Address to Congress On the High Cost of Living
Gentlemen of the Congress:
I have sought this opportunity to address you because it is clearly my duty to call your attention to the present cost of living and to urge upon you with all the persuasive force of which I am capable the legislative measures which would be most effective in controlling it and bringing it down. The prices the people of this country are paying for everything that it is necessary for them to use in order to live are not justified by a shortage in supply, either present or prospective, and are in many cases artificially and deliberately created by vicious practises which ought immediately be checked by law. They constitute a burden upon us which is the more unbearable because we know that it is wilfully imposed by those who have the power and that it can by vigorous public action be greatly lightened and made to square with the actual conditions of supply and demand. Some of the methods by which these' prices are produced are already illegal, some of them criminal, and those who employ them will be energetically proceeded against ; but others have not yet been brought under the law, and should be dealt with at once by legislation.
I need not recite the particulars of this critical matter, the prices demanded and paid at the sources of supply, at the factory, in the food markets, at the shops, in the restaurants and hotels, alike in the city and in the village. They are familiar to you. They are the talk of every domestic circle and of every group of casual acquaintances even. It is a matter. of familiar knowledge, also, that a process has set in which is likely, unless something is done, to push prices and rents and the whole cost of living higher and yet higher, in a vicious cycle to which there is no logical or natural end.
With the increase in the prices of the necessaries of life come demands for increase in wages—demands which are justified if there be no other means of enabling men to live. Upon the increase of wages there follows close an increase in the price of the products whose producers have been accorded the increase—not a proportionate increase, for the manufacturer does not content himself with that —but an increase considerably greater that the added wage cost and for which the added wage cost is oftentimes hardly more than an excuse. The laborers who do not get an increase in pay when they demand it are likely to strike, and the strike only makes matters worse. It checks production, it affects the railways, it prevents distribution and strips the markets, so that there is presently nothing to buy, and there is another excessive addition to prices resulting from the scarcity. -
These are facts and forces with which we have become only too familiar; but we are not justified because of our familiarity with them, or because of any hasty and shallow conclusion that they are "natural" and inevitable, in sitting inactively by and letting them work their fatal results if there is anything that we can do to check, correct, or reverse them. I have sought this opportunity to inform the Congress what the Executive is doing by way of remedy and control, and to suggest where effective legal remedies are lacking and may be supplied.
We must, I think, frankly admit that there is no complete immediate remedy to be had from legislation and executive action. The free processes of supply and demand will not operate of themselves, and no legislative or Executive action can force them into full and natural operation until there is peace. There is now neither peace nor war. All the world is waiting—with what unnerving fears and haunting doubts who can adequately say?—waiting to know when it comes—a peace in which each nation shall make shift for itself as it can, or a peace buttressed 'and supported by the will and concert of the nations that have the purpose and the power to do and to enforce what is right.
Politically, economically, socially, the world is on the operating table, and it has not been possible to administer any anaesthetic. It is conscious. It even watches the capital operation upon which it knows that its hope of healthful life depends. It cannot think its business out or make plans or give intelligent and provident direction to its affairs while in such a case.
Where there is no peace of mind there can be no energy in endeavor. There can be no confidence in industry, no calculable basis for credits, no confident buying or systematic selling, no certain prospect of employment, no normal restoration of business, no hopeful attempt at reconstruction or the proper reassembling of the dislocated elements of enterprise until peace has been established and, so far as may be, guaranteed.
Our national life has no doubt been less radically disturbed and dismembered than the national life of other peoples whom the war more directly affected, with all its terrible ravaging and destructive force, but it has been, nevertheless, profoundly affected and disarranged, and our industries, our credits, our productive capacity, our economic processes are inextricably interwoven with those of other nations and peoples—most intimately of all with the nations and peoples upon whom the chief burden and confusion of the war fell and who are now most dependent upon the co-operative action of the world.
