conference, was promptly re­ sented twenty countries and were desig­ placed by a slogan titIe-"The Tariff Truce nated as experts, though the representation Conference." The deliberations of the con­ was in facl quite as much political as tech­ ference were not confined to agricultural nical. Of the net wheat-exporting countries topics and indeed there are reasons for in­ the following were represented: Australia, ferring that initially it was planned to deal Canada, Hungary, India,! Jugo-Slavia, Po­ largely with industrial tariffs. But the in­ land/ Roumania, and the United States. Of fluence of the central and eastern European the net wheat-importing countries the fol­ countries was strong enough to bring agri­ lowing were represented: Austria, Bel­ cultural problems, and particularly those gium, Czecho-Slovakia, Denmark, Finland, of cereals, to the fore. As the deliberations Germany, Great Britain, the Irish Free progressed, intra-European questions be­ State, Latvia, the Netherlands, Norway, came more and more prominent, while Spain,! Sweden, and Switzerland. those of the relations between Europe and The sessions were devoted largely to the overseas countries became less promi­ orientation. In respect to wheat, the heavy nent. crop of 1928 and the price declines in con­ The localization and extent of surplus nection with the onset of business depres­ production of cereals, the purchasing sion in the fall of 1929 seemed to be the power of cereals in terms of manufactures factors arousing particular apprehension. of European countries, the methods and There was discussion on the rationalization routes of disposal of cereal surpluses, and of agriculture along broad lines and of di­ in general the facilitation of exchanges be­ versification of crops on the basis of costs. tween the agricultural countries of central Inevitably the tariff and self-containment and ea~tern Europe and the manufacturing were touched on. This meeting was really countnes of western Europe, were given an ass.embly of delegates for the purpose of significant consideration. Rather incongru­ orgamzation of investigations desired by ously, definite concepts of self-containment the .Econ.omic Committee of the League of of individual countries appeared side by side with indefinite concepts of a Pan­ NatIons 111 the development of its general program and for use in the subsequent Europe. The countries represented at the meeting held in January 1931. meeting agreed to present their views and c.ompil.e data in re~ponse to a formal ques­ TIlE GENEVA CONFERENCE OF FEBRUARY 17- tIOnnmre, the replIes to be delivered to the MARCH 24, 1930 League of Nations for use in future de­ liberations. The agricultural countries of ~he ag~tation against the multiplying central Europe were so prominent in the tariff barners of European countries, which deliberations of this conference as to lead

1 See pp. 454-55 for comment on status of India astute political observers to infer that thev Poland, and Spain. ' acted by p~earrangement and possibly 2 'rhe Conference with a View to Concerted Eco­ under the gUIdance of M. Briand. ':OIUIC Action is a subsidiary of the League of Na­ ;~ons, . operating in connection with the Economic 'OI:lllllttee of the League, and was set up by reso- 11ltl?1l of the tenth assembly of the League of Nations THE BUCHAREST CONFERENCE OF ~.n S.cptcmbeL· 2:1, 1929. The general objective of the JULY 21-23, 1930 ,?n!erence is to establish programs of negotiations UllTIl.ng at collective agreements for facilitating eco­ This conference really represented the !~OIUIC relations, and more specifically to labor for a ~ustoms truce" and the building down of trade bar­ reunited agrarians of pre-war Austria­ l'Jers between European countries. Hungary, though doubtless this interpret a- 442 THE INTERNATIONAL WHEAT CONFERENCES DURING 1930-31 tion would be resented in political circles in its agricultural products in exchange for the three countries participating-Hungary, manufactures from western countries, nei­ Roumania, and Jugo-Slavia.1 The primary ther desired the other to secure an advan­ objective of the conference was to consider tage in such preference-hence, the impulse joint action to be taken on the questionnaire for concerted action. Just why Roumania sent out by the League of Nations. Not and Jugo-Slavia called a conference di­ unnaturally some differences of opinion rectly following the conference of these developed. There was agreement that cereal countries with Hungary is not apparent on prices were too low and that the Danube the surface but could doubtless be ex­ states could not approach that question plained by those familiar with the intrica­ through reduction of acreage. The sugges­ cies of politics in the Danube countries. tion was advanced that co-ordination be Internally, this was an important confer­ developed between the three countries in ence. the physical shipment of cereals, this again a revival of the situation existing before THE WAH SAW CONFEHENCE OF the war. These export states were in prin­ AUGUST 28-30, 1930 ciple not opposed to moderate import duties on cereals to protect producers in importing The conferences in Bucharest and Sinaia European countries. They objected, how­ doubtless awakened agrarian interest ever, to high tariffs, to embargoes on im­ southward in Bulgaria and in the countries ports, and to milling regulations designed lying to the north, between Hungary and to transform import duties into veritable the Baltic Sea. Also, these conferences may prohibitions of import. A significant decla­ have aroused political suspicion in Poland. ration was one suggesting that cereals ought The Poles are astute politicians, and a re­ to be exempted from the direct application vival of the unity among the agrarian states of the "most-favored-nation" clauses in which sprang from the Austro-Hungarian commercial treaties between European Empire could hardly be regarded with in­ countries. Experienced observers regarded difference by Poland, which aspires to be the conference as the belated expression of a net cereal-exporting country. Moreover, recognition of the community of interests such a co:"ordination might be interpreted of cereal producers in the Danube coun­ as a menace to Czecho-Slovakia, a net tries, presumably under the expert political cereal-importing country. Under these cir­ guidance of the Briand party. A positive cumstances, a broad discussion of interests influence has been the contrast of wheat from the Baltic to the Adriatic and Medi­ prices in central Europe with the much terranean seas seemed next in order. higher prices in Germany, France, and The Warsaw conference was attended by Italy. representatives from five net wheat-export­ ing countries (Bulgaria, Hungary, Jugo­ THE SINAIA CONFERENCE OF JULY 30- Slavia, Poland, and Roumania) and AUGUST 1, 1930 from three net wheat-importing countries (Czecho-Slovakia, Estonia, and Latvia). This was really a local conference of The conference reached a general agree­ delegates from Roumania and Jugo-Slavia, ment on replies to the questionnaire of the called to consider the question of a cus­ League of Nations referred to above. It was toms-union between the two countries and made clear that these countries could not the establishment of a common policy in consider acreage reduction. The prices of respect of exports of agricultural products cereals were too low to be remunerative to to western European countries. While each producers, also too low in purchasing power country desired preferential treatment for for the manufactures of western Europe in amounts commensurate with the needs of

1 Since the war Hungary has not ceased to protest the importing countries. Recommendations the transfer of territory to noumania and Jugo­ were made on establishment of facilities for Slavia under the Treaty of Peace. But apparently the solidarity of interests as grain producers has brought storage, with appropriate credits. The con~ the three countries closer together. ference was unanimous in the support of THE EARLIER CONFERENCES 443

the project of seeking prefe:ential tre~t­ THE GENEVA CONFERENCE OF SEPTEM­ ment from the cereal-importmg countrIes BER 10-0CTOBER 4, 1930 of western Europe, exempted from the most-favored-rration clauses of the com­ The Assembly of the League of Nations met in Geneva on September 10, 1930. He:c mercial treaties. It was felt t~lat only appeared the coalition which hereafter m through union of the cereal-exportmg co~n­ tries of central Europe could preferentIal this article will be called the "central Euro­ treatment and, in general, advantageous pean agricultural bloc,:' co.mposed of Bul­ treatment be secured from the western garia, Hungary, J ugo-SlavI~, Poland, a?-d Roumania. On behalf of thIS bloc was m­ European countries. The conference ~x­ hibited a curious indifference to RussIa, troduced a formal proposal for a system which is not surprising when one recalls of preferential tariff relations, bearing o.n that the wheat exports of Russia were not European agricultural products. At thIS then much under way, and quite prob­ meeting the proponents of preference to be lematical. In their desire to suppress com­ extended by European importers to ,~u::o­ petition between the wheat growers of the pean exporters went farther than prm­ countries represented at the conference, ciples" and advanced proposals for ope~a­ tive procedures. The European. eXl?o.rtmg the agricultural divergencies be~ween the northern and the southern regIOns were countries were to organize both mdlvldual unduly minimized; merely because regions and group systems of control of export~ of are predominatingly agricultural does not wheat. To make such controls effectIve, appropriate credits would need to be ex­ signify that they may be. agricult~rally co­ ordinated. The resolutIOns envisaged a tended to the exporting states-for adva?-ce rather significant expansion of state control payments to growers, storage, and WIth­ through bilateral and multilateral agree­ holding of wheat from the market when ments, including development of. storage desired. The proposal was opposed .by facilities credits, marketing tachcs, and representatives of overseas wheat-expor~mg selling p~licies. The conference en~isaged countries, since quite naturally Argentma, the establishment of a comprehenSIve ad­ Australia, and Canada regarded the pro­ ministrative organization for the operation posal as discriminatory. Without the eve~­ of co-ordinated export policy. As in all such tual reactions being sharply defined, It conferences, the "principles" were unduly seemed clear that the position of Great Britain would be negative, that of Italy emphasized and the "d~tails" un?uly sub­ ordinated. In commentmg on tillS confer­ critical and that of France lukewarm if ence one of the leading European journals accept~ble; the German attitude ,,:as ap­ rem~rked that the deliberations "carried parently that of a country wi~lmg to cordiality to the point of impracticability." consider negotiations. At that tIme the The solidarity of agrarian interests was opponents of the Briand policy were ap­ stretched to the breaking-point; the diffi­ parently" in sufficient control of the ~ren.ch culties in elimination of regional competi­ representation to exercise an effectIve .m­ tive relations were glossed over. The con­ fluence since it was believed that Tardleu ference was really more important in the sided ~ith the French peasants against the l hroad sense than in the narrower relation preference scheme. Not only did the pro- to the wheat problem. The meeting brought into greater prominence than hither~o the 1 There are two wings of opinion in France on the subject of preferential treatment of European wh.eats. concept of the central European regIOn as The political view has been presented WIth c?nslder­ a cereal belt opposed to the overseas cereal able elaboration before the League of NatIons. A areas and desirous of securing through broad declaration is made of favorable "rapports preferentiels entre les Etats vendeurs el les Etals political arrangements preferential tre~t­ aclIeleurs de ceT/!ales ezzropeenlles." It is contended ment hardly to be justified on commodIty that this preference in treatment is not. unjust to overseas countries but is essentially an !l1stance of grounds. One will not go far astray in re­ neighborly treatment quite analogous to border trade. garding Poland as the master mind of the It is envisaged as a particular case in a broad syst.em conference and in attributing to Briand the of preferential relations between European cO~llltrzes, based upon the hegemony of European agrzcnlturc tenets of the Polish policy. in European affairs, a sort of Pan-European customs 414 TIlE INTERNATIONAL WHEAT CONFERENCES DURING 1930-31 posal seem, in the minds of otherwise neu­ This was a general conference in which tral members of the League, to threaten to were considered the various problems of create, so to speak, a League within the the British Commonwealth. But a particu­ League, but it was held as a possibly dan­ lar discussion on Empire preference for gerous precedent of restriction of interna­ . wheat was so significant as to deserve a tional commerce al a time when the League somewhat extended notice here. was trying to eliminate trade restriction; During recent years two movements have also, it was feared that confusion would be been advocated in Great Britain. One was introduced through violation of the letter of to grant to the Dominions (including India) most-favored-nation clauses in commercial a preference in the wheat market of the treaties. United Kingdom through a system of tariffs. At the termination of the debate the pro­ The other was to secure for the Dominions, posal was given a qualified inclusion in the without the use of tariffs, a preference program of negotiations adopted for the through agreement on the part of the Conference with a View to Concerted Eco­ mother country to purchase predetermined nomic Action scheduled for March 1931. quotas of import wheat from Australia and The discussion before the Assembly of the Canada. Despite the fact that only some 50 League of Nations was less significant for million bushels of wheat are raised in the what it accomplished than for what it por­ United Kingdom (much of which is fed to tended. animals), the distressed position of English wheat growers at the low current prices has THE LONDON IMPEHIAL CONFERENCE OF provoked sympathy in all circles. What has OCTOBER 1-NoVEMBER 14, 1930 been sought was to insure to domestic pro­ ducers the complete and preferential ab­ The next conference in chronological sorption of domestic wheat by domestic order, though of a different category, was mills, through some arrangement in rela­ the Imperial Conference which opened in tion to imports which would promote the London, on October 1, 1930, participated in availability of domestic wheat. by the British Commonwealth of Nations. At the Imperial Conference, Prime Minis­ ter Bennett of Canada made an open ap­ union. This doctrine has been prepared for political peal for Empire preference. The two acceptance by a series of publications in books and following quotations from his address periodicals of which that of Delaisi, Les Deux Eu­ ropes, is perhaps the best illustration. The attempt (taken from The Economist of October 11, is made in a broad way to compare the relations of 1930, p. 651) will serve to make the position western and central Europe with those of the United clear: States cast and west of the Mississippi River. While the arrangement contemplated is urged in the inter­ The primary concern of Canada to-day is profi­ est of peasants in agricultural central Europe and workers in the industries of western Europe, it is tably to sell its wheat. We believe that we shall sought to show that it is not to the disadvantage of be reaching towards a solution of that problem industrial workers in central Europe or of peasants if we can establish a better market in Great in wcstern Europe. Nevertheless, with all the per­ Britain. This market we want, and for it we are suasive marshaling of economic data, the fact re­ willing to pay by giving in the Canadian market mains that it is primarily a political idea. The spon­ a preference for British goods .•... sorship of France is based to a governing extent upon I offer to the Mother Country, and to all the the political relations of France to the countries of other parts of Empire, a preference in the Cana­ central Europe, which sprang from Austria-Hungary. The wheat growcrs of France are the opposite of dian market in exchange for a like preference in enthusiastic in their reception of the doctrine of a theirs, bascd upon the addition of a 10 per cent. preference to be extended to import wbeats of central increase in prevailing general tariffs or upon Europe over import wheats of overseas countries. tariffs yet to be created. In the universal accept­ The French peasant reasons, quite cogently, that the ance of this offer, and in like proposals and ac­ best utilization and the highest price for French ceptances by all the other parts of the Empire, wheats ought to be obtained when the miller has the we attain to the ideal of Empire preference. freest choice among foreign wheats to select such wheats as are best adapted for mixing with French wheats of the season. A preference extended to Euro­ Such a preference could be based on an pean wheats would tend toward lower flour standards import tariff on all wheats, with a prefer­ and poorer brcad. In short, on technical grounds French whcat growers and millcrs oppose preferential ence (of perhaps 5-15 cents a bushel) for treatment for European wheats. Dominion wheat; or Dominion wheat could TIlE EARLIER CONFERENCES 415 enter free, and a tariff (of 5-15 cents a quota; but they have not enough to offer in bushel) be levied on wheat from outside return to compensate Great Britain for the the Empire. Practically speaking, the only cost of her rejection of the wheat of other parts of the Empire concerned would be countries. To assign quotas in the British Australia and Canada, India also in some import market to all wheat-exporting coun­ years. Since Australia offers soft wheat and tries would involve unforeseeable intrica­ Canada offers hard wheat, the require­ cies. But in any event, British industrialists ments of British millers both for the home would now hardly countenance any import market and for re-export as flour could be scheme which does not include some Ar­ met technically in most years by a combina­ gentine wheat. It seems reasonable to infer tion of domestic, Australian, and Canadian that the action taken at the Conference was wheats. There are times when wheats from not a definitive decision in the sense that it Argentina and especially from Russia (oc­ represented the reasoned conclusion of the casionally also from the United States) are inhabitants of Great Britain, Canada, and cheaper than wheats of the same type from Australia. In the development of Empire within the Empire. The wheats hit hardest policy, Great Britain has sometimes pre­ by Empire preference would be those of ferred to have refusal of proposals come Argentina, Russia, and the United States, from the Dominions and the Dominions usually in the order given. have sometimes preferred to have refusals The Conservative Party as a whole, and come from Great Britain. In the puhlic in particular certain prominent individuals mind an onus is likely to be attached to a in the Tory group, have been leaning refusal and Empire preference for wheat toward protection, even to the extent of may have been regarded in this light. The levying import taxes on foodstuffs. The forceful action of Prime Minister Bennett Liberals and the Labor Party are opposed provoked an unequivocal rejection by to a tax on staple foods. The Labor govern­ Prime Minister MacDonald. But it does not ment rejected the proposal of the Prime follow that Empire preference for wheat Minister of Canada and the proposal fell has become impossible. through, under dramatic circumstances. In The conference adjourned to reassemble the following quotation from a speech of in Ottawa in the autumn of 19:n. At the Prime Minister MacDonald in the House of coming meeting it seems likely, unless there Commons the rejection is made clear: is a change of governments in Canada, that what The Economist calls "Mr. Bennett's If it is going to be a single exchange, our imposing tariffs for the purpose of allowing a egregious red herring" will be revived for wider field of preference to be shown us, the further discussion.1 Free trade with the only tariff that we can propose, that is worth world, the safeguarding of the essential in­ anything to the Dominions, is a tariff on food. dustries, Empire free trade with protection .... The first thing that every [Dominion] Pre­ mier says, and in some cases not only the first against the outside world, and general pro­ thing but the last thing, is "Tax wheat." We tection for Great Britain with tariff prefer­ cannot do it. ence within the Empire-these are moving questions today in the British Common­ Following the rejection of Empire p'refer­ wealth. When one measures the pressure cnce based on tariff, there was some dis­ which the few wheat growers of England cussion of a wheat import board, bulk are able to exert on the political policies of purchase, and quota plans in Great Britain. Great Britain and the sympathy that they These schemes included three objectives: can arouse, one must not be surprised at assistance to wheat growers in the United whatsoever outcome emerges when the Kingdom, assistance to wheat growers in more numerous wheat growers of Germany, the Dominions, and assistance to export of France, and Italy undertake political action. British manufactures. These objectives are not inherently consistent. Australia and 1 At the later London conference, the Russians Canada would be glad to supply all the im­ made their acceptance of the quota plan conditional port wheat required by Great Britain, upon the non-occnrrence of other contracts between producer and consumer states, which would mean the Whether through bulk purchase or through exclusion of Empire preference for wheat. 11fi TIlE INTERNATIONAL WIlEAl' CONFERENCES DURING 1930-31

