Carnegie Endowment for International Peace' DIVISION OF ECONOMICS AND,HISfORY' JOHN BATES CLARK, DIRECTOR : ~ PRELIMINARY ECONOMIC STUDIES OF ,THE ~Alf EDITED BY , DAVID KINLEY ' . profehor of PoUtl .... Economy, Unlveralty of Illinois" . Member of CommIttee of Reoean:h of the Endowment:' No., 19 PRICES AND PRICE CONTROL IN, GREAT' BRITAIN AND THE UNITED STATES,;P:';' DURING. THE, WORLD WAR • I, + BY , SIMON,LITMAN ' . Professor of Economics, University of Illinois. ~ ." - - . :~ . t . .NEWYORK' ~'OXFORD UNlVERSI'IT,PRESS AMERICAN BRANCH :35 WEST 32lfD STREET' LONDOIf, TOIlOIITO, lIELBOUB.1f1l Alro 1I0JofBAY . '" , ""! ." .,", 1920 " Carnegie E.Ii~owment :for)n~er~ationaI. ~Peace .. --- -, .. DIVI.SION OF. ECON~MIC's..ANI7' HI6TOR'y ~OH'N BATES CuwlIC, DIRECTOR " '.. Dbananjayarao Gadgil Library . '. .:\ \~~U \\\1 \\\\\ \\\11\\\'1\\\1 . PRELIMINARY ECONOMi'c 'STud, GlPE_P~E-024942 ~ ,'..- BDrrED' II., PAViD KINLEY' . Prof....... of Political Ec6aomY.· Uhlveisity ~; Jllinois MODIbet' of Committee of Researeh of the Eudowment No. 19 PRICES· AND' PRiC;;E CONTROL IN GR~AT BRITAIN AND 'THE UNITED "sT~rES DURING~ TH~ wQRLb WAR .• 111' SIMoN LITMAN , Professor of .E~omics, Unive";ity. of Illinois NEW-YORK " OXFO&D ·uNIVERSITY PRESS , ' AMERICAN BRANCH: 3S WEST 32~D'STREET ';'; . .. LONDO If, ,TORO~; IlELBOUIUIE'AND BOMBAY •. •1920 , • 7t , 3-73 fO COPYRIGHT' 1920 BYTIIB CARNEGIE J1:NDOWMENT FOR INTERNATIONAL PEACE WASHINGTON, D. C. .,... RUMFORD I'IID8 CONCOII1I PRICES AND PRICE CONTROL IN GREAT BRITAIN AND THE UNITED STATES DURING THE WORLD WAR PRELIMINARY ECONOMIC STUDIES OF THE WAR EDITED BY DAVID KINLEY Prof... "" of Poliliazl E"""""y. U"i.er.ily of IUinois M.mber of Commill•• of'Res.arch of Ih. Endowment I. EARLY ECONOMIC EFFECTS OF THE WAR UPON CANADA. By Adam Shortt, formerly Commis­ sioner of the Canadian Civil Service, now Chairman. Board of Historical Publications. Canada, 2. EARLY EFFECTS OF THE EUROPEAN WAR UPON THE FINANCE, COMMERCE AND INDUSTRY 0,. CHILE. By L. S, Rowe. Professor of Political Science. University of Pennsylvania. ,3. WAR ADMINISTRATION OF THE RAILWAYS IN THE UNITED STATES AND GREAT BRITAIN. By Frank H. Dixon, Professor of Economics, Dartmouth College, and Julius H, Parmelee, Statistician, Bureau of Railway Economics. 4. ECONOMIC EFFECTS OF THE WAR UPON WOMEN AND CHILDREN IN GREAT BRITAIN. By Irene Osgood Andrews. Assistant Secretary of the American Association for Labor Legislation, 5. DIRECT COSTS OF THE PRESENT WAR. By Ernest L, Bogart, Professor of Economics, Univer­ sity of Illinois. 6. EFFECTS OF THE WAR UPON INSURANCE WITH SPECIAL REFERENCE TO THB SUBSTITUTION OF INSURANCE FOR PENSIONs.. By William F. Gephart, Professor of Economics, Wash­ ington University, St. Louis. 7. THE FINANCtAL H,STORY OF GREAT BRITAIN, [9[4-[9[8, By Frank L. McVey, President. University of Kentucky. 8. BRITISH WAR ADMINISTRATION. By John A. Fairlie, Professor of Political Science, Univer­ sity of Illinois. 9. ·INFLUENCE OF THE GREAT WAR UPON SHIPPING. By J. Russell Smith, Professor of Industry, University of Pennsylvania. [0. WAR THRIFT. By Thomas Nixon Carver, Professor of Political Economy, Harvard Univer­ sity. II. EFFECTS OF THE GREAT WAR UPON AGRICULTURE IN THE UNITED STATES AND GREAT BRITAIN. By Benjamin H. Hibbard, Professor of Agricultural Economics, University of Wisconsin. 12. DISABLED SoLDIERS ANb SAILORS-PENSIONS AND TRAINING. By Edward T. Devine, Pro­ fessor of Social Economy, Columbia University. 13. GoVERNMENT CONTROL OF THE LIQUOR BUSINESS IN GREAT BRITAIN ANn THE UNITED STATES. By Thomas Nixon Carver, Professor of Political Economy, Harvard University. [4. BRITISH LABOR CONDITIONS AND LEGISLATION DURING THE WAR. By Matthew B. Hammond, Professor of Economics, Ohio State University. IS. EFFECTS OF THE WAR UPON MONEY, CREDIT ANn BANI<ING IN FRANCE ANn THE UNITED STATES. By B. M. Anderson, Jr., Ph.D. 16. NEGRO MIGRATION DURING THE WAR. By Emmett J. Scott, Secretary-Treasurer, Howard University, Washington, D. C. '7. EARLY EFFECTS OF THE WAR UPON THE FINANCE, COMMERCE AND INDUSTRY OF PEltU. By . 1.. S. Rowe, Professor of Political Science, University of Pennsylvania. *[8. GoVERNMENT WAR CONTROL OF INDUSTRY AND TRADE. WITH SPECtAL REFERENCE TO GREAT BRITAIN ANn THE UNITED STATES. By Charles Whiting Baker, New York City. 19. PRICES ANn PRICE CONTROL IN GREAT BRITAIN AND THE UNITED STATES DURING THE WORLD WAR. By Simon Litman. Professor of Economics, University of Illinois. _ *20. THB RELATION OF THB ECONOMIC AND SoCIAL CONDITIONS IN SOUTBKASTERN EuRoPB AND IN ALSACE-LoRRAINE TO CONDITIONS OF PEACE. Two volumes. By Stephen Pierce Dug­ gan, Professor of Education, College of the City of New York. *21. THE GERMANS 1N SoUTH AMERICA: A CONTRIBUTION TO THE ECONOMIC H,STORY OF THH WAR. By C. H. Haring, Professor of History, Yale University• •••• EFFECTS OF THE WAR ON PAUPERISM, CRIME ANn PROGRAJIS OF SoCtAL WELFARE. By Edith Abbott, Lecturer in Sociology. University