ing on of war. An example of what has been done may be found in the division into three classes of establishments which consume iron and steel: Class A, which comprises war work such as the production of arms, ammunition, and ships; Class B, which includes work not primarily designed for the prosecution of the war, but still of public interest and essential to the national welfare; and Class C, which comprises all orders not included in the other two classes. For Class A and Class B the government now issues certificates which entitle the work mentioned to preferential treatment. Orders and work in Class A take precedence irrespective of the date upon which orders are given, orders in Class B come next, etc. Both classes A and B are divided into many subdivisions. What has been done for iron and steel has been done for other industries also. In September, 1917, Priority Director Lovett ordered carriers serving Lake Erie ports to give preference to the shipment of bituminous coal, moving by rail to Lake Erie and thence by vessel to ports on Lakes Superior and Michigan. The following month he forbade the use of any but flat or box cars in the transportation of passenger vehicles, materials for the construction or repair of theaters, and materials and supplies other than coal for the construction and repair or manufacture of highways, pleasure vehicles, furniture or musical instruments. In November, common carriers in Texas were directed to give preference in car supply and transportation to traffic in cottonseed cake and cottonseed meal to points in Texas and New Mexico, in order to prevent cattle in those states from perishing for lack of food. Still again, in December, the Director defined the order in which preference should be granted to essential commodities as follows: 1. Steam railroad fuel for current use.

2. Live stock, perishable freight, food and feed.

3. Shipments of military supplies consigned to the United States or the allied governments.

4. Other shipments for the United States Government.

5. Coal to and for by-product coking plants.

6. Coal for current use to hospitals, schools, retailers of coal for use in supplying domestic consumers, blast furnaces, foundries, iron and steel mills, smelters, manufacturers engaged in work for the United States Government or its allies, public utilities, flour mills, sugar factories, fertilizer factories and ship builders; also shipments of paper, petroleum and petroleum products.

This sequence represented the policy of the Priorities Director at the time the United States Government took over the operation of American railroads. The efforts of the Director have been supplemented by orders of the Fuel Administration relating to the sale of fuel. In some respects the two departments differ in the preference which they accord to certain classes of consumers, but both make the same attempt to emphasize essential as distinguished from non-essential consumption in respect to military needs and the comfort of the population at large. It is to be hoped that certain apparent inconsistencies will presently be removed.

In the regulation of price the administration has had to steer its way with the greatest discrimination. The period of war is normally a time of rising prices. This in part is owing to increased demand due to wasteful expenditure by armies in the field; in part it is the result of a dislocation of industry which makes the continuance of normal output difficult; and in part also the rising prices are a consequence of purely monetary conditions, and flow from the great increase in the circulating medium that takes place. Prices which go up for reasons like these are extremely difficult to control; in fact, a wise policy will refrain from arbitrary limitation, in the hope of stimulating production by the chance of profit that is opened to producers of necessary supplies. On the other hand, a war is likely to give rise to great fluctuation in price, with the accompaniment of speculation and attempts at temporary monoply. The policy which the government has adopted in the

face of these problems may be stated in a series of propositions:

1. So far as food production, and in particular so far as the production of wheat is concerned, the government has believed that the urgent need is for a minimum price and not for a maximum price. The absolutely vital consideration here is maximum output. In recognition of this fact Congress, as far back as August, 1917, set a $2 minimum price for the 1918 crop of wheat. Four days later the government created a corporation, to be known as the Food Administration Grain Corporation, and proceeded to study the situation in 1917. The stock of the grain corporation was to be held by the United States Government, and the Food Administrator was authorized to subscribe up to $150,000,000 if so much money might be required. The object was to provide an organization which might, if necessary, take over the entire wheat crop of the current year. Through this machinery the government was able to guarantee to producers a minimum price of $2.20 a bushel for 1917. No action was taken by the corporation at this time with respect to the price of grains other than wheat.

2. The government has seen no reason for allowing unusual profits to the handlers and distributors of wheat, or indeed to the handlers of any other necessaries. It prevented this by early introducing a system of licensing. On August 14 the President by proclamation required all persons engaged in the business of either storing or distributing wheat and rye as owners, lessees, or operators of warehouses or elevators, and all persons engaged in the business of manufacturing any products derived from wheat or rye, except those persons operating plants of a daily capacity of 100 barrels or less, and farmers and co-operative associations of farmers, to secure licenses for the conduct of their business. The license system was subsequently extended to include corn, rice, cottonseed, milk, butter and cheese, sugar, fresh and canned fruit, and a number of other articles.

Retailers whose gross sales of some commodities reached a total of $100,000 annually were also covered by the law. Licensees were made subject to a number of regulations, designed to limit the prices which they charged so as to yield only a reasonable surplus over expenses, to keep all commodities moving in as direct a line as practicable from producer to consumer, and to limit also, as far as possible, contracting for future delivery. To enable the Food Administrator more effectively to carry out these provisions, Mr. Hoover was authorized in October to requisition foods and storage facilities as he might find it necessary.

3. In the case of articles other than food, and especially in cases where articles were produced under conditions of limited competition, the government has been of the opinion that a maximum price should be imposed. This policy resulted in August in the publication of a list of prices for bituminous and anthracite coal delivered at the mines, accompanied by regulations affecting jobbers' margins, and by the creation of machinery to control the retail price of anthracite coal. Changes in list prices were subsequently made from time to time. The regulation of coal prices took place under the authority of the Food and Fuel Control Law. In November, 1917, a schedule of prices for iron and steel products was agreed upon with producers of these articles. Even before this, in September, the price which the government would pay for copper was announced. Here again is a policy likely to be extended.

In adopting the practice of price fixing the government has entered upon a task the success of which, however desirable, is more doubtful than the outcome of the other activities which have been developed. Already there is complaint that the smaller coal mines cannot operate under the price schedule laid down. Nor has the effect of the minimum price of wheat been exactly what was anticipated. It is important, in any case, to make clear to the general public that under the new conditions of regulated prices

low cost to the consumer is no longer evidence of abundant supply, nor are high prices evidence of relative scarcity. Whereas in ordinary times the financial interest of the consumer and the national interest reasonably correspond, it is by no means true that the man who saves his pocketbook today thereby economizes in the consumption of those articles which it is to the national interest to preserve. That this is recognized by the Food Administration itself is shown by the literature with which the country is flooded. The public is urged to save meat, fats, sugar, pork, and, above all, wheat. The allies need wheat, and we are told that an adequate supply can only be obtained for them by a reduction in the consumption of wheat within the United States. This does not mean private economy, for substitutes for the specified articles may be more expensive than the commodities which it is desired to save, but it does mean action for the public good. Unfortunately this kind of appeal is not always understood or heeded. The American housewife is an individualistic person, unused to common action for public ends, and responsive in her buying mainly to the element of cost. The administration has already found it necessary to announce that beginning in February it will cut down the supply of wheat flour sold to bakers in order to compel the use of other grains, and this species of enforced saving will probably be enlarged.

On the whole the progress made by the administration during the past nine months has been all that we have had a right to expect. New machinery for the control of industry is not to be devised and set to running in a day. Creaks and jars and breakdowns inevitably occur. Doubtless, also, something of efficiency has to be sacrificed in a democratic state for the sake of bringing large numbers of persons in intelligent contact with the work which is being done. What has been accomplished up to the present time is nevertheless only a beginning. We need a better distribution of power between the government department and the extra-departmental administrative boards. We need in gen