We are just now shipping more goods out of our ports to foreign markets than we ever shipped before—not foodstuffs merely, but stuffs and materials of every sort ; but this is no index of what our foreign sales will continue to be or of the effect the volume of our exports will have on supplies and prices. It is impossible yet to predict how far or how long foreign purchasers will be able to find the money or the credit to pay for or sustain such purchases on such a scale; how soon or to what extent foreign manufacturers can resume their former production, foreign farmers get their accustomed crops from their own fields, foreign mines resume their former output, foreign merchants set up again their old machinery of trade with the ends of the earth.
All these things must remain uncertain until peace is established and the nations of the world have concerted the methods by which normal life and industry are to be restored. All that we shall do, in the meantime, to restrain profiteering and put the life of our people upon a tolerable footing will be makeshift and provisional. There can be no settled conditions here or elsewhere until the treaty of peace is out of the way and the work of liquidating the war has become the chief concern of our Government and of other Governments of the world. Until then business will inevitably remain speculative, and sway now this way and again that, with heavy losses or heavy gains, as it may chance, and. the consumer must take care of both the gains and the losses. There can be no peace prices so long as our whole financial and economic system is on a war basis.
Europe will not, cannot, recoup her capital or put her restless, distracted peoples to work until she knows exactly where she stands in respect of peace; and what we will do is for her the chief question upon which her quietude of mind and confidence of purpose depend. While there is any possibility that the peace terms may be changed or may be held long in abeyance or may not be enforced because of divisions of opinion among the powers associated against Germany, it is idle to look for permanent relief.
But what we can do we should do, and should do at once. And there is a great deal that we can do, provisional though it be. Wheat shipments and credits to facilitate the purchase of our wheat can and will be limited and controlled in such a way as not to raise, but rather to lower, the price of flour here. The Government has the power, within certain limits, to regulate that. We cannot deny wheat to foreign peoples who are in dire need of it, and we do not wish to do so; but, fortunately, though the wheat crop is not what we hoped it would be, it is abundant, if handled with provident care. The price of wheat is lower in the United States than in Europe, and can with proper management be kept so.
By way of immediate relief, surplus stocks of both food and clothing in the hands of the Government will be sold, and, of course, sold at prices at which there is no profit. And by way of a more permanent correction of prices, surplus stocks in private hands will be drawn out of storage and put upon the market.
Fortunately, under the terms of the Food Control act the hoarding of foodstuffs can be checked and prevented; and they will be, with the greatest energy. Foodstuffs can be drawn out of storage and sold by legal action, which the Department of Justice will institute wherever necessary; but so soon as the situation is systematically dealt with, it is not likely that the courts will often have to be resorted to.
Much of the accumulating of stocks has no doubt been due to the sort of speculation which always results from an uncertainty. Great surpluses were accumulated because it was impossible to foresee what the market would disclose and dealers were determined to be ready for whatever might happen, as well as eager to reap the full advantage of rising prices. They will now see the disadvantage, as well as the danger, of holding off from the new process of distribution.
Some very interesting and significant facts with regard to stocks on hand and the rise of prices in the face of abundance have been disclosed by, the inquiries of the Department of Agriculture, the Department of Labor, and the Federal Trade Commission. They seem to justify the statement that in the case of many necessary commodities effective means have been found to prevent the normal operation of the law of supply and demand.
Disregarding the surplus stocks in the hands of the Government, there was a greater supply of foodstuffs in this country on June I of this year than at the same date last year. In the combined total of a number of the most important foods in dry and cold storage the excess is quite 19 per cent. And yet prices have risen. The supply of fresh eggs on hand in June of this year, for example, was greater by nearly Jo per cent than the supply on hand at the same time last year, and yet the wholesale price was 40 cents a dozen as against 3o cents a year ago.