THE BUCHAREST CONFERENCE OF 1930. Only the net wheat-exporting Coun­ OCTOBER 18-21, 1U30 tries were represented-Bulgaria, Hungary, J ugo-Slavia, Poland, and Roumallla. Re­ In consequence of their disappointment garding the "principle" of export control, at the outcome of the meeting in Geneva, quotas, and European preference as ac­ the countries of Central Europe directly cepted, the Conference was devoted largely thereafter met at Bucharest to consolidate to the setting up of paper organizations to the forces of the central European agricul­ be recommended to the governments of the tural bloc. The countries represented were countries participating in the Conference. Bulgaria, Czecho-Slovakia, Estonia, Hun­ A national export board was to be set up in gary, Jugo-Slavia, Latvia, Poland, and Rou­ each country, and an interstate board cover­ mania. Differences appeared and the dele­ ing the five countries. Apparently the na­ gates of the three net wheat-importing tional boards were to yield control over countries did not sign the resolutions exports to the central interstate board. It adopted, while the delegate of Bulgaria was recognized that guarantees would be made reservations indicating that the posi­ necessary to effectuate the observance of tion of the Danube states was regarded as . regUlations, but these were deferred. The too extreme by the southernmost wheat­ detail attempted in the paper organizations exporting country. In general the meeting was surprising in view of the purely hypo­ was a continuation and amplification of thetical status of the major proposals. the discussion as it developed at the War­ saw conference. The quota system was accepted as a foregone policy, sooner or THE GENEVA CONFERENCE OF NOVEMBER 17-28, 1930 later; the determination of the quotas and their applications within existing commer­ In accordance with the permissive reso­ cial treaties were regarded as details. The lution adopted at the meeting of the As­ needs for credit were emphasized and the­ sembly of the League of Nations, the central suggestion advanced that quotas on imports European agrarian bloc appeared before of manufactures might be found effective the Second Conference with a View to Con­ factors in the negotiations for preferences certed Economic Action, which met at Ge­ sought by the central European states. neva in November 1930. The conference appointed a committee to consider the pro­ TIlE W ARSA W CONFEHENCE OF posals; this committee gave to the .pro­ NOVEMBEH 10, 1930 posals an endorsement so qualified as to be This conference was essentially a de­ almost meaningless. The conference there­ liberation devoted to agricultural credit, after took notice of the proposals but took and it is possible that it had a generic re­ no action. This meeting was significant lation with the International Agricultural largely because of subsequent develop­ Mortgage Credit Company which was later ments.1 created at Geneva. The meeting was note­ worthy for the incidental occurrence of a THE GENEVA CONFERENCE OF split-off of the east Baltic states, which JANUAHY 12-14, 1931 announced their inability to accept the pro­ This meeting was essentially a reassem­ posal of wheat preferences, owing to con­ bly of the meeting of agricultural experts flicts with existing commercial treaties. The held in Geneva a year earlier and com­ meeting had the further value of indicating mented on above as the first of the list. It a clear appreciation that credit needs would was attended by representatives of the fol­ be different under a quota system than lowing net Wheat-exporting countries: A:r­ without it. gentina, Australia, Canada, Hungary, IndIa, Jugo-Slavia, Poland, Roumania, and the THE BELGHADE CONFERENCE OF

NOVEMBER 10-13, 1930 1 Cf. Proceedinas of tlle Second International Con­ ference willi a View to Concerted Econom·ic Action This meeting was essentially a reconven­ (Series of League of Nations Publications, II, Eco­ ing of the Bucharest conference of October nomic and Financial, 1931. II, E, 3). THE EARUER CONFERENCES 117

United States. The net wheat-importing lowing March. Broadly considered, the con­ countries represented were Austria, Bel­ ference seemed to take the pOfiition thal gium, Czecho-Slovakia, Denmark, Finland, control of production was impossible, France, Germany, Great Britain, the Irish whereas alleviation of the effects of over­ Free State, Latvia, the Netherlands, Nor­ production might be sought indirectly way, Spain, Sweden, and Switzerland. The through efforts in the control of marketing. International Institute of Agriculture in Home was represented by three delegates. THE BUCHAREST CONFERENCE OF The representatives of the participating FEBRUAHY 16-18, 19:H countries were statisticians, economists, agricultural experts, delegates to the The purpose of this conference was re­ League of Nations, diplomats, officials of organization of plans. Though attended by agrarian organizations, and politicians. Czecho-Slovakia and Latvia, the meeting The American delegate was L. G. Steere, was dominated by the five states of the cen­ Agricultural Commissioner attached to the tral European agricultural bloc. It was re­ American Embassy at Berlin. The agri­ solved that representatives he sent to the cultural delegation of the Economic Com­ conference in Paris to he described below. mittee of the League of Nations consisted It was resolved that the participating coun­ of the following: M. A. Di Nola (Italy); tries get together for the adoption of a com­ Dr. Hichard Schuller (Austria) ; M. P. Elbel mon policy prior to the meeting to he held (France); Dr. E. Trendelenburg, later re­ in the International Institute of Agriculture placed by Dr. H. E. Posse (Germany); Sir in Rome. The conference reafllrmed the Sydney Chapman (Great Britain); M. N. position of the participating countries in Ito (Japan); and M. F. Dolezal (Poland). respect of preferential treatment and the Considered as a whole, the body of ac­ countries were enjoined to hold together. credited experts could hardly be regarded as possessing exceptional technical compe­ THE PARIS CONFERENCES OF tence in respect to wheat and other cereals, FEBRUARY 23-28, 1931 and indeed was strikingly deficient in Under the auspices of the Commission of familiarity with the marketing and milling Enquiry for European Union of the League of wheat. The discussion was general, but of Nations,! two conferences were held in wheat was accorded particular attention. Led by the central European agricultural 1 The Commission of Enquiry for European Union bloc, the representatives of the European was organized under the authority of a resolution of the Assembly of the League of Nations adopted on countries tended to view with reserved September 17, 1930. Membership on the Commission favor some form of allocation of import is conllned to membership in the League of Nations, supplies in the European wheat market. and twenty-seven European governments have en­ tered into the CommIssion. The objective of the The hope was expressed that a preference Commission is economic union of the countries of extended to wheat-exporting countries in Europe. No flat proposition bas been accepted fOl" promotion-a customs union, tariff pl"eferences be­ Europe would not lead to increase of pro­ tween the European countries, the leveling of trade­ duction, whereas a restriction of imports restricting regulations, a common treatment of prob­ of wheat from overseas countries might lems of credit and currency, co-ordinated internal and external policies of emigration, co-operation in tend to check production there. It was clear purchase of overseas supplies of essential raw mate­ from the debate that the European coun­ rials-these questions illustrate the problems which tries were becoming more and more fa­ come before the Commission. Unquestionably, politi­ cal as well as economic considerations had a part in miliar with the idea (the "principle") of the founding of the Commission. While it would be control measures. The delegates from the going too far to denominate the Commission as the creation of Briand for the purpose of promoting his overseas countries were, for the most part, Pan-European policy, it is not to be questioned that critical or negative. No action was taken, the strongest interest in the development of the partly because the delegations were obvi­ work of the Commission lies with those who seek to substitute what may be called a European national­ ously averse to definitive action and partly ism for separate state nationalisms in Europe. Cf. because it was clear that the topic in any Documents Relatina to tile Oraanizaiion of a System event would be revived at the meeting of European Federal Union (Series of League of Na­ tions Publications, VII, Political, 1930, VII 4, espe­ scheduled to be held in Rome in the fol- cially Part IV). 448 THE INTERNATIONAL WHEAT CONFERENCES DURING 19.30-31

Paris on February 23-25 and 26-28. The able those transactions to be carried out, and topic assigned to the first conference was thus to justify to the full the confidence which the Commission of Enquiry for European Union the disposal of existing stocks of wheat in has placed in them. The results of their efforts the central European countries (Meeting will be communicated to the Commission of En­ for the Disposal of 1930 Cereal Stocks). As­ quiry for European Union at its forthcoming signed to the second conference was the sessions..... topic of disposal of future stocks which might arise in those countries. It will be noted that the words "prefer­ The first meeting was attended by repre­ ence" and "quota" were not used, instead sentatives of twenty-four members of the of which was only the unbinding declara­ League of Nations, as follows: Austria, Bel­ tion concerning "Members, being prepared gium, Bulgaria, Czecho-Slovakia, Denmark, to reserve a certain proportion of their im­ Estonia, Finland, France, Germany, Great ports of foreign wheat for wheat originating Britain, Greece, Hungary, Irish Free in the countries under consideration ...." State, Italy, Jugo-Slavia, Latvia, Lithuania, Eighteen of the delegations signed; Den­ Luxembourg, Netherlands, Poland, Rou­ mark, Great Britain, Irish Free State, mania, Spain, Sweden, and Switzerland. It Luxemburg, the Netherlands, Spain, and will be noted that the five central European Sweden did not sign. countries were the only net wheat exporters The second conference, to which was as­ represented. The conference thus included signed the question of disposal of future mostly importers of wheat. Following a stocks of central European countries, had a statistical determination of the existing significantly smaller attendance. Of the five stocks, the conference adopted the follow­ exporting states of central Europe only ing resolution: J ugo-Slavia was represented. The other countries represented were net wheat­ 1. The Conference, which m.et at Paris on February 23rd, on the invitation of the Comm.is­ importing countries: Austria, Belgium, sion of Enquiry for European Union: Czecho-Slovakia, Estonia, France, Ger­ Having collected, compared and exactly deter­ many, Great Britain, Italy, Norway, Swe­ mined the figures relating to the surpluses of den, and Switzerland. The discussion was wheat available until the next harvest in the largely along general lines. There was no countries of Central and Eastern Europe; Has noted that those surpluses represent only overproduction in Europe outside of Rus­ a small part of the needs of the European coun­ sia, but overproduction existed outside of tries which import wheat. Europe, and it was recognized that free ex­ It ha~v further noted that both the representa­ port from Russia would make the position tives of the countries which normally buy for­ eign wheat and those of the countries which do of the central European states much more not import foreign wheat or do not usually im­ difIlcult. There was considerable discussion port wheat from the countries under considera­ on tariffs and commercial treaties, on stor­ tion are willing to participate to the utmost age, transport, and credits. This conference possible extent in the purchase of the stocks of also, in effect, assigned the problem to the wheat recognised to be available in those coun­ tries or in some of them. forthcoming conference in Rome, as fol­ It is therefore convinced that the attitude re­ lows: vealed in the course of its meetings will, in the near future, enable the surplus quantities of 1. The Committee recognised in the first place wheat to be marketed and disposed of. that the disposal of surplus European cereals is As regards the details of the commercial oper­ not merely a European but a world problem, and ations which will have to take place and the that a wholly satisfactory solution could be terms of the contracts which will bind the reached only by an understanding between all purchasers to the vendors and will' define the the parts of the world concerned. conditions governing their transactions, the Con­ As compared with the pre-war figures, the total ference recognises that, in view of the great cereal- growing areas of Europe have not in­ diversity of cases, it would be difficult for the creased, although the yield is slightly greater. Conference itself to prescribe an identical solu­ There is no over-production in Europe; there is tion for all; but its Members, being prepared to over-production in the world as a whole, and, reserve a certain proportion of their imports of in view of the circumstances in which that over­ foreign wheat for wheat originating in the coun­ production has taken place and the re-entry of tries under consideration, undertake to initiate Russian cereals into the market, it is clear that without delay the negotiations necessary to en- the resultant crisis would not settle itself until THE EARLIER CONFERENCES 449 after a long lapse" of time and at the cost of great was urged, especially in countries where suffering. the use of wheaten bread is now small or The Committee therefore considers that it is in the interest of producers in every continent to nonexistent, and wheat producers were act together with a view to checking the spread given the rather gratuitous advice to sell of the cri sis. wheat at low prices to the low-level con­ If, in response to the wish expressed by the suming countries of the world, in order to Commission of Enquiry for European Union, all the overseas countries concerned agree to take part in the Conference which has been organised 1 The calling of the nome conference may have been influenced by the desire of the Italian govern­ by the International Institute of Agriculture and ment to keep the International Institute of Agricul­ which is to be held at Rome from March 2fHh, the ture prominent, and also the wish to share with latter will provide an early opportunity for the France in influence in the wheat problems of the exchange of views which is essential. central European countries. 2 The United States Department of Agriculture re­ frained from participation in the Home conference THE ROME CONFERENCE OF primarily because of the wholly unsatisfactory rela­ tions arising from the manner in whieh the Inter­ MARCH 26-ApRIL 2, 1931 national Institute of Agriculture, under whose auspi­ ces the conference was called, is at present managed Under the auspices of the International and controlled. Because of dissatisfaction with the Institute of Agriculture, the Second World administrative policies of the Institute, the United States government in 1928 announced that it was no Wheat Conference was held in Rome on longer interested in participating in its activities. March 26-April 2, 1931.1 Participating in When the call for the Rome conference was issued the deliberations were delegates from forty­ and thc decision of the United States not to partici­ pate was announced, numerous organizations and eight wheat-importing and Wheat-exporting individuals sought on various grounds to have the countries: Algeria, Argentina, Australia, agriculture of the United States represented, infor­ mally if not formally. In the cnd two Americans at­ Austria, Belgium, Belgian Congo, Bolivia, tended the conference, presumably at the invitation Bulgaria, Canada, Cyrenaica, Czecho-Slo­ of the Institute and at its expense. These representa­ vakia, Denmark, Egypt, Etitrea, Estonia, tives were C. E. Croes, manager of the South Dakota Wheat Growers' Association, and John Simpson of Finland, France, Germany, Great Britain Oklahoma, president of the Farmers' National Union. and Northern Ireland, Greece, Guatemala, These Americans were not so accredited as to induce Hungary, India, Irish Free State, Italy, the delegates of the other countries to regard them as full-fledged delegates. It is to be inferred from the Italian Somalia, Japan, Jugo-Slavia, Latvia, reports of the delibcrations that the policies ad­ Lithuania, Mexico, Morocco, Norway, Neth­ vanced by the two Americans were at cross-purposes. The Federal Farm Board was not represented even erlands, Peru, Persia, Poland, Portugal, by an observer, nor did an observer represent the Houmania, Russia, Spain, Sweden, Switzer­ United States Department of Agriculture. At the land, Tripolitania, Tunis, Turkey, Union of time considerable criticism was expressed, at home and abroad, of the official non-participation 0{ the South Africa, and Uruguay. The United United States. The American Committee on the In­ States did not participate! Of these forty­ ternational Institute of Agriculture urged official eight countries, eight were dependent colo­ representation on the part of the United States. In a formal statement occurred the following sentencc: nies and five were dominions of the British "The United States Government has at the present Empire. time declined to participate in this General Confer­ ence of all consuming and producing countries to The deliberations, despite considerable arrange a world-wide co-operative program to dispose exLraneous and desultory discussion, were of the cUITent grain surplus, and to agree upon meas­ finally focussed into the reports of three ures to avoid difficulty and friction in the future." It strikes us that this declaration contains special committees, dealing with wheat production pleading or at least is so phrased as to lead to a and trade, international agricultural credit, misinterpretation. It is a common statcment abroad and the preferential tariff system. In the that the United States "declines to co-operate" in world problems. As superior a periodical as The Eco­ report of the committee on wheat produc­ nomist displayed this bias in the issue of April 11, tion and trade it was recognized that Euro­ 1931 (p. 774), in the remark that "the United States Government, by its refusal of the invitation to send pean countries could not reduce wheat representatives to the Home conference, showed itself acreage, and that the contraction of wheat unwilling to participate in international co-opera­ acreage in other continents could not be tion." What really happens is that the other countries commit themselves to a specific form and objective of secured through external regulation but co-operation, and when the United States does not only through the natural incentives of enter into the prearranged plan we are told that our country declines to co-operate. The real difference ~heat growers. A world-wide propaganda lies not in the willingness to co-operate but in the 111 favor of increased consumption of wheat objectives and methods of co-operation. 450 THE INTERNATIONAL WHEAT CONFERENCES DURING 1930-31 promote the usc of wheatcn bread. A re­ SUMMARY organization of international marketing of wheat was recommended, and, in view of The accomplishment of the several con­ the existence of abnormal stocks, the con­ ferences described above may be summar­ ference urged the calling of a meeting of ized2 as follows: European producers of the principal wheat-exporting countries of wheat do not regard themselves as respon­ the world, from which action the London sible for the relative preponderance of conference proceeded.1 supply over demand (supply outrunning The report of the committee on interna­ demand) during recent years. They do not tional agricultural credit does not concern regard it as their obligation to their own us here. agricultures to contract the acreage planted The committee on preferential tariffs, in to wheat, and they point to the inevitability which the quota scheme was more or less of post-war recovery of areas from the implicitly included, was unable to make a lowered level of war years. In low price is definitive recommendation on account of found the main cause of the distress of the opposition of Russia and the overseas wheat growers. Alleviation is not to be wheat-exporting countries. This opposition gained through reduction of costs, which is was based in part upon lack of authority, for the time being impracticable both on in part upon lack of information, and in large estates and on peasant holdings. The part on lack of conviction of the feasibility wheal-surplus-producing countries of Eu­ of any quota system in the absence of ad­ rope are willing to co-ordinate their mar­ herence of Russia and the United States. keting of export wheat, but regard such The report of this committee represented a co-ordination as offering little prospect of set-back for the central European agricul­ improvement in the absence of world­ tural bloc, but on tactical grounds rather wide co-ordination of marketing of export than on conviction, as was later made clear. wheat. The wheat-surplus-producing coun­ We take it that the International Insti­ tries of Europe believe they possess a tute of Agriculture, reviewing the earlier historic equity in the import markets of conferences, believed that the subject was Europe which should give them· a prior ripe for definitive action and called the con­ right and a guaranteed preference over ference with this objective, fully expecting wheat from overseas. Such preferential that all prominent countries would partici­ treatment they believe should be effectu­ pate. If this was in fact the objective of ated in the wheat-importing countries the International Institute of Agriculture, of Euorpe by the establishment of an the outcome of the conference in Rome was import duty on European wheat (ex-Rus­ hardly to be interpreted otherwise than as sia) lower than on wheat from Russia and a failure. from overseas, such difference in import tariff rates not to be held to constitute in­ 1 In Appendix A, p. 467, is to be found the report on the organization of wheat production and of the fraction of the most-favored-nation ciause wheat trade. of commercial treaties. With the accom­ 2 For interesting French views, see Roland Maspe­ plishment, however, of all the changes de­ tiol, "Le Statut Agricole de l'Europe Central," Revue sired within Europe, on behalf of Euro­ Sciences Politiques, January-March 1931, LIV, 82; also Simon Aberdom, "Mevente du Ble et SolidaritC pean wheat growers, it is felt that little net Europeenne," Revue Politique et Parlementaire, May increase in price would accrue to growers 1931, CXLVII, 222, and Raymond Passille, "Un Aspect Industrielle du Problem.e du Ble," Revue Politique et in the wheat-surplus-producing countries Parlemenlaire, June 1931, CXLVII, 441. It is to be of Europe unless restriction could be ap­ kept in mind that the political interests and the plied to the export of wheat to Europe milling interests are not in accord in the relations of the western to the central European countries. The from the wheat-surplus-producing coun­ French politicians cultivate Polish favor, but the tries overseas, and from Russia. Assuming French millers have little use for Polish wheat. In that the wheat-surplus-producing countries general, the exportable wbeat surpluses of the five central European countries tend to be too soft to meet of Europe would receive quotas equal to the prime milling requirements in Germany, France, their pre-war exports, these countries pro­ and Italy, since the hard wheats required by these im­ porting countries tend to be retained by the central pose an international system of wheat European exporters for domestic grinding. quotas to be applied to the eleven principal THE LONDON CONFERENCE 451 wheat-exporting countries of the world. would be fruitless in respect to this objec­ This was the definitive objective toward tive. Therefore, the London conference was which the deliberations of the successive called for the specific purpose of resuming conferences led. With the failure to secure the discussion of the proposed interna­ the attendance of the United States at the tional wheat quota plan with the partici­ Rome conference, it was realized that fur­ pation of the United States. The deciding ther deliberations of European countries appeal to conferees came from overseas.