of Chicago. *'3. MONETARY CONDITIONS IN WAR TIMES IN INDIA, MEXICO ANn THE PHILIPPINES. By E. W. Kemmerer, Professor of ~nomics and Finance, Princeton University. '4. D1RECT AND INDIRECT COSTS OF THE GREAT WORLD WAR. By Ernest L. Bogart, Professor of Economics, University of Illinois. (Revised edition of Study NO.5.) *'5. GoVEIINMENT WAR CONTRACTS. By John F. Crowell, Consulting Economist, New York City• ••6. COOPERATIVE MOVEMENT IN RUSSIA. By E. M. Kayden. THE CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE • JACKSON PLACE. WASHINGTON, D. C. • These numbers have not yet been published. iv EDITOR'S PREFACE Professor Litman's study of prices is a welcome addition to the literature of the subject. The general trend of its con­ clusions, however, will not surprise a student of economic history. The charges of profiteering and manipulation which have been so rife in the past three years are paralleled in the experience of the world in every great war. Efforts to control these movements by law show in general a similar history and similar results on all occasions. Here and there, under such circumstances, a government is able to catch and punish a profiteer. But legal action on the whole has had little effect at any time in preventing or removing the evil practices that have caJled forth so much popular denunciation. Still more true is it that the legal activity of governments, on the whole, has had little influence in fixing prices or in keeping them stable. Most of the evidence to this effect, when carefully studied, shows that the results have been ob­ tained in occasional cases and have had little permanent effect. The truth is that the lines of economic activity for the accomplishment of even one purpose are so numerous that the severing of one usually serves to render the others more open. Most of the good effect which the agitation, legislation and legal prosecutions of the past three years have had in this field has been a result of psychological rather than of legal influences. The great bulk of business and popular opinion in the United States has been in favor of the proposition that individuals should not be permitted to make undue profit at the expense of the people in a crisis. The good results of the agitation can be attributed, therefore, to the general high standard of business integrity rather than to fear of legal prosecution. This may be fairly said, making allowance for all exceptions in the way of successful prose­ cution by the officers of the government. It was a realiza­ tion beforehand of the practical impossibility of controlling v vi EDITOR'S PREFACE the situation by law which evidently led the Food Adminis­ tration to rely largely on appeals to the good sense and patri­ otism of the people in its attempt to keep the prices of food stable. To have fix~ prices for the multitude of articles consumed as food under the multifarious and daily changing economic conditions would have been futile and foolish. On the whole, the policy of our government was sound in laying down prices for certain great staples and relying on the judg­ ment of the people, based on information furnished freely by • the government from day to day, to see to it that they were not exploited. It is too much to hope that another generation will take to heart the lessons taught by the experiences recorded in this and other volumes of this series or works dealing with similar subjects. Each generation, like each individual, must learn in large measure from its own experience.. Never­ theless, history shows that there are always some leading minds who are able to exert an influence in a new crisis in the direction of sanity and safety by their studies of similar expe­ riences in the past. To that extent, at any rate, we may hope that the influence of these studies will be helpful. DAVID KINLEY, Editor. Urbana, Illinois, July 16, 1920. FOREWORD The part of the work dealing with price control in the United Kingdom was finished in July, 1918; that which con­ siders prices and price regulation in the United States was begun in November, 1918, and concluded in June, 1919. Detailed discussions of such items as causes of the rise in prices, profiteering, industrial unrest, which are included in the treatment of price control'in Great Britain,are omitted from the part considering price fixing in the United States; this was done chiefly because such an inquiry, although it would have presented some additional illustrative material, would have involved too much repetition and lengthened considerably the study, without aiding either in the statement of the problems or in their elucidation. On the other han<J, the consideration of the control of articles directly used for war purposes, such as iron and steel, ,copper, hides and leather, etc., which is omitted from the part dealing with Great Britain, is included in the investigation -of price fixing in the United States.