The stock of frozen fowls had increased more than 298 per cent., and yet the price had risen also from 34 1/2 cents per pound to 37 1/2 cents. The supply of creamery butter had increased 129 per cent., and the price from 41 to 53 cents per pound. The supply of salt beef had been augumented 3 per cent., and the price had gone up from $34 a barrel to $36 a barrel. Canned corn had increased in stock nearly 92 per cent., and had remained substantially the same in price.
In a few foodstuffs the prices had declined, but in nothing like the proportion in which the supply had increased. For example, the stock of canned tomatoes had increased 102 per cent., and yet the price had declined only 25 cents per dozen cans. In some cases there had been the usual result of an increase of price following a decrease of supply, but in almost every instance the increase of price had been disproportionate to the decrease in stock.
The Attorney General has been making a careful study of the situation as a whole and of the laws that can be applied to better it, and is convinced that, under the stimulation and temptation of exceptional circumstances, combinations of producers and combinations of traders have been formed for the control of supplies and of prices which are clearly in restraint of trade, and against these, prosecutions will be promptly instituted and actively pushed which will in all likelihood have a prompt corrective effect.
There is reason to believe that the prices of leather, of coal, of lumber, and of textiles have been materially affected by forms of concert and co-operation among the producers and marketers of these and other universally necessary commodities which it will be possible to redress. No watchful or energetic effort will be spared to accomplish this necessary result. I trust that there will not be many cases in which prosecution will be necessary. Public action will no doubt cause many who have perhaps unwittingly adopted illegal methods to abandon them promptly and of their own motion.
And publicity can accomplish a great deal. The purchaser can often take care of himself if he knows the facts and influences he is dealing with; and purchasers are not disinclined to do anything, either singly or collectively, that may be necessary for their self-protection. The Department of Commerce, the Department of Agriculture, the Department of Labor, and the Federal Trade Commission can do a great deal toward supplying the public, systematically and at short intervals), with information regarding the actual supply of particular commodities that is in existence and available, and with regard to supplies which are in existence but not available because of hoarding, and with regard to the methods of price fixing which are being used by dealers in certain foodstuffs and other necessaries.
There can be little doubt that retailers are in part—sometimes in large part—responsible for exorbitant prices; and it is quite practicable for the Government through the agencies I have mentioned to supply the public with full information as 'to the prices at which retailers buy and as to the cost of transportation they pay, in order that it may be known just what margin of profit they, are demanding. Opinion and concerted action on the part of purchasers can probably do the rest.
That is, these agencies may perform this indispensable service provided the Congress will supply them with the necessary funds to prosecute their inquiries and keep their price lists up to date. Hitherto the appropriation committee of the Houses have not always, I fear, seen the full value of these inquiries, and the departments and commissions have been very much straitened for means to render this service.
That adequate funds be provided by appropriation for this purpose, and provided as promptly as possible, is one of the means of greatly ameliorating the present distressing conditions of livelihood that I have come to urge, in this attempt to concert with you the best ways to serve the country in this emergency. It is one of the absolutely necessary means, underlying many others, and can be supplied at once.
There are many other ways. Existing law is inadequate. There are many perfectly legitimate methods by which the Government can exercise restraint and guidance.
Let me urge, in the first place, that the present Food Control Act should be extended, both as to the period of time during which it shall remain in operation and as to the commodities to which it shall apply. Its provisions against hoarding should be made to apply not only to food, but also to feedstuffs, to fuel, to clothing, and to many other commodities which are indispensably necessaries of life. As it stands now, it is limited in operation to the period of the war and becomes inoperative upon the formal, proclamation of peace.
But I should judge that it was clearly within the constitutional power of the Congress to make similar permanent provisions and regulations with regard to all goods destined for interstate commerce, and to exclude them from interstate shipment if the requirements of law are not complied with. Some such regulation is imperatively necessary. The abuses that have grown up in the manipulation of prices by the withholding of foodstuffs and other necessaries of life cannot otherwise be effectively prevented. There can be no doubt of either the necessity or the legitimacy of such measures. May I not call attention to the fact, also, that, although, the present act prohibits profiteering, the prohibition is accompanied by no penalty? It is clearly in the public interest that a penalty should be provided which will be persuasive.