II. THE LONDON CONFERENCE OF MAY 18-23,1931 The wheat conference held in London Australia during May 18-23 was called pursuant to Frank L. McDougall, Economic Adviser A. E. Gough, General Manager, Overseas Farm­ the following resolution passed at the Sec­ ers' Co-operative Federation ond World Wheat Conference, under the A. R. Walker, London Representative, Victo­ International Institute of Agriculture, in rian Wheat Growers' Corporation Rome: Bulgaria The Conference, recognizing the importance Ivan Nicoloff, Director of the Bulgarian Agri­ of the orderly marketing of the export surpluses cultural Bank of wheat and being convinccd that the present Canada low price of wheat on the world's markets is a G. Howard Ferguson, High Commissioner for serious factor in the present economic depres­ Canada in London sion, is of the opinion that it is desirable that the W. A. Riddell, Canadian Advisory Office, delegates of the countries exporting wheat, League of Nations, Geneva namely: The Argentine Republic, Australia, Bul­ garia, Canada, Hungary, India, Poland, The Un­ Hungary ion of Socialist Soviet Republics, Rumania, and George Pronay, Under-Secretary of State for Yugoslavia, should meet together as soon as pos­ Agriculture sible to formulate a plan on an international M. Stephen Winchkler, Counsellor in the Hun­ basis for the exportation of the 1931-32 crop. garian Ministry for Foreign Affairs The above-mentioned States will invite the Gov­ India ernment of the United States of America to take H. A. F. Lindsay, Trade Commissioner part in their discussions. Jugo-Slavia The conference was limited to net wheat­ Milivoj Pilja, Director of Ministry of Com­ exporting countries. London was selected merce and Industry Velimir Stojkovitch, Director of Ministry of because of central location and neutral at­ Agriculture mosphere. The conference was assembled Leon Gottlieb, Director-General, Societe Privi­ on the invitation of the government of the legiee d'Exportation Dominion of Canada. The meetings were Poland held in Canada House and the staff of the Adam Rose, Director of Department of the Canadian High Commissioner served as the Ministry of Agriculture secretariat of the conference. The person­ Antoni Roman, Economic Adviser of the Min­ istry of Foreign Affairs nel of the delegations attending the confer­ ence was as follows: Roumania E. Marian, Director of the Institute of Export United States of America of the Roumanian Ministry of Agriculture Samuel R. McKelvie, Member of the Federal Arthur Holban, Commercial Attache in London Farm Board Nils Andreas Olsen, Chief of the Bureau of Union of Soviet Socialist Republics Agricultural Economics of the United States Abraham Kissin, Member of the Collegium of Department of Agriculture the People's Commissariat for Foreign Trade M. W. Thatcher, Representative of the Farm­ and Chairman of the Exportkhleb (grain ex­ ers' National Grain Corporation porting organization of the U.S.S.R.) Isidore Lubimoff, Deputy People's Commissar Argentina for Foreign Trade of the U.S.S.R. and Trade Tomas A. Ie Breton, Ambassador to France Representative of the U.S.S.R. in Germany Carlos Brebbia, Commercial Counsellor of the Saul Bron, Member of the Collegium of the Argen~ine Embassy in Rome People's Commissariat for Trade and Trade Carlos Miguens, Counsellor of the Argentine Representative of the U.S.S.R. in Great Embassy in London Britain 4G2 THE INTERNATIONAL WHEAT CONFERENCES DURING 1930-31

The first plenary session of the Confer­ which added nothing to the public infor­ ence of Wheat Exporting Countries opened mation already possessed by the confer­ at Canada House at 11 o'clock on May 18, ence. The committee on expansion of 1931. The conference having been called utilization of wheat prepared a report by the government of the Dominion of which merely emphasized the various prac­ Canada (originally planned for Ottawa but tical and impractical methods widely sug­ later transferred to London), the Canadian gested for increasing the use of this cereal." High Commissioner, G. Howard Ferguson,1 It was in the committee on plans for the opened the meeting. After welcoming the marketing of the exportable surpluses of delegates and explaining the relation of the wheat that the battles of the conference present conference to the one in Rome, the were fought. provisional chairman called for the elec­ Prior to the meeting a fairly extensive tion of a permanent chairman. On motion list of documents had been prepared for of Delegate McKelvie, seconded by Dele­ the use of the conference. Of these the fol­ gate Lindsay, the Canadian High Commis­ lowing were noteworthy in one direction or sioner was elected permanent Chairman. another: Statistics of Area, Production, In accepting the office, the Chairman out­ Consumption, Exports, Imports, Carry­ lined his general views on the wheat prob­ over, etc.; Statistics of Prices; Statistics of lem which constituted the agenda of the Monthly Movements of Exports and Im­ conference. He proposed specifically the ports; Statistics of Direction of Trade of separation of the problem of disposition Exports and Imports; Visible Wheat Sup­ of present accumulated stocks from the plies May 1 and Probable Carryover Aug­ problem of disposition of surplus stocks of ust 1, 1931; U.S.S.R. Statistics; Statistics of wheat in the future, a distinction which was ex-European Countries; Controlled Mar­ soon lost in the debates. Following a dis­ keting of Exports; Multi-lateral Marketing cussion, it was decided that the meetings Schemes; The Chadbourne Agreement; should be private, including no representa­ Possible Lines of Concerted Action; Wheat tives of the press, that all communications and the Consumer; Effects of Protective should be held confidential, and that no Measures Adopted by European Wheat communiques should be issued except Importing Countries. through the Chairman.2 The Chairman requested each delega­ Three committees were appointed: one tion to make replies to the following ques­ to deal with plans for marketing the ex­ tions: portable surpluses of wheat, one to present 1. Do there exist any laws concerning an up-to-date statistical picture of the pres­ the control of the quantities of agricultural ent position, and the third to consider ex­ products exported? pansion in the utilization of wheat. The 2. If such a law exists concerning some committee on statistics prepared a report agricultural products, can this law also be extended to cover other products-wheat, 1 The Canadian High Commissioner had previously for instance-without additional legisla­ represented his country at the conference in Rome. tion? 2 This was done in part to prevent the delibera­ tions from reacting on prices on the grain exchanges. 3. The surplus quantities of wheat at Looking backward, it seems clear that the policy of present available. secrecy was unfortunate and misleading. It is a 4. The total quantity of the harvest of severe, and -we believe undeserved, indictment of the grain exchanges to say that the market cannot stand last year. the truth revealed in an open discussion of wheat­ 5. The quantities of wheat consumed in exporting countries. the country. 3 It might have been pointed out by the delegations of Argentina, Australia, and Canada that if the in­ 6. The area under cultivation and to be habitants in the five wheat-surplus-producing coun­ sown for the 1931-32 harvest. tries of central Europe had the same per capita consumption of wheat as holds in Argentina, Aus­ 7. What crop is anticipated in 1931 ? tralia, and Canada, the central European countries The replies returned were more or less would have little or no exportable surplus of wheat. incomplete and conjectural and did not The wheat problem of central Europe is really a prob­ lem of bread grain, and in recent years rye has pro­ provide the expected basis for comprehen­ voked more difficulties than has wheat. sive appraisal. THE LONDON CONFERENCE

The crux of the situation became appar­ tern of quotas in the distribution of wheat ent on the first day of the conference and on the international market. They had as­ was fully developed on the second day. The sembled to support in agreement a quota central European exporting countries pre­ plan, "in principle"; it was their hope, in­ sented early their proposal for interna­ deed their expectation, that the conference tional control of exports. In the view of would proceed to discuss the scope, admin­ these countries "international collaboration istration, regulation, and enforcement of between exporting states was the only solu­ the operative plan of distribution agreed tion" of the export problem. The proposal on. There were numerous signs indicating was a practically unmodified quota plan that the governments of the nine countries as developed in the earlier conferences were prepared to receive such recommen­ which have been described above. dation in the formal resolutions of the con­ This attitude on the part of the central ference. But united on the subject of quota, European states was of course expected. the nine exporting countries were not Unexpected, however, was the adherence united on the subject of minimum price. It of Argentina, Australia, Canada, and India. deserves to be said in recognition of the At the Rome conference, as at earlier con­ sincerity of the central European countries ferences, the representatives of the over­ that their somewhat naIve views on the seas wheat-exporting countries had de­ international marketing of wheat were pre­ clined to favor, or had actively opposed, the sented unreservedly and without the sem­ quota plan. But in London, in the presence blance of trading tactics. of both Russia and the United States, the The adherence of the four overseas four named countries favored the plan. wheat-exporting countries was rather diffi­ The position of the overseas countries was cult to explain, and indeed the influences well brought out, on paper at least, by which brought about their adherence to the resolutions cabled to the Australian dele­ quota plan were not revealed. H. A. F. gation by the Commonwealth Government Lindsay, the Indian delegate, was particu­ of Australia, for presentation to the Lon­ larly outspoken in the expression of his don conference: views. He regarded the situation as compa­ rable with an emergency-"things could 1. That [an] International Marketing Organisa­ tion represent[ing] Wheat Exporting Countries not be allowed to drift in face of the se­ be crcated to control all whcat offered for export rious position at present." This apprehen­ salc. sion bore the complexion of altruism, since 2. Each exporting country as contracting party India has in recent years not been signifi­ be represented on such organisation. cantly burdened with an exportable sur­ 3. Prcliminary meeting bc arrangcd betwecn reprcscntatives of govcrnments of exporting plus of wheat, and has instead in most years countries which bccome parties to agreement to imported wheat at prices advantageous to . suggcst basis regarding proportion and percent­ her urban population . age cxport [of] surpluscs to be marketed con­ The extreme position of Australia prob­ jointly. 4. Countries adhcring to agrccment as con­ ably reflected the influence of the wheat tracting parties to give guarantees for due ob­ poolers. The adherence of Argentina was servance [ofJ agrecmcnt reached, guarantec to passive rather than active and seemed to bc in thc form of Bond lodgcd with Bank of reflect a desire on the part of the home gov­ Intcrnational Settlcment. ernment to take advantage of an export 5. Central Marketing Organisation in its sclling policy to have regard to normal relativity [of] quota, howsoever determined, on the hy­ pricc[s] as bctween market graders] [of] par­ pothesis that growers would receive a ticipating countries. higher price if only part of the exportable surplus remained in private hands than When the addresses and debates of the under the present situation where most of early sessions of the conference and com­ the exportable surplus is exported by the mittees were amplified and clarified by per­ houses of Bunge and of Dreyfus. sonal interviews, it became clear that nine The position of Canada was then (and out of the eleven delegations came prepared remains) rather inscrutable. The High to support and recommend a formal sys- Commissioner acted both as Chairman of 454 THE INTERNATIONAL WHEAT CONFERENCES DURING 1930-31 the conference and as delegate of the com­ The presence and diligence of the delega­ monwealth of Canada. Delegate Riddell tions from India and Poland could hardly has for some time represented Canada at fail to awaken surprise, in view of the the League of Nations. Neither of these statistical position of these countries. From delegates was close to the wheat growers, the attitude of the Polish delegates the ob­ the grain merchants, or the millers of Can­ server might have drawn the inference that ada. The Canadian delegation had two since the war Poland had suffered griev­ advisers: A. E. Darby, Secretary of the ously under the burden of exportable sur­ Winnipeg Grain Exchange, and D. L. pluses of wheat. For such inference, how­ Smith, representing the Canadian Co­ ever, no statistical basis exists. The Poland operative Wheat Producers, Limited. The of the present boundaries has been a net Secretary of the Winnipeg Grain Exchange wheat-importing country in seven of the was in position to advise the delegation that last ten crop years. In 1925-26 Poland was the grain dealers, the grain exchanges, and a net wheat exporter to the extent of 4.6 the millers of Canada had never taken million bushels, and in 1929-30 to the ex­ action in support of the quota plan. D. L. ten t of 0.22 million bushels. Otherwise, Smith was for some time the head of the the figure for net imports ranged from 1.2 Central Selling Agency of the Canadian million bushels to 17.1 million bushels. pools in London; this ofIice was discontin­ This year (closing July 31, 1931) Poland ued some time since, but he has remained is a net exporter to the extent of probably in London and attended the Chairman in 5-6 million bushels. The position of net an advisory capacity on invitation of Pre­ exporter Poland evidently hopes to main­ mier Bennett. tain as expression of the policy of contrac­ From the standpoint of considerations of tion of rye acreage and substitution of quality of Canadian wheat, something is to wheat acreage. This outcome may indeed be said both for and against the desirability eventuate, but at the time of meeting of the of the export quota. Since European mill­ London conference it was fair to suggest ers regard Canadian wheat as the premier that the classification of Poland as a net hard wheat of the world, many Canadians wheat-exporting country rested more on feel that such wheat will sell itself, since expectation than on performance. there is hardly a substitute for it; quotas In the case of India the circumstances are needed by filler wheats and poorer were somewhat different. Before the war types, not by Canadian wheat. As against India was an important net wheat-export­ this, other Canadians, recognizing the ad­ ing country. Since the war the exports of vances which have been made by Euro­ India have been smaller, almost negligible pean mills in substitution of other wheat in some years, and in two of the last ten for Canadian wheat, feel that a quota years the country was a net importer. would be advantageous. Unquestionably Whether India imports or exports wheat the desire for a quota to Great Britain is depends on the size of the domestic crop of much stronger than the wish to enjoy a wheat, the price of wheat, and the supplies quota on the Continent; a quota to Asia is and prices of rice and millet. The Indian hardly to be discussed. Perhaps it is fair delegate to the conference confirmed the to say that grower sentiment would be in current impression that significant exports favor of supporting the quota movement if of wheat from India are not to be expected accepted by all producing countries, rather except at a high international price level in than occupying a detached position if a a year of abundant domestic supply. Since quota plan could be set up without the in­ the average net exports of wheat during the clusion of Canada. The co-ordinated mar­ past decade have been less than 10 million keting of export wheat was strongly fa­ bushels per annum, it was difficult to pic­ vored in Canada a couple of years ago, ture India as suffering heavily from an un­ when consultations were held with Argen­ exported surplus of wheat. tineans and Australians; but the reverses Two other countries stood on the border of the pools during the last year may have line, Spain and Turkey. Turkey applied for weakened this sentiment. admission, on the ground that her new TIlE LONDON CONFERENCE 455 agricultural program implied the produc­ quotas, could hardly be asked to finance the tion of an exportable surplus of wheat; the Russian surplus; and if Russia were to be application for admission was denied. guaranteed a quota corresponding to her Spain did not apply, so far as was reported. pre-war export of wheat, this left the over­ In the last ten reported years Spain has seas countries almost in the position of been a net importer six times and a net dividing remnants. Indeed, a careful read­ exporter four times, but in insignificant ing of the Russian statement left a doubt amounts. Chile, a net exporting country in whether the Russians merely claimed as most years, but in small amounts, was not their quota the average export of the five represented; nor was Uruguay, whose posi­ years before the war (162 million bushels), tion is similar. Algeria, Morocco, Tunis, or something more. Beyond all else, how­ as dependencies of France, could have no ever, the Russian statement was signifi­ status in an exporters' conference. cant by reason of the declaration that At the end of the first day the parlia­ Russia intended not to contract but to ex­ mentary battle lines were drawn. Nine pand the acreage planted to wheat and wheat-exporting countries were united in would listen to no suggestion of adjustment support of the quota plan and prepared to of production to demand.2 recommend its adoption to their govern­ The adherence of the central European ments. The position of the Russians was countries and of Russia to a program of unheralded, but could be inferred. The quotas supported also by Argentina, Aus·· position of the American delegation could tralia, and Canada, revealed an incongru­ hardly have been in doubt in the minds of ity whenever the bases of the allocations astute foreign observers of the American came up for discussion. The position of wheat problem. The Russian delegation the central European countries and of Rus­ adroitly turned the situation to their par­ sia was that contraction of acreage could liamentary advantage. In a formal ad­ not be entertained-instead, expansion was dress,! the Russian delegation accepted "in to be expected. For comparable bounda­ principle" the quota plan, with three reser­ ries, the wheat acreage, production, and vations and qualifications. The quota as­ exports of Bulgaria, Hungary, Jugo-Slavia, signable to Russia must equal her pre-war and Roumania combined were as follows: export of wheat; credits would need to be Average Average extended to Russia to cover the administra­ 1909-14 1925-30 tion of the export quota and the impound­ Wheat acreage (million acres).. 19.6 19.0 Wheat production (million bush- ing of un exportable surplus in excess of els) ...... 330.0 314.0 the quota; and all exporting countries, spe­ Net exports of wheat and flour cifically the United States, must enter into as wheat (million bushels) . .. 110.0 42.7 the agreement, and without other and sep­ arate understandings. The Russian gesture From these data it is apparent th~t no ex­ was at once a smile and a blow. The other pansion of wheat acreage above the pre­ exporting countries, burdened with the car­ war level as a whole has occurred in the rying charges on their unexportable sur­ countries of central Europe, even if we in­ pluses in excess of any remotely predictable clude the prospective expansion in Poland. It is correspondingly obvious that the ex­ 1 See Appendix B, pp. 468-69. ports from this region since the war have 2 Broadly speaking, the Hussian claim was not especially contingent on the success of the Five-Year been less than they were before the war. Plan, but presupposed merely a production corre­ On internal grounds, therefore, a contrac­ sponding to the pre-war outturn with continuation of tion of wheat acreage could not be enter­ the pre-war per capita consumption. But it was as­ sHmed that improvement in wheat culture under the tained by these countries, and instead of a Five-Year Plan would make up for the deterioration reduction of exports being contemplated which occurred during and directly after the war. The change of the western boundary of Hussia through the opposite is being sought. Thus, in a the loss of Finland, Estoni.a, Latvia, Lithuania, Con­ consideration of quotas the countries of gress Poland, and Bessarabia, increased rather than central Europe proceeded upon the as­ decreased the wheat-exporting capacity of the coun­ try, since the territory lost was a net importer of sumption that they were entitled to quotas wheat before the war. equaling their pre-war net exports; this 1GG TIlE INTERNATIONAL WHEAT CONFERENCES DURING 1930-.11

position was not stated categorically, but claim, and a choice of the alternatives followed naturally and logically from the would present considerable ground for dif­ exposition of the state of agriculture in ferences of opinion. A cursory examination those countries. of the different interpretations will indicate The Russian position, broadly stated, that a Russian quota might he claimed well was that Russia felt herself entitled to the in excess of 200 million hushels per annum. re-establishment of her pre-war status as The overseas wheat-exporting countries, a wheat exporter.l There are several pos­ contrasted with Russia and the central Eu­ sible interpretations of this declaration, and ropean countries, judged their potentials although these were not developed in the as wheat exporters not on the basis of the formal Russian statement, we may be sure pre-war average, h'ut on the basis of post­ they would have heen astutely devel­ war occurrences. To have admitted the oped if a discussion on the program of validity of the propositions of Russia and quotas had ever to come to definitive terms. of the countries of central Europe would One interpretation is that Russia would he have meant transferring the hurden of un­ entitled annually to export a volume of exported hut exportahle surpluses to the wheat equal to the ahsolute figure of her overseas countries, with Russia and the five average export in the five years before the central European countries tending to have war, namely, 162 million hushels, irrespec­ small or negligible carryovers. If the over­ tive of others. A second interpretation is seas countries, accepting pre-war exports as that Russia would be entitled annually to hase-line for Russia and the central Euro­ export a volume corresponding to the pro­ pean countries, were to use post-war ex­ portion which 162 bears to the total pre­ ports as the base-line for the overseas war net imports of Europe from Russia and exporting countries, the combination of the from overseas. A third interpretation is two procedures would evolve a figure for that Russia would expect in the future to prospective total exports far in excess of contrihute such proportion of Broomhall's the world demand. For illustration, let us total shipments as was contributed on the take the simplest formulation, one in abso­ average in the five years before the war, lute terms, disregarding relative propor­ according to Broomhall's Russian shipment tions. figures. A fourth interpretation is that Rus­ Wheat and flour (Million sia would expect a quota based on the rela­ bu .• bels) tion of her pre-war exports (162 million Average export of Russia, 1909-14...... 162 Average export of central European hushels) to the average export volume of states, 1909-14 ...... 110 wheat in the five years hefore the war as Average export of India, 1909-14...... 50 stated in Broomhall's compilation of total A verage export of United States, 1924-29 179 overseas export shipments. This would Average export of Canada, 1924-29..... 310 mean including in the hasis of computa­ Average export of Argentina, 1924-29... 155 Average export of Australia, 1924-29. . . . \)7 tions the wheat shipped to ex-Europe as well as to Europe. A fifth interpretation Total ...... 1,063 is that Russia would expect such a quota as would correspond to the proportion When one recalls that the largest trade which the pre-war export of Russia bore in history, including not merely the coun­ to the pre-war exports of the other ten tries named but all other countries, was countries represented at the conference, 943 million bushels (in 1928-29), the ab­ this to he applied with the use of the last surdity of such a computation becomes ap­ five years as the hase-line. All these are parent. If the schedule of quotas were to he possible in terpretations of the Russian based on the average pre-war exports of Russia, India, and the central European 1 The exact statement was as follows: " .... the countries, as a minimum for those coun­ u.s.s.n. has naturally the right to occupy on the world's grain market the same place as was occupied tries, and on the average post-war exports hy pre-war Hussia..... There is no cIouht that it of Argentina, Australia, Canada, and the would he correct if the quota for the U.S.S.R. were hased on the quantity of wheat exported before the United States as representing the achieved war." positions of their agricultures, in the ab- TIlE LONDON CONFERENCE sence of unforeseeahle and unexpected in­ offset hy lower per capita consumption in creases in demand and without reduction other countries, especiaUy in the United of acreage or of yield per acre, an expand­ States, where the present rate of consump­ ing carryover would accumulate. Such tion per capita is at least 10 per cent below accumulation in the very nature of the the immediate post-war rate. hase-lines adopted would occur in Argen­ Correspondingly, in effect, Bussia, the tina, Australia, Canada, and the United central European countries, and India with­ Slates, largely or entirely. And if adjust­ drew from the world export wheal market ment of production to demand (contrac­ or fell to lower positions. Argentina, Aus­ tion of acreage) were to be sought to hring tralia, Canada, and the United States ad­ the prospective exportahle surplus down vanced and took their places. Becovered, to prospective demand, such adjustment of Bussia and the countries of central Europe production and contraction of acreage claim their old places; the overseas ex port­ would need to occur in Argentina, Austra­ ing countries decline to evacuate their lia, Canada, and the United States. Never­ newly won positions. Someone must yield, theless, Argentina, Australia, and Canada unless the exportable wheat surpluses of supported the quota plan, even after it the world are to continue to he excessive, was made clear that Russia positively, the or unless it so happens the average world Central European countries prospectively, yields per acre turn ou t to he sm all for and India probahly would demand pre-war several successive years. With accep tance exports as base-lines for their quotas. of the positions stipulated hy Bussia and Thus viewed, the situation resembles that desired by the central European countries, of sugar. Before the war the average (1909- the yielding would need to he done hy Ar­ 10 to 1913-14) production of cane sugar gentina, Australia, Canada, and the United was 10.5 million tons, and of beet sugar States. And yet, Argentina, Australia, and 8.5 million tons, with a total of 19.0 mil­ Canada accepted the quota plan containing lion tons. In consequence of the war, beet such implications. While accepting the sugar acreage contracted, while cane sugar plan, these countries had no policy of acre­ acreage expanded. Since the war, the beet age contraction. The United States, while sugar acreage has gradually recovered and not accepting the quota plan, put forward thc cane sugar acreage has persisted. In a policy of acreage contraction. the five years 1925-26 to 1929-30 the aver­ The American delegation held a negative age production of cane sugar was 19.2 mil­ position toward the quota plan on juridical lion tons and of beet sugar 9.6 million and economic grounds. In connection with tons, with a total of 28.8 million tons. Cane informal discussions on legal powers and sugar had usurped the place of beet sugar constitutional limitations, rather hroad con­ and when beet sugar returned to claim its trasts were developed between the Ameri­ place, cane sugar declined to yield. The can government and those of the other result has been a glut of sugar with the countries participating in the conference. futures price of raw sugar down close to It became again clear, as was revealed dur­ one cent a pound, colossal losses by pro­ ing the war, that the governments of most ducers and bankers, and finally the Chad­ foreign countries possess executive powers bourne Plan evolved in the endeavor to which are less limited by constitutional adjust production to demand. There exists, provisions than is the case in the United however, an important difference between States. Three general methods were sug­ sugar and wheat; a great increase in per gested as parts of the administration and capita consumption of sugar has provided enforcement of an international quota ap­ an outlet for much of the increased pro­ plied to wheat. (a) An export tax would duction. Per capita consumption of wheat, be levied on wheat shipped out in excess of on the contrary, though recently rising, is the denominated quota. (b) An export per­ Jl~ohably still below the pre-war average; mit would be required for wheat shipped hIgher per capita consumption in certain out, with a check at the limit of the denom­ European countries, in tropical countries, inated quota. (c) An indemnity fund would and in the Orient is probably more than be created, each participating country mak- 458 THE INTERNATIONAL WHEAT CONFERENCES DURING 19.~O-31 ing a deposit, against which fines would be scribed in the Agricultural Marketing Act, assessed in the event of the prescribed the Farm Board could post money in an quota being exceeded, said fines presum­ indemnity fund abroad. In short, while it ably to accrue to the quota-observing seemed possible on constitutional grounds countries. These methods were clearly in­ to conceive of the Farm Board becoming applicable to wheat in private hands in the sole exporter of wheat (through owner­ the United States, under existing consti­ ship secured by purchase), on legislative tutional rights. The Constitution of the grounds this seemed entirely unfeasible. United States contains an express provision The delegates of the other countries, in against the levy of export taxes. To require sharp contrast, professed to believe, and an American national in time of peace to more or less categorically affirmed, that the secure an export permit to sell his private necessary functions to operate an effective property abroad (apart from quarantine wheat quota plan lay within present consti­ restrictions) would seem to involve a vio­ tutional powers and easily secured legis­ lation of the commerce clause of the Con­ lative authorization in their respective stitution and of the Fifth Amendment. To countries. That Argentina, Australia, Bul­ require an American national to post an garia, Canada, Hungary, India, Jugo­ indemnity fund abroad, with those of other Slavia, Poland, and Roumania possessed in wheat growers, with a collective liability their various forms of government the pow­ which might apply to each individual ir­ ers over export of wheat possessed by the respective of his participation in exports Soviet government of Russia struck the relative to those of other individuals, American delegation as remarkable if true. would seem also to contravene the Fifth On grounds of agricultural policy Amendment of the Constitution. In short, and broader economic considerations, the to make an international quota effective, American delegation could not accept the the necessary participation of the United quota plan. In the address of the head of States would seem to imply amendment to the American delegation (printed in the the Constitution. Such a far-reaching in­ Appendix),! prepared by the Farm Board novation the American delegation was not and released in the United States as an prepared to consider. official utterance of that body, stress was The delegates of the other countries im­ laid on the necessity of adjustment of sup­ mediately appreciated the force of these ply to demand. It was not to be believed Constitutional limitations, when brought to that marketing restraints and a continuous their attention. They had a way out, how­ program of holding wheat could bring ever: the Federal Farm Board should pur­ about a return of remunerative prices in chase the entire exportable surplus of the face of unrestricted and indeed ex­ wheat, and of course the Board could de­ panding acreage. Year after year someone termine amount of export and rate of would need to "hold the bag" for the un­ movement. To this simple solution the exported exportable surpluses, and while American rejoinder was that under the this point was not emphasized, it must limitations of the existing appropriation (in have been clear to all of the delegates that view of the needs of other branches of the carryovers would be held largely in agriculture) it would be necessary for the Argentina, Australia, Canada, and the Congress to provide funds for the specific United States, and probably most largely in conduct of such an enterprise. The Farm the United States, as is the case today. The Board had never accepted such a view of countries participating in the conference the scope of its functions as would comport were urged to consider, each on the basis with the proposal to become the single ex­ of its internal circumstances, the best porter of wheat from the United States, methods of adjusting supply to demand and there seemed no prospect that Con­ through contraction of production and gress would specifically authorize the Farm through increase in consumption. Board to exercise such a responsibility. Russia had declined flatly to consider a Also, it was doubtful whether, under the existing limitation of use of funds pre- 1 See Appendix C, pp. 470-75. THE LONDON CONFERENCE 159

contraction of acreage planted to wheat, age and lower our contribution to the wheat and the five countries of central Europe export market to relatively insignificant were in the same position, though more re­ proportions, represented a consummation strained in their formal declarations. The highly welcome to the other exporting coun­ delegates of Argentina, Australia, and Can­ tries. If the United States wheat acreage ada did not need to be told that their coun­ were to be contracted, this might furnish tries had expanded wheat acreage heavily an added incentive to expansion of wheat since HH4, without regard to their domes­ acreage in one or the other of the other tic populations; but they saw no way of ten countries. If the United States were reversing this trend of their agriculture out of the export market, except for occa­ and could discern no crops which might sional and incidental shipments, then the be recommended on a comprehensive scale other ten countries could set up a quota in substitution for wheat growing.1 The plan. The only thing which dimmed the large importance of maintaining exports of allurement of this prospect was the fear wheat in the international accounts of that the United States wheat growers might these three debtor countries was obvious not contract their acreage; and this was a at a glance. In short, both on grounds in­ conviction rather than a fear. In short, if ternal to agriculture and on considerations the United States had no exports of wheat, hased on their social economies, Argen­ we could he disregarded in the setting up tina, Australia, and Canada could not be of a quota plan; but since the delegates of expected to contract wheat acreage in the the other ten countries were convinced that presence of favorable climatic conditions. the United States would continue to be a This left only India and the United net exporter of prominence even after the States. The population of India is growing present abnormal carryover had been dis­ rapidly, industrialization is progressing, posed of, adherence of the United States the standard of living is rising, and the an­ was essential to the setting up of a quota nual per capita consumption of wheat per­ plan. haps increasing. India's contributions to The American delegation formally re­ the export wheat market have had little quested that the proponents of the quota significance in recent years, and there is plan should present a "statistical exposi­ small prospect of any other situation, ex­ tion" of their case. No such statistical cept in the event of high wheat prices exposition was ever offered. The Soviet (when the problem of the surplus would delegation made the rejoinder that "be­ have disappeared) or a series of succes­ fore the Conference discussed the actual sively large crops. To suggest that India figures, it ought to give its opinion on the should reduce her wheat acreage would be question of principle." The nearest to a tantamount to the suggestion that India statistical statement was the declaration should agree to become for all time a nel made on behalf of Poland that "a basic wheat-importing country, which the In­ quota would be fixed in an international (lians would regard as absurd. India thus convention, and this would be diminished disposed of, this left only the United States. or increased according to variations in That the United States might determine, market prices." It is probably not far from on internal grounds, to reduce wheat acre- the truth to assume that none of the pro­ ponents had ever seriously drafted a sched­

1 Argentina, Aush'alia, Canada, and thc United ule of quotas under any assumption of ~tates arc in position to malle the rejoinder that the price levels. Increase in wheat acreage since the war has been lal:gely on. virgin land developed with modern ma­ As mentioned above, it was first planned c!lJnery WIth relatively low costs of production, pre­ to separate the problem of present sur­ Cisely the character of agricultural expansion which pluses from that of future surpluses. Such finds an economic justification. The Hussians would ~neet the rejoinder with the retort that wheat growing a separation was not seriously attempted I!l Russia is also a mechanized production at rela­ in the discussions. This was probably due tively low cost. The countries of central Europe can­ not claim to be low-cost producers, but instead con­ to the acceptance of the view, expressed or tend that wheat growing is an indispensable part of implied, that at least for several years to their diversified agriculture. come the surplus problem would recur an- 4(jO THE INTERNATIONAL WHEAT CONFERENCES DURING 1930-.31 nually, and therefore a continuing opera­ Preference in European markets was sought tion would be necessary. It was this con­ by Bulgaria, Hungary, Jugo-Slavia, Poland, tinuing feature of the plan which seemed and Roumania. These five countries, acting to hold out hope to the exporting countries as a unit on the proposed international ex­ of Europe especially, but was regarded port commission of eleven countries, would with especial disfavor by the American del­ require the support of but one additional egation. Though we have no authority to country in order to exercise control as a support the suggestion, we make the infer­ majority. After having disposed of their ence that the Farm Board might have been exportable surpluses under preferential willing to consider a plan for the orderly treatment, these five countries would be in distrihution of the carryovers at the end of position to influence, if not indeed to de­ the 1931 crop year, of which this country termine, the amounts to be contributed by held the largest part. We gather, however, the other six exporting countries. The pos­ that no such limited negotiation was given sibilities inherent in such a situation-di­ consideration. rectly in respect of influence on movement The quota plan was projected on the of wheat from different exporting coun­ hypothesis that the schedule of export tries, and indirectly in influence on move­ quotas would constitute the basis for an ment of finished goods from European equation of supply and demand more fa­ countries to the Wheat-exporting countries vorable to the selling side. Just as world -are too patent to require further deline­ crop and world requirements of wheat are ation. regarded as equated in world price in the The proponents of quota marketing en­ general sense and exporters' surpluses in deavored to reject the suggestion that ex­ the principal countries are regarded as periences with coffee and rubber tended to equated with importers' requirements in discredit the prospects of a centralized mar­ the principal countries in a special sense, keting of wheat; at the same time they so it was assumed that under the quota plan seemed to feel that the newly established the export supplies as represented in the quota marketing plans applied to tin and schedule of exporters' quotas would be sugar could be used in support of their equated with import requirements in the plan for the quota marketing of wheat. In principal countries. That is, it was assumed our view, the experiences with rubber and that the un exportable surpluses in the coffee cannot be effectively employed in eleven exporting countries, over and above arguments against the quota marketing of the export quotas of those countries, would wheat, nor yet may the schemes now being not influence price and could be regarded used in the marketing of tin and sugar serve within the crop year as non-existent. It as models for the marketing of wheat. In was even assumed that the importing coun­ the case of sugar (which was specifically tries could be compelled to bid against each brought to the attention of the conference other for wheat under the export quotas, in a memorandum devoted to the Chad­ and that the unexportable surpluses in the bourne Plan) the contrasts are greater than eleven exporting countries would influence the similarity. Aside from Great Britain, neither the exporters nor the importers. This the continent of Europe is a net exporter of price hypothesis seemed to be accepted by sugar, but a heavy net importer of wheat; the exporting countries, especially in Eu­ the United States is a net exporter of wheat rope, though the importers and millers of but a heavy net importer of sugar. In fact, Europe flouted it. the Chadbourne Plan is built upon the cir­ The bilateral situation (to make use of an cumstance that the United States imports adjective which is popular in the publica­ on the average something considerably tions of the League of Nations) contained over three million tons of sugar annually. an alluring prospect. The quota plan for In the broad sense one may compare the distribution of export wheat had a definite import demand of sugar in the United relation to the wheat preference plan of States with the import demand of wheat in the central European agricultural bloc. To Europe. But the circumstances are entirely a certain extent they were complementary. different in relation to production; and the TIlE LONDON CONFERENCE 1(;1 distributive circumstances are different, be­ the best utilization of the domestic wheats cause one is a raw material and the other a (with reflection of the highest prices) will manufactured commodity. Also, the de­ be secured when the millers are permitted mand for sugar is more elastic than that utmost freedom in the selection of the for­ for wheat. Judged entirely from the stand­ eign wheats needed for blending with do­ point of marketing expediency, one might mestic wheat to produce the standard flour judge the Chadbourne Plan to be prac­ of the country. ticahle and at the same time regard an It is reasonable to infer that the delegates international wheat quota plan as imprac­ of the nine exporting countries, in spite of ticable, this apart from economic consider­ their attitudes of insistence and their dis­ ations. appointment at the outcome, verging on dis­ The attitude of the wheat-importing illusionment, did not expect that the Ameri­ countries of western Europe deserves a can delegation would discuss the operation short comment. If a quota plan of distribu­ of a quota plan. The delegations of the other tion were to be effective in the interests of countries quite certainly had no powers to the agrarians in the surplus-producing bind their countries in the setting up of countries, this would tend to raise prices to administrative operations. What was de­ consumers in the net importing countries, sired from the American delegation was in the same way that discriminatory regu­ that degree of acquiescence in what they lations in wheat-importing countries tend called the "principle" (hut what was really to raise prices to consumers in those coun­ the hypothesis) of quota marketing of ex­ tries. Of course it would he said that when port surpluses, which would lead the dele­ the international commission administering gation to such a provisional acceptance as a quota plan allocated the quotas from dif~ would be involved in referring the plan to ferent exporting countries, this would he the American government for definitive ac­ done with consideration of the prices, types, ceptance. That such an action on the part varieties, and qualities of wheat in both im­ of the American delegation would have porting and exporting countries. But no been tantamount to sending home a straw one familiar with the technical phases of man for the government to knock down, flour milling and bread making in the dif­ was apparently not understood adequately, ferent importing countries of the world be­ or, if understood, was dismissed. If the lieves that this could he done or that it American delegation had thought well would he seriously attempted. To fit a se­ enough of the hypothesis to have agreed to lection of wheats correct for the purpose of refer the quota plan to the government of manufacture of hlended flours into a sched­ the United States, this would have heen ule of quota allocations, would not be found transformed in the inspired press of the practicable by a commission of the pro­ European countries in to an outstanding ducer countries administering the quota achievement of the conference, reflecting plan. Therefore, the quota plan was re­ great credit on the delegates of the several garded wi th horror by European millers countries represented. The later rejection and bakers. Bread consumers in Europe, by the American government, after a lapse especially the urban workers, could not be of time, would have only dimmed but not brought to believe that the quota plan rep­ destroyed the glory of the achievement of resented a rationalization in the interest of the London conference; and, from the producers and still not to consumers' disad­ standpoint of internal politics in the coun­ vantage. Furthermore, the approval of the tries concerned, such rejection would have quota plan could not be expected to prevail been utilized to pile still more blame on the !n agrarian circles in the net wheat-import­ United States as the chief obstacle to in ter­ II1g countries. These growers endeavor to national unity. The conference desired to promote self-containment and to protect limit its acts to such as could be adopted themselves from low international prices unanimously. Therefore, the conference hy tariffs and other regulations; but in so recognized the "principle" of restriction of far as imports are necessary in their own production, not that of export quotas. This schemes, their spokesmen recognize that the daily press of London designated as 462 THE INTERNATIONAL WHEAT CONFERENCES DURING 1930-31

"ending in deadlock." Such a circumstance The Conference considers that, where possible usually requires the creation of some in­ a reduction in the areas devoted to wheat should be undertaken in whatever way each country strument of political solace, and this is to considers to be most effective and practical. be found in the provision contained in the It was also felt to be especially desirable that final report for the possible calling of a there should be a careful exploration of all avenues later conference. The Final Act of the con­ for the greater utilisation of wheat, both for food ference was as follows: and also for other purposes. The Conferenee further considered that cur­ FINAL ACT rent information regarding the supply, the de­ mand, and the movements of wheat should be OF THE brought together in such a way as to assist the CONFERENCE OF THE WHEAT EXPORTING wheat exporting countries towards the orderly marketing of their surpluses. COUNTRIES The Conference of the Wheat Exporting Coun­ HELD IN LONDON AT THE OFFICES OF THE HIGH tries has, therefore, decided to establish a Com­ COMMISSIONEll FOll CANADA FllOM THE EIGHT­ mittee of the Conference consisting of one repre­ EENTH DAY TO THE TWENTY-THInD DAY OF MAY, sentative from each State participating in the ONE THOUSAND NINE HUNDHED AND THnnY-ONE Conference to: a) Submit to the Governments of' the countries The official Delegations of the following Coun­ participating in this Conference a definite tries: America, the United States of; Argentina, proposal for establishing, under the super­ Australia, Bulgaria, Canada, Hungary, India, Po­ vision of the Committee of the Conference, land, Roumania, Union of Soviet Socialist Repub­ a Clearing House of information to serve lics, and Yugo-Slavia have met on the invitation the wheat exporting countries. For this of the Canadian Government and at the Offices Of purpose, the Committee shall be em­ the High Commissioner for Canada from May powered to secure from the States repre­ 18th to 23rd for the Conference of Wheat Export­ sented on the Committee full information ing Countries. as to the unloadings and stocks of wheat at The Conference invited the Honourable G. all importing points, the areas sown to Howard Ferguson, K.C., etc., High Commissioner wheat, and the crop prospects, thereby as­ for Canada, to act as its Chairman. sisting the orderly distribution of wheat in world markets. This information should At the Fourth Plenary Session on May the 23rd, be provided as far as possible in the form 1931, the Report of the Committee was presented prescribed and at the times fixed by the to the Conference and was finally adopted in the Committee. following form: b) To explore carefully all possible avenues for The Conference of Wheat Exporting Countries, the greater utilisation of this important consisting of Delegations appointed by the Gov­ cereal. ernments of: America, the United States of; Ar­ gentina, Australia, Bulgaria, Canada, Hungary, The Conference, convinced that the existence India, Poland, Roumania, Union of Soviet Social­ of this standing Committee will develop the con­ ist Republics, and Yugo-Slavia, having studied tacts already established here between the wheat the existing world wheat situation is convinced exporting countries, proposes that the CommjUee that among the underlying causes for the present may prepare and recommend a draft Agenda for depressed prices for wheat, the following points a further meeting of the Conference at which should be specially mentioned: countries here represented may enter upon the 1. The effects of the economic depression consideration of such subjects as may then be throughout the world. deemed appropriate. 2. The fact that there is more wheat produced Executed at London, the twenty-third day of than can be sold at a profit. May, one thousand nine hundred and thirty-one. 3. The absence of sufficiently adequate informa­ A copy of the present Act will be sent to par­ tion regarding the movements of wheat, the ticipating Governments by the Secretariat of the requirements of certain countries, and the Conference. quantities which are liable to be placed upon the market. Signed by Representatives of the above-men­ 4. The present uncertain state of the wheat mar­ tioned Countries. kets. The Conference, recognising the serious nature of the world economic depression, believes nev­ If the Statistical Committee is properly ertheless that a substantial contribution to an organized, adequately supported, effec­ improvement of the present situation may be made through a clearer understanding of the tively conducted, and is able to secure ap­ underlying facts regarding so important a com­ propriate co-operation with importing modity as wheat. countries, a substantial improvement in CONCLUDING OBSERVATIONS 463 our statistical information may be attained. effect the interrelated posts of a vast single Nothing is more greatly needed in this field market. Whether wheat growers market ilian adequa~ repor~ on stock~ and on their products co-operatively or dispose of disappearance of wheat in its several cate­ them through middlemen, does not affect gories of food, feed, and seed. If such ad­ this postulate. Against this, the quota plan vances eventuate, the conference will have represented the marketing of wheat h.y been worth while directly. Indirectly, the negotiation, essentially political, with no conference was worth while because of the guarantee that the political negotiation contrasts it developed. Though the broad would be of an agrarian complexion or one questions were not submitted to funda­ conducted from the standpoint of the inter­ mental discussion, the real cleavage of ests of producers. opinion lay between marketing by political If the quota plan for distribution of negotiation and marketing through equa­ wheat, essentially a cartelization, had been tion of supply and demand in price. The adopted, this would have constituted a position of the American delegation repre­ precedent of unquestioned influence on the sented a pronouncement in favor of open future distribution of other primary mate­ international wheat prices, openly arrived rials. The non-adoption of the quota plan at on open international wheat markets.1 for distribution of wheat may be expected It envisaged continuation of the estab­ to exert a restraining influence on existing lished system of international trading in and pending schemes for the distribution wheat on grain exchanges in exporting and of other primary materials under govern­ importing countries, these constituting in mental control.

III. CONCLUDING OBSERVATIONS The production of wheat in the world has central Europe and of Russia and of the outrun the effective demand. The disparity wheat acreage attained during and after has been accentuated by the sudden re­ the war in the overseas countries represent entry of Russia as a large-scale exporter of together (perhaps in conjunction with some wheat and by the reduction in effective high yields per acre) a supply in excess purchasing capacity associated with the of effective demand for the time being. In business depression. How far variation in consequence, carryovers have accumulated. yield per acre may have contributed to the Following accumulation of stocks, and in situation is not clear. The wheat growers the midst of the psychological atmosphere (and the governments) of Bulgaria, Hun­ of the business depression, international gary, Jugo-Slavia, Poland, Roumania, and and export wheat prices have declined to Russia have exerted their efforts to repair a point equaling the low prices of the last the loss in wheat acreage suffered in conse­ century; gold prices of wheat represent the quence of the war. Wheat producers in lowest level in the memory of living men. Argentina, Australia, Canada, and the In sharp contrast with the low wheat price United States have sought to maintain all stand costs and the high rates of interest on or most of the added wheat acreage brought long-term investments of, and short-term into operation in consequence of the war. credits extended to, wheat growers more or The combined contributions of the re­ less the world over. The important net stored wheat acreage of the countries of wheat-importing countries, largely under agrarian political influence, have protected their wheat growers by high tariffs and 1 Several of the European delegates suggested that the pegging of the domestic price of American wheat various restrictive regulations discrimina­ by the Farm Board was inconsistent with the declara­ tory against imported wheat. These coun­ tion in favor of a free international market. This tries to a large extent seek self-contain­ objection is not valid; it could hardly be a matter of dircct concern to the eleven wheat-exporting states ment in food supplies and especially in What domestic prices were maintained in those states, wheat; of this tendency Germany, France, so long as their export prices were uncontrolled and l?cir wheats sold competitively on a free interna­ and Italy furnish striking illustrations. The lIonal market. self-containment policies of the net wheat- TIlE INTERNATIONAL WHEAT CONFERENCES DURING 1930-31 importing countries which follow this doc­ Enlargement of effective demand has not trine and the natural tactics of merchants proved a tangible program for the wheat­ and millers in countries like Great Britain exporting countries. They see no ways of which do not seek self-containment com­ increasing the consumption of wheat in hine to leave the burden of accumulated their own countries. Any undertaking to stocks upon the surplus-producing coun­ stimulate consumption of wheat in net tries. Thus, more and more, the surplus wheat-importing countries lies too fur wheat prohlem has become a problem of away from wheat growers in the exporting the exporting countries. The wheat growers countries to constitute a tangible program. of the exporting countries have turned to In addition, wheat growers in exporting their governments for aid. The sixteen countries observe to their dismay that high wheat conferences which have been re­ tariffs and other regulations designed viewed in this issue of WHEAT STUDIES rep­ largely to achieve self-containment in some resent the combined efforts of wheat net wheat-importing countries tend to re­ growers, governments, agrarian domestic duce per capita consumption of wheat in politicians, international politicians, and those countries. At the same time, growers experts to solve the problem of the dis­ in exporting countries fail to observe a position of accumulated stocks of wheat at perceptible tendency toward increased con­ prices higher than current prices. sumption of wheat in their countries as the From the beginning all parties to the expression of low price. examination of the problem in each coun­ Since contraction of acreage is regarded try have realized that the grower's price of as impossible, and expansion of effective wheat (which represents the intricate equa­ demand is held to be impracticable, this tion of available supply to effective de­ leaves open only the third method. Here mand) could be improved by one or all of enters a magic term which the wheat three procedures: (1) reduction of supply growers in distant scattered countries seem through contraction of acreage planted to to have borrowed from the pUblications of wheat; (2) increase in effective demand the League of Nations-"concerted action." through enlargement of the circle of wheat "Concerted action" in the international consumers, elevation of per capita con­ marketing of wheat contains the implica­ sumption, and increase in purchasing capa­ tion of an international co-operative asso­ city; (3) improvement in the bargaining ciation of wheat growers. The arguments position of wheat sellers, and increase in which are adduced in support of co-opera­ the efiiciency of distribution of wheat. It tive marketing of wheat within a country mayor may not be that they have compre­ are expanded and glorified in the concept hended the potential effect of an accident of concerted action of wheat growers on of climate resulting in several years of low the world market, with distance lending yields per acre. enchantment to the view. One hears the The wheat growers, agrarian politicians, same exaggeration of the profits of middle­ and governments have recoiled from ad­ men and the influences of speculation. One justment of supply to demand through con­ finds the same prediction that, with supply traction of acreage. If w,e omit the position and demand unchanged, these may be of the American Farm Board, it is to be equated through co-ordinated marketing at said that in every country reasons are ad­ a substantially higher price than would vanced which are found compelling in that otherwise be arrived at. One observes the country why the wheat acreage cannot be same exaggeration of the price influence contracted, but must be maintained or, of holding wheat, carrying it from one indeed, expanded. The older exporting crop year to another, with the familiar dis­ countries demand their old ranking, the regard of the cost of carrying. One hears newer exporting countries decline to re­ the same confident anticipation that pro­ linquish their new ranking. Having found ducers' prices in exporting countries can competition destructive, both groups seek be raised substantially without sensibly co-ordination-but co-ordination outside of affecting consumers' prices in importing contraction of wheat acreage. countries. The need visualized is for co- CONCLUDING OBSERVATIONS 465 operation; but since effective association superhuman power working for higher of wheat growers in different countries is prices. The farther the responsihility for regarded as impossible, the governments adjustment of supply to demand lies from are drawn into the picture. What finally the individual wheat grower, the freer will evolves is a program of concerted action to be the inclination to expand production. be undertaken by the governments of the The United States alone of the eleven wheat-exporting countries. major net wheat-exporting countries has We have here the general explanation of declined to consider a program of con­ the wheat conferences which have been certed action in the cartelization of the held during the past two years. The con­ international wheat market. There is ap­ certed action first sought was that between parently less faith in government in the the net wheat-exporting and net wheat­ United States than in the other wheat­ importing countries of Europe, not includ­ exporting countries. It seems very unlikely ing Russia. The prominence of Russian that the other ten Wheat-exporting coun­ exports during the crop year 1930-31 neces­ tries will adopt a program of concerted sitated a revision of the concept of con­ action in the absence of the United States. certed action. Since Russia could not be Presumably Russia's flat declaration will excluded if the overseas countries were block the quota plan, since it is impossible included, and vice versa, since Russia could to picture a coalition between the five cen­ not be included if the overseas countries tral European countries and Argentina, were excluded, the plan was expanded into Australia, and Canada. It is to be expected a world-wide concert of wheat-exporting that the central European agricultural bloc countries. In effect, the governments of will continue the endeavor to secure pref­ some of the wheat-exporting countries erential treatment in the western Euro­ have endeavored to unite in concerted pean wheat-importing countries; this hope action the governments of all the wheat­ may be realized/ with some gain to the exporting countries. The objective has central European states and a lesser loss to been an international marketing organiza­ the overseas exporters. The trend of pro­ tion, including the division of the annual duction during the next few years is not to exports into quotas, with provision for the be foreseen; but, other things equal, with carrying of accumulated stocks. Such a the failure to achieve concerted action by scheme has points of similarity at once the surplus-producing countries, it is to be with the Chadbourne Sugar Plan and with expected that adjustment of production to the steel cartel embracing Germany, demand will gradually occur, barring suc­ France, Belgium, and Luxembourg. Since cessive years of high yields per acre. it is the governments which must directly We regard political action as the conse­ or indirectly carry through the concerted quence of agrarian distress. Andrew Cairns, action, co-ordination becomes political the statistician of the Canadian wheat rather than technical. If such international pools, has expressed the conjecture that concerted action were to be undertaken, the open marketing of wheat internation­ the subsequent political developments ally is due to decline and be supplanted by might be such that the original agrarian governmental or other form of controlled objectives would be lost sight of. marketing. We incline to the opposite In the broad sense, such concerted action view: with the turn of the trade cycle and in the disposition of exportable surpluses consequent improvement in prices, we of wheat would represent the marketing anticipate that marketing of wheat by gov- of wheat through political negotiation 1 It is rumored in trade circles in Europe that ar­ rather than through equation of supply rangements are already under way for the 1931-32 and demand in price. Other things equal, crop year, whereby manufactures of western Eu­ the tendency would be to exaggerate rather ropean countries carrying an export bounty will be exchanged for wheat of the central European coun­ than solve the surplus problem, since the tries carrying an export bounty, this bilateral appli­ wheat growers in the exporting countries cation of export bounties being relied on to circum­ would incline to regard international con­ vent the favored nation treatment clauses in the commercial treaties. A government hoard for wheat certed action as something approaching a export was set up in Jugo-Slavia on July 1, 1931. 46{) THE INTERNATIONAL WHEAT CONFERENCES DURING 1930-31 ernmenls (that is, by negoliation) will de­ low prices will bring about contraction of cline and open marketing by co-operative wheat growing in high-cost areas. The net associations of growers and by merchants effect therefore will he to introduce a con­ and millers on open exchanges will be re­ flict belween high-cost and low-cost areas stored, slowly or rapidly as the circum­ in Argentina, Australia, Canada, and the slances dictate. But as long as wheat prices United States. The United States may he remain very low, we must expect to wit­ in position to protect some of its wheat ness continuous, perhaps intensified, con­ growers (those in the hard spring wheat flicts hetween private trade and government belt) hy tariff'; heyond that, it might trans­ trade. fer to its consumer class a part of the bur­ The outcome of the present situation, den by the use of the equalization fee or according to European opinion, will be the export debenture. In the case of Argen­ somewhat as follows, with continuation of tina, Australia, and Canada, the only way the usual yields per acre. The unhampered of preventing acreage reduction regarded economic forces would tend to reduce as disastrous would be by direct or indi­ wheat acreage in high-cost areas and allow rect form of subsidy. If, in consequence of it to be maintained or even increased in any form of honus or subsidy, the export low-cost areas. In Europe and Russia, how­ wheats of the overseas countries were to ever, governmental policies will not permit appear on European markets with even this adj ustment to happen; instead, the the semblance of dumping, the importing home markets for wheat and the commer­ countries of Europe would have recourse cial interests of wheat growers will be pro­ to further restrictions or to embargoes. In tected by tariff's, blending restrictions, and short, Europe seems to believe that the other forms of regulation. Outside of major onus of the wheat surplus can be Europe and Russia, it is to be expected that transferred to the overseas countries.

Tllis study is the work of Alonzo E. Taylor APPENDIX

APPENDIX A RESOLUTION ADOPTED AT CONFERENCE IN ROME

OIlOANISATION OF WHEAT PnODUGTION AND OF (The right to put this article to vote is re­ THE WHEAT THAI)}'; served.) 1. The International Preparatory Conference of VI. At the same time the Conference urgently the lInd Wheat Conference recommends an ex­ recommends the importing countries to endeav­ amination of the possibility, in countries where our to organise the purchase of imported wheats. wheat is already consumed, of considering the This can be carried out, whatever form it takes, chances and means of developing such consump­ in accordance with the particular situation in titin. It also recommends the carrying out of a each country. strong puhlicity campaign in order to diffuse the consumption of bread in countries where it is not VII. The Conference considers that the Inter­ at present largely used. It is of opinion that, in national Institute of Agriculture and Economic order to give full effeet to this publicity, there Organisation of the League of Nations should fol­ must be no hesitation to dispose of part of the low closely the efforts to be made by the variolls stocks, which overburden the world market, at countries in the sphere of wheat production ;md low prices in these countries. trade, in order to be in a position to take in full agreement sueh steps as current experience may II. It recognises that the European countries, suggesV for manifold reasons, economical, social, or po­ litical, are unable, either to give up the cultivation VITI. It considers that the improvement of the of wheat or to allow it to he endangered. organisation of world wheat production and trade largely depends on an improvement in the pro­ III. It recognises that it is impossible to secure vision of information and statistical forecasts. a general reduction in the areas sown throughout It cxprcsses its confidence in the International the world by the direct method of obligatory re­ Institute of Agriculture as a means for co-ordinat­ striction, whether advocated by an international ing and unifying the statistical data of the various body or by national bodies. It is convinced that countries in this respect for ehecking and inll'r­ the reduction of sowing can only be obtained by preting the figures; for supplementing the docu­ natural methods, by the farmers themselves, in­ mentation from official sources by sueh profes­ lIuenced by the conditions of the market and a sional or cOlllmercial documcntation as may study of the figures and facts. It recommends that throw light on the problem; for facilitating the in countries which consider it advisable, this in­ utilisation of statistical information and for plac­ Jluence should be reinforced by a vocational and ing it without delay at the disposal of the inter­ persuasive propaganda among the producers. csted parties. IV. The Co nference considers that, in order to The Conference rccommends all the Stall's to bring about a solution of the wheat crisis, it is increase the financial means which are available particularly necessary that there should be an im­ for thc International Institute of Agriculture, in proved organisation of the wheat market. Such order that it may be possible for the Institute to organisation should be brought about rather by a carry out this work to best advantage. gradual and progressive policy based step by step on the results obtained, than by any policy that [1 It strikes us that the prerogative of the Interna­ claims to cover every aspect of the problem. tional Institute of Agriculture in respect of its direc­ tive and collaborative functions has bccome open to In order to reach a rapid solution it recom­ reappraisal, partly by reason of its present policies mends the countries interested to concentrate for and partly on the ground of the activities of the the present their effol·ts on some particular, defi­ League of Nations in economic fields. Interested read­ nite and limited object; the disposal or the or­ ers are referred to a recent review of the International ganisation of the carry-over of existing stocks. Institute of Agriculture, written by Asher Hobson, the American representatfve on the PCl'manent Committee V. The Conference is glad to note that the of the Institnte during 1!J22-2!l, The International In­ overseas exporting countries have agreed in col­ stitute of Agriculture: An Historical and Critical laboration with Europe, to explore a means for Anal/lsis of Its Organization, ActiviliC!s, lind Policies the exportation of wheat for the year of 1931-32, of Administration (I3erkeley, University of California Press, 1!l31). The subject is especially interesting to and for the actual stocks. They will hold a meet­ Americans because the establishment of the Inlerna­ ing to this effect, under the direction of Mr. tional Institnte of Agriculture proceeded from the ~<'crguson, Canada's High Commissary, on May 18, idealism and statesmanship of David Lubin, a Califor­ m London. nia merchanl.-A. E. T.)

[467 ) 1G8 TilE INTERNATIONAL WHEAT CONFERENCES DURING 1930-31 APPENDIX B THE STATEMENT MADE BEFORE THE WHEAT CONFERENCE BY THE CHAIRMAN OF THE DELEGATION OF THE U.S.S.R., MR. I. E. LUBIMOFF

The Conference of Wheat Exporting Countries solution is unacceptable. In the conditions of are mainly interested in the actual position of our social system, with the extraordinary rate wheat production in the U.S.S.R. of development of our industries and the growth The wheat crop in the U.S.S.R. last year of the number of our industrial workers, as amounted to 29,500,000 tons. Out of this quantity well as the raising of the standard of life of our consumption within the country amounted to working population, an increase in production is 23,400,000 tons. The surplus of last year's harvest necessary first of all to meet the growing internal was thus approximately 6.1 million tons. To­ demand. At the same time it will no doubt lead wards the beginning of the new campaign the also to a growth of grain surplus to meet our quantity of wheat from the last crop exported export requirements. It seems to us advisable to will reach probably 3,500,000 tons. allow each country to decide for itself whether As regards the new harvest, the sowing of win­ to curtail the production of agricultural com­ ter wheat amounts approximately to 12,600,000 modities and wheat in particular. As far as the hectares and the sowing of spring wheat will U.S.S.R. is concerned other countries can only amount to 29,700,000 hectares. This latter figure be interested in the extent of its wheat export will probably be exceeded owing to the intensive and sales abroad. sowing in the Collective and State farms. The From the announcement of the delegates it is total area under wheat in 1931 will be not less manifest that one of the principal solutions for than 42,000,000 hectares. The wheat crop antici­ the regulation of wheat export is the fixing of pated is 36,500,000 tons. The new principles of definite export quotas. Such a proposal seems to State and Collective farming, combined with the us an acceptable basis if certain reservations and advantages of the system of planned economy guarantees are provided. When deciding this and the utilisation of modern machinery make it question it is necessary to take into consideration possible for the U.S.S.R. to enter the world the vital interests of our country. In the foreign market with a high quality grain and with lower trade balance of the U.S.S.R. the export of wheat costs of production than in a number of other before the war, and during the last year, in countries. contradistinction to the importance of wheat ex­ Some preceding speakers have referred to the port to some other countries, occupied and occu­ question of the causes of the present agricultural pies at the present time a most important position crisis. We entirely disagree with them in their and is one of the principal sources by which the interpretation of this problem. We consider that U.S.S.R. pays for its imports. the crisis is directly due to the contradictions of At the Rome Conference the Delegates of some the capitalist system. countries as well as the Chairman of the Com­ At the Rome Conference the delegates of the mittee of Production and Distribution, in the U.S.S.R. have already pointed out that the summary of the activities of this Committee, rec­ U.S.S.H. does not experience any crisis and con­ ognised that the U.S.S.R. has naturally the right tinues to develop its industry and agriculture in to occupy on the world's grain market the same conformity with the Five-Year Plan, although the place as was occupied by pre-war Russia. The U.S.S.R. as an exporter is suffering losses similar Soviet Delegation notes with satisfaction that to those of the capitalist countries owing to the these announcements did not raise any adverse difficulties of sale and low prices. The U.S.S.R. comments at the Conference in Rome. There is cannot therefore remain indifferent to the pres­ no doubt that it would be correct if the quota ent condition of the world grain market. for the U.S.S.R. were based on the quantity of As an exporter with large and constantly grow­ wheat exported before the war. ing prospects the U.S.S.H. is undoubtedly inter­ At the same time I think it necessary to em­ ested in regulating the grain market. It is how­ phasise that the establishment of a scheme based ever necessary to state emphatically our position on quotas can be acceptable only in the case if that the methods adopted of deciding this impor­ the largest wheat exporting countries will parti­ tant question must not lead to a lowering of the cipate in this proposed scheme. standard of life of the working masses. I am certain that all the DelCgates to this Con­ Yesterday in the general discussion the repre­ ference will agree also that the eonclusion of an sentatives of the United States of Ameriea, Aus­ agreement on quotas predetermines that the tralia and the Danube countries submitted a num­ States adhering to quotas should not conclude ber of definite proposals for regUlating the grain any separate agreement between themselves in market. The chief proposal for the solution of order to place their wheat exports under beUer this problem according to the President of the conditions than the wheat exports of other coun­ United States delegation was a reduction of the tries participating in the agreement. In the same area under cultivation. I must declare that as wayan agreement on quotas must rule out any far as our country is concerned this suggested separate agreement between one country or a APPENDIX 469 group of the wheat exporting countries, on the regime established by the International Banking one hand, and one country or a group of the Capital for the U.S.S.R., adequate credits for wheat importing countries, on the other. financing of those quantities of wheat which in Some delegates put forward the proposal for consequence of the agreement may be kept in the establishment of minimum prices for wheat. stocks within the U.S.S.R. must be guaranteed to Taking into consideration the relations with con­ the U.S.S.R. Wheat stocks in the U.S.S.R. in this suming countries as well as the interests of the connection can serve as a security for the credits large mass of consumers we consider the estab­ granted to the U.S.S.R. lishment of fixed prices, even if minimum, as We admit that the devising of one or another unacceptable. form of the orderly grain market will necessitate, We fully adhere to the proposal of some of the possibly, the creation of a small Permanent Bu­ Delegations on the distribution of wheat exports reau for the purpose of statistical records and by months and quarters in the course of the year. solution of any question in connection with But the Conference has to recognise on the other organisation. hand, as I pointed out above, that insofar as This question, however, is a subordinate one wheat represents one of the main sources for and its solution as well as the solution of other covering of our liabilities in connection with our secondary questions we hope will be found if an imports, and in view of the exceptional financial agreement on the principal problems is reached. 170 THE INTERNATIONAL WHEAT CONFERENCES DURING 1930-31

APPENDIX C STATEMENT BY MR. McKELVIE, MEMBER OF THE FEDERAL FARM BOARD, U.S.A., BEFORE INTERNATIONAL WHEAT CONFERENCE, LONDON, MAY 18, 1931

TIlE POINT OF VIEW modity and security markets. To accept them brings no new bearish forces into play. Admit­ The existing world wheat situation is of deep tedly the world is in the midst of a severe concern to the United States, our Government depression, after a prolonged period of declines and our people. It concerns us directly because in commodity priees, industrial activity, and of our extensive wheat-growing and wheat­ movement of goods; and strenuous efforts, public distributing interests, and indirectly because of and private, to restrain or check this decline its bearing on world economic conditions which have had disappointing results. The world's affect our economic life. Improvement of that farmers have been especially injured in this dis­ situation is of vital importance to American astrous recession. farmers, whose interests the Department of Ag­ We have come here primarily because we riculture and the Federal Farm Board were cre­ would leave no stone unturned to accelerate ated to serve. sound recovery from the severe agricultural de­ We have been forced to study the problem in­ pression that has gripped our country and others. tensively, not only from our national viewpoint We enter the conference alert to consider all sug­ but from a world viewpoint. We welcome this op­ gestions that may yield practical aid in coping portunity to share our best thought upon it and with the world wheat problem; yet we have no to counsel together with representatives of other expectation that any grand magical scheme can wheat-exporting countries under conditions be found to solve it simply and easily. It must which should render such interchange most prof­ be attacked not in one but in several ways, by itable. We are aware that no two exporting the utilization of resources of all kinds. countries are situated alike and that divergences in national wheat policies may properly exist. RESPONSIBILITY OF THE CONFERENCE We have not seen fit to defer the definitions of major policies until other countries had ham­ In a very large measure, the responsibility for mered out theirs, or until some international leading the way out of the disastrous wheat situa­ understanding on policy could be reached. Yet tion that confronts the world rests upon the we are convinced that progressive improvement wheat-exporting countries invited to this confer­ can be materially accelerated by a common diag­ ence, and the success of such efforts depends nosis of the disease and by a common acceptance upon their wheat growers as well as upon their of broadly harmonious policies. Governments. The world as now organized has the human In the past five years these countries1 have pro­ talent, the natural resources, the equipment, and duced 70 per cent of the world wheat crop out­ the technique, for satisfying the essential wants side of China, and exported almost all of the of the world's population to an extent hitherto wheat that has entered into international trade. unknown, and for providing desirable goods be­ In each of these countries wheat is a great staple yond essential needs in unprecedented variety crop, and constitutes a major interest of agri­ and amounts. If we could utilize these available culture and commerce. Since before the Great resources c-ffectively, the standard of living, lib­ War the world's wheat acreage has increased eral as it is in comparison with previous periods about 20 PCI' cent-some 55 million acres. Prac­ (considering comparable years of relative pros­ tically the whole of the net increase in wheat perity or depression), would be far higher than acreage, and most of the net increase in pro­ it is. One should not minimize the progress al­ duction, has been in the exporting counl!·ies. ready made; but it must be frankly admitted that Total net exports from all net-exporting coun­ we have not mastered, in any country, the art of tries, in the foul' crop years ending with the adequate utilization of available resources. One present year2 may be said to have averaged little source of our troubles is that from time to time over 800 million bushels a year, in spite of the the production of specific commodities, agricul­ low levels to which wheat prices have fallen. In tural and industrial, seriously outruns the effec­ tive demand for these goods. Persisting surpluses 1 Canada, the United States, India, Argentina, Aus­ in a number of particular commodities lead to tralia, Russia, Hungary, Jugo-Slavia, Roumania, Bul­ garia. The other countries that usually export small maladjustment all along the line. The correction quantities of wheat are Uruguay, Chile, Morocco, Al­ of such maladjustment is the problem facing the geria, and Tunis. If these five countries were included world economy, and wheat interests in particu­ the percentage would rise to 72 or 73. Poland is not lar, to-day. included in these figures because she has usually been We can discuss frankly the hard facts of the an importer of wheat. situation confronting us. They are already well 2 Estimating 1930-31 net exports at around 810 known and are discounted in the world's com- million bushels. APPENDIX 471 this same period exporting countries exclusive bushels was established, as compared with a of Russia and minor exportersl have produced maximum of 375 million bushels as on March 1 supplies of wheat in excess of liberal domestic prior to 1928. requirements to the extent of some 850 million A more comprehensive estimate (made by the bushels a year, on the average, or more than Food Research Institute) of year-end carryovers, enough to supply the export market from these outside of Russia, India, the Orient, and ex­ countries alone. This year Russia has come European countries generally, indicated a high forward as a large exporter, and has already record carryover in July, 1929, of 783 million shipped out some 90 million bushels of wheat. bushels, as compared with a previous maximum Consequently, burdensome stocks of wheat in of 459 million in July, 1924. Similar estimates excess of normal have accumulated during the for July, 1930, showed a reduction to only 698 past four years. million bushels, after the short world crop of These surplus stocks are largely concentrated 1929; and a preliminary forecast points to an in the exporting countries. While they represent increase of 44 million bushels during the current only a small fraction of the world's annual pro­ year, when presumably Russia and India also <.Iuction of wheat, they constitute an important will have larger stocks than in July, 1929, or 1930. fraction of the annual international movement of It is probably not too mueh to say that world wheat. The responsibility for dealing with those wheat stocks in the past three years have been stocks therefore rests primarily with the export­ 300 to 400 million bushels above normal. ing countries. It is not <.Iifficult to ascertain the significant Whatever specific results mayor may not come causes, immediate and more remotc, for the accu­ from this conference, it will be of great value if mulation of burdensome stocks and the extreme the representatives from the wheat-exporting depression of wheat prices, closely related as countries can come to agreement on the causes these facts are. Without undertaking an exhaus­ of the severe depression in wheat prices, and the tive analysis, I believe it is worth while to set broad lines of policy which the situation ren­ them forth in brief for the light they may throw <.Iers appropriate in each of these countries. If upon methods of dealing with the situation. we can arrive at a common understanding of the problem and its causes, and certain ways by CAUSES OF THE MALADJUSTMENT whieh it must be met, this conference will have achieved a signal forward step. Paramount has been the great expansion in wheat acreage and production. The Great War EVIDENCES OF WHEAT MALADJUSTMENT quickly eliminated Russia and the Danube basin exporting countries as major contributors to the The level of wheat prices in free world mar­ world wheat market. The war also eaused a kets is lower than it has been for decades, per­ marked decline in wheat production in most of haps even for centuries, except for a few months the importing countries of Europe. Spurred by in 1894 and 1895 when the level of prices in gen­ high prices, patriotic appeals, or both, the wheat eral was much lower than to-day. In terms of farmers of North America, Argentina, and Aus­ purehasing power over goods and services in tralia increased their wheat acreage and produc­ general, wheat is far cheaper than in 1894-95; tion to new high levels, and most of the world indeed, it has probably never before been so cheap market deficit created by the withdrawal of over wide areas as it is this year. Except where Russia and Southeastern Europe was thus made governmimt measures have given support to up. After the war, the United States acreage and market prices, wheat growers generally have re­ production receded until 1925, and have not since cently been able to get little more than costs of risen nearly to the post-war peak; but Canada, harvesting the grain and putting it into position Argentina, and Australia have, on the whole, for shipment. At current prices, wheat is a continued to expand both acreage and produc­ source of loss rather than of profit to the great tion. After the war also, acreage, yield per acrc, majority of wheat growers in exporting coun­ and production of wheat gradually recovcred in tries. Europe, eventually in most countries to or some­ Further evidence of maladjustment lies in the what above pre-war levels. Recovery in Russia abundance of world wheat stocks. While there and the Danube basin also proceeded apace but are no comprehensive data for the world as a from a much lower level, and their export sup­ whole, all available statistics give evidence of plies have not yet risen to pre-war dimcnsions. superabundant stocks. Whereas in the five years before the war, thcir A well-known monthly trade series sometimes net exports were 41 per cent of the world total, called "world wheat visibles" shows that ever in the four past completed years they wcre only since August, 1926, with the exception of Novem­ 8.2 per cent of the world total. The combination ber 1 and December 1, 1930, and January 1, 1931, of recovery of wheat production in Europe, ex­ each month's figure exceeded that of the corre­ pansion in the principal overseas exporting sponding month in the preceding year. On countries, and latterly the re-entry of Russia and March 1, 1931, an all-time record of 630 million the Danube basin countrics into the ranks of important exporters, constitutes a fact of first 1 Uruguay, Chile, Morocco, Algeria, Tunis, and oc­ importance. casional other exporters, such as Poland. A few interpretative comments are in point. 472 THE INTERNATIONAL WHEAT CONFERENCES DURING 1930-31

Increased production in exporting countries of larly large in the four principal exporting Coun­ the Western Hemisphere, and latterly in Russia tries; abundant crops of cereals in Europe in as well, has been greatly promoted by develop­ 1929; greatly enlarged acreage, production, and ments in the technique of growing wheat on export surpluses in Australia and Russia in 1930; semi-arid lands and by notable developments in decreased purchasing power of ex-European im­ agricultural maehinery, including tractors, har­ porting countries during the business depression; vester-thresher combines, and trucks. The great and increasing restrictions on wheat imports by upward shift in the level of wheat prices, which many countries during the past two years; these followed the short crop of 1924 and financial re­ in combination have caused a marked excess of covery in Europe and the persistence of good exportable supplies over importers' demands for prices for two or three years, furnished added current consumption and for stocks. Abnormally stimulus to expansion. Low rates of ocean freight heavy stocks of wheat remained after the close of have been a favouring influence in overseas' ex­ the marketing year 1928-29. A short crop in porting countries. Finally, national policies di­ 1929, outside of European deficit countries, did rected toward increasing wheat production and not serve to reduce these stocks to normal or exports have been im!portant factors in Canada even wieldy proportions. The 1930 crops in the and Australia throughout, in Russia particularly principal exporting countries outside of Russia under the Five-Year Plan inaugurated in 1928, yielded exportable surpluses ample to fill world and in Australia particularly during the past import requirements, in spite of unusually heavy year. feed use in the United States in consequence of Increases in wheat production in several im­ drought disaster to the corn crop; and Russia porting countries of Europe have been stimulated has already shipped something like 90 million by governmental measures ineluding protective bushels into world markets this year. tariffs, milling regulations, educational propa­ The collapse of wheat prices was undoubtedly ganda, and preferential priees for domestie influenced in part by financial pressure affecting wheat. In the past two years these measures have several exporting countries, by the severe decline been intensified as never before, in several major since the middle of 1929 in prices of competing importing countries, as agrarian protective meas­ commodities and indeed of food products in ures. general, and by the general indisposition to carry Coupled with these tendencies to expansion of liberal stocks after so great a shock to confidence wheat production were tendencies to more lim­ in commodity values. These conditions have in­ ited growth of demand for wheat. The post-war creased the severity of a marked decline that growth of population, at least in most of the the developing maladjustment between wheat wheat-consuming countries, is at a much less production and consumption would have brought rapid rate than before the war. Moreover, in a about in any case. number of important wheat-exporting and wheat­ importing countries, per capita consumption of EXCESSIVE PESSIMISM OR OPTIMISM wheat for human food is materially lower than UNWARRANTED before the war. This is true of Canada, the United States, Australia, Great Britain, France In the midst of world-wide depression, with and the Netherlands, and probably in various business activity, commodity prices, and returns other countries. This decline is attributable to a to agriculture, industry, and commerce generally variety of basic factors, including lighter manual, at extremely low levels, there is a tendency to labour, better housing, heating and clothing, excessive pessimism. Bearish factors, weighty higher wages permitting purchase of a greater though they may be, tend to be given excessive variety of foods which have been made available weight. The world wheat market is under this at moderate prices, and increased consumption pressure to-day. I would add nothing to it. The of sugar. wheat crop of 1931 is still in the making. Before In several countries, including the Scandina­ many months developments in wheat production, vian countries, Germany, Italy, and the Danube trade, and consumption, and/or in the general exporting countries, as well as in Japan and economic situation, may easily lift the level of various ex-European importing countries, per world wheat prices. Extremely low as they are, capita consumption of wheat for food has risen prices can more easily be advanced than driven to higher levels than before the war, largely at down further, if the marketing of surplus stocks the expense of other cereals; but latterly this is wisely handled. increase has been of minor importance. Indeed, Nevertheless, we cannot afford to delude our­ high prices of wheat by reason of high import selves with the hope that Nature unassisted will duties, and restrictions adversely affecting the restore wheat prices to levels remunerative to quality of manufactured flour and bread, have wheat growers in exporting countries. Similar in some countries recently tended to reverse hopes were rudely dashed in 1929-30, when the these trends. world wheat crop was reduced by more than the The more recent debacle in wheat prices rep­ surplus carryovers into that year. A repetition resents the culmination of these trends toward this year of the striking improvement in wheat restricted consumption and increased produc­ prices that took place in 1924-25 is out of the tion, accentuated by special developments. A question. Whatever the immediate future may bumper world crop of wheat in 1928, particu- have in store, the situation calls for earnest and APPENDIX 473 general efforts to bring about a better adjustment for tapping these strata. Persistent production between production and consumption, not a of large surpluses over insistent requirements for policy of standing by in the hope that Nature or food therefore entails extreme price depression. other nations will effect the adjustment for us. We must not he led astray by the fact that in When in a single year the production of wheat the 20 years before the Great War world wheat happens· to exceed the year's requirements, even production expanded at a rapid rate, while wheat on a more liberal scale than in a year of light prices tended gradually upward, even faster than crops, the surplus is carried forward, in widely prices of goods in general. The world's popula­ scattered hands, without severely depressing tion is growing at a much slower rate than be­ prices; and since Nature rarely gives abundant fore the war. In most countries the displacement crops two or three years in succession, the sur­ of other cereals by wheat for bread has already plus is absorbed a year or two later. A small gone far. Per capita consumption of wheat for and gradual expansion of production can be human food is considerably lower than before taken care of, at little or no reduction in prices, the war in Anglo-Saxon countries, in France, and through increase in population. When, however, in a number of other countries, and. these coun­ there is a persisting tendency to expand produc­ tries contain a large fraction of the world's tion so fast or so far that consumption cannot wheat-consuming population. The causes of this keep pace or catch up, abnormally large sur­ reduction are deep-seated, and probably perma­ pluses accumulate and lead to abnormally de­ nent. Tendencies to expansion in per capita con­ pressed prices. This is the situation at present, sumption in Germany, Italy and some other as everyone knows. countries are being checked by measures taken When such surpluses have accumulated and in the interest of their wheat growers. Expansion current production is ample for current require­ in many countries outside of Europe is hampered ments, as at present, two courses of action are by limitations of purchasing power of these indicated: consumption must be expanded, and peoples, accentuated by the business depression production must be cut down, until the surpluses and by high and rising tariff barriers. The de­ are reduced to normal dimensions and equilib­ mand for wheat for food in most countries is rium between production and consumption is re­ comparatively inelastic. In order to tap exten­ gained. Neither course alone will suffice; both sively the strata of elastic demand-for food in must be taken. Neither in industry nor in agri­ China, for example, for feed in many countries, culture is curtailment of production popular; it and for industrial uses-prices cruelly low to is merely an absolute necessity, under given cir­ wheat producers are necessary. Temporarily cumstances, and will be forced by the ruthless this may be inevitable; but as a permanent cure working of economic law, unless men and gov­ it is less worthy of contemplation than other ernments work in harmony with that law and lines of effort which are also painful. thereby reduce the strain and stress of its op­ This is not to say that the task of promoting eration. expansion in consumption is hopeless. The working down of burdensome surpluses is essen­ POSSIBLE EXPANSION OF CONSUMPTION tial even if prices remain, for a period, far below The expansion of consumption of wheat by levels satisfactory to wheat growers. There is large amounts, either temporarily or perma­ room for skilful merchandising that will yield nently, is no simple task. We should recognise results not merely for the immediate future but the existence of several strata of demand for over a period of years. Mere propaganda for in­ wheat: crease in consumiption of wheat has been, and seems likely to continue to be, largely futile. 1. For consumption for food regardless of price Both effective merchandising and economic dip­ lomacy must be called into play. 2. For consumption for food in wheat-eating countries where consumption is responsive to price MARKETING PHASES 3. For consumption for food in countries where Unquestionably the manner in which available a large proportion of the population does not supplies of wheat are marketed exerts an impor­ eat wheat as a staple (e.g., China), except under tant influence upon the course of wheat prices. the stimulus of very low prices Selling under extreme pressure, by any country, 4. For feed to livestock as all present have good reason to know, gravely 5. For industrial uses depresses world wheat prices and sends to a dis­ The great bulk of the world's wheat crops has count under its normal parity the wheat that is been used for human consumption in countries, so pressed upon the world market. It is well or among classes of the population, in which worth while for this conference to explore pos­ Wheat is a staple article of diet. There is only a sible means of reducing such pressure selling, limited scope for expansion of wheat consump­ with a view to avoiding unnecessarily extreme tion among these groups, for the demand is com­ fluctuations and depressions in wheat prices. paratively inelastic. To expand wheat utilization In our own country the Federal Farm Board is to a mark~d extent requires the tapping of other especially charged, under the Agricultural Mar­ strata; and low prices, even persistingly low keting Act, not only with promoting co-operative prices, constitute the most effective instrument marketing of wheat in the grower's interest, but 471 THE INTERNATIONAL WHEAT CONFERENCES DURING 1930-31

with taking measures to prevent undue and ex­ not. In the main it is excellent wheat; most of it cessive instability of prices, if need be with the is wheat of the 1930 crop. It is in good condi­ aid of stabilization corporations. In view of our tion, and will be kept so. Any portion that may experience under these provisions to date, and be found unsuitable for milling will not be sold the position to which it has brought us, a few as milling wheat. Any other policy than this words on this subject are pertinent here. would be extremely short-sighted on the part of This year, as a means of protecting our farm­ the agencies responsible. ers from the disastrous consequences of extreme Apart from such extraordinary intervention in depression in wheat prices, the Grain Stabiliza­ the wheat market as was felt justified during the tion Corporation has acquired large holdings of past year, however, the effect of marketing meth­ wheat in supporting the wheat market in the ods on the level of wheat prices can easily be United States. For the time our wheat and flour exaggerated. It would be folly to assume that exports have been curtailed, when export mar­ the solution of the world wheat crisis can be kets were subject to extreme pressure. Had this found in marketing channels. At best they can action not been taken, we are convinced that not alleviate, they cannot cure, a serious situation. only our domestic prices but world market prices When supplies are patently excessive, in agricul­ as well would have been driven down still fur­ ture as well as in industry, nothing short of an ther, to the injury not only of our wheat growers adjustment of production will serve to correct the but of those in other countries too. The policy difficulty at its source. was adopted in what appeared to be an extreme emergency, to reduce the shock from a striking CURTAILMENT OF PRODUCTION ESSENTIAL further decline in wheat prices that was immi­ nent. Collectively, the Wheat-exporting countries It was not intended, and is not practicable, to have been and are producing too much wheat. continue indefinitely the policy of stabilization We may as well admit this plain fact, first as last. purchases, and the Federal Farm Board has an­ We have produced larger surpluses over our nounced that it will not authorise such purchases several domestic requirements than the world from the 1931 crop. To the question, what plans market wants, larger 'than it has been willing to there are for disposing of the stocks thus ac­ absorb at practically any price. The concrete quired, there is and can be no highly explicit evidence of this is the limited absorption of answer. Simply expressed, however, it is this: cheap and cheaper wheat in the past eighteen they will be sold, but they will be merchandised months, and the persistence of wheat stocks far in orderly fashion; they will not be thrown over­ above levels needed for continuous milling op­ board for anything they will bring, to demoralise erations and to ensure against a year of short domestic and foreign markets. crops. This year wheat has actually moved into There are some, both in our country and export market in larger quantities than the world abroad, who have sought to excite the fears of markets would take except at prices that yield the gullible portion of the trade and the publie most wheat growers a net loss on their opera­ over the large supplies that are or will be under tions, and in many cases little above the cost of the control of the Stabilization Corporation. harvesting the wheat and putting it on the road These fears are not justified. There can be no to market. The consequences of continued ex­ evasion of the fact that the existence of large cessive production for export are staring us in carryovers, in our country and in several others, the face. If we wish to have these consequences must constitute a factor that will retard and limit persist, the way to ensure it is clear and easy. advances in wheat prices. This would be true no If we wish to prevent their persistence, reversal matter how the holdings were distributed. It was of expansion in production, difficult as this may true in 1929, in the face of a very short world be, is no less clearly indicated. crop, when large wheat stocks were wholly in After careful consideration of the world wheat the hands of the old-line trade, before the Grain outlook, the Federal Farm Board arrived at the Stabilization Corporation came into existence, conviction that our wheat growers could not ex­ before the onset of the worldwide business de­ pect in the future to get remunerative prices, on pression, and when it was generally expected that the average, so long as we continue to produce a the surplus would be absorbed in a year of light surplus of 200 million bushels for export. The crops, 1929-30. World market prices to-day at developments of the past year have strengthened least fully reflect the existence of these stocks, these convictions. Our growers are coming to and probably overdiscount their significance be­ accept these views. The Federal Farm Board and cause they are heavily concentrated in "visible" the Secretary of Agriculture have therefore positions. Such depressing force as they exert strongly advised American farmers, in their own should be less, and not greater, because they are interest, to cut down their wheat acreage, with a in strong hands rather than weak hands, and be­ view to reducing our wheat production as far as cause the men responsible for their disposition possible toward the limits of our domestic re­ are thoroughly alive to the importance of mer­ quirements. While so extensive a readjustment chandising them rather than dumping them re­ is difficult for farmers to make, they are taking gardless of consequences. steps in this direction. We believe the continu­ There is equally no basis for fears that this ance of these efforts to be in the interests of our wheat will be palmed off on buyers for what it is wheat growers. APPENDIX 475

It would not be fair, however, to the members and as a whole, until a bettcr adjustment be­ of this Conference or to the world at large, to tween supply and disposition can be effccted, leave the misapprehension that the United States and restraint upon fresh expansion of production is out of the export market. Many wish that we thereafter. We commend these views to the ear­ were, but we emphatically are not-at least for nest consideration of the Conference. a considerable time to come. Our carry-over this In conclusion, there are three distinguishing July will probably be 175 million bushels or more facts that we would impress upon this Confer­ above a normal carry-over. Our 1931 crop, owing ence: to favourable conditions for fall-sown wheat and 1. From the outset the Federal Farm Board in spite of expected reductions in spring wheat has sought to recognise the fundamentals of this acreage, may contain an export surplus of some­ question. It is a simple economic fact that when thing like 200 million bushels. Even if our grow­ more of a commodity is being produced than can ers find it possible to make heavy reductions in be sold at a profit to the producer, production their acreage for the 1932 crop, there is every must be contracted. Before January, 1930, when reason to expect some exportable surplus to be the first discussion of the present wheat problem carried forward into that year. So radical a con­ was held at Geneva, the Federal Farm Board had traction of acreage as 25 per cent, which would adopted the policy of advising American wheat be necessary to eliminate our current export sur­ growers to reduce acreage. Prior to the first plus completely, on the average, is exceedingly Bucharest Conference July 21, 1930, the Chairman difficult for farmers to make. It cannot be ef­ of the Federal Farm Board and the Secretary of fected overnight, if completely at all. Moreover, if Agriculture had toured the United States urging it should be made in one year, to ensure the per­ growers to contract wheat acreage as much as 25 sistence of so radical contraction would create per cent. The United States made the first defi­ new problems. It is even probable that after the nite appeal to farmers to adjust production to maximum adjustments are made and surplus probable demand. This program is being per­ stocks are worked down, the United States will suasively urged by the Federal Farm Board, and continue, in some degree, an exporter of wheat the U.S. Department of Agriculture in its Outlook and flour. We believe that action in our country Work is constantly seeking acreage readjustment on the advice we have given, in the interests of and a more economic utilization of land. We our own wheat growers, will contribute toward believe this looks toward a practical and ulti­ improving the world wheat situation, and we mate solution of our common problem, if all expect our growers to get higher prices partly exporting countries will do the same. because of such improvement. But it would be wholly illusory for other countries to count upon 2. For domestic reasons of an emergency na­ ture, the Federal Farm Board has for many reductions in acreage and wheat production in months held the burden of the American wheat the United States alone to provide the solution of their wheat problems. surplus off the world market. While this was designed to serve our own farmers, there is no As we see it, exporting countries which set doubting the great benefit that has accrued to about increasing wheat acreage and exports, in the face of the situation that exists and has ex­ growers in other countries as a result of limita­ tion of supply on the export market. isted in the past year, are unintentionally de­ feating their own aims and injuring their own 3. The Federal Farm Board has designedly growers, as well as ensuring the continuance of avoided all contractural implications in the for­ low prices for other exporting countries. We see eign field. We have sought no quotas, we have no prospect that export bounties or wholesale done nothing to disturb the freedom of trade on dumping into the export market, in such a situa­ international wheat markets. tion as the present, will result advantageously to May I express the hope that the countries rep­ the exporting country concerned. Persistent resented in this Conference will use utmost selling below cost by governments is just as dis­ frankness toward their own growers and the astrous as selling below cost by wheat growers. wheat importing countries, in dealing with the We see no possibility of a satisfactory solution of question. It would be unfortunate indeed if out the world wheat problem which does not include, of our deliberations we should giv~ farmers the as the most important single element, curtailment wrong impression of what it is possible to ac­ of production in exporting countries, individually complish without their co-operation. WHEAT STUDIES of the FOOD RESEARCH INSTITUTE Special studies (exclusive of review and survey numbers) in Volumes IV-VII are listed below with prices. VOLUME IV No.2. Statistics of American Wheat Milling and Flour Disposition since 1879. December 1927. $1.00 No.4. Disposition of American Wheat since 1896. February 1928. $1. 00 No.5. Rye in Its Relation to Wheat. March 1928. $1.50 No.7. The Objectives of Wheat Breeding. June 1928. $0.50 No.8. Britisil Parcels Prices: A World Wheat Price Series. July 1928. $1.00 No.9. Ex-European Trade in Wheat and Flour. August 1928. $1.50 VOLUME V No. 1. Forecasting Wheat Yields from the Weather. November 1928. $1.00 No.4. Tize Place of Wheat in the Diet. February 1929. $1.00 No.5. A Weighted Series of Cash Wheat Prices at Winnipeg. March 1929. $1.00 No.7. Variations in Wheat Prices. June 1929. $1.50 No.8. The Export Debenture Plan for Wheat. July 1929. $1.00 No.9. Wheat under the Agricultural Marketing Act. August 1929. $1.50 VOLUME VI No. 1. The Post-Harvest Depression of Wheat Prices. November 1929. $1. 00 No.4. The Contractility of Wheat Acreage in the United States. February 1930. $1.00 No.5. TIle Danube Basin as a Producer and Exporter of Wheat. March 1930. $2.00 No.7. Growtlt of Wheat Consumption in Tropical Countries. June 1930. $.50 No.8. Japan as a Producer and Importer of Wheat. July 1930. $1.00 No.10. The Changing World Wheat Situation: A Statistical Appraisal in Terms of Averages, Trends, and Fluctuations. September 1930. $1. 00 VOLUME VII No. 1. The United States Wheat Flour Export Trade. November 1930. $2.00 No.4. Speculation, Short Selling, and the Price of Wheat. February 1931. $1. 00 No.5. Official and Unofficial Statistics of International Trade in Wheat and Flour. March 1931. $1.00 No.6. The Wheat Situation in Scandinavia. June 1931. $1.50 No.8. Financial Results of Speculative Holding of Wheat. July 1931. $1.00 No.9. The International Wheat ConfCI"ences during 1930-31. August 1931. $1.00 RECENT CONTRIBUTIONS FROM THE FOOD RESEARCH INSTITUTE (Reprints available free on request) G 50. "Review of Interrelationships of Supply and Price" (by G. F. Warren and F. A. Pearson), Holbrook Working. Journal of the American Statistical Association, December 1929 G 51. "Some Possibilities and Problems of the Federal Farm Board," J. S. Davis. Journal of Farm Economics, January 1930 G 52. "Materials for a Theory of Wheat Prices," Holbrook Working. Proceedings of the International Conference of Agricultural Economics, 1930 G 53. "International and Domestic Commodities and the Theory of Prices," L. B. Zapoleon. Quar­ terly Journal of Economics, May 1931 (; 54. "The National Overweight," Alonzo E. Taylor. Scielltific MOllthly, May 1931 G 55. "Review of Methods of Correlation 1lnalysis" (by Mordecai Ezekiel), Holbrook Working. Jour­ nal ot" Farm Economics, April 1931 G 56. "Agricultural Commodities and the Business Cycle," Holbrook Working. Proceedings of the Institute of Finance, 1931 E 29. "A Mill for Small Samples," W. H. Cook, E. P. Griffing, and C. L. Alsberg. Industrial and Engi­ neering Chemistry, January 1931 E 30. "Note on the Ter Meulen-Heslinga Methods for the Estimation of Nitrogen, Carbon and Hydro­ gen in Organic Material," E. P. Griffing and C. L. Alsberg. Journal of the American Chemical Society, March 1931 E 31. "Preparation of Starch Solution for Use in Iodimetric Titrations," C. L. Alsberg and E. P. Griffing. Journal of the American Chemical Society, April 1931 E 32. "The Flocculation of Gelatin at the Isoeleetric Point," Danella Straup. Journal ot" General Physiology, May 1931 E 33. "Studies on the Starch-Iodine Reaction," John Field. Journal of Biological Chemistry, July 1931 (More complete list on request) FOOD RESEARCH INSTITUTE PUBLICATIONS

WHEAT STUDIES Each volume contains a comprehensive review of the world wheat situation during the preceding crop year (price, $2.00), three surveys of current developments (price, $1. 00 each), and six special studies (vadously priced, see inside back cover).

Vol. I. December 1924-September 1925. 375 pages, bound in red buckram. Price $10.00 Vol. II. November 1925-September 1926. 367 pages, bound in red buckram. Price $10.00 Vol. III. November 1926-September 1927. 467 pages, bound in red buckram. Price $10.00 Vol. IV. November 1927-September 1925. 404 pages, bound in red buckram. Priee $10.00 Vol. V. November 1925-September 1929. 4S1 pages, bound in red buckram. Price $10.00 Vol. VI. November 1929-September 1930. 476 pages, bound in red buckram. Price $10.00 Vol. VII. November 1930-September 1931. Ten issues. Subscription, including temporary binder, $10.00

FATS AND OILS STUDIES A series of studies in fats and oils of animal and vegetable origin, dealing primarily with economic aspects-production, trade, prices, and utilization-but with due reference to technical knowledge.

No. 1. The Fats and Oils: A General View. By C. L. Alsberg and A. E. Taylor. February 1925. 103 pp., Svo. Cloth, $1.50; paper, $1.00 No.2. Copra and Coconut Oil. By Katharine Snodgrass. April 1925. 135 pp., Svo. Cloth, $2.00; paper, $1.50 No.3. Inedible Animal Fats in the United States. By L. B. Zapoleon. December 1929. 353 pp., Svo. Cloth, $4.00 No.4. Margarine as a Butter Substitute. By Katharine Snodgrass. December 1930. 333 pp., Svo. Cloth, $3.00

MISCELLANEOUS PUBLICATIONS No. 1. Stale Bread Loss as a Problem of the Baking Industry. By J. S. Davis and Wilfred Eldred. February 1923. 70 pp., Svo. Paper, $.50 No.2. The American Baking Industry, 1849-1923, as Shown in the Census Reports. By Hazel Kyrk and J. S. Davis. September 1925. lOS pp., Svo. Cloth, $1.50; paper, $1.00 No.3. Combination in the American Bread-Baking Industry, with Some Observations on the Mergers of 1924-25. By C. L. Alsberg. January 1926. 14S pp., Svo. Cloth, $2.00; paper, $1.50 No.4. Farm Cost Studies in the United States: Their Development, Applications, and Limitations. By M. K. Bennett. June 1925. 2S9 pp., Svo. Cloth, $3.50 No.5. TIle Farm Export Debenture Plan. By J. S. Davis. December 1929. 274 pp., 8vo. Cloth, $3.00

For subscriptions, completed volumes, and individual publications, address

FOOD RESEARCH INSTITUTE STANFORD UNIVERSITY, CALIFORNIA

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