To the same end I earnestly recommend, in the second place, that the Congress pass a law regulating cold storage as it is regulated, for example, by the laws of the state of New Jersey, which limit the time during which goods may be kept in storage, prescribe the methods of disposing of them if kept beyond the permitted period, and require that goods released from storage shall in all cases bear the date of their receipt.
It would materially add to the serviceability of the law, for the purpose we now have in view, if it were also prescribed that all goods released from storage for interstate shipment should have plainly marked upon each package the selling or market price at which they went in storage. By this means the purchaser would always be able to learn what profits stood between him and the producer or the wholesale dealer.
It would serve as a useful example to the other communities of the country, as well as greatly relieve local distress, if the Congress were to regulate all such matters very fully for the District of Columbia, where its legislative authority is without limit.
I would also recommend that it be required that all goods destined for interstate commerce should in every case, where their form or package makes it possible, be plainly marked with the price at which they left the hands of the producer. Such a requirement would bear a close analogy to certain provisions of the Pure Food Act, by which it is required that certain detailed information be given on the labels of packages of food and drugs.
And it does not seem to me that we can confine ourselves to detailed measures of this kind, if .it is indeed our purpose to assume national control of the processes of distribution. I take it for granted that that is our purpose and our duty. Nothing less will suffice. We need not hesitate to handle a national question in a national way. We should go beyond the measures I have suggested.
We should formulate a law requiring a Federal license of all corporations engaged in interstate commerce and embodying in the license, or in the conditions under which it is to be issued, specific regulations designed to secure competitive selling and prevent unconscionable profits in the method of marketing. Such a law would afford a welcome opportunity to effect other much needed reforms in the' business of interstate shipment and in the methods of corporations which are engaged in it ; but for the moment I confine my recommendations to the object immediately in hand, which is to lower the cost of living.
May I not add that there is a bill now pending before Congress which, if passed, would do much to stop speculation and to prevent the fraudulent methods of promotion by which our people are annually fleeced of many millions of hard earned money? I refer to the measure proposed by the Capital Issues Committee for the control of security issues. It is a measure formulated by men who know the actual conditions of business, and its adoption would serve a great and beneficent purpose.
We are dealing, gentlemen of the Congress, I need hardly say, with, very critical and very difficult matters. We should go forward with confidence along the road we see, but we shall also seek to comprehend the whole of the scene amidst which we act. There is no ground for some of the fearful forecasts I hear uttered about me, but the condition of the world is unquestionably very grave and we should face it comprehendingly.
The situation of our own country is exceptionally fortunate. We of all peoples can afford to keep our heads and to determine upon moderate sensible courses, of action which will insure us against the passions and distempers which are working such deep unhappiness for some of the distressed nations on the other side of the sea. But we may be involved in their distresses unless we help, and help with energy and intelligence.
The world must pay for the appalling destruction wrought by the Great War, and we are part of the world. We must pay our share. For five years now the industry of all Europe has been slack and disordered. The normal crops have not been produced; the normal quantity of manufactured goods has not been turned out. Not until there are the usual crops and the usual production of manufactured goods on the other side of the Atlantic can Europe return to the former conditions; and it was upon the former conditions, not the present, that our economic relations with Europe were built up.
We must face the fact that unless we help Europe to get back to her normal life and production a chaos will ensue there which will inevitably be communicated to this country. For the present, it is manifest, we must quicken, not slacken, our own production. We, and we alone, now hold the world steady. Upon our steadfastness and self-possession depend the affairs of nations everywhere.
It is in this supreme crisis—the crisis for all mankind that America must prove her mettle. In the presence of a world confused, distracted, she must show herself self-possessed, self-contained, capable of sober and effective action. She saved Europe by her action in arms; she must now save it by her action in peace. In saving Europe she will save herself, as she did upon the battlefields of the war. The calmness and capacity with which she deals with and masters the problems of peace will be the final test and proof of her place among the peoples of the world.
And, if only in our own interest, we must help the people overseas. Europe is our biggest customer. We must keep her going or thousands of our shops and scores of our mines must close. There is no such thing as letting her go to ruin without ourselves sharing in the disaster.
In such circumstances, face to face with such tests, passion must be discarded. Passion and a disregard for the rights of others have no place in the counsels of a free people. We need light, not heat, in these solemn times of self-examination and saving action. There must be no threats. Let there be only intelligent counsel, and let the best reasons win, not the strongest brute force. The world has just' destroyed the arbitrary force of a military junta. It will live under no other. All that is arbitrary and coercive is in the discard. Those who seek to employ it only prepare their own destruction.
We cannot hastily and overnight revolutionize all the processes of our economic life. We shall not attempt to do so. These are days of deep excitement and of extravagant speech; but with us these are things of the surface. Everyone who is in real touch with the silent masses of our great people knows that the old strong fibre and steady self-control are still there, firm against violence or any distempered action that would throw their affairs into confusion. I am serenely confident that they will readily find themselves, no matter what the circumstances, and that they will address themselves to the tasks of peace with the same devotion and the same stalwart preference for what is right that they displayed to the admiration of the whole world in the midst of war.
And I entertain another confident hope. I have spoken today chiefly of measures of imperative regulation and legal compulsion, of prosecutions and the sharp correction of selfish processes; and these no doubt are necessary. But there are other forces that we may count on besides those resident in the Department of Justice. We have just fully awakened to what has been going on and to the influences, many of them very selfish and sinister, that have been producing high prices and imposing an intolerable burden on the mass of our people. To have brought it all into the open will accomplish the greater part of the result we seek.
I appeal with entire confidence to our producers, our middlemen, and our merchants to deal fairly with the people. It is their opportunity to show that they comprehend, that they intend to act justly, and that they have the public interest sincerely at heart. And I have no doubt that housekeepers all over the country and every one who buys the things he daily stands in need of will presently exercise a greater vigilance, a more thoughtful economy, a more discriminating care as to the market in which he buys or the merchant with whom he trades than he has hitherto exercised.
I believe, too, that the more extreme leaders of organized labor will presently yield to a sober second thought and, like the great mass of their associates, think and act like true Americans. They will see that strikes undertaken at this critical time are certain to make matters worse, not better—worse for them and for everybody else.
The worst thing, the most fatal thing, that can be done now is to stop or interrupt production or to interfere with the distribution of goods by the railways and the shipping of the country. We are all involved in the distressing results of the high cost of living, and we must unite, not divide, to correct it.
There are many things that ought to be corrected in the relations between capital and labor, in respect of wages and conditions of labor, and other things even more far-reaching, and I, for one, am ready to go into conference about these matters with any group of my fellow- countrymen who know what they are talking about and are willing to remedy existing conditions by frank counsel rather than by violent contest.
No remedy is possible while men are in a temper, and there can be no settlement which does not have as its motive and standard the general interest. Threats and undue insistence upon the interest of a single class make settlement impossible.
I believe, as I have hitherto had occasion to say to the Congress, that the industry and life of our people and of the world will suffer irreparable damage if employers and workmen are to go on in a perpetual contest as antagonists. They must, on one plan or another, be effectively associated. Have we not steadiness and self-possession and business sense enough to work out that result? Undoubtedly we have, and we shall work it out. -
In the meantime—now and in the days of readjustment and recuperation that are ahead of us—let us resort more and more to frank and intimate counsel and make ourselves a great and triumphant nation by making ourselves a united force in the life of the world. It will not then have looked to us for leadership in vain.
Woodrow Wilson, Address to Congress On the High Cost of Living Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